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Lords Amendments to the Financial Services (Banking Reform) Bill


 
 

94

 
 

(a)    

shall provide for income from penalties imposed by the

 

Regulator to be paid into the Consolidated Fund, but

 

(b)    

may provide that such income is to be paid into the

 

Consolidated Fund after the deduction of costs incurred

 

by the Regulator in collecting, or enforcing the payment

 

of, such penalties.

 

      (4)  

The regulations may also include, in particular—

 

(a)    

provision for a penalty imposed by the Regulator to be

 

enforced as a debt;

 

(b)    

provision specifying conditions that must be met before

 

any action to enforce a penalty may be taken.”

 

(8)    

In section 13 of the Compensation Act 2006 (appeals and references to

 

Tribunal)—

 

(a)    

in subsection (1), omit the “or” at the end of paragraph (d) and after

 

paragraph (e) insert “, or

 

(f)    

imposes a penalty on the person.”;

 

(b)    

after subsection (1) insert—

 

“(1A)    

A person who is appealing to the Tribunal against a decision

 

to impose a penalty may appeal against—

 

(a)    

the imposition of the penalty,

 

(b)    

the amount of the penalty, or

 

(c)    

any date by which the penalty, or any part of it, is

 

required to be paid.”;

 

(c)    

in subsection (3), after paragraph (d) insert—

 

“(da)    

may require a person to pay a penalty (which may

 

be of a different amount from that of any penalty

 

imposed by the Regulator);

 

(db)    

may vary any date by which a penalty, or any part of

 

a penalty, is required to be paid;”.”

163

Insert the following new Clause—

 

         

“Recovery of expenditure incurred by Office for Legal Complaints

 

(1)    

The Schedule to the Compensation Act 2006 (claims management

 

regulations) is amended as set out in subsections (2) and (3).

 

(2)    

The provision in paragraph 7 becomes sub-paragraph (1) of that

 

paragraph.

 

(3)    

In paragraph 7, after sub-paragraph (1) insert—

 

  “(2)  

The fees that may be charged by the Regulator by virtue of sub-

 

paragraph (1) include fees in respect of costs incurred by the

 

Regulator for the purposes of meeting any leviable OLC

 

expenditure.

 

            

“Leviable OLC expenditure” has the meaning given by section

 

173(7) of the Legal Services Act 2007.”

 

(4)    

The Legal Services Act 2007 is amended as set out in subsections (5) and (6).

 

(5)    

After section 174 insert—


 
 

95

 
 

“OLC expenditure relating to claims management services

 

174A  

OLC expenditure relating to claims management services

 

(1)    

This section has effect at any time when no person is designated

 

under section 5(1) of the Compensation Act 2006 (the Regulator in

 

relation to claims management services).

 

(2)    

In determining the leviable OLC expenditure for the purposes of

 

section 173, any expenditure incurred, or income received, by the

 

OLC in connection with the exercise of its functions in relation to

 

claims management services is to be disregarded.

 

(3)    

The Lord Chancellor may by regulations charge periodic fees for

 

authorised persons for the purposes of meeting any costs incurred

 

by the Lord Chancellor in respect of relevant OLC expenditure.

 

(4)    

“Relevant OLC expenditure” means the difference between—

 

(a)    

any expenditure of the OLC incurred in connection with the

 

exercise of its functions in relation to claims management

 

services, and

 

(b)    

the aggregate of the amounts which the OLC pays into the

 

Consolidated Fund under section 175(1)(g), (h) or (n), so far

 

as relating to the exercise of its functions in relation to such

 

services.

 

(5)    

Regulations made under subsection (3) may, in particular—

 

(a)    

permit the charging of different fees for different cases or

 

circumstances (which may, in particular, be defined wholly

 

or partly by reference to turnover or other criteria relating to

 

an authorised person’s business);

 

(b)    

enable the person exercising functions of the Regulator

 

under section 5(9) of the Compensation Act 2006 to collect

 

fees on behalf of the Lord Chancellor;

 

(c)    

specify the consequences of failure to pay fees (which may

 

include anything which could be specified in regulations

 

under section 9 of that Act as a consequence of a failure to

 

pay fees charged under those regulations).

 

(6)    

In this section “authorised person” and “claims management

 

services” have the same meaning as in Part 2 of the Compensation

 

Act 2006 (see section 4 of that Act).”

 

(6)    

In section 206 (Parliamentary control of orders and regulations), in

 

subsection (4), after paragraph (o) insert—

 

“(oa)    

section 174A(3) (power to charge fees on persons providing

 

claims management services);”.”

Before Clause 17

164

Insert the following new Clause—


 
 

96

 
 

“Part 8

 

Final provisions

 

         

Orders and regulations: general

 

(1)    

Any power of the Treasury, the Secretary of State or the Lord Chancellor to

 

make an order or regulations under this Act is exercisable by statutory

 

instrument.

 

(2)    

Subsection (1) does not apply to an order under section (Designation orders)

 

(payment systems: designation orders).

