Financial Services Bill

Session 2012 - 13
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Financial Services Bill

Financial Services Bill
Part 5 — Inquiries and investigations
147

Publication of reports
77
Publication of reports of inquiries and investigations
(1)
This section applies where a report is made to the Treasury under section 67 or
75.
(2)
Subject to subsection (3), the Treasury must publish the report in full.
5
(3)
The Treasury may withhold material in the report from publication to such
extent—
(a)
as is required by any statutory provision, enforceable EU obligation or
rule of law, or
(b)
as the Treasury consider to be necessary in the public interest, having
10
regard in particular to the matters mentioned in subsection (4).
(4)
Those matters are—
(a)
the extent to which withholding material might inhibit the allaying of
public concern;
(b)
the risk of harm or damage that could be avoided or reduced by
15
withholding any material;
(c)
any conditions of confidentiality subject to which any person acquired
information that was given to the inquiry or used in the investigation.
(5)
In subsection (4)(b) “harm or damage” includes in particular—
(a)
damage to national security or international relations;
20
(b)
damage to the economic interests of the United Kingdom or a part of
the United Kingdom;
(c)
damage caused by disclosure of commercially sensitive information.
(6)
The Treasury must lay before Parliament whatever is published under
subsection (2).
25
(7)
If the Treasury receive a report under section 67 or 75, but withhold all or part
of the material in the report from publication, they must publish and lay before
Parliament a statement of their reasons for not publishing the report in full.
(8)
Publication under subsection (2) or (7) is to be in such manner as the Treasury
think fit.
30
(9)
References to a report under section 67 or 75 include references to an interim
report required under section 65 or 74.
Supplementary
78
Interpretation and supplementary provision
(1)
In this Part—
35
“authorised person” has the same meaning as in FSMA 2000;
“collective investment scheme” has the same meaning as in FSMA 2000;
“consumer” has the meaning given in section 1G of FSMA 2000;
“listed securities” means anything which has been admitted to the official
list under Part 6 of FSMA 2000;
40
“PRA-authorised person” has the same meaning as in FSMA 2000;
“recognised clearing house” has the same meaning as in FSMA 2000;

Financial Services Bill
Part 6 — Investigation of complaints against regulators
148

“recognised investment exchange” has the same meaning as in FSMA
2000;
“regulated activity” has the same meaning as in FSMA 2000;
“regulator” means the FCA or the PRA.
(2)
A direction by the Treasury under this Part must be given in writing.
5
Part 6
Investigation of complaints against regulators
79
Arrangements for the investigation of complaints
(1)
The regulators must—
(a)
make arrangements (“the complaints scheme”) for the investigation of
10
complaints arising in connection with the exercise of, or failure to
exercise, any of their relevant functions (see section 80), and
(b)
appoint an independent person (“the investigator”) to be responsible
for the conduct of investigations in accordance with the complaints
scheme.
15
(2)
For the purposes of this Part “the regulators” are the FCA, the PRA and the
Bank of England, and references to a regulator are to be read accordingly.
(3)
The complaints scheme must be designed so that, as far as reasonably
practicable, complaints are investigated quickly.
(4)
The Treasury’s approval is required for the appointment or dismissal of the
20
investigator.
(5)
The terms and conditions on which the investigator is appointed must be such
as, in the opinion of the regulators, are reasonably designed to secure—
(a)
that the investigator will be free at all times to act independently of the
regulators, and
25
(b)
that complaints will be investigated under the complaints scheme
without favouring the regulators.
80
Relevant functions in relation to complaints scheme
(1)
This section has effect for the interpretation of the reference in section 79(1)(a)
to the relevant functions of the regulators.
30
(2)
The relevant functions of the FCA or the PRA are its functions other than its
legislative functions.
(3)
The relevant functions of the Bank of England are its functions under Part 18 of
FSMA 2000 (recognised clearing houses) or under Part 5 of the Banking Act
2009 (inter-bank payment systems), other than its legislative functions.
35
(4)
For the purposes of subsection (2), the following are the FCA’s legislative
functions—
(a)
making rules under FSMA 2000;
(b)
issuing codes under section 64 or 119 of FSMA 2000;
(c)
issuing statements under—
40
(i)
section 63C, 64, 69, 88C, 89S, 93, 124, 131J, 138N, 192H, 192N,
210 or 312J of FSMA 2000,

