Financial Services Bill

SEVENTH
MARSHALLED
LIST OF AMENDMENTS
TO BE MOVED
IN COMMITTEE
OF THE WHOLE HOUSE

The amendments have been marshalled in accordance with the Instruction of 20th June 2012, as follows—

Clauses 26 and 27
Schedule 7
Clauses 28 to 32
Schedule 8
Clauses 33 and 34
Schedule 9
Clause 35
Schedule 10
Clause 36
Schedule 11
Clauses 37 and 38
Schedule 12
Clause 39
Schedule 13
Clauses 40 and 41
Schedule 14
Clause 42
Schedule 15
Clause 43
Schedule 16
Clauses 44 to 90
Schedule 17
Clauses 91 to 95
Schedules 18 and 19
Clauses 96 to 100
Schedules 20 and 21
Clauses 101 to 104

[Amendments marked * are new or have been altered]

Clause 27

LORD SASSOON

176A

Page 115, line 25, after “Act;” insert—

“(ba) Part 2A makes provision relating to the winding up, administration or insolvency of UK clearing houses;”

Schedule 7

LORD SASSOON

176B

Page 217, line 42, at end insert—

“Insolvency

23A (1) The following provisions of Part 24 of this Act are to apply in relation to the Bank—

(a) section 356 (powers to participate in proceedings: company voluntary arrangements);

(b) section 358 (powers to participate in proceedings: trust deeds for creditors in Scotland);

(c) section 359 (administration order);

(d) section 362 (powers to participate in administration proceedings);

(e) section 362A (consent to appointment of administrator);

(f) section 363 (powers to participate in proceedings: receivership);

(g) section 365 (powers to participate in proceedings: voluntary winding-up);

(h) section 367 (winding-up petitions);

(i) section 371 (powers to participate in proceedings: winding-up).

(2) Those provisions are to apply as if any reference to an authorised person or recognised UK investment exchange were a reference to a recognised clearing house.

23B In the case of any regulated activity which is carried on for the purposes of, or in connection with, the provision of clearing services, the reference to the FCA in section 375(1) is to be read as including a reference to the Bank.”

176C

Page 219, line 41, at end insert—

“PART 2A Winding up, administration or insolvency of UK clearing houses Notice to Bank of England of preliminary steps

31A (1) An application for an administration order in respect of a UK clearing house may not be determined unless the conditions below are satisfied.

(2) A petition for a winding up order in respect of a UK clearing house may not be determined unless the conditions below are satisfied.

(3) A resolution for voluntary winding up of a UK clearing house may not be made unless the conditions below are satisfied.

(4) An administrator of a UK clearing house may not be appointed unless the conditions below are satisfied.

(5) Condition 1 is that the Bank of England has been notified—

(a) by the applicant for an administration order, that the application has been made,

(b) by the petitioner for a winding up order, that the petition has been presented,

(c) by the UK clearing house, that a resolution for voluntary winding up may be made, or

(d) by the person proposing to appoint an administrator, of the proposed appointment.

(6) Condition 2 is that a copy of the notice complying with Condition 1 has been filed (in Scotland, lodged) with the court (and made available for public inspection by the court).

(7) Condition 3 is that—

(a) the period of 2 weeks, beginning with the day on which the notice is received, has ended, or

(b) the Bank of England has informed the person who gave the notice that—

(i) it has no objection to the order, resolution or appointment being made, and

(ii) it does not intend to exercise a stabilisation power under Part 1 of the Banking Act 2009.

(8) Arranging for the giving of notice in order to satisfy Condition 1 can be a step with a view to minimising the potential loss to a UK clearing house’s creditors for the purpose of section 214 of the Insolvency Act 1986 (wrongful trading).

(9) In this paragraph “the court” means—

(a) in England and Wales, the High Court,

(b) in Scotland, the Court of Session, and

(c) in Northern Ireland, the High Court.

Power to give directions to insolvency practitioner

31B (1) This paragraph applies where a person has been appointed to act as an insolvency practitioner (within the meaning of section 388 of the Insolvency Act 1986 or article 3 of the Insolvency (Northern Ireland) Order 1989) in relation to company which is, or has been, a UK clearing house.

(2) The Bank of England may give directions to the person if satisfied that it is desirable to give the directions, having regard to the public interest in—

(a) protecting and enhancing the stability of the UK financial system,

(b) protecting and enhancing public confidence in the stability of the UK financial system, and

(c) maintaining the continuity of central counterparty clearing services.

(3) Before giving directions the Bank of England must consult—

(a) the Treasury,

(b) (if the clearing house is a PRA-authorised person) the PRA, and

(c) the FCA.

(4) Directions are enforceable, on an application by the Bank of England, by an injunction or, in Scotland, by an order for specific performance under section 45 of the Court of Session Act 1988.

(5) A person is not liable for damages in respect of action or inaction in accordance with directions.

(6) The immunity 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.

(7) In this paragraph “central counterparty clearing services” has the same meaning as in section 155 of the Companies Act 1989 (see subsection (3A) of that section).”

After Clause 28

LORD SASSOON

176D

Insert the following new Clause—

“Additional power to direct UK clearing houses

After section 296 of FSMA 2000 insert—

“296A Additional power to direct UK clearing houses

(1) The Bank of England may direct a UK clearing house to take, or refrain from taking, specified action if the Bank is satisfied that it is desirable to give the direction, having regard to the public interest in—

(a) protecting and enhancing the stability of the UK financial system,

(b) maintaining public confidence in the stability of the UK financial system,

(c) maintaining the continuity of the central counterparty clearing services provided by the clearing house, and

(d) maintaining and enhancing the financial resilience of the clearing house.

(2) The direction may, in particular—

(a) specify the time for compliance with the direction,

(b) require the rules of the clearing house to be amended, and

(c) override such rules (whether generally or in their application to a particular case).

(3) The direction is enforceable, on the application of the Bank, by an injunction or, in Scotland, by an order for specific performance under section 45 of the Court of Session Act 1988.

(4) The Bank may revoke a direction given under this section.

(5) In this section “central counterparty clearing services” has the same meaning as in section 155 of the Companies Act 1989 (see subsection (3A) of that section).”

Clause 30

LORD MCFALL OF ALCLUITH

177

Page 116, line 14, after “if” insert “after investigation”

178

Page 117, line 2, after “if” insert “after investigation”

179

Page 117, line 12, at end insert “the reason for its decision to issue a statement and”

180

Page 117, line 23, after “out” insert “the reasons for its decision to issue a statement and”

LORD HODGSON OF ASTLEY ABBOTTS

181

Page 118, line 6, at end insert “, and

(c) the proportion of that business in relation to the firm or person being investigated”

Schedule 8

LORD SASSOON

182

Page 223, line 25, leave out “subsection (5)” and “subsections (5) and (6)”

182ZA

Page 223, line 26, after “procedure)” insert—

“(a) in subsections (1), (6) and (7), after “section 296” insert “or 296A”, and

(b) ”

182A

Page 223, line 40, leave out from “provision)” to “substitute” in line 41 and insert “for “Authority” (in each place)”

183

Page 225, line 12, leave out “and (12) (in both places)” and insert “(12) (in both places) and (13) (in the first place),”

183ZZA

Page 225, line 15, leave out “In section 313 (interpretation)” and insert—

“(1) Section 313 (interpretation) is amended as follows.

(2) In subsection (1), at the end insert—

“UK clearing house” means a clearing house—

(a) which has its head office or its registered office (or both) in the United Kingdom,

(b) which provides central counterparty clearing services, and

(c) in relation to which a recognition order is in force.”

(3) ”

Schedule 9

LORD SASSOON

183ZA

Page 227, line 43, leave out ““UCITS directive”” and insert ““auctioning regulation””

183ZB

Page 229, line 14, leave out ““UCITS directive”” and insert ““auctioning regulation””

183ZC

Page 230, line 12, leave out ““UCITS directive”” and insert ““auctioning regulation””

183ZD

Page 231, line 16, leave out ““UCITS directive”” and insert ““auctioning regulation””

LORD FLIGHT

183A

Page 232, line 23, leave out paragraph (b)

LORD SASSOON

184

Page 233, line 18, leave out “and”

185

Page 233, line 19, at end insert “, and

(c) for “a final notice” substitute “the notice required by subsection (2A)”.

( ) After that subsection insert—

“(2A) The notice required by this subsection is—

(a) in a case where the regulator is acting in accordance with a direction given by the Tribunal under section 133(6)(b), or by the court on an appeal from a decision by the Tribunal under section 133(6), a further decision notice, and

(b) in any other case, a final notice.”.”

LORD FLIGHT

185A

Page 233, line 23, leave out from beginning to end of line 29 on page 234

BARONESS HAYTER OF KENTISH TOWN

185B*

Page 233, line 30, leave out from beginning to “the” in line 31

LORD FLIGHT

186

Page 233, leave out line 39

LORD SASSOON

187

Page 234, line 30, at end insert—

“( ) In subsection (7A), for “the Authority” substitute “a regulator”.”