 

(3)    

An order or regulations made by the Treasury, the Secretary of State or the

 

Lord Chancellor under this Act may—

 

(a)    

make different provision for different cases, and

 

(b)    

contain such incidental or transitional provision as the person

 

making the order or regulations considers appropriate.”

Clause 17

165

Leave out Clause 17 and insert—

 

         

“Orders and regulations: Parliamentary control

 

(1)    

A statutory instrument containing an order or regulations under this Act is

 

subject to annulment in pursuance of a resolution of either House of

 

Parliament, unless—

 

(a)    

the instrument contains only provision made under section 21

 

(commencement), or

 

(b)    

the instrument is required by subsection (3) or any other enactment

 

to be laid in draft before, and approved by a resolution of, each

 

House.

 

(2)    

Subsection (3) applies to a statutory instrument that contains (with or

 

without other provisions)—

 

(a)    

regulations under section 8 (building societies: power to make

 

provision about ring-fencing);

 

(b)    

an order under section (Meaning of “payment system”)(4) (meaning

 

of “payment system”);

 

(c)    

an order under section (Power to make further consequential

 

amendments) (power to make further consequential amendments)

 

that amends or repeals primary legislation;

 

(d)    

an order under paragraph 6 of Schedule (Conduct of FMI

 

administration) (conduct of FMI administration).

 

(3)    

A statutory instrument to which this subsection applies may not be made

 

unless a draft of the instrument has been laid before, and approved by a

 

resolution of, each House of Parliament.

 

(4)    

In subsection (2)(c) “primary legislation” means—

 

(a)    

an Act of Parliament,

 

(b)    

an Act of the Scottish Parliament,

 

(c)    

a Measure or Act of the National Assembly for Wales, or

 

(d)    

Northern Ireland legislation.”


 
 

97

 

After Clause 18

166

Insert the following new Clause—

 

         

“Power to make further consequential amendments

 

(1)    

The Treasury, the Secretary of State or the Lord Chancellor may by order

 

make such provision amending, repealing, revoking or applying with

 

modifications any enactment to which this section applies as the person

 

making the order considers necessary or expedient in consequence of any

 

provision made by or under this Act.

 

(2)    

This section applies to—

 

(a)    

any enactment passed or made before the passing of this Act, and

 

(b)    

any enactment passed or made on or before the last day of the

 

Session in which this Act is passed.

 

(3)    

Amendments and repeals made under this section are additional to those

 

made by or under any other provision of this Act.”

Clause 19

167

Page 29, line 20, after “Treasury” insert “, the Secretary of State or the Lord

 

Chancellor”

168

Page 29, line 20, leave out “they consider” and insert “the person making the order

 

considers”

Clause 20

169

Page 29, line 29, leave out from “Ireland” to end of line 30 and insert—

 

    

“This is subject to subsection (2).

 

(2)    

The amendments made by the following sections have the same extent as

 

the enactments amended—

 

(a)    

section 9 (preferential debts: Great Britain),

 

(b)    

section (Power to impose penalties on persons providing claims

 

management services) (power to impose penalties on persons

 

providing claims management services), and

 

(c)    

section (Recovery of expenditure incurred by Office for Legal Complaints)

 

(recovery of expenditure incurred by Office for Legal Complaints).”

Clause 21

170

Page 29, line 33, at end insert—

 

“( )    

The following provisions—

 

section (Duty of FCA to make rules restricting charges for high-cost short-

 

term credit), and

 

section (Building societies) and Schedule (Building societies), apart from

 

paragraph 4 of that Schedule,

 

    

come into force at the end of the period of 2 months beginning with the day

 

on which this Act is passed.”

171

Page 29, line 33, at end insert—


 
 

98

 
 

“( )    

Sections (Power to impose penalties on persons providing claims management

 

services) and (Recovery of expenditure incurred by Office for Legal

 

Complaints)(1) to (3) come into force on such day as the Secretary of State

 

may by order appoint.”

172

Page 29, line 33, at end insert—

 

“( )    

Section (Recovery of expenditure incurred by Office for Legal Complaints)(4) to

 

(6) comes into force on such day as the Lord Chancellor may by order

 

appoint.”

Before Schedule 2

173

Insert the following new Schedule—

 

“Bail-in stabilisation option

 

Part 1

 

Amendments of Banking Act 2009

 

1          

The Banking Act 2009 is amended as follows.

 

New stabilisation option: bail-in

 

2          

After section 12 insert—

 

“12A  

Bail-in option

 

(1)    

The third stabilisation option is exercised by the use of the power

 

in subsection (2).

 

(2)    

The Bank of England may make one or more resolution

 

instruments (which may contain provision or proposals of any

 

kind mentioned in subsections (3) to (6)).

 

(3)    

A resolution instrument may—

 

(a)    

make special bail-in provision with respect to a specified

 

bank;

 

(b)    

make other provision for the purposes of, or in

 

connection with, any special bail-in provision made by

 

that or another instrument.

