Session 2012 - 13
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Other Bills before Parliament

Financial Services Bill


Financial Services Bill
Part 1 — Bank of England

13

 

Power of Bank to require FCA or PRA to provide information

9V      

Directions requiring information or documents

(1)   

The Bank may exercise the powers conferred by this section where it

considers that information or documents are reasonably required in

connection with the exercise by the Bank of its functions in pursuance

5

of the Financial Stability Objective.

(2)   

The Bank may give a direction to the FCA or the PRA (“the regulator”)

requiring the regulator—

(a)   

to provide the Bank with specified information or information

of a specified description, or

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(b)   

to produce to the Bank specified documents or documents of a

specified description.

(3)   

The direction may relate to information or documents which are held

by persons other than the regulator and which the regulator has power

to obtain or whose production the regulator has power to require.

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(4)   

Any information or documents to which the direction relates are—

(a)   

where the information or documents are held by a person in

relation to whom the powers conferred by subsections (1) and

(3) of section 165 of FSMA 2000 are exercisable, to be taken to be

information or documents to which that section applies by

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virtue of subsection (4) of that section, and

(b)   

where they are held by a person to whom section 165A of FSMA

2000 applies and the direction is given to the PRA, to be taken

to be information or documents to which that section applies by

virtue of subsection (3) of that section.

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(5)   

The information or documents must be provided or produced before

the end of such period as may be specified.

(6)   

The Bank may require any information provided under this section to

be provided in such form as it may require.

(7)   

The Bank may require—

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(a)   

any information provided, whether in a document or otherwise,

to be verified in such manner as it may require;

(b)   

any document produced to be authenticated in such manner as

it may require.

9W      

Further provisions about directions under section 9V

35

(1)   

In the exercise of its functions under section 9V, the Bank must have

regard to the principle that a burden or restriction which is imposed on

a person, or on the carrying on of an activity, should be proportionate

to the benefits, considered in general terms, which are expected to

result from the imposition of that burden or restriction.

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(2)   

Before giving a direction under section 9V to the FCA or the PRA (“the

regulator”), the Bank must consult the regulator.

(3)   

A direction under section 9V must be in writing, and may be revoked

by a notice in writing.

 
 

Financial Services Bill
Part 1 — Bank of England

14

 

(4)   

As soon as practicable after giving a direction under section 9V, the

Bank must publish the direction in such manner as it thinks appropriate

for bringing the direction to the attention of persons (other than the

regulator to which it is given) who may be affected by it.

(5)   

Subsection (4) does not require the publication of information whose

5

publication at the time required by that subsection would in the

opinion of the Bank be against the public interest.

(6)   

Where the Bank decides under subsection (5) that publication of any

information would be against the public interest, it must from time to

time review that decision and if it subsequently decides that

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publication is no longer against the public interest it must comply with

subsection (4).

Supplementary

9X      

Interpretation of Part 1A

In this Part—

15

“the FCA” means the Financial Conduct Authority;

“financial assistance” has the meaning given by section 257(1) of

the Banking Act 2009;

“the Financial Policy Committee” means the Financial Policy

Committee of the Bank of England;

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“the financial sector” means financial institutions generally;

“FSMA 2000” means the Financial Services and Markets Act 2000;

“the PRA” means the Prudential Regulation Authority;

“systemic risk” has the meaning given by section 9C(5);

“the UK economy” means the economy of the United Kingdom;

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“the UK financial system” means the financial system of the

United Kingdom.”

(2)   

After Schedule 2 to the Bank of England Act 1998 insert as Schedule 2A the

Schedule set out in Part 1 of Schedule 1 to this Act.

(3)   

The further amendments relating to the Financial Policy Committee in Part 2

30

of Schedule 1 have effect.

(4)   

Sections 2B and 2C of the Bank of England Act 1998 (which relate to the

establishment and procedure of the Financial Stability Committee) are

repealed.

4       

Further amendments relating to Bank of England

35

Schedule 2 contains further amendments relating to the Bank of England.

 
 

Financial Services Bill
Part 2 — Amendments of Financial Services and Markets Act 2000

15

 

Part 2

Amendments of Financial Services and Markets Act 2000

Financial Conduct Authority and Prudential Regulation Authority

5       

The new Regulators

(1)   

For sections 1 to 18 of the Financial Services and Markets Act 2000 (in this Act

5

referred to as “FSMA 2000”) substitute—

“Part 1A

The Regulators

Chapter 1

The Financial Conduct Authority

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The Financial Conduct Authority

1A      

The Financial Conduct Authority

(1)   

The body corporate previously known as the Financial Services

Authority is renamed as the Financial Conduct Authority.

(2)   

The Financial Conduct Authority is in this Act referred to as “the FCA”.

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(3)   

The FCA is to have the functions conferred on it by or under this Act.

(4)   

The FCA must comply with the requirements as to its constitution set

out in Schedule 1ZA.