LORD FLIGHT

187A

Page 234, line 42, leave out paragraph (a)

BARONESS HAYTER OF KENTISH TOWN

187AA*

Page 235, leave out lines 30 and 31 and insert—

“(1) Each regulator will establish and maintain a committee (referred to as the “Determinations Panel”).

(2) Each regulator must appoint a chairman of the Determinations Panel.

(3) The chairman of each Panel must—

(a) decide the number of persons to be appointed as the other members of the Panel; and

(b) nominate a person for each of those appointments.

(4) Each regulator must then appoint as the other members of the Panel the persons nominated by the chairman of the Panel.

(5) The following are ineligible for appointment as members of the Panel—

(a) any member of the relevant regulator;

(b) any member of staff of the regulator;

(c) any employee of Her Majesty’s Treasury.

(6) Each Panel may establish sub-committees consisting of members of the Panel.

(7) Each Panel will be responsible for the following—”

Clause 35

BARONESS HAYTER OF KENTISH TOWN

187AB*

Page 119, line 27, at end insert—

“( ) Within 30 days of the coming into force of this Act, Her Majesty’s Government shall inform the governments of the European Union of the United Kingdom’s desire that the EU limits on financial compensation for charities affected by the loss of retail banking deposits should be reviewed.”

Schedule 10

LORD SASSOON

187B

Page 239, line 33, at end insert—

“( ) In subsection (7), omit “board members,”.”

LORD TEVERSON

BARONESS KRAMER

187C

Page 240, line 12, at end insert—

“(5A) In making any provision of the scheme under subsection (3), the relevant regulator must so far as practicable establish classes of authorised person on which levies may be imposed such that the claims that are likely to be made in respect of that class of person share a close affinity.

(5B) For these purposes, a claim shares a close affinity with another claim if both the nature of the services or activities and the type of financial instruments in relation to which the claims arise exhibit a high degree of similarity.”

LORD HODGSON OF ASTLEY ABBOTTS

187CA*

Page 240, line 12, at end insert—

“( ) In subsection (5), for the words “take account of the desirability of ensuring” substitute “ensure”.”

LORD SASSOON

187D

Page 242, line 11, at end insert—

“In section 221 (powers of court), in subsection (2), after “director or” insert “other”.

In section 222 (statutory immunity), in subsection (1), omit “board member,”.”

Schedule 11

LORD FLIGHT

187E

Page 242, line 16, at end insert—

“After section 225 insert—

“225A General obligations

(1) In discharging its functions, the scheme operator must comply with the requirements of this section.

(2) The scheme operator must, so far as is reasonably practicable, act in a way which is compatible with the FCA’s strategic and operational objectives and regulatory principles.””

187F

Page 243, line 5, leave out “must” and insert “may, if it considers appropriate to do so in any particular case,”

187G

Page 243, line 7, leave out from first “the” to “to” in line 9 and insert “scheme operator decides it is appropriate”

187H

Page 243, line 10, leave out from “must” to end of line 11 and insert “explain the rationale for publication”

187J

Page 243, line 17, at end insert—

“( ) Unless the respondent agrees, a report of a determination published by the scheme operator may not include the name of subject of the respondent, or particulars which, in the opinion of the scheme operator, are likely to identify the respondent or reveal commercially sensitive information.”

187K

Page 243, line 17, at end insert—

“( ) Where the scheme operator considers it appropriate to publish a report of its determination, the scheme operator must specify a reasonable period (which may not be less than 28 days) within which the respondent may make representations to the scheme operator.”

187L

Page 243, line 17, at end insert—

“( ) The scheme operator must then decide, within a reasonable period, whether to publish the determination in question.”

LORD SASSOON

187M

Page 243, line 17, at end insert—

“In section 232 (powers of court), in subsection (2), after “director or” insert “other”.”

LORD FLIGHT

187N

Page 243, line 20, at beginning insert “If the scheme operator considers that an issue with implications wider than an individual case has arisen or could arise it shall suspend determination of such complaints and refer the matter to the FCA and”

187P

Page 244, line 7, at end insert—

“The FCA must take such steps as are necessary to ensure that the scheme operator exercises those functions in a manner which is consistent with its strategic and operational objectives and the regulatory principles, and at least once a year, the FCA will conduct a review of the scheme operators’ operations, policies and procedures.”

187Q

Page 244, line 18, at end insert—

“( ) This must include, but not be limited to, a regulatory clarification procedure pursuant to which the FCA shall be called upon to resolve any issue or provide any guidance to the ombudsman (or both) with respect to any applicable regulatory matters arising from or in relation to a complaint or group of complaints.”

LORD SASSOON

187R

Page 244, line 22, at end insert—

“In paragraph 6 (status), in sub-paragraph (2), omit “board members,”.”

BARONESS HAYTER OF KENTISH TOWN

187RZA*

Page 245, line 24, at end insert—

“19A In paragraph 8 (guidance), at the end insert—

“( ) The scheme operator must consult publicly on any information, advice or guidance produced prior to publication.””

LORD FLIGHT

187RA

Page 245, line 39, at end insert—

“After paragraph 11 insert—

“Limitation

11A Rules made by the FCA must provide that no complaint is to be entertained where an action based on that complaint would fall outside the time limits prescribed under the Limitation Act 1980.””

187S

Page 246, line 4, at end insert—

“(za) in sub-paragraph (1)—

(i) for “scheme operator” substitute “FCA”; and

(ii) after “for reference of complaints” substitute “to the scheme operator”,

(zb) in sub-paragraph (2)—

(i) in the first sentance, leave out “may” and insert “must”;

(ii) in sub-sub-paragraph (a) after “reasonable” insert “which matters must include, but not be limited to—

(i) the FCA’s strategic and operational objectives and regulatory principles;

(ii) any applicable laws and regulations in force at the relevant times;

(iii) any applicable regulatory rules, guidance and standards in place at the relevant times; and

(iv) the finding or outcome of any such other complaint determination body or process as referred to in sub-paragraph (2)(c) below;”;

(iii) leave out sub-paragraph (7).”

187T

Page 246, line 26, at end insert—

“After paragraph 19 insert—

“The scheme operator must consult publicly on any information, advice or guidance produced prior to publication.””

LORD KENNEDY OF SOUTHWARK

187TA*

Page 246, line 28, at end insert—

“29 After paragraph 22 insert—

“Part 5 Complainant representatives Introduction

23 This Part of this Schedule applies to a complaint under the compulsory jurisdiction, the consumer credit jurisdiction or the voluntary jurisdiction in respect of which the complainant has entered into an agreement with a complainant representative.

24 A “complainant representative” is a person who has entered into an agreement with a complainant with respect to a complaint pursuant to which any fee has been, will be or may be paid by the complainant.

Complainant representative rules

25 The scheme operator must make rules, to be known as “complainant representative rules”, which are to set out requirements applicable to complainant representatives and to complaints falling within paragraph 1.

26 Complainant representative rules may, among other things—

(a) require that a complainant representative disclose to the scheme operator the agreement referred to in paragraph 2 when a complaint within paragraph 1 is made;

(b) require a complainant representative to take reasonable steps to obtain from the complainant, and as appropriate to supply to the ombudsman, such information as an ombudsman might reasonably require to determine a complaint;

(c) provide for the consequences if a complainant representative does not comply with complainant representative rules or other applicable legal or regulatory requirements, including requiring or enabling the ombudsman not to consider any complaint or to consider a complaint only if conditions specified by the ombudsman have been satisfied;

(d) enable the ombudsman to dismiss a complaint without consideration of its merits where the complainant representative has not cooperated with reasonable requests made by the respondent, including not providing adequate information as to the true nature of the complaint.

27 Complainant representative rules shall not require the disclosure to the ombudsman scheme of any material which is legally privileged.

Consultation

28 If the scheme operator proposes to make any complainant representative rules it must publish a draft of the proposed rules in the way appearing to it to be best calculated to bring them to the attention of persons appearing as likely to be affected.

29 The draft must be accompanied by a statement that representations about the proposals may be made to the scheme operator within a time specified in the statement.

30 Before making the proposed complainant representative rules, the scheme operator must have regard to any representations made to it under paragraph 7.

31 The consent of the Authority is required before any complainant representative rules may be made.””

Clause 37

LORD SASSOON

187TB

Page 120, line 20, at end insert—

“(ii) in paragraph (b), for “section 315” substitute “provision made by or under this Act”, and”

187TC

Page 121, line 27, at end insert—

“(ii) in paragraph (c), for “section 315” substitute “provision made by or under this Act”.”

187TD

Page 121, line 38, at end insert—

“( ) In section 317 (the core provisions), in subsection (1), for “X” substitute “9A”.”

Schedule 12

BARONESS HAYTER OF KENTISH TOWN

187TE*

Page 247, line 24, at end insert—

“(c) after subsection (10) insert—

“(11) The PRA should require the submission of reports from any PRA-authorised person for the purpose of assessing the extent to which a financial activity or financial market in which the PRA-authorised person participates may pose a threat to financial stability in accordance with the PRA’s general objective.

(12) The PRA shall collect, in a manner determined by the PRA and in consultation with the FPC, financial transaction data and position data from the PRA-authorised person companies.

