Session 2012 - 13
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Financial Services Bill


Financial Services Bill
Part 1 — Bank of England

6

 

Directions by Financial Policy Committee

9G      

Directions to FCA or PRA requiring macro-prudential measures

(1)   

The Financial Policy Committee may give a direction to the FCA or the

PRA (“the regulator”) requiring the regulator to exercise its functions so

as to ensure the implementation, by or in relation to a specified class of

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regulated persons, of a macro-prudential measure described in the

direction.

(2)   

“Regulated person” means—

(a)   

in relation to the FCA—

(i)   

an authorised person within the meaning of FSMA 2000,

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(ii)   

a recognised investment exchange within the meaning

of that Act, or

(iii)   

an EEA market operator as defined by section 312D of

that Act;

(b)   

in relation to the PRA, a PRA-authorised person within the

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meaning of that Act.

(3)   

“Macro-prudential measure” is to be read in accordance with section

9K.

(4)   

The direction may relate to all regulated persons or to regulated

persons of a specified description, but may not relate to a specified

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regulated person.

(5)   

The direction—

(a)   

may refer to the opinion of the regulator or require or authorise

the exercise of a discretion by the regulator;

(b)   

may be expressed to remain in force for a specified period or

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until revoked.

(6)   

The direction may not require its provisions to be implemented by

specified means or within a specified period, but may include

recommendations as to the means to be used and the timing of

implementation.

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(7)   

A recommendation made under subsection (6) may be expressed to be

one to which section 9P(3) (duty to comply or explain) applies.

(8)   

The direction may not require the regulator to do anything that it has

no power to do, but the existence of the direction is relevant to the

exercise of any discretion conferred on the regulator.

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(9)   

The direction may specify particular matters to which the regulator is

or is not to have regard in complying with the direction, but those

matters must be specified in relation to all regulated persons or a class

of regulated person rather than a specified regulated person.

(10)   

The direction may refer to a publication issued by the FCA, the PRA,

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another body in the United Kingdom or an international organisation,

as the publication has effect from time to time.

9H      

Compliance with directions under section 9G

(1)   

The regulator must comply with a direction given to it under section 9G

as soon as reasonably practicable.

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Part 1 — Bank of England

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(2)   

An order under section 9K may, in relation to cases where the regulator

is complying with a direction under section 9G, exclude or modify any

procedural requirement that would otherwise apply under FSMA 2000

in relation to the exercise by the regulator of its functions in pursuance

of the direction.

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(3)   

The regulator to which a direction under section 9G is given must give

the Financial Policy Committee one or more reports on how it is

complying or has complied with the direction.

(4)   

The Financial Policy Committee may give directions to the regulator

specifying the times by which reports required by subsection (3) must

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be given to the Committee.

(5)   

“Regulator” has the same meaning as in section 9G.

9I      

Revocation of directions under section 9G

(1)   

The Financial Policy Committee may at any time by notice to the

regulator revoke a direction under section 9G.

15

(2)   

A direction under section 9G is to be taken to be revoked if the measure

to which it relates ceases to be a macro-prudential measure, but this is

subject to any provision made under section 9K(4)(e).

(3)   

The revocation of a direction under section 9G does not affect the

validity of anything previously done in accordance with it.

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(4)   

“Regulator” has the same meaning as in section 9G.

9J      

Further provisions about directions under section 9G

(1)   

Each of the following must be in writing—

(a)   

a direction under section 9G;

(b)   

a notice revoking such a direction;

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(c)   

a report under section 9H(3).

(2)   

The Financial Policy Committee must give the Treasury a copy of any

direction under section 9G or any notice revoking such a direction.

(3)   

The Treasury may, if they think fit, lay before Parliament a copy of a

direction under section 9G or a notice revoking such a direction.

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(4)   

Where a direction under section 9G, or a notice revoking such a

direction, is included in a record published under section 9R, the

Treasury must, if they have not already done so, lay before Parliament

a copy of the direction or notice in the form in which it is published in

the record.

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9K      

Macro-prudential measures

(1)   

For the purposes of section 9G a “macro-prudential measure” is a

measure prescribed by the Treasury by order.

(2)   

Before making an order under this section, the Treasury must—

(a)   

consult the Financial Policy Committee, or

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(b)   

if the Treasury considers that the delay involved in consulting

the Committee would be prejudicial to the stability of the UK

financial system, consult the Governor of the Bank.

 
 

Financial Services Bill
Part 1 — Bank of England

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(3)   

In prescribing a measure, the order must specify whether the measure

is prescribed in relation to the FCA, the PRA, or both.

(4)   

An order under this section—

(a)   

may make different provision for different cases;

(b)   

may confer a discretion on the Financial Policy Committee, the

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FCA or the PRA;

(c)   

may refer to rules made by the FCA or the PRA;

(d)   

may refer to a publication issued by the FCA, the PRA, another

body in the United Kingdom or an international organisation,

as the publication has effect from time to time;

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(e)   

may contain transitional provisions and savings relating to the

coming into force of any provision of the order or to the ceasing

to be in force of any temporary provision made by the order.

