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Financial Services Bill


Financial Services Bill
Part 7 — Amendments of Banking Act 2009

154

 

(b)   

the reverse property transfer instrument is made with

the written consent of the onward transferee.”

(7)   

In section 46 (temporary public ownership: reverse property transfer)—

(a)   

in subsection (1) omit from “providing for” to the end, and

(b)   

after subsection (3) insert—

5

“(3A)   

The Treasury must not make a reverse property transfer order

unless—

(a)   

the transferee under the original order is—

(i)   

a company wholly owned by the Bank of

England,

10

(ii)   

a company wholly owned by the Treasury, or

(iii)   

a nominee of the Treasury, or

(b)   

the reverse property transfer order is made with the

written consent of the transferee under the original

order.”

15

(8)   

In section 48A (creation of liabilities), in subsection (1) after “42(3)(b),” insert

“42A(3)(b),”.

(9)   

In section 53 (onward and reverse transfers: compensation), in subsection (1)—

(a)   

before paragraph (a) insert—

“(za)   

the Bank of England makes a private sector reverse

20

share transfer instrument under section 26A,”,

(b)   

after paragraph (d) insert—

(da)   

the Bank of England makes a private sector reverse

property transfer instrument under section 42A,”.

(10)   

In the Table in section 261 (index of defined terms), after the entry relating to

25

“partial property transfer”, insert—

 

“Private sector reverse property transfer

42A

 
 

instrument

  
 

Private sector reverse share transfer

26A”.

 
 

instrument

  

30

85      

Property transfer instruments: property held on trust

(1)   

The Banking Act 2009 is amended as follows.

(2)   

In section 34(7) (effect of property transfer instruments: provision in respect of

property held on trust), in paragraph (a) omit “(which provision may remove

or alter the terms of the trust)”.

35

(3)   

At the end of section 34 insert—

“(8)   

Provision under subsection (7)(a) may remove or alter the terms of the

trust on which the property is held only to the extent that the Bank of

England thinks it necessary or expedient for the purpose of

transferring—

40

(a)   

the legal or beneficial interest of the transferor in the property;

 
 

Financial Services Bill
Part 7 — Amendments of Banking Act 2009

155

 

(b)   

any powers, rights or obligations of the transferor in respect of

the property.

(9)   

In subsection (8) references to the transferor are references to the

transferor under the property transfer instrument.”

(4)   

In section 45 (temporary public ownership: property transfer orders) after

5

subsection (5) insert—

“(5A)   

In the application of section 34(8) by virtue of subsection (5)(b) above,

the reference to the Bank of England is to be treated as a reference to the

Treasury.”

(5)   

In section 46 (temporary public ownership: reverse property transfer orders)

10

after subsection (5) insert—

“(5A)   

In the application of section 34(8) by virtue of subsection (5)(b) above,

the reference to the Bank of England is to be treated as a reference to the

Treasury.”

86      

Reports following exercise of a stabilisation power

15

(1)   

After section 79 of the Banking Act 2009 insert—

“79A    

Private sector purchaser: report

(1)   

This section applies where the Bank of England sells all or part of a

bank’s business to a commercial purchaser.

(2)   

The Bank must report to the Chancellor of the Exchequer about the

20

exercise of the power to make share transfer instruments and property

transfer instruments under section 11(2).

(3)   

The report must comply with any requirements as to content specified

by the Treasury.

(4)   

The report must be made as soon as is reasonably practicable after the

25

end of one year beginning with the date of the first transfer instrument

made under section 11(2).”

(2)   

After section 81 of that Act insert—

“81A    

Accounting information to be included in reports under sections 80

and 81

30

(1)   

A report under section 80(1) or 81 must include accounting information

in respect of the bank or bridge bank that is the subject of the report.

(2)   

In this section “accounting information” means—

(a)   

a balance sheet that, in the opinion of the person making the

report, gives a true and fair view of the state of affairs of the

35

bank or bridge bank as at the reporting date, and

(b)   

a profit and loss account that, in the opinion of the person

making the report, gives a true and fair view of the profit or loss

of the bank or bridge bank for the reporting period.

(3)   

In this section—

40

(a)   

“reporting period” means the period to which the report relates,

and

 
 

Financial Services Bill
Part 7 — Amendments of Banking Act 2009

156

 

(b)   

“reporting date” means the last day of the reporting period.”

87      

State aid

After section 145 of the Banking Act 2009 insert—

“145A   

 Power to direct bank administrator

(1)   

This section applies where—

5

(a)   

a bank administration order has been made, and

(b)   

the Treasury are of the opinion that anything done, or proposed

to be done, in connection with the exercise of one or more of the

stabilisation powers may constitute the granting of aid to which

any of the provisions of Article 107 or 108 of TFEU applies

10

(“State aid”).

(2)   

The Treasury may, in writing, direct the bank administrator to take

specified action to enable the United Kingdom to fulfil any of the

purposes specified in subsection (3).