(13) For the purposes of subsection (12)—

(a) “financial transaction data” shall mean data pertaining to the structure and legal description of a financial contract, with sufficient detail to describe the rights and obligations between counterparties and make possible an independent valuation; and

(b) “position data” shall mean data pertaining to data on financial assets or liabilities held on the balance sheet of a financial company, where positions are created or changed by the execution of a financial transaction and which includes information that identifies counterparties, the valuation by the financial company of the position, and information that makes possible an independent valuation of the position.

(14) The FCA shall assist the PRA in accordance with section 3D to ensure that the PRA is able to exercise its function as described in subsections (11) and (12).

(15) To facilitate the effective collection of data, the PRA should prepare and publish, in a manner that is easily accessible to the public and in the form of a summary or collection of information so framed that it is not possible to ascertain from it information relating to any particular person—

(a) a database detailing relevant counterparties;

(b) a financial instrument reference database; and

(c) formats and standards for PRA data, including standards for reporting financial transaction and position data to the PRA.

(16) Where possible, the PRA shall co-operate with foreign regulators to the extent required to collect relevant information on PRA-authorised persons already collected by those foreign regulators.

(17) The PRA shall develop and maintain sufficient resources to review the collection of data referred to in subsections (11) and (12) in order to—

(a) develop and maintain metrics and reporting systems for risks to the financial stability of the United Kingdom;

(b) evaluate stress tests or other stability-related evaluations of financial entities overseen;

(c) investigate disruptions and failures in the financial markets;

(d) conduct studies on the impact of policies relating to systemic risk;

(e) promote best practices for financial risk management to PRA-authorised persons.

(18) The PRA shall publish a report which compiles the data collected in accordance with subsections (11) and (12) on a periodic basis as determined by the PRA, which shall be—

(a) made available to the public in an easily accessible medium; and

(b) in the form of a summary or collection of information so framed that it is not possible to ascertain from it information relating to any particular person.””

LORD SASSOON

187U

Page 250, line 35, at end insert—

“( ) at the end of paragraph (i), omit “or”,”

187V

Page 250, line 37, after “insert” insert ““or”

187VA

Page 254, line 20, leave out sub-paragraph (4)

187W

Page 255, leave out lines 29 and 30 and insert—

“(i) officers of, or members of the staff of, the regulator, or”

187X

Page 255, line 43, leave out “or members of its governing body”

Clause 39

BARONESS WHEATCROFT

LORD LAWSON OF BLABY

BARONESS KRAMER

188

Page 124, line 20, at end insert—

“( ) In section 340 of FSMA 2000 (appointment of auditors and actuaries) after subsection (2) insert—

“(2A) Rules must require auditors of deposit taking institutions to provide a narrative report on the institution’s risk management policies and its exposure to risk as part of the audited accounts of the institution.””

Clause 40

BARONESS HAYTER OF KENTISH TOWN

188A*

Page 124, line 33, at end insert—

“( ) A designated consumer body may make a complaint to the PRA that a feature, or combination of features, of the market for with-profits insurance policies is, or appears to be, significantly damaging the interests of consumers.”

188B*

Page 124, line 34, leave out “a” and insert “an independent and impartial”

LORD MCFALL OF ALCLUITH

189

Page 125, line 3, after “of” insert “the general public or”

LORD FLIGHT

189A

Page 125, line 18, leave out from beginning to end of line 34 on page 126

BARONESS HAYTER OF KENTISH TOWN

189AA*

Page 126, line 36, after “FCA” insert “or PRA”

189AB*

Page 126, line 45, after “FCA’s” insert “or the PRA’s”

LORD FLIGHT

189B

Page 127, line 25, leave out from beginning to end of line 5 on page 128

BARONESS HAYTER OF KENTISH TOWN

189BZA*

Page 127, line 25, leave out from beginning to end of line 5 on page 128, and insert—

“234H Power of FCA to make request to Competition Commission

The FCA may, subject to subsection (4) of section 131 of the Enterprise Act 2002, make a reference to the Commission if the FCA has reasonable grounds for suspecting that any feature, or combination of features, of a market for financial services in the United Kingdom prevents, restricts or distorts competition in connection with the supply or acquisition of any financial services in the United Kingdom or a part of the United Kingdom.”

LORD WHITTY

189BA

Page 128, line 5, at end insert—

“Collective proceedings

234J Collective proceedings and collective redress

(1) In respect of claims to the courts covering a significant number of consumers with equivalent or near equivalent interests or complaints, the following procedures will apply.

(2) The court may, on the application of a person (“the representative”), by order authorise the representative to bring collective proceedings before the court in respect of financial services claims of a kind specified in the order.

(3) “Collective proceedings” means proceedings brought by the representative on behalf of persons who are entitled to bring (or have brought) proceedings in respect of the specified kind of claim.

(4) “Collective proceedings order” means an order under subsection (2).

(5) A collective proceedings order may be made only if it appears to the court that the specified kind of claims raise the same, similar or related issues of fact or law.

(6) A person may be authorised under subsection (2) to bring proceedings even if the person would not otherwise be regarded as having any interest, or any sufficient interest, in the proceedings.

(7) Proceedings may be authorised under subsection (2) even if each represented person does not have a claim of the specified kind against all of the defendants to the proceedings.”

189BB

Page 128, line 5, at end insert—

“234K Collective proceedings: “opt-in” and “opt-out” bases

(1) This section applies where a collective proceedings order has been made.

(2) The court must direct that the collective proceedings are to be brought either on an “opt-in” basis or on an “opt-out” basis.

(3) If the court directs that the proceedings are to be brought on an “opt-out” basis, it may at any time direct that any issue in the proceedings is to be determined on an “opt-in” basis.

(4) Any direction may be varied or revoked by a further direction.

(5) Collective proceedings are brought on an “opt-in” basis if they are brought on behalf of each person who—

(a) has a claim of the specified kind, and

(b) notifies the representative, in a way and by a time specified by the court, that the claim should be included in the collective proceedings.

(6) Collective proceedings are brought on an “opt-out” basis if they are brought on behalf of each person who has a claim of the specified kind except—

(a) any person who notifies the representative, in a way and by a time specified by the court, that the claim should not be included in the collective proceedings, and

(b) any person who—

(i) is not domiciled in the United Kingdom at a time specified by the court, and

(ii) does not, in a way and by a time so specified, notify the representative that the claim should be included in the collective proceedings.

(7) Subsection (5) applies (with appropriate modifications) for the purposes of interpreting the reference in subsection (3) to the determination of an issue on an “opt-in” basis.

(8) Sections 41, 42, 45 and 46 of the Civil Jurisdiction and Judgments Act 1982 apply for the purpose of determining whether a person is regarded as domiciled in the United Kingdom” for the purposes of subsection (6)(b)(i) above.”

BARONESS HAYTER OF KENTISH TOWN

189BC*

Page 128, line 5, at end insert—

“234L Small businesses: complaints and proceedings

The Treasury and Secretary of State shall bring forward proposals within three months of the passing of the Financial Services Act 2012—

(a) to introduce provision for collective proceedings before the court in respect of financial services claims made on an opt-out basis by small and medium sized enterprises; and

(b) to introduce provision for complaints by small and medium sized enterprises to the FCA that a feature, or combination of features, of a market in the United Kingdom for financial services is, or appears to be, significantly damaging the interests of small business.”

Schedule 14

LORD SASSOON

189BD

Page 263, line 8, before “the appropriate” insert “or recognised investment exchange,”

189BE

Page 264, line 6, at end insert—

“(1A) In subsections (1), (2) and (6), after “authorised person” insert “or recognised investment exchange”.”

189BF

Page 264, line 24, at end insert “, and

(b) in paragraph (a), after “authorised person” insert “or recognised investment exchange”.”

189BG

Page 265, line 12, at end insert “, and

(b) in paragraph (a), after “authorised person” insert “or recognised investment exchange”.”

189BH

Page 266, line 17, at end insert—

“(1A) In subsection (1)(a), after “authorised person” insert “or recognised investment exchange”.”

189BJ

Page 266, line 37, at end insert—

“(1A) In subsection (1)(b), after “authorised person” insert “or recognised investment exchange”.”

189BK

Page 267, line 20, at end insert “, and

(b) in paragraph (a), after “authorised person” insert “or recognised investment exchange”.”

189BL

Page 269, line 19, at end insert “and

(b) in paragraph (a), after “authorised person” insert “or recognised investment exchange”.”

Schedule 15

LORD SASSOON

189C

Page 272, line 2, at end insert—

“In paragraph 3 (status), in sub-paragraph (2), omit “board members,”.”

BARONESS NOAKES

190

Page 272, line 4, at end insert—

“Omit paragraph 5.”

Clause 47

LORD STEVENSON OF BALMACARA

190ZZA*

Page 131, line 7, at end insert—

“( ) making provision for the increased diversity of the financial services sector and promotion of mutual societies, including arrangements to measure the number of members of mutual societies, and the market share for mutual societies as a proportion of the UK financial services sector.”