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Part 6 — Investigation of complaints against regulators
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(ii)
section 345D of FSMA 2000 (whether as a result of section 345(2)
or 345A(3) or section 249(1) of that Act), or
(iii)
section 76 of the Financial Services Act 2012;
(d)
giving directions under section 316, 318 or 328 of FSMA 2000;
(e)
issuing general guidance, as defined in section 139B(5) of FSMA 2000.
5
(5)
For the purposes of subsection (2), the following are the PRA’s legislative
functions—
(a)
making rules under FSMA 2000;
(b)
issuing codes under section 64 of FSMA 2000;
(c)
issuing statements under—
10
(i)
section 63C, 64, 69, 192H, 192N, 210 or 345D of FSMA 2000, or
(ii)
section 76 of the Financial Services Act 2012;
(d)
giving directions under section 316, 318 or 328 of FSMA 2000;
(e)
issuing guidance under section 2H of FSMA 2000.
(6)
For the purposes of subsection (3), the following functions of the Bank of
15
England under Part 18 of FSMA 2000 are legislative functions—
(a)
making rules;
(b)
issuing statements—
(i)
under section 312J, or
(ii)
by virtue of the application by Schedule 17A of a provision
20
mentioned in subsection (5)(c)(i) of this section.
(7)
For the purposes of subsection (3), the following functions of the Bank of
England under Part 5 of the Banking Act 2009 are legislative functions—
(a)
publishing principles or codes of practice under sections 188 and 189;
(b)
preparing statements under section 198(3).
25
81
Consultation in relation to, and publication of, complaints scheme
(1)
Before making the complaints scheme, the regulators must publish a draft of
the proposed scheme in the way appearing to them to be best calculated to
bring it to the attention of the public.
(2)
The draft must be accompanied by notice that representations about it may be
30
made to any of the regulators within a specified time.
(3)
Before making the proposed complaints scheme, the regulators must have
regard to any representations made to any of them in accordance with
subsection (2).
(4)
If the regulators make the proposed complaints scheme, they must publish an
35
account, in general terms, of—
(a)
the representations made to any of them in accordance with subsection
(2), and
(b)
their response to the representations.
(5)
If the complaints scheme differs from the draft published under subsection (1)
40
in a way which is, in the opinion of the regulators, significant the regulators
must (in addition to complying with subsection (4)) publish details of the
difference.
(6)
The regulators must publish up-to-date details of the complaints scheme
including, in particular, details of—
45

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Part 6 — Investigation of complaints against regulators
150

(a)
the provision made under section 82(5), and
(b)
the powers which the investigator has to investigate a complaint.
(7)
Those details must be published in the way appearing to the regulators to be
best calculated to bring them to the attention of the public.
(8)
The regulators must notify the Treasury of the publication of details under
5
subsection (6).
(9)
A regulator may charge a reasonable fee for providing a person with a copy
of—
(a)
a draft published under subsection (1), or
(b)
details published under subsection (6).
10
(10)
Subsections (1) to (5) and (9)(a) also apply to a proposal to alter or replace the
complaints scheme.
82
Investigation of complaints
(1)
A regulator is not obliged to investigate in accordance with the complaints
scheme a complaint which it reasonably considers would be more
15
appropriately dealt with in another way (for example by referring the matter
to the Upper Tribunal or by the institution of other legal proceedings).
(2)
The complaints scheme must provide—
(a)
for reference to the investigator of any complaint which a regulator is
investigating,
20
(b)
for the investigator—
(i)
to have the means to conduct a full investigation of the
complaint,
(ii)
to report to the regulator to which the complaint relates and the
complainant on the result of the investigator’s investigation,
25
and
(iii)
to be able to publish the investigator’s report (or part of it) if the
investigator considers that it (or the part) ought to be brought to
the attention of the public, and
(c)
for the meeting by the regulators of the expenses of the scheme.
30
(3)
If a regulator has decided not to investigate a complaint, it must notify the
investigator.
(4)
If the investigator considers that a complaint of which the investigator has been
notified under subsection (3) ought to be investigated, the investigator may
proceed as if the complaint had been referred to the investigator under the
35
complaints scheme.
(5)
The complaints scheme must confer on the investigator the power to
recommend, if the investigator thinks it appropriate, that the regulator to
which a complaint relates takes either or both of the following steps—
(a)
makes a compensatory payment to the complainant, or
40
(b)
remedies the matter complained of.
(6)
The complaints scheme must require the regulator to which a complaint
relates, in a case where the investigator—
(a)
has reported that the complaint is well-founded, or
(b)
has criticised the regulator in a report,
45