9L      

Statements of policy by Financial Policy Committee

(1)   

In relation to each macro-prudential measure prescribed under section

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9K, the Financial Policy Committee must prepare and maintain a

written statement of the general policy that it proposes to follow in

relation to the exercise of its power of direction under section 9G so far

as it relates to that measure.

(2)   

The Committee may at any time alter or replace a statement maintained

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under this section.

(3)   

The Bank must publish each statement maintained under this section.

(4)   

Publication is to be in such manner as the Bank thinks fit.

(5)   

Nothing in this section is to be regarded as preventing the Financial

Policy Committee from exercising its power of direction under section

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9G in relation to a macro-prudential measure, where it considers it

necessary to do so by reason of urgency, before it has prepared a

statement under this section in relation to that measure.

9M      

Parliamentary control of orders under section 9K

(1)   

Except as provided by subsection (2), an order under section 9K is not

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to be made unless a draft of the order has been laid before and

approved by resolution of each House of Parliament.

(2)   

An order under section 9K may be made without a draft having been

laid and approved as mentioned in subsection (1) if the order contains

a statement that the Treasury are of the opinion that, by reason of

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urgency, it is necessary to make the order without a draft being so laid

and approved.

(3)   

An order under section 9K made in accordance with subsection (2)—

(a)   

must be laid before Parliament after being made, and

(b)   

ceases to have effect at the end of the relevant period unless

40

before the end of that period the order is approved by a

resolution of each House of Parliament (but without affecting

anything done under the order or the power to make a new

order).

(4)   

The “relevant period” is a period of 28 days beginning with the day on

45

which the order is made.

 
 

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Part 1 — Bank of England

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(5)   

In reckoning the relevant period no account is to be taken of any time

during which Parliament is dissolved or prorogued or during which

either House is adjourned for more than 4 days.

Recommendations by Financial Policy Committee

9N      

Making of recommendations within the Bank

5

(1)   

The Financial Policy Committee may make recommendations within

the Bank.

(2)   

The recommendations may, in particular, relate to—

(a)   

the provision by the Bank of financial assistance to financial

institutions;

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(b)   

the exercise by the Bank of its functions in relation to payment

systems, settlement systems and clearing houses.

(3)   

The Committee may not make recommendations about—

(a)   

the provision by the Bank of financial assistance in relation to a

particular financial institution, or

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(b)   

the exercise by the Bank of its powers under Parts 1 to 3 of the

Banking Act 2009 in relation to a particular institution.

(4)   

The recommendations must be made or confirmed in writing.

9O      

Recommendations to Treasury

(1)   

The Financial Policy Committee may make recommendations to the

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Treasury.

(2)   

The recommendations may, in particular, relate to the exercise by the

Treasury of their power to make orders under—

(a)   

section 9K (macro-prudential measures),

(b)   

section 22(1) or (1A) of FSMA 2000 (regulated activities),

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(c)   

section 22A(1) of that Act (designation of activities requiring

prudential regulation by PRA),

(d)   

section 137C(1)(b) of that Act (purposes for which FCA may

make product intervention rules), or

(e)   

section 165A(2)(d) of that Act (additional persons who may be

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required by PRA to provide information).

(3)   

The recommendations must be made or confirmed in writing.

(4)   

The Committee may make a recommendation under subsection (2)(e)

only if it considers that the exercise by the Treasury of their power to

make an order under section 165A(2)(d) of FSMA 2000 in the manner

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proposed is desirable for the purposes of the exercise by the Committee

of its functions.

(5)   

Before giving a recommendation under subsection (2)(e), the

Committee must consult the Treasury.

9P      

Recommendations to FCA and PRA

40

(1)   

The Financial Policy Committee may make recommendations to the

FCA and the PRA about the exercise of their respective functions.

 
 

Financial Services Bill
Part 1 — Bank of England

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(2)   

The recommendations may relate to all regulated persons or to

regulated persons of a specified description, but may not relate to the

exercise of the functions of the FCA or the PRA in relation to a specified

regulated person.

(3)   

If the recommendations are expressed to be recommendations to which

5

this subsection applies, the body to which they are made must as soon

as reasonably practicable—

(a)   

act in accordance with the recommendations, or

(b)   

if to any extent it does not, notify the Committee of the extent to

which it has not acted in accordance with the recommendations

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and of the reasons for its decision.

(4)   

The recommendations, and any notification under subsection (3)(b),

must be made or confirmed in writing.

(5)   

“Regulated person” has the same meaning as in section 9G.

9Q      

Recommendations to other persons

15

(1)   

The Financial Policy Committee may make recommendations to

persons other than those mentioned in sections 9N to 9P.

(2)   

The recommendations must be made or confirmed in writing.