190ZZB*

Page 131, line 7, at end insert—

“( ) providing for any function of the FSA in respect of the Registry of Friendly Societies to be transferred to a registrar established at the Registrar of Companies.”

190ZZC*

Page 131, line 13, leave out “both the FCA and PRA” and insert “the Registry of Friendly Societies established at the Registrar of Companies or to any of the FCA and PRA and the Registry of Friendly Societies at the Registrar of Companies”

Clause 48

LORD SASSOON

190ZA

Page 131, line 47, leave out subsection (3)

190ZB

Page 132, line 7, leave out “subsections (2) and (3)” and insert “subsection (2)”

190ZC

Page 132, line 12, leave out “or (3)”

LORD STEVENSON OF BALMACARA

190ZCA*

Page 132, line 17, leave out “to the FCA and the PRA” and insert “the Registrar of Companies or to the FCA, the PRA and the Registrar of Companies”

After Clause 48

LORD SASSOON

190ZD

Insert the following new Clause—

“Power to apply or disapply provision made by or under FSMA 2000

(1) The Treasury may by order provide—

(a) for any relevant provision that would not otherwise apply in relation to transferred functions to apply in relation to those functions with such modifications as may be specified;

(b) for any relevant provision that would otherwise apply in relation to transferred functions not to apply in relation to them or to apply with such modifications as may be specified.

(2) “Relevant provision” means a provision of, or made under, FSMA 2000.

(3) “Transferred function” means a function that has been or is being transferred by an order under section 47; and section 48(4) applies for the purpose of this subsection.”

Clause 57

BARONESS NOAKES

LORD MCFALL OF ALCLUITH

190ZE

Page 136, line 4, leave out from “to” to “the” in line 5 and insert “any of the Bank’s powers or functions, including but not limited to”

Clause 62

LORD FLIGHT

190A

Page 139, line 24, at end insert—

“( ) The memorandum must make provision for the UK authorities to consult with the financial services industry and, where appropriate, consumers on initiatives brought forward by the European Supervisory Authorities, the EU institutions and other international organisations.”

Clause 64

BARONESS NOAKES

190AA*

Page 140, line 36, leave out subsection (4) and insert—

“(4) If subsections (2) or (3) apply, the Treasury must arrange for an enquiry to be held under section 65 unless the Treasury consider that it is not in the public interest that there should be an independent inquiry into the events and the circumstances surrounding them.”

190B

Page 140, line 38, leave out “may” and insert “must”

Clause 65

LORD MCFALL OF ALCLUITH

191

Page 141, line 3, at end insert—

“( ) The person appointed by the Treasury to hold the inquiry under this section must be suitably qualified and experienced to hold such an inquiry.”

Clause 66

LORD MCFALL OF ALCLUITH

192

Page 141, line 29, at end insert—

“( ) The power conferred by this section is not exercisable in relation to information or documents in respect of which a claim to legal professional privilege (in Scotland to confidentiality of communications) could be maintained in legal proceedings.”

Clause 72

BARONESS NOAKES

192ZA

Page 145, line 7, leave out “may” and insert “must”

Clause 74

LORD HODGSON OF ASTLEY ABBOTTS

192A

Page 145, line 20, at end insert—

“( ) In carrying out an investigation, the regulator must have regard to its regulatory principles and act proportionately, reasonably and fairly.”

192B

Page 145, line 30, at end insert “or becomes aware that the investigation does not meet the principles by which the regulator must abide”

Clause 79

LORD MCFALL OF ALCLUITH

193

Page 148, line 15, at end insert—

“( ) The investigator must be suitably qualified and experienced to conduct such investigations.”

193A

[Re-tabled as Amendment 187TA]

Clause 80

LORD SASSOON

193B

Page 149, line 13, leave out “, 318 or 328” and insert “or 318”

Before Clause 84

LORD SASSOON

193BA

Insert the following new Clause—

“Objectives and conditions

(1) The Banking Act 2009 is amended as follows.

(2) In section 3 (interpretation: other expressions), after “this Part—” insert—

““client assets” means assets which an institution has undertaken to hold for a client (whether or not on trust, and whether or not the undertaking has been complied with),”.

(3) In section 4 (special resolution objectives), after subsection (8) insert—

“(8A) Objective 6, which applies in any case in which client assets may be affected, is to protect those assets.

(8B) Objective 7 is to minimise adverse effects on institutions (such as investment exchanges and clearing houses) that support the operation of financial markets.”

(4) In section 8(2) (Condition A: private sector purchaser and bridge bank)—

(a) in paragraph (b) for “the banking systems of the United Kingdom, or” substitute “those systems,”, and

(b) after paragraph (c) insert “, or

(d) the protection of any client assets that may be affected.”

(5) In section 47 (restriction of partial transfers), for subsection (3) substitute—

“(3) Provision under subsection (2) may, in particular, refer to—

(a) particular classes of deposit;

(b) particular classes of client assets.”

(6) In the Table in section 261 (index of defined terms), after the entry relating to “central counterparty clearing services”, insert—

“Client assets (Part 1) 3”.”

Clause 84

LORD SASSOON

193C

Page 154, line 24, at end insert—

“( ) In section 83 (supplemental), in subsection (2)(d)—

(a) at the end of sub-paragraph (iii) insert “and”, and

(b) for sub-paragraphs (iv) and (v) substitute—

“(iv) is not subject to the restriction in section 29(3) that the securities issued by the bank were transferred under the original order (as defined in section 29(1)).””

Clause 86

LORD SASSOON

193D

Page 156, line 1, at end insert—

“( ) In section 1(6) of that Act (table describing provisions of Part 1), in the entry relating to sections 76 to 81, for “81” substitute “81A”.”

After Clause 86

LORD SASSOON

193E

Insert the following new Clause—

“Groups

(1) The Banking Act 2009 is amended as follows.

(2) In section 1 (overview), for the entry in the Table relating to sections 82 and 83 substitute—

“Sections 81B to 83 Groups”.

(3) In section 20 (directors), after subsection (1) insert—

“(1A) Subsection (1) also applies to a director of any undertaking which is a banking group company in respect of a specified bank.”

(4) After section 36 insert—

“36A Directors

(1) A property transfer instrument may enable the Bank of England—

(a) to remove a director of a specified bank;

(b) to vary the service contract of a director of a specified bank;

(c) to terminate the service contract of a director of a specified bank;

(d) to appoint a director of a specified bank.

(2) Subsection (1) also applies to a director of any undertaking which is a banking group company in respect of a specified bank.

(3) Appointments under subsection (1)(d) are to be on terms and conditions agreed with the Bank of England.”

(5) For the italic heading before section 82 substitute “Groups”, and after that heading insert—

“81B Sale to commercial purchaser and transfer to bridge bank

(1) The Bank of England may exercise a stabilisation power in respect of a banking group company in accordance with section 11(2) or 12(2) if the following conditions are met.

(2) Condition 1 is that the PRA is satisfied that the general conditions for the exercise of a stabilisation power set out in section 7 are met in respect of a bank in the same group.

(3) Condition 2 (which does not apply in a financial assistance case) is that the Bank of England is satisfied that the exercise of the power in respect of the banking group company is necessary, having regard to the public interest in—

(a) the stability of the financial systems of the United Kingdom,

(b) the maintenance of public confidence in the stability of those systems,

(c) the protection of depositors, or

(d) the protection of any client assets that may be affected.

(4) Condition 3 (which applies only in a financial assistance case) is that—

(a) the Treasury have recommended the Bank of England to exercise a stabilisation power on the grounds that it is necessary to protect the public interest, and

(b) in the Bank’s opinion, exercise of the power in respect of the banking group company is an appropriate way to provide that protection.

(5) Condition 4 is that the banking group company is an undertaking incorporated in, or formed under the law of any part of, the United Kingdom.

(6) Before determining whether Condition 2 or 3 (as appropriate) is met, the Bank of England must consult—

(a) the Treasury,

(b) the PRA, and

(c) the FCA.

(7) In exercising a stabilisation power in reliance on this section the Bank of England must have regard to the need to minimise the effect of the exercise of the power on other undertakings in the same group.

(8) In this section “financial assistance case” means a case in which the Treasury notify the Bank of England that they have provided financial assistance in respect of a bank in the same group for the purpose of resolving or reducing a serious threat to the stability of the financial systems of the United Kingdom.

81C Section 81B: supplemental

(1) In the following provisions references to banks include references to banking group companies—

(a) section 10(1), and

(b) section 75(5)(a).

(2) Where the Bank of England exercises a stabilisation power in respect of a banking group company in reliance on section 81B, the provisions relating to the stabilisation powers and the bank administration procedure contained in this Act (except sections 7 and 8) and any other enactment apply (with any necessary modifications) as if the banking group company were a bank.

(3) For the purposes of the application of section 143 (grounds for applying for bank administration order), the reference in subsection (2) to the Bank of England exercising a stabilisation power includes a case where the Bank of England intends to exercise such a power.

81D Interpretation: “banking group company” &c.

(1) In this Part “banking group company” means an undertaking—

(a) which is (or, but for the exercise of a stabilisation power, would be) in the same group as a bank, and

(b) in respect of which any conditions specified in an order made by the Treasury are met.