(3)   

The purposes are—

15

(a)   

to inform the European Commission that State aid has been,

may have been, or may be, given;

(b)   

to obtain a decision from the Commission whether State aid—

(i)   

has been given, or

(ii)   

would be given, if the action proposed was taken;

20

(c)   

to apply for approval that such aid is, or would be, compatible

with the internal market, within the meaning of Article 107 of

TFEU;

(d)   

to comply with any requirements to enable an investigation

under Article 108 of TFEU to be carried out;

25

(e)   

to comply with any undertaking given to the European

Commission in connection with the application for approval

referred to in paragraph (c);

(f)   

to comply with any requests from the Commission relating to

the application for approval, including the provision of

30

information;

(g)   

to comply with any undertakings given to the Commission, or

conditions imposed by the Commission, where approval has

been given.

(4)   

Before giving a direction under this section the Treasury must consult

35

the bank administrator.

(5)   

The bank administrator must comply with the direction within the

period of time specified in the direction, or if no period of time is

specified, as soon as reasonably practicable.

(6)   

A direction under this section is enforceable on an application made by

40

the Treasury, by injunction or, in Scotland, by an order for specific

performance under section 45 of the Court of Session Act 1988.

(7)   

A direction may specify circumstances in which the bank administrator

is immune from liability in damages.

(8)   

Immunity by virtue of subsection (7) does not extend to action—

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Financial Services Bill
Part 7 — Amendments of Banking Act 2009

157

 

(a)   

in bad faith, or

(b)   

in contravention of section 6(1) of the Human Rights Act 1998.

(9)   

If the United Kingdom has made, or proposes to make, an application

to the Council of the European Union under Article 108 of the TFEU,

references in subsection (3) to the Commission are to be read as

5

including references to the Council.

(10)   

In this section “TFEU” means the Treaty on the Functioning of the

European Union.”

Inter-bank payment systems

88      

Inter-bank payment systems

10

(1)   

Part 5 of the Banking Act 2009 (inter-bank payment systems) is amended as

follows.

(2)   

After section 186 insert—

“186A   

  Amendment of recognition order

(1)   

The Treasury may amend a recognition order.

15

(2)   

Before amending a recognition order the Treasury must—

(a)   

consult the Bank of England,

(b)   

notify the operator of the recognised inter-bank payment

system, and

(c)   

consider any representations made.

20

(3)   

In addition, the Treasury—

(a)   

must consult the FCA before amending a recognition order in

respect of a payment system the operator of which—

(i)   

is, or has applied to become, a recognised investment

exchange, or

25

(ii)   

has, or has applied for, a Part 4A permission, and

(b)   

if the operator has, or has applied for, a Part 4A permission for

the carrying on of a PRA-regulated activity, must also consult

the PRA.

(4)   

The Treasury must consider any request by the operator of a recognised

30

inter-bank payment system for the amendment of its recognition

order.”

(3)   

For section 191 substitute—

“191    

Directions

(1)   

The Bank of England may give directions in writing to the operator of

35

a recognised inter-bank system.

(2)   

A direction may—

(a)   

require or prohibit the taking of specified action in the operation

of the system;

(b)   

set standards to be met in the operation of the system.

40

 
 

Financial Services Bill
Part 7 — Amendments of Banking Act 2009

158

 

(3)   

If a direction is given for the purpose of resolving or reducing a threat

to the stability of the UK financial system, the operator (including its

officers and staff) has immunity from liability in damages in respect of

action or inaction in accordance with the direction.

(4)   

A direction given for the purpose mentioned in subsection (3) must—

5

(a)   

include a statement that it is given for that purpose, and

(b)   

inform the operator of the effect of that subsection.

(5)   

The Treasury may by order confer immunity on any person from

liability in damages in respect of action or inaction in accordance with

a direction (including a direction given for the purpose mentioned in

10

subsection (3)).

(6)   

An order—

(a)   

is to be made by statutory instrument, and

(b)   

is subject to annulment in pursuance of a resolution of either

House of Parliament.

15

(7)   

An immunity conferred by or under this section does not extend to

action or inaction—

(a)   

in bad faith, or

(b)   

in contravention of section 6(1) of the Human Rights Act 1998.”

(4)   

In section 186 (procedure)—

20

(a)   

for subsection (2) substitute—

“(2)   

In addition, the Treasury—

(a)   

must consult the FCA before making a recognition order

in respect of a payment system the operator of which—

(i)   

is, or has applied to become, a recognised

25

investment exchange, or

(ii)   

has, or has applied for, a Part 4A permission, and

(b)   

if the operator has, or has applied for, a Part 4A

permission for the carrying on of a PRA-regulated

activity, must also consult the PRA.”, and

30

(b)   

in subsection (3), for “or the FSA” substitute “, the FCA or the PRA”.