Publication of record of meetings

9R      

Publication of record of meetings

20

(1)   

The Bank must publish a record of each meeting of the Financial Policy

Committee before the end of the period of 6 weeks beginning with the

day of the meeting.

(2)   

The record must specify any decisions taken at the meeting (including

decisions to take no action) and must set out, in relation to each

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decision, a summary of the Committee’s deliberations.

(3)   

The decisions referred to in subsection (2) include in particular a

decision—

(a)   

to give or revoke a direction under section 9G;

(b)   

to make recommendations under any of sections 9N to 9Q.

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(4)   

Where a decision has been made to give or revoke a direction under

section 9G, the record must include the text of the direction or of the

notice of revocation.

(5)   

Where a decision has been made to make recommendations under any

of sections 9N to 9Q, the record must include the recommendations.

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(6)   

Where since the previous meeting the Committee has received a

notification under section 9P(3)(b), the record must include the

notification.

(7)   

The information required by subsections (1) and (2) does not include

information identifying particular members of the Committee.

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(8)   

Subsections (1) to (6) do not require the publication of—

(a)   

information about any recommendations made under 9N(2)(a);

 
 

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Part 1 — Bank of England

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(b)   

information whose publication within the time required by

subsection (1) would in the opinion of the Committee be against

the public interest;

(c)   

information about any decision under paragraph (b);

(d)   

information about a decision to give a direction under section

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9G which has been revoked before the record of the meeting at

which it was given is published;

(e)   

information about the decision to revoke a direction where

information about the direction is withheld under paragraph

(d).

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(9)   

Publication under this section or section 9S is to be in such manner as

the Bank thinks fit.

9S      

Deferred publication

(1)   

Where the Financial Policy Committee decides under subsection (8)(b)

of section 9R that publication of information within the time required

15

by subsection (1) of that section would be against the public interest—

(a)   

it must consider whether to fix a date as the earliest date on

which the information may be published, and

(b)   

if it does not fix a date, it must keep under consideration the

question whether publication of the information would still be

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against the public interest.

(2)   

The Committee must from time to time determine the procedures that

it will follow in complying with the duty in subsection (1)(b).

(3)   

Where the Committee—

(a)   

fixes a date under subsection (1)(a) as the earliest date on which

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any information may be published, or

(b)   

decides under subsection (1)(b) that publication of any

information is no longer against the public interest,

the Bank must publish the information at the time when it next

publishes under section 9R(1) the record of a meeting of the Committee.

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Financial stability reports by Financial Policy Committee

9T      

Financial stability reports by Financial Policy Committee

(1)   

The Financial Policy Committee must prepare and publish reports

relating to financial stability (“financial stability reports”).

(2)   

Two financial stability reports must be published in each calendar year.

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(3)   

A financial stability report must include—

(a)   

the Committee’s view of the stability of the UK financial system

at the time when the report is prepared,

(b)   

an assessment of the developments that have influenced the

current position,

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(c)   

an assessment of the strengths and weaknesses of the UK

financial system,

(d)   

an assessment of risks to the stability of the UK financial system,

and

 
 

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Part 1 — Bank of England

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(e)   

the Committee’s view of the outlook for the stability of the UK

financial system.

(4)   

A financial stability report must also include—

(a)   

a summary of the activities of the Committee in the reporting

period, and

5

(b)   

an assessment of the extent to which the exercise by the

Committee of its functions (both during the reporting period

and previously) has succeeded during the reporting period in

achieving the Committee’s objectives.

(5)   

The reporting period is the period since the date of the previous

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financial stability report, except that in the case of the first financial

stability report it is the period since the time when this section came

fully into force.

(6)   

Nothing in subsection (3) or (4) is to be regarded as requiring the

Committee to include in a financial stability report any information

15

whose publication would in the Committee’s opinion be against the

public interest.

(7)   

The Committee must give a copy of each financial stability report to the

Treasury.

(8)   

The Treasury must lay before Parliament a copy of each financial

20

stability report.

(9)   

Publication of a financial stability report is to be in such manner as the

Bank thinks fit.

Meetings between Governor and Chancellor of the Exchequer

9U      

Meetings between Governor and Chancellor of the Exchequer

25

(1)   

As soon as reasonably practicable after the publication by the Financial

Policy Committee of a financial stability report, the Governor of the

Bank and the Chancellor of the Exchequer must meet to discuss the

report and any other matters relating to the stability of the UK financial

system that they consider it appropriate to discuss.

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(2)   

The Treasury must publish a record of each meeting required by

subsection (1) before the end of the period of 6 weeks beginning with

the day of the meeting.

(3)   

Publication under subsection (2) is to be in such manner as the Treasury

think fit.

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(4)   

Subsection (2) does not require the publication of information whose

publication within the time required by that subsection would in the

opinion of the Treasury be against the public interest.

(5)   

Before publishing the record of a meeting required by subsection (1), or

deciding under subsection (4) not to publish such a record, the

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Treasury must consult the Bank about the record and its publication.

 
 

 
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