(2) An order may require the Bank of England to consult specified persons before determining whether the conditions are met.

(3) An order—

(a) is to be made by statutory instrument, and

(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

(4) If an order contains a statement that the Treasury are of the opinion that, by reason of urgency, it is necessary to make the order without complying with subsection (3)(b)—

(a) the order may be made, and

(b) the order lapses unless approved by resolution of each House of Parliament during the period of 28 days (ignoring periods of dissolution, prorogation or adjournment of either House for more than 4 days) beginning with the day on which the order is made.

(5) The lapse of an order under subsection (4)(b)—

(a) does not invalidate anything done under or in reliance on the order before the lapse and at a time when neither House has declined to approve the order, and

(b) does not prevent the making of a new order (in new terms).

(6) Undertakings are in the same group for the purposes of sections 81B, 81C and this section if they are group undertakings in respect of each other.

(7) Expressions defined in the Companies Act 2006 have the same meaning in section 81B and this section as in that Act.”

(6) In the Table in section 259 (statutory instruments), in Part 1 after the entry relating to section 78 insert—

“81D Meaning of “banking group company” Draft affirmative resolution (except for urgent cases)”

(7) In the Table in section 261 (index of defined terms), after the entry relating to “bank insolvency order” insert—

“Banking group company 81D”.”

193F

Insert the following new Clause—

“Application to investment firms

(1) The Banking Act 2009 is amended as follows.

(2) In section 1 (overview), after the entry in the Table relating to sections 84 to 89 insert—

“Section 89A Investment firms”.

“(8) Section 89A applies this Part to investment firms with modifications.”

(4) In section 75(5) (power to change law: application to other institutions), omit the “or” following paragraph (c) and after that paragraph insert—

“(ca) to investment firms,”.

(5) After section 89 (and in Part 1) insert—

“Investment firms

89A Application to investment firms

(1) This Part applies to investment firms as it applies to banks, subject to the modifications in subsection (2).

(2) Ignore sections 1(2)(b), 4(2)(b) and (6), 5(1)(b), 7(7), 8(2)(c) and 14(5).”

(6) After section 159 insert—

“159A Application to investment firms

This Part applies to investment firms as it applies to banks.”

(7) After section 258 insert—

“258A “Investment firm”

(1) In this Act “investment firm” means a UK institution which is (or, but for the exercise of a stabilisation power, would be) an investment firm for the purposes of Directive 2006/49/EC on the capital adequacy of investment firms and credit institutions.

(2) But “investment firm” does not include—

(a) an institution which is also—

(i) a bank (within the meaning of Part 1),

(ii) a building society (within the meaning of section 119 of the Building Societies Act 1986), or

(iii) a credit union (within the meaning of section 31 of the Credit Unions Act 1979 or Article 2(2) of the Credit Unions (Northern Ireland) Order 1985), or

(b) an institution which is of a class or description specified in an order made by the Treasury.

(3) An order—

(a) is to be made by statutory instrument, and

(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

(4) If an order contains a statement that the Treasury are of the opinion that, by reason of urgency, it is necessary to make the order without complying with subsection (3)(b)—

(a) the order may be made, and

(b) the order lapses unless approved by resolution of each House of Parliament during the period of 28 days (ignoring periods of dissolution, prorogation or adjournment of either House for more than 4 days) beginning with the day on which the order is made.

(5) The lapse of an order under subsection (4)(b)—

(a) does not invalidate anything done under or in reliance on the order before the lapse and at a time when neither House has declined to approve the order, and

(b) does not prevent the making of a new order (in new terms).

(6) In subsection (1) “UK institution” means an institution which is incorporated in, or formed under the law of any part of, the United Kingdom.”

(8) In the Table in section 259 (statutory instruments), in Part 7 after the entry relating to section 257 insert—

“258A Meaning of “investment firm” Draft affirmative resolution (except for urgent cases)”.

(9) In the Table in section 261 (index of defined terms), after the entry relating to “inter-bank payment system”, insert—

“Investment firm 258A”.

193G

Insert the following new Clause—

“Application to UK clearing houses

(1) The Banking Act 2009 is amended as follows.

(2) In section 1 (overview), after the entry in the Table relating to section 89A, insert—

“Sections 89B to 89G UK clearing houses”.

“(9) Section 89B applies this Part to UK clearing houses with modifications.”

(4) After section 39 insert—

“39A Banks which are clearing houses

Sections 89C to 89E (clearing house rules, membership and recognition) apply in relation to a bank which would be a UK clearing house but for section 89G(2) (exclusion of banks etc from definition of UK clearing house) as they apply in relation to a UK clearing house.”

(5) In section 75(5) (power to change law: application to other institutions), after paragraph (ca) insert—

“(cb) to UK clearing houses, or”.

(6) After section 89A (and in Part 1) insert—

“UK clearing houses

89B Application to UK clearing houses

(1) This Part applies to UK clearing houses as it applies to banks, subject to—

(a) the modifications specified in subsections (2) to (5), and in the Table in subsection (6), and

(b) any other necessary modifications.

(2) For section 13 substitute—

“13 Transfer of ownership

(1) The third stabilisation option is to transfer ownership of the UK clearing house to any person.

(2) For that purpose the Bank of England may make one or more share transfer instruments.”

(3) For sections 28 and 29 substitute—

“28 Onward transfer

(1) This section applies where the Bank of England has made a share transfer instrument, in respect of securities issued by a UK clearing house, in accordance with section 13(2) (“the original instrument”).

(2) The Bank of England may make one or more onward share transfer instruments.

(3) An onward share transfer instrument is a share transfer instrument which—

(a) provides for the transfer of—

(i) securities which were issued by the UK clearing house before the original instrument and have been transferred by the original instrument or a supplemental share transfer instrument, or

(ii) securities which were issued by the UK clearing house after the original instrument;

(b) makes other provision for the purposes of, or in connection with, the transfer of securities issued by the UK clearing house (whether the transfer has been or is to be effected by that instrument, by another share transfer instrument or otherwise).

(4) An onward share transfer instrument may not transfer securities to the transferor under the original instrument.

(5) The Bank of England may not make an onward share transfer instrument unless the transferee under the original instrument is—

(a) the Bank of England,

(b) a nominee of the Treasury, or

(c) a company wholly owned by the Bank of England or the Treasury.

(6) Sections 7 and 8 do not apply to an onward 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).

(7) Before making an onward share transfer instrument the Bank of England must consult—

(a) if the UK clearing house is a PRA-authorised person, the PRA, and

(b) the FCA.

(8) Section 26 applies where the Bank of England has made an onward share transfer instrument.

29 Reverse share transfer

(1) This section applies where the Bank of England has made a share transfer instrument in accordance with section 13(2) (“the original instrument”) providing for the transfer of securities issued by a UK clearing house to a person (“the original transferee”).

(2) The Bank of England may make one or more reverse share transfer instruments in respect of securities issued by the UK clearing house and held by the original transferee (whether or not they were transferred by the original instrument).

(3) If the Bank of England makes an onward share transfer instrument in respect of securities transferred by the original instrument, the Bank may make one or more reverse share transfer instruments in respect of securities issued by the UK clearing house and held by a transferee under the onward share transfer instrument (“the onward transferee”).

(4) A reverse share transfer instrument is a share transfer instrument which—

(a) provides for transfer to the transferor under the original instrument (where subsection (2) applies);

(b) provides for transfer to the original transferee (where subsection (3) applies);

(c) 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) or (b).

(5) The Bank of England may not make a reverse share transfer instrument under subsection (2) unless—

(a) the original transferee is—

(i) the Bank of England,

(ii) a company wholly owned by the Bank of England or the Treasury, or

(iii) a nominee of the Treasury, or

(b) the reverse share transfer instrument is made with the written consent of the original transferee.

(6) The Bank of England may not make a reverse share transfer instrument under subsection (3) unless—

(a) the onward transferee is—

(i) the Bank of England,

(ii) a company wholly owned by the Bank of England or the Treasury, or

(iii) a nominee of the Treasury, or

(b) the reverse share transfer instrument is made with the written consent of the onward transferee.

(7) Sections 7 and 8 do not apply to a 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).

(8) Before making a reverse share transfer instrument the Bank of England must consult—

(a) if the UK clearing house is a PRA-authorised person, the PRA, and

(b) the FCA.

(9) Section 26 applies where the Bank of England has made a reverse share transfer instrument.”

(4) For sections 45 and 46 substitute—

“45 Transfer of ownership: property transfer

(1) This section applies where the Bank of England has made a share transfer instrument, in respect of securities issued by a UK clearing house, in accordance with section 13(2) (“the original instrument”).

(2) The Bank of England may make one or more property transfer instruments.

(3) A property transfer instrument is an instrument which—

(a) provides for property, rights or liabilities of the UK clearing house to be transferred (whether accruing or arising before or after the original instrument);

(b) makes other provision for the purposes of, or in connection with, the transfer of property, rights or liabilities of the UK clearing house (whether the transfer has been or is to be effected by the instrument or otherwise).