(5)   

In section 187 (de-recognition), for subsection (4) substitute—

“(4)   

In addition, the Treasury—

(a)   

must consult the FCA before revoking a recognition order in

respect of a payment system the operator of which—

35

(i)   

is, or has applied to become, a recognised investment

exchange, or

(ii)   

has, or has applied for, a Part 4A permission, and

(b)   

if the operator has, or has applied for, a Part 4A permission for

the carrying on of a PRA-regulated activity, must also consult

40

the PRA.”

(6)   

In section 192 (role of FSA)—

(a)   

in subsection (1), for “the FSA” substitute “the FCA or the PRA”,

(b)   

for subsection (2) substitute—

“(2)   

The Bank of England—

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Financial Services Bill
Part 7 — Amendments of Banking Act 2009

159

 

(a)   

must consult the FCA before taking action under this

Part in respect of a recognised inter-bank payment

system the operator of which satisfies section 186(2)(a),

and

(b)   

must consult the PRA before taking action under this

5

Part in respect of a recognised inter-bank payment

system the operator of which satisfies section

186(2)(b).”,

(c)   

in subsection (3)—

(i)   

for “the FSA”, in the first place, substitute “the FCA or the PRA”,

10

(ii)   

for “the FSA”, in the second place, substitute “it”,

(iii)   

for “section 186(2)” substitute “section 186(2)(a) or (b)”, and

(iv)   

in paragraph (a), for “the FSA” substitute “the FCA or (as the

case may be) the PRA”, and

(d)   

in the heading, for “FSA” substitute “FCA and PRA”.

15

(7)   

After section 202 insert—

“202A   

 Injunctions

(1)   

If, on the application of the Bank of England, the court is satisfied—

(a)   

that there is a reasonable likelihood that there will be a

compliance failure, or

20

(b)   

that there has been a compliance failure and there is a

reasonable likelihood that it will continue or be repeated,

   

the court may make an order restraining the conduct constituting the

failure.

(2)   

If, on the application of the Bank of England, the court is satisfied—

25

(a)   

that there has been a compliance failure by the operator of a

recognised inter-bank payment system, and

(b)   

that there are steps which could be taken for remedying the

failure,

   

the court may make an order requiring the operator, and anyone else

30

who appears to have been knowingly concerned in the failure, to take

such steps as the court may direct to remedy it.

(3)   

If, on the application of the Bank of England, the court is satisfied—

(a)   

that there may have been a compliance failure by the operator

of a recognised inter-bank payment system, or

35

(b)   

that a person may have been knowingly concerned in a

compliance failure,

   

the court may make an order restraining the operator or person from

dealing with any assets which it is satisfied the operator or person is

reasonably likely to deal with.

40

(4)   

The jurisdiction conferred by this section is exercisable—

(a)   

in England and Wales and Northern Ireland, by the High Court,

and

(b)   

in Scotland, by the Court of Session.

(5)   

In this section—

45

(a)   

references to an order restraining anything are, in Scotland, to

be read as references to an interdict prohibiting that thing,

 
 

Financial Services Bill
Part 7 — Amendments of Banking Act 2009

160

 

(b)   

references to remedying a failure include mitigating its effect,

and

(c)   

references to dealing with assets include disposing of them.”

(8)   

After section 203 insert—

“203A   

Records

5

(1)   

The Bank of England must maintain satisfactory arrangements for—

(a)   

recording decisions made in the exercise of its functions under

this Part, and

(b)   

the safe-keeping of those records which it considers ought to be

preserved.

10

(2)   

The duty in subsection (1) does not apply to a decision to issue a notice

under section 204(1).

203B    

Annual report

(1)   

At least once a year the Bank of England must make a report to the

Treasury on—

15

(a)   

the discharge of its functions under this Part,

(b)   

the extent to which, in its opinion, in discharging those

functions its financial stability objective has been met, and

(c)   

such other matters as the Treasury may from time to time direct.

(2)   

Subsection (1) does not require the inclusion in the report of any

20

information whose publication would in the opinion of the Bank of

England be against the public interest.

(3)   

The Treasury must lay before Parliament a copy of each report received

by them under this section.”

(9)   

In section 204 (information)—

25

(a)   

after subsection (1), insert—

“(1A)   

The Bank of England may by notice in writing require the

operator of a recognised inter-bank payment system to provide

information which the Bank requires in connection with the

exercise of its functions (whether under this Part or otherwise)

30

in pursuance of its financial stability objective.”,

(b)   

in subsections (2) and (3), after “notice” insert “under subsection (1) or

(1A)”,

(c)   

in subsection (4), for paragraph (b) substitute—

“(b)   

the FCA;

35

(ba)   

the PRA;”, and

(d)   

in paragraph (c) of that subsection, for “or the FSA” substitute “, the

FCA or the PRA”.

(10)   

In section 206A (services forming part of recognised inter-bank payment

systems)—

40

(a)   

in subsection (4)(a), for “and the FSA” substitute “, the FCA and the

PRA”, and

(b)   

in subsection (6), for paragraph (b) (and the “and” at the end of it)

substitute—

“(b)   

the FCA,

45

 
 

 
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