 

(4)    

A resolution instrument may—

 

(a)    

provide for securities issued by a specified bank to be

 

transferred to a bail-in administrator (see section 12B) or

 

another person;

 

(b)    

make other provision for the purposes of, or in

 

connection with, the transfer of securities issued by a

 

specified bank (whether or not the transfer has been or is

 

to be effected by that instrument, by another resolution

 

instrument or otherwise).

 

(5)    

A resolution instrument may set out proposals with regard to the

 

future ownership of a specified bank or of the business of a

 

specified bank, and any other proposals (for example, proposals

 

about making special bail-in provision) that the Bank of England

 

may think appropriate.


 
 

99

 
 

(6)    

A resolution instrument may make any other provision the Bank

 

of England may think it appropriate to make in exercise of

 

specific powers under this Part.

 

(7)    

Provision made in accordance with subsection (4) may relate to—

 

(a)    

specified securities, or

 

(b)    

securities of a specified description.

 

(8)    

Where the Bank of England has exercised the power in

 

subsection (4) to transfer securities to a bail-in administrator, the

 

Bank of England must exercise its functions under this Part (see,

 

in particular, section 48V) with a view to ensuring that any

 

securities held by a person in the capacity of a bail-in

 

administrator are so held only for so long as is, in the Bank of

 

England’s opinion, appropriate having regard to the special

 

resolution objectives.

 

(9)    

References in this Part to “special bail-in provision” are to

 

provision made in reliance on section 48B.

 

12B    

Bail-in administrators

 

(1)    

The Bank of England may, in a resolution instrument, appoint an

 

individual or body corporate as a bail-in administrator.

 

(2)    

A bail-in administrator is appointed—

 

(a)    

to hold any securities that may be transferred or issued to

 

that person in the capacity of bail-in administrator;

 

(b)    

to perform any other functions that may be conferred

 

under any provision of this Part.

 

(3)    

The Bank of England may appoint more than one bail-in

 

administrator to perform functions in relation to a bank (but no

 

more than one of them may at any one time be authorised to hold

 

securities as mentioned in subsection (2)(a)).

 

(4)    

Securities held by a bail-in administrator (in that capacity, and

 

whether as a result of a resolution instrument or otherwise) are

 

to be held in accordance with the terms of a resolution

 

instrument that transfers those, or other, securities to the bail-in

 

administrator.

 

(5)    

For example, the following provision may be made by virtue of

 

subsection (4)—

 

(a)    

provision that specified rights of a bail-in administrator

 

with respect to all or any of the securities are to be

 

exercisable only as directed by the Bank of England;

 

(b)    

provision specifying rights or obligations that the bail-in

 

administrator is, or is not, to have in relation to some or

 

all of the securities.

 

(6)    

A bail-in administrator must have regard, in performing any

 

functions of the office, to any objectives that may be specified in

 

a resolution instrument.

 

(7)    

Where one or more objectives are specified in accordance with

 

subsection (6), the objectives are to be taken to have equal status

 

with each other, unless the contrary is stated in the resolution

 

instrument.


 
 

100

 
 

(8)    

See sections 48I to 48K for further provision about bail-in

 

administrators.”

 

3          

After section 8 insert—

 

“8A    

Specific condition: bail-in

 

(1)    

The Bank of England may exercise a stabilisation power in

 

respect of a bank in accordance with section 12A(2) only if

 

satisfied that the condition in subsection (2) is met.

 

(2)    

The condition is that the exercise of the power is necessary,

 

having regard to the public interest in—

 

(a)    

the stability of the financial systems of the United

 

Kingdom,

 

(b)    

the maintenance of public confidence in the stability of

 

those systems,

 

(c)    

the protection of depositors, or

 

(d)    

the protection of any client assets that may be affected.

 

(3)    

Before determining whether that condition is met, and if so how

 

to react, the Bank of England must consult—

 

(a)    

the PRA,

 

(b)    

the FCA, and

 

(c)    

the Treasury.

 

(4)    

The condition in this section is in addition to the conditions in

 

section 7.”

 

Further provision about the bail-in option

 

4          

After section 48A insert—

 

“Bail-in option

 

48B    

Special bail-in provision

 

(1)    

“Special bail-in provision”, in relation to a bank, means any of the

 

following (or any combination of the following)—

 

(a)    

provision cancelling a liability owed by the bank;

 

(b)    

provision modifying, or changing the form of, a liability

 

owed by the bank;

 

(c)    

provision that a contract under which the bank has a

 

liability is to have effect as if a specified right had been

 

exercised under it.

 

(2)    

“Special bail-in provision”, in relation to a bank, also includes

 

any associated provision (see subsection (3)) that the Bank of

 

England may think it appropriate to make in consequence of any

 

provision under subsection (1) that—

 

(a)    

is made in the same resolution instrument, or

 

(b)    

has been made in another resolution instrument in

 

respect of the bank.

 

(3)    

“Associated provision” means provision cancelling or modifying

 

a contract under which a banking group company has a liability.


 
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