(4) The Bank of England may not make a property transfer instrument in accordance with this section unless the original instrument transferred securities to—

(a) the Bank of England,

(b) a company wholly owned by the Bank of England or the Treasury, or

(c) a nominee of the Treasury.

(5) Sections 7 and 8 do not apply to a property transfer instrument made in accordance with this section.

(6) Section 42 applies where the Bank of England has made a property transfer instrument in accordance with this section.

(7) Before making a property transfer instrument in accordance with this section, the Bank of England must consult—

(a) if the UK clearing house is a PRA-authorised person, the PRA, and

(b) the FCA.

46 Transfer of ownership: reverse property transfer

(1) This section applies where the Bank of England has made a property transfer instrument in accordance with section 45(2) (“the original instrument”).

(2) The Bank of England may make one or more reverse property transfer instruments in respect of property, rights or liabilities of the transferee under the original instrument.

(3) A reverse property transfer instrument is a property 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 which are, could be or could have been transferred.

(4) The Bank of England must not make a reverse property transfer instrument unless—

(a) the transferee under the original instrument is—

(i) the Bank of England,

(ii) a company wholly owned by the Bank of England or the Treasury, or

(iii) a nominee of the Treasury, or

(b) the reverse property transfer instrument is made with the written consent of the transferee under the original instrument.

(5) Sections 7 and 8 do not apply to a reverse property transfer instrument made in accordance with this section.

(6) Before making a reverse property transfer instrument in accordance with this section, the Bank of England must consult—

(a) if the UK clearing house is a PRA-authorised person, the PRA, and

(b) the FCA.

(7) Section 42 applies where the Bank of England has made a reverse property transfer instrument in accordance with this section.”

(5) For section 81 substitute—

“81 Transfer of ownership: report

(1) This section applies where the Bank of England makes one or more share transfer instruments in respect of a UK clearing house under section 13(2).

(2) The Bank must report to the Chancellor of the Exchequer about the exercise of the power to make share transfer instruments under that section.

(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 end of one year beginning with the date of the first transfer instrument made under section 13(2).”

(6) The table mentioned in subsection (1)(a) is as follows—

Provision Modification
Section 1 Ignore subsection (2)(b) and (c).
In subsection (3)(c), for “to temporary public ownership” substitute “of ownership”.
In subsection (4)(a), for “15, 16, 26 to 31 and 85” substitute “15, 26 and 28 to 31”.
Section 4 Ignore subsection (2)(b) and (c).
Ignore subsection (3)(a), (b) and (ba).
In subsection (5), for “banking” substitute “financial”.
In subsection (6), for “protect depositors” substitute “maintain the continuity of central counterparty clearing services”.
Ignore subsections (8A), (8B) and (9).
Section 5 Ignore subsection (1)(b) and (c).
In subsection (3)— (a) for “Sections 12 and 13 require” substitute “Section 12 requires”, and (b) ignore the words “and temporary public ownership”.
Section 6 In subsection (4)— (a) after “Before” insert “issuing or”, and (b) ignore paragraph (d).
In subsection (5) after “after” insert “issuing or”.
Section 7 In subsection (1), for “PRA” substitute “Bank of England”.
In subsection (2), for the words following “satisfy the” substitute “recognition requirements”.
The Bank of England may treat Condition 1 as met if satisfied that it would be met but for the withdrawal or possible withdrawal of critical clearing services by the UK clearing house.
In subsection (3), for “satisfy the threshold conditions” substitute “maintain the continuity of any critical clearing services it provides while also satisfying the recognition requirements”.
In subsection (4), for “PRA” substitute “Bank of England”.
Ignore subsection (4A).
In subsection (5)— (a) for “PRA” substitute “Bank of England”, and (b) ignore paragraph (a) unless the UK clearing house is a PRA-authorised person, in which case for “Bank of England” substitute “PRA”.
Ignore subsections (7) and (8).
For the purposes of section 7— (a) “critical clearing services” means central counterparty clearing services the withdrawal of which may, in the Bank of England’s opinion, threaten the stability of the financial systems of the United Kingdom, and (b) “recognition requirements” means the requirements resulting from section 286 of the Financial Services and Markets Act 2000.
Section 8 In subsection (1), omit “in accordance with section 11(2) or 12(2)”.
Ignore subsection (2)(c) and (d).
In subsection (3), ignore paragraph (a) unless the UK clearing house is a PRA-authorised person.
In subsection (4), ignore the words “in accordance with section 11(2) or 12(2)”.
Section 9 Ignore section 9.
Section 11 Ignore subsection (2)(a).
Section 13 See above.
Section 14 Ignore subsection (5).
Section 16 Ignore section 16.
Section 20 Ignore subsections (2) and (4).
Section 24 In subsection (1), ignore paragraph (c) unless the UK clearing house is a PRA-authorised person.
Section 25 Ignore section 25.
Section 26 In subsection (1), for “11(2)” substitute “13(2)”.
In subsection (5), ignore paragraph (a) unless the UK clearing house is a PRA-authorised person.
In subsection (6), for “11(2)” substitute “13(2)”.
Sections 26A and 27 Ignore sections 26A and 27.
Sections 28 and 29 See above.
Section 30 In subsection (5), ignore paragraph (a) unless the UK clearing house is a PRA-authorised person.
Section 31 In subsection (4), for “7, 8 and 51” substitute “7 and 8”.
In subsection (5), ignore paragraph (a) unless the UK clearing house is a PRA-authorised person.
Section 41 In subsection (1), ignore paragraph (c) unless the UK clearing house is a PRA-authorised person.
Section 42 In subsection (5), ignore paragraph (a) unless the UK clearing house is a PRA-authorised person.
Section 42A In subsection (5), for “7, 8 and 50” substitute “7 and 8”.
In subsection (6), ignore paragraph (a) unless the UK clearing house is a PRA-authorised person.
Section 43 In subsection (6), for “7, 8 and 52” substitute “7 and 8”.
In subsection (7), ignore paragraph (a) unless the UK clearing house is a PRA-authorised person.
Section 44 In subsection (5), for “7, 8 and 52” substitute “7 and 8”.
In subsection (6), ignore paragraph (a) unless the UK clearing house is a PRA-authorised person.
Sections 45 and 46 See above.
Sections 49 to 53 Ignore sections 49 to 53.
Section 54 In subsection (1), for “A compensation scheme order” substitute “An order under section 89F”.
In subsection (4)(b), for “compensation scheme order” substitute “the order under section 89F”.
Section 55 In subsection (10), for “to which section 62 applies” substitute “under section 89F”.
Section 56 In subsection (6), for “to which section 62 applies” substitute “under section 89F”.
Section 57 In subsection (1), for “A compensation scheme order” substitute “An order under section 89F”.
In subsection (4)(a), for “has had a permission under Part 4A of the Financial Services and Markets Act 2000 (regulated activities) varied or cancelled” substitute “no longer qualifies as a recognised body under Part 18 of the Financial Services and Markets Act 2000 (recognised investment exchanges and clearing houses) or is subject to a requirement imposed under that Part”.
Section 58 In subsection (1), for “A resolution fund order” substitute “An order under section 89F that provides for transferors to become entitled to the proceeds of the disposal of things transferred”.
Ignore subsection (3).
In subsection (4), for “A resolution fund order” substitute “An order under section 89F that provides for transferors to become entitled to the proceeds of the disposal of things transferred”.
In subsection (5), for “A resolution fund order” substitute “An order under section 89F that provides for transferors to become entitled to the proceeds of the disposal of things transferred”.
Ignore subsections (6) to (8).
Section 59 Ignore section 59.
Section 60 In subsection (3)(c), ignore the references to bank insolvency and bank administration.
In subsection (4)— (a) ignore paragraphs (a) and (b), and (b) in paragraph (c), for “a third party compensation order” substitute “an order under section 89F”.
In subsection (5)— (a) ignore paragraph (a), and (b) in paragraph (c), for “a compensation scheme order or resolution fund order” substitute “an order under section 89F”.
Section 61 In subsection (1)— (a) ignore paragraphs (a) to (c), and (b) treat the subsection as including a reference to orders under section 89F.
Ignore subsection (2)(b).
Section 62 Ignore section 62.
Section 65 In subsection (1)(a)(ii), for “order” substitute “instrument”.
In subsection (3)— (a) in paragraph (a), ignore the words “where subsection (1)(a)(i) applies”, and (b) ignore paragraph (b).
Section 66 In subsection (1)— (a) in paragraph (a), ignore the reference to section 11(2)(a), (b) in paragraph (d)(i), ignore the words following “England”, and (c) ignore paragraph (d)(ii).
Section 68 In subsection (1)(a), for “order” substitute “instrument”.
Section 69 In subsection (4)— (a) in paragraph (a), ignore the words “in relation to sections 63 and 64”, and (b) ignore paragraph (b).
Section 70 In subsection (3)— (a) in paragraph (a), ignore the words “in relation to section 63”, and (b) ignore paragraph (b).
Section 71 Ignore subsection (1)(a).
Section 72 Ignore subsection (1)(a).
Section 73 Ignore subsection (1)(a).
Section 79A In subsection (2), ignore the words “share transfer instruments and”.
Section 81 See above.
Section 81B In subsection (1), for “or 12(2)” substitute “, 12(2) or 13(2)”.
Ignore subsection (3)(c) and (d).
In subsection (6), ignore paragraph (b) unless the clearing house is a PRA-authorised person.
Section 81C In subsection (2), ignore the words “and the bank administration procedure”.
Ignore subsection (3).
Sections 82 and 83 Ignore sections 82 and 83.

