Financial Services Bill

Session 2012 - 13
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Other Bills before Parliament

Financial Services Bill

Financial Services Bill
Part 4 — Collaboration between Treasury and Bank of England, FCA or PRA
138

(d)
how the Treasury, the Bank and the PRA will co-operate in fulfilling
those roles;
(e)
the use by the Treasury of their power under section 57;
(f)
matters connected with the Bank’s compliance with a direction under
that section;
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(g)
the obtaining and sharing of information.
(3)
The memorandum may make provision about such other matters as may be
agreed between the Treasury, the Bank and the PRA, which must be matters
that—
(a)
relate to the stability of the UK financial system or the regulation of
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financial services, and
(b)
affect the public interest.
(4)
The memorandum need not make provision about the relationship between
the Bank and the PRA.
(5)
The Treasury, the Bank of England and the PRA may, with the agreement of a
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body falling within subsection (6), include in the memorandum provisions
relating to co-operation between any of them and that body in relation to
matters falling within subsection (3)(a) and (b).
(6)
The bodies falling within this subsection are—
(a)
the FCA;
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(b)
the scheme manager of the Financial Services Compensation Scheme;
(c)
any other body exercising functions that relate to the stability of the UK
financial system or the regulation of financial services.
(7)
The Treasury must—
(a)
lay before Parliament a copy of the memorandum and any revised
25
memorandum, and
(b)
publish the memorandum as currently in force in such manner as they
think fit.
62
Memorandum of understanding: international organisations
(1)
The Treasury, the Bank of England, the FCA and the PRA (“the UK
30
authorities”) must prepare and maintain a memorandum describing how they
intend to co-ordinate the exercise of their relevant functions so far as they relate
to membership of, or relations with, the European Supervisory Authorities, EU
institutions and other international organisations.
(2)
The “European Supervisory Authorities” are the European Banking Authority,
35
the European Insurance and Occupational Pensions Authority and the
European Securities and Markets Authority.
(3)
“Relevant function”—
(a)
in relation to the FCA or the PRA, means any of its functions;
(b)
in relation to the Bank of England, means any of its functions relating
40
to the stability of the UK financial system or the regulation of financial
services;
(c)
in relation to the Treasury, means any of their functions relating to the
matters mentioned in paragraph (b).
(4)
The memorandum is to be made with a view to ensuring—
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Financial Services Bill
Part 4 — Collaboration between Treasury and Bank of England, FCA or PRA
139

(a)
that, to the extent that it is appropriate to do so, the UK authorities
agree consistent objectives in relation to matters of common interest;
(b)
that, to the extent that it is appropriate to do so, they exercise their
relevant functions in a way that is likely to advance those objectives;
(c)
that they exercise their relevant functions in a way that is consistent and
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effective.
(5)
The memorandum must, in particular, make provision—
(a)
stating, in relation to each of the UK authorities, those international
organisations of which it is a member or with which it has relations and
which are concerned with matters that are related to its relevant
10
functions;
(b)
for there to be a committee for the purposes of the co-ordination
mentioned in subsection (1);
(c)
for that committee to include representatives of the UK authorities and
to be chaired by a representative of the Treasury;
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(d)
about the procedures to be followed by the UK authorities in agreeing
consistent objectives in relation to matters that materially affect 2 or
more of them;
(e)
about how the UK authorities will consult each other about the
discharge of their relevant functions relating to international
20
organisations.
(6)
The memorandum need not make provision about co-ordination between the
FCA and the PRA in relation to membership of, or relations with, the European
Supervisory Authorities (as to which, see section 3E of FSMA 2000).
(7)
The UK authorities may, with the agreement of a body exercising functions
25
relating to the stability of the UK financial system or the regulation of financial
services, include in the memorandum provisions relating to co-operation
between any of them and that body in relation to membership of, or relations
with, the European Supervisory Authorities, EU institutions and other
international organisations.
30
(8)
The Treasury must—
(a)
lay before Parliament a copy of the memorandum and any revised
memorandum, and
(b)
publish the memorandum as currently in force in such manner as they
think fit.
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63
Interpretation of Part 4
(1)
This section has effect for the interpretation of this Part.
(2)
“Public funds notification” is to be read in accordance with section 54(2).
(3)
“Financial assistance” includes giving guarantees or indemnities and any other
kind of financial assistance (actual or contingent).
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(4)
The Treasury may by order provide that a specified activity or transaction, or
class of activity or transaction, is to be or not to be treated as financial assistance
for the purposes of this Part; and subsection (3) is subject to this subsection.
(5)
“Qualifying financial assistance” is to be read in accordance with section 56(5).