(5)   

Schedule 1ZA also makes provision about the status of the FCA and the

exercise of certain of its functions.

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(6)   

References in this Act or any other enactment to functions conferred on

the FCA by or under this Act include references to functions conferred

on the FCA by or under—

(a)   

the Insolvency Act 1986,

(b)   

the Banking Act 2009, or

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(c)   

the Financial Services Act 2012.

The FCA’s general duties

1B      

The FCA’s general duties

(1)   

In discharging its general functions the FCA must, so far as is

reasonably possible, act in a way which—

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(a)   

is compatible with its strategic objective, and

(b)   

advances one or more of its operational objectives.

(2)   

The FCA’s strategic objective is: ensuring that the relevant markets (see

section 1F) function well.

(3)   

The FCA’s operational objectives are—

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Financial Services Bill
Part 2 — Amendments of Financial Services and Markets Act 2000

16

 

(a)   

the consumer protection objective (see section 1C);

(b)   

the integrity objective (see section 1D);

(c)   

the competition objective (see section 1E).

(4)   

The FCA must, so far as is compatible with acting in a way which

advances the consumer protection objective or the integrity objective,

5

discharge its general functions in a way which promotes effective

competition in the interests of consumers.

(5)   

In discharging its general functions the FCA must have regard to—

(a)   

the regulatory principles in section 3B, and

(b)   

the importance of taking action intended to minimise the extent

10

to which it is possible for a business carried on—

(i)   

by an authorised person or a recognised investment

exchange, or

(ii)   

in contravention of the general prohibition,

   

to be used for a purpose connected with financial crime.

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(6)   

For the purposes of this Chapter, the FCA’s general functions are—

(a)   

its function of making rules under this Act (considered as a

whole),

(b)   

its function of preparing and issuing codes under this Act

(considered as a whole),

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(c)   

its functions in relation to the giving of general guidance under

this Act (considered as a whole), and

(d)   

its function of determining the general policy and principles by

reference to which it performs particular functions under this

Act.

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(7)   

Except to the extent that an order under section 47 of the Financial

Services Act 2012 (orders relating to mutual societies functions) so

provides, the FCA’s general functions do not include functions that are

transferred functions within the meaning of section 48 of that Act.

(8)   

“General guidance” has the meaning given in section 139B(5).

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1C      

The consumer protection objective

(1)   

The consumer protection objective is: securing an appropriate degree of

protection for consumers.

(2)   

In considering what degree of protection for consumers may be

appropriate, the FCA must have regard to—

35

(a)   

the differing degrees of risk involved in different kinds of

investment or other transaction;

(b)   

the differing degrees of experience and expertise that different

consumers may have;

(c)   

the needs that consumers may have for the timely provision of

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information and advice that is accurate and fit for purpose;

(d)   

the general principle that consumers should take responsibility

for their decisions;

(e)   

the general principle that those providing regulated financial

services should be expected to provide consumers with a level

45

of care that is appropriate having regard to the degree of risk

 
 

Financial Services Bill
Part 2 — Amendments of Financial Services and Markets Act 2000

17

 

involved in relation to the investment or other transaction and

the capabilities of the consumers in question;

(f)   

any information which the consumer financial education body

has provided to the FCA in the exercise of the consumer

financial education function;

5

(g)   

any information which the scheme operator of the ombudsman

scheme has provided to the FCA pursuant to section 232A.

1D      

The integrity objective

(1)   

The integrity objective is: protecting and enhancing the integrity of the

UK financial system.

10

(2)   

The “integrity” of the UK financial system includes—

(a)   

its soundness, stability and resilience,

(b)   

its not being used for a purpose connected with financial crime,

(c)   

its not being affected by behaviour that amounts to market

abuse,

15

(d)   

the orderly operation of the financial markets, and

(e)   

the transparency of the price formation process in those

markets.

1E      

The competition objective

(1)   

The competition objective is: promoting effective competition in the

20

interests of consumers in the markets for—

(a)   

regulated financial services, or

(b)   

services provided by a recognised investment exchange in

carrying on regulated activities in respect of which it is by virtue

of section 285(2) exempt from the general prohibition.

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(2)   

The matters to which the FCA may have regard in considering the

effectiveness of competition in the market for any services mentioned

in subsection (1) include—

(a)   

the needs of different consumers who use or may use those

services, including their need for information that enables them

30

to make informed choices,

(b)   

the ease with which consumers who obtain those services can

change the person from whom they obtain them,

(c)   

the ease with which new entrants can enter the market, and

(d)   

how far competition is encouraging innovation.

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Interpretation of terms used in relation to FCA’s general duties

1F      

Meaning of “relevant markets” in strategic objective

In section 1B(2) “the relevant markets” means—

(a)   

the financial markets,

(b)   

the markets for regulated financial services (see section 1H(2)),

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and

(c)   

the markets for services that are provided by persons other than

authorised persons in carrying on regulated activities but are

provided without contravening the general prohibition.

 
 

 
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Revised 28 May 2012