89C Clearing house rules

(1) A property transfer instrument made in respect of a UK clearing house may make provision about the consequences of a transfer for the rules of the clearing house.

(2) In particular, an instrument may—

(a) modify or amend the rules of a UK clearing house;

(b) in a case where some, but not all, of the business of a UK clearing house is transferred, make provision as to the application of the rules in relation to the parts of the business that are, and are not, transferred.

(3) Provision by virtue of this section may (but need not) be limited so as to have effect—

(a) for a specified period, or

(b) until a specified event occurs or does not occur.

89D Clearing house membership

(1) A property transfer instrument made in respect of a UK clearing house may make provision about the consequences of a transfer for membership of the clearing house.

(2) In particular, an instrument may—

(a) make provision modifying the terms on which a person is a member of a UK clearing house;

(b) in a case where some, but not all, of the business of a UK clearing house is transferred, provide for a person who was a member of the transferor to remain a member of the transferor while also becoming a member of the transferee.

89E Recognition of transferor company

(1) The Bank of England may provide for a company to which the business of a UK clearing house is transferred in accordance with section 12(2) to be treated as a recognised clearing house for the purposes of the Financial Services and Markets Act 2000—

(a) for a specified period, or

(b) until a specified event occurs.

(2) The provision may have effect—

(a) for a period specified in the instrument, or

(b) until the occurrence of an event specified or described in the instrument.

(3) The power under this section—

(a) may be exercised only with the consent of the Treasury, and

(b) must be exercised by way of provision in a property transfer instrument (or supplemental instrument).

89F Clearing house compensation orders

(1) The Treasury may by order make provision for protecting the financial interests of transferors and others in connection with any transfer under this Part as it applies by virtue of section 89B.

(2) The order may make provision establishing a scheme—

(a) for determining whether transferors should be paid compensation, or providing for transferors to be paid compensation, and establishing a scheme for paying any compensation,

(b) under which transferors become entitled to the proceeds of the disposal of things transferred in specified circumstances, and to a specified extent, and

(c) for compensation to be paid to persons other than transferors.

(3) An order—

(a) is to be made by statutory instrument, and

(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

89G Interpretation: “UK clearing house” &c.

(1) In this Part “UK clearing house” means a clearing house—

(a) which is incorporated in, or formed under the law of any part of, the United Kingdom,

(b) which provides central counterparty clearing services, and

(c) in relation to which a recognition order is in force under Part 18 of the Financial Services and Markets Act 2000.

(2) But “UK clearing house” does not include a clearing house which is also—

(a) a bank,

(b) a building society (within the meaning of section 119 of the Building Societies Act 1986),

(c) a credit union (within the meaning of section 31 of the Credit Unions Act 1979 or Article 2(2) of the Credit Unions (Northern Ireland) Order 1985), or

(d) an investment firm.

(3) Where a stabilisation power is exercised in respect of a UK clearing house, it does not cease to be a UK clearing house for the purposes of this Part if the recognition order referred to in subsection (1)(c) is later revoked.

(4) In this Part—

“central counterparty clearing services” has the same meaning as in section 155 of the Companies Act 1989 (see subsection (3A) of that section), and

“PRA-authorised person” has the meaning given by section 2B(5) of the Financial Services and Markets Act 2000.”

(7) In the Table in section 259 (statutory instruments), in Part 1 after the entry relating to section 89 insert—

“89F Clearing house compensation orders Draft affirmative resolution”.

(8) In the Table in section 261 (index of defined terms)—

(a) after the entry relating to “bridge bank share transfer instrument” insert—

“central counterparty clearing services 89G”,
“PRA-authorised person 89G”, and

(c) at the end insert—

“UK clearing house 89G”.”

Schedule 17

LORD SASSOON

193H

Page 279, line 32, at end insert—

“Section 81B
(a) Treat the reference to the PRA in subsection (2) as a reference to the FCA.
(b) Ignore subsection (7)(b).”

193J

Page 281, line 6, at end insert—

“( ) In subsection (6), after “filed” insert “(in Scotland, lodged)”.”

Clause 91

LORD SASSOON

194

Page 162, line 20, at end insert—

“(ga) enable the Department of Enterprise, Trade and Investment in Northern Ireland to institute proceedings in Northern Ireland for a relevant offence;”

195

Page 162, line 24, after “(2)(g)” insert “and (ga)”

196

Page 162, line 30, at end insert—

“(3A) The Treasury may make provision by virtue of subsection (2)(ga) only with the consent of the Department of Enterprise, Trade and Investment in Northern Ireland.”

After Clause 91

LORD SASSOON

196A

Insert the following new Clause—

“Suspension of licences under Part 3 of Consumer Credit Act 1974

(1) The Consumer Credit Act 1974 is amended as follows.

(2) In section 32 (suspension or revocation)—

(a) in subsection (1), omit “or suspended”,

(b) in subsection (2)—

(i) in paragraph (a), omit “, as the case may be,” and “, or suspend it until a specified date or indefinitely,”, and

(ii) in paragraph (b), omit “or suspension” and “or suspend”,

(c) in subsection (3)—

(i) in paragraph (a), omit “, as the case may be,” and “, or suspend it until a specified date or indefinitely,”, and

(ii) in paragraph (b), omit “or suspension”,

(d) in subsection (4)—

(i) in paragraph (a), omit “, as the case may be,” and “, or suspend it until a specified date or indefinitely,”, and

(ii) in paragraph (b), omit “or suspension”,

(e) in subsections (6) and (7), omit “or suspension”,

(f) omit subsection (8),

(g) in subsection (9), omit “or to suspend”, and

(h) for the title, omit “Suspension and”.

(3) After section 32 insert—

“32A Power to suspend licence

(1) If during the currency of a licence it appears to the OFT to be urgently necessary for the protection of consumers that the licence should cease to have effect immediately or on a specified date, the OFT is to proceed as follows.

(2) In the case of a standard licence the OFT must, by notice—

(a) inform the licensee that the OFT is suspending the licence from the date of the notice or from a later date specified in the notice,

(b) state the OFT’s reasons for the suspension,

(c) state either—

(i) that the suspension is to end on a specified date, which must be no later than the last day of the 12 months beginning with the day on which the suspension takes effect, or

(ii) that the duration of the suspension is to be as provided by section 32B,

(d) specify any provision to be made under section 34A, and

(e) invite the licensee to submit to the OFT in accordance with section 34ZA representations—

(i) as to the suspension, and

(ii) about the provision (if any) that is or should be made under section 34A.

(3) In the case of a group licence the OFT must—

(a) give general notice that the OFT is suspending the licence from the date of the notice or from a later date specified in the notice,

(b) state in the notice the OFT’s reasons for the suspension,

(c) state in the notice either—

(i) that the suspension is to end on a specified date, which must be no later than the last day of the 12 months beginning with the day on which the suspension takes effect, or

(ii) that the duration of the suspension is to be as provided by section 32B,

(d) specify in the notice any provision to be made under section 34A, and

(e) in the notice invite any licensee to submit to the OFT in accordance with section 34ZA representations as to the suspension.

(4) In the case of a group licence issued on application the OFT must also—

(a) inform the original applicant of the matters specified under subsection (3)(a) to (d) in the general notice, and

(b) invite the original applicant to submit to the OFT in accordance with section 34ZA representations as to the suspension.

(5) Except for the purposes of sections 29 to 32 and section 33A, a licensee under a suspended licence is to be treated, in respect of the period of suspension, as if the licence had not been issued.

(6) The suspension may, if the OFT thinks fit, be ended by notice given by it to the licensee or, in the case of a group licence, by general notice.

(7) In this section “consumers”, in relation to a licence, means individuals who have been or may be affected by the carrying on of the business to which the licence relates, other than individuals who are themselves licensees.

32B Duration of suspension

(1) This section applies where a notice under section 32A provides for the duration of a suspension under that section to be as provided by this section.

(2) The suspension ends at the end of the period of 12 months beginning with the day on which it takes effect, but this is subject to—

(a) subsections (3) and (4) (where those subsections give a later time), and

(b) the powers of the OFT under section 32A(6) and section 33.

(3) Subsection (4) applies where—

(a) the OFT gives notice under section 32 that it is minded to revoke the licence, and

(b) it gives that notice—

(i) on or before giving the notice under section 32A, or

(ii) after giving that notice but before the end of the period of 12 months mentioned in subsection (2).

(4) The period of suspension is to continue until—

(a) the time of any determination by the OFT not to revoke the licence in pursuance of the notice under section 32, or

(b) where the OFT determines to revoke the licence in pursuance of the notice, the end of the appeal period.”