Financial Services Bill
Part 7 — Amendments of Banking Act 2009
151


to inform the investigator and the complainant of the steps which it proposes
to take in response to the report.
(7)
The investigator may require the regulator to which a complaint relates to
publish the whole or a specified part of the response.
(8)
The investigator may appoint a person to conduct the investigation on the
5
investigator’s behalf but subject to the investigator’s direction.
(9)
An officer or employee of any of the regulators may not be appointed under
subsection (8).
(10)
Subsection (2) is not to be taken as preventing a regulator from making
arrangements for the initial investigation of a complaint to be conducted by the
10
regulator.
83
Exemption from liability in damages
(1)
Neither the investigator appointed under section 79 nor a person appointed to
conduct an investigation on the investigator’s behalf under section 82(8) is to
be liable in damages for anything done or omitted in the discharge, or
15
purported discharge, of functions in relation to the investigation of a
complaint.
(2)
Subsection (1) does not apply—
(a)
if the act or omission is shown to have been in bad faith, or
(b)
so as to prevent an award of damages made in respect of an act or
20
omission on the ground that the act or omission was unlawful as a
result of section 6(1) of the Human Rights Act 1998.
Part 7
Amendments of Banking Act 2009
Special resolution regime and bank administration
25
84
Private sector purchasers
(1)
The Banking Act 2009 is amended as follows.
(2)
After section 26 insert—
“26A
Private sector purchaser: reverse share transfer
(1)
This section applies where the Bank of England has made a share
30
transfer instrument in accordance with section 11(2) (“the original
instrument”) providing for the transfer of securities issued by a bank to
a person (“the original transferee”).
(2)
The Bank of England may make one or more private sector reverse
share transfer instruments in respect of securities issued by the bank
35
and held by the original transferee.
(3)
A private sector reverse share transfer instrument is a share transfer
instrument which—
(a)
provides for transfer to the transferor under the original
instrument;
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Part 7 — Amendments of Banking Act 2009
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(b)
makes other provision for the purposes of, or in connection
with, the transfer of securities which are, could be or could have
been transferred under paragraph (a).
(4)
The Bank of England must not make a private sector reverse share
transfer instrument without the written consent of the original
5
transferee.
(5)
Sections 7, 8 and 50 do not apply to a private sector reverse share
transfer instrument (but it is to be treated in the same way as any other
share transfer instrument for all other purposes including for the
purposes of the application of a power under this Part).
10
(6)
Before making a private sector reverse share transfer instrument the
Bank of England must consult—
(a)
the PRA,
(b)
the FCA, and
(c)
the Treasury.
15
(7)
Section 26 applies where the Bank of England has made a private sector
reverse share transfer instrument.”
(3)
In section 29 (reverse share transfer)—
(a)
in subsection (3) for the words from “securities”, in the second place, to
the end substitute “securities issued by the bank and held by a
20
transferee under the onward share transfer order (“the onward
transferee”).”, and
(b)
after subsection (4) insert—
“(4A)
The Treasury must not make a reverse share transfer order
under subsection (3) unless—
25
(a)
the onward transferee is—
(i)
a company wholly owned by the Bank of
England,
(ii)
a company wholly owned by the Treasury, or
(iii)
a nominee of the Treasury, or
30
(b)
the reverse share transfer order is made with the written
consent of the onward transferee.”
(4)
In section 31 (bridge bank: reverse share transfer)—
(a)
in subsection (1) omit the words from “providing for” to the end,
(b)
in subsection (2) for “person within subsection (1)(a) to (c)” substitute
35
“transferee under the original instrument”,
(c)
after subsection (3) insert—
“(3A)
The Bank of England must not make a bridge bank reverse
share transfer instrument unless—
(a)
the transferee under the original instrument is—
40
(i)
a company wholly owned by the Bank of
England,
(ii)
a company wholly owned by the Treasury, or
(iii)
a nominee of the Treasury, or
(b)
the bridge bank reverse share transfer instrument is
45
made with the written consent of the transferee under
the original instrument.”

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Part 7 — Amendments of Banking Act 2009
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(5)
After section 42 insert—
“42A
Private sector purchaser: reverse property transfer
(1)
This section applies where the Bank of England has made a property
transfer instrument in accordance with section 11(2) (“the original
instrument”) providing for the transfer of property, rights or liabilities
5
of a bank to a person (“the original transferee”).
(2)
The Bank of England may make one or more private sector reverse
property transfer instruments in respect of property, rights or liabilities
of the original transferee.
(3)
A private sector reverse property transfer instrument is a property
10
transfer instrument which—
(a)
provides for transfer to the transferor under the original
instrument;
(b)
makes other provision for the purposes of, or in connection
with, the transfer of property, rights or liabilities that are, could
15
be or could have been transferred under paragraph (a) (whether
the transfer has been or is to be effected by that instrument or
otherwise).
(4)
The Bank of England must not make a private sector reverse property
transfer instrument without the written consent of the original
20
transferee.
(5)
Sections 7, 8 and 50 do not apply to a private sector reverse property
transfer instrument (but it is to be treated in the same way as any other
property transfer instrument for all other purposes including for the
purposes of the application of a power under this Part).
25
(6)
Before making a private sector reverse property transfer instrument the
Bank of England must consult—
(a)
the PRA,
(b)
the FCA, and
(c)
the Treasury.
30
(7)
Section 42 applies where the Bank of England has made a private sector
reverse property transfer instrument.”
(6)
In section 44 (reverse property transfer)—
(a)
in subsection (3) for “of a transferee” to the end substitute “of a
transferee under the onward property transfer instrument (“the
35
onward transferee”).”,
(b)
after subsection (4) insert—
“(4A)
The Bank of England must not make a reverse property transfer
instrument unless—
(a)
the onward transferee is—
40
(i)
a company wholly owned by the Bank of
England,
(ii)
a company wholly owned by the Treasury, or
(iii)
a company wholly owned by a nominee of the
Treasury, or
45