Financial Services Bill
Part 5 — Inquiries and investigations
140

Part 5
Inquiries and investigations
Inquiries
64
Cases in which Treasury may arrange independent inquiries
(1)
This section applies in two cases.
5
(2)
The first case is where it appears to the Treasury that—
(a)
events have occurred in relation to—
(i)
a collective investment scheme,
(ii)
a person who is, or was at the time of the events, carrying on a
regulated activity (whether or not as an authorised person), or
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(iii)
listed securities or an issuer of listed securities,

which posed or could have posed a serious threat to the stability of the
UK financial system or caused or risked causing significant damage to
the interests of consumers, and
(b)
those events might not have occurred, or the threat or damage might
15
have been reduced, but for a serious failure in—
(i)
the system established by FSMA 2000, or by any previous
statutory provision, for the regulation of such schemes, or of
such persons and their activities, or the listing of securities, or
(ii)
the operation of that system.
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(3)
The second case is where it appears to the Treasury that—
(a)
events have occurred in relation to a recognised clearing house or a
recognised inter-bank payment system which—
(i)
posed or could have posed a serious threat to the stability of or
confidence in the UK financial system, or
25
(ii)
caused or risked causing significant damage to business or
other interests throughout the United Kingdom, and
(b)
those events might not have occurred, or the threat or damage might
have been reduced, but for a serious failure in—
(i)
the system established by Part 18 of FSMA 2000, or by any
30
previous statutory provision, for the regulation of clearing
houses,
(ii)
the system established by Part 5 of the Banking Act 2009 for the
regulation of inter-bank payment systems, or
(iii)
the operation of either of those systems.
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(4)
If the Treasury consider that it is in the public interest that there should be an
independent inquiry into the events and the circumstances surrounding them,
they may arrange for an inquiry to be held under section 65.
(5)
In this section—
“event” does not include any event occurring before 1 December 2001 (but
40
no such limitation applies to the reference in subsection (4) to
surrounding circumstances);
“recognised inter-bank payment system” means an inter-bank payment
system, as defined by section 182 of the Banking Act 2009, that is a
recognised system for the purposes of Part 5 of that Act.
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Financial Services Bill
Part 5 — Inquiries and investigations
141

65
Power to appoint person to hold an inquiry
(1)
If the Treasury decide to arrange for an inquiry to be held under this section,
they may appoint such person as they consider appropriate to hold the inquiry.
(2)
The Treasury may, by a direction to the appointed person, control—
5
(a)
the scope of the inquiry;
(b)
the period during which the inquiry is to be held;
(c)
the conduct of the inquiry;
(d)
the making of reports.
(3)
A direction may, in particular—
10
(a)
confine the inquiry to particular matters;
(b)
extend the inquiry to additional matters;
(c)
require the appointed person to postpone the start of, or suspend, an
inquiry until a specified time or until a further direction;
(d)
require the appointed person to discontinue the inquiry or to take only
15
such steps as are specified in the direction;
(e)
require the appointed person to make such interim reports as are so
specified.
66
Powers of appointed person and procedure
(1)
The person appointed to hold an inquiry under section 65 (“A”) may—
20
(a)
obtain such information from such persons and in such manner as A
thinks fit,
(b)
make such inquiries as A thinks fit, and
(c)
determine the procedure to be followed in connection with the inquiry.
(2)
A may require any person who, in A’s opinion, is able to provide any
25
information, or produce any document, which is relevant to the inquiry to
provide any such information or produce any such document.
(3)
For the purposes of an inquiry, A has the same powers as the court in respect
of the attendance and examination of witnesses (including the examination of
witnesses abroad) and in respect of the production of documents.
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(4)
“The court” means—
(a)
the High Court, or
(b)
in Scotland, the Court of Session.
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Conclusion of inquiry
(1)
On completion of an inquiry under section 65, the person holding the inquiry
35
must make a written report to the Treasury—
(a)
setting out the result of the inquiry, and
(b)
making such recommendations (if any) as the person considers
appropriate.
(2)
Any expenses reasonably incurred in holding an inquiry under section 65 are
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to be met by the Treasury out of money provided by Parliament.