(4) In section 33 (application to end suspension), for subsection (1) substitute—

“(1) On an application made by a licensee the OFT may, if it thinks fit, by notice to the licensee end the suspension of a licence under section 32A, whether the suspension was for a fixed period or for a period determined in accordance with section 32B.”

(5) In section 33A (power of OFT to impose requirements on licensees) after subsection (6) insert—

“(6A) A requirement imposed under this section during a period of suspension cannot take effect before the end of the suspension.”

(6) After section 34 insert—

“34ZA Representations to OFT: suspension under section 32A

(1) Where this section applies to an invitation by the OFT to any person (“P”) to submit representations, the OFT must invite P, within 21 days after the notice containing the invitation is given to P or published, or such longer period as the OFT may allow—

(a) to submit P’s representations in writing to the OFT, and

(b) to give notice to the OFT, if P thinks fit, that P wishes to make representations orally,

and where notice is given under paragraph (b) the OFT must arrange for the oral representations to be heard.

(2) The OFT must reconsider its determination under section 32A and determine whether to confirm it (with or without variation) or revoke it and in doing so must take into account any representations submitted or made under this section.

(3) The OFT must give notice of its determination under this section to the persons who were required to be invited to submit representations about the original determination under section 32A or, where the invitation to submit representations was required to be given by general notice, must give general notice of the confirmation or revocation.”

(7) In section 34A (winding-up of standard licensee’s business), in subsection (2)—

(a) in paragraph (c), omit “suspend or”, and

(b) after paragraph (c) insert—

“(d) a determination to suspend such a licence under section 32A (including a determination made under section 34ZA on reconsidering a previous determination under section 32A);”.

(8) In section 41 (appeals) after subsection (1) insert—

“(1ZA) References in the table to a determination as to the suspension of a standard licence or group licence are to be read as references to a determination under section 34ZA to confirm a determination to suspend a standard licence or group licence.”

(9) Nothing in this section affects the powers conferred by section 22 of FSMA 2000 or section 91 of this Act.”

After Clause 94

LORD FLIGHT

197

Insert the following new Clause—

“Retail account transfer

Transferability of retail banking current accounts

(1) If an individual customer gives notice in writing to a bank at which he holds a personal current account (Bank A) that he wishes to transfer the balance standing to the credit of that account (Account A) to a personal current account established or to be established at another bank (Bank B) and thereafter to close Account A—

(a) Bank A shall without charge within a period of 10 working days—

(i) transfer to Bank B the balance of Account A less any charges owing in respect of that account;

(ii) notify Bank B of all standing orders, direct debits and other orders for periodical payments that the customer has created in relation to Account A;

(iii) pass to Bank B a copy of all material that it holds in relation to the customer as a result of having performed checks on his identity, the source of his funds or otherwise with regard to its regulatory obligations to counter financial crime;

(b) Bank B shall without charge—

(i) accept the funds transferred under paragraph (a)(i) and credit them without deduction to the account that the customer has applied to open (Account B);

(ii) accept the details that Bank A provides under paragraph (a)(ii) and apply them to Account B so that they operate in accordance with the customer’s instructions from the date that Account B is credited under sub-paragraph (i);

(iii) save where it has grounds for suspicion, accept the material provided under paragraph (a)(iii) in lieu of performing fresh checks on the identity of the customer, the source of his funds or otherwise in relation to its regulatory obligations to counter financial crime.

(2) In this section a bank shall mean any person authorised under this Act and holding a permission for deposit taking granted by the PRA.”

LORD BORRIE

197ZA

Insert the following new Clause—

“Amendment of Tribunals, Courts and Enforcement Act 2007

In section 124 of the Tribunals, Courts and Enforcement Act 2007 (charges by operator of approved scheme), for subsections (1) and (2) substitute—

“(1) The operator of an approved scheme may recover its charges from debtors or affected creditors (or both).

(2) In this section—

“charges” means the costs which the operator incurs, taking one year with another, in connection with the approved scheme along with any charges made by the operator, so far as those costs and charges are reasonable;

“debtors” means—

(a) debtors who make requests for debt repayment plans to be arranged in accordance with the approved scheme, and

(b) debtors for whom debt repayment plans are arranged in accordance with the approved scheme.””

Schedule 18

LORD SASSOON

197A

Page 286, line 16, at end insert—

“In section 177 (offences), in subsection (2), after “director or” insert “other”.”

198

Page 289, line 13, at end insert—

“In paragraph 8 of Schedule 6 (additional threshold conditions), in sub-paragraph (2)(b), for “the Authority” substitute “such of the FCA or the PRA as may be specified,”.”

198A

Page 291, line 32, at end insert—

“Lloyd’s Act 1982 (c. xiv)

In section 7 of the Lloyd’s Act 1982 (the Disciplinary Committee and the Appeal Tribunal), in subsection (1A)(c), for “Financial Services Authority” substitute “Prudential Regulation Authority or the Financial Conduct Authority”.”

199

Page 302, line 5, at end insert—

“Trustee Act 2000 (c. 29)

(1) Section 29 of the Trustee Act 2000 (remuneration of certain trustees) is amended as follows.

(2) In subsection (3)—

(a) for “an authorised institution under the Banking Act 1987” substitute “a deposit taker”, and

(b) for “institution’s” substitute “deposit taker’s”.

(3) After that subsection insert—

“(3A) In subsection (3), “deposit taker” means—

(a) a person who has permission under Part 4A of the Financial Services and Markets Act 2000 to accept deposits, or

(b) an EEA firm of the kind mentioned in paragraph 5(b) of Schedule 3 to that Act which has permission under paragraph 15 of that Schedule (as a result of qualifying for authorisation under paragraph 12(1) of that Schedule) to accept deposits.

(3B) A reference in subsection (3A) to a person or firm with permission to accept deposits does not include a person or firm with permission to do so only for the purposes of, or in the course of, carrying on another regulated activity in accordance with that permission.

(3C) Subsections (3A) and (3B) must be read with—

(a) section 22 of the Financial Services and Markets Act 2000,

(b) any relevant order under that section, and

(c) Schedule 2 to that Act.”.”

200

Page 310, line 32, at end insert—

“Finance Act 2011 (c. 11)

(1) Part 4 of Schedule 19 to the Finance Act 2011 (the bank levy) is amended as follows.

(2) In paragraph 37(2), in both places, for “section 213(2)(b)” substitute “section 213(3)(b)”.

(3) In paragraph 38(3)(a), for “section 139(1)” substitute “section 137B(1)”.

Terrorism Prevention and Investigation Measures Act 2011 (c. 23)

In Part 1 of Schedule 1 to the Terrorism Prevention and Investigation Measures Act 2011 (measures), in paragraph 5(4), for “Part 4” substitute “Part 4A”.”

200A

Page 311, line 16, at end insert—

“Charities and Trustee Investment (Scotland) Act 2005 (asp 10)

In section 106 of the Charities and Trustee Investment (Scotland) Act 2005 (general interpretation), in the definition of “relevant financial institution”, for “Part 4” substitute “Part 4A”.”

200B

Page 311, line 37, at end insert—

“Part 5 Amendment of Measure of the National Assembly for Wales Welsh Language (Wales) Measure 2011 (nawm 1)

In Schedule 6 to the Welsh Language (Wales) Measure 2011 (public bodies etc: standards)—

(a) in the Welsh text, omit the entry relating to “Awdurdod Gwasanaethau Ariannol (“The Financial Services Authority”)” and at the appropriate place among the entries headed “Cyffredinol” insert—

“Awdurdod Ymddygiad Ariannol (“Financial Conduct Authority”)
Safonau cyflenwi gwasanaethau
Safonau llunio polisi
Safonau gweithredu
Safonau cadw cofnodion.”

(b) in the English text, omit the entry relating to “The Financial Services Authority (“Awdurdod Gwasanaethau Ariannol”)” and at the appropriate place among the entries headed “General” insert—

“Financial Conduct Authority (“Awdurdod Ymddygiad Ariannol”)
Record keeping standards
Service delivery standards
Policy making standards
Operational standards.”

(c) in the Welsh text, at the appropriate place among the entries headed “Cyffredinol”, insert—

“Awdurdod Rheoleiddio Darbodus (“Prudential Regulation Authority”)
Safonau cyflenwi gwasanaethau
Safonau llunio polisi
Safonau gweithredu
Safonau cadw cofnodion.”

(d) in the English text, at the appropriate place among the entries headed “General”, insert—

“Prudential Regulation Authority (“Awdurdod Rheoleiddio Darbodus”)
Record keeping standards
Service delivery standards
Policy making standards
Operational standards.”.”

Clause 98

LORD EATWELL

BARONESS HAYTER OF KENTISH TOWN

201

Page 166, line 4, at end insert—

“where the phrase “court of directors” appears it is to be understood as “Supervisory Board”;”

Clause 103

LORD SASSOON

202

Page 167, line 41, leave out “Section 94 comes” and insert “Sections 94 and (Suspension of licences under Part 3 of Consumer Credit Act 1974) come”

Prepared 12th October 2012