Financial Services Bill

REVISED
SECOND
MARSHALLED
LIST OF AMENDMENTS
TO BE MOVED
ON REPORT

The amendments have been marshalled in accordance with the Order of 31st October 2012, as follows—

Clause 6
Schedule 3
Clauses 7 to 11
Schedule 4
Clauses 12 to 14
Schedule 5
Clauses 15 to 21
Schedule 6
Clauses 22 to 28
Schedule 7
Clauses 29 to 34
Schedule 8
Clauses 35 and 36
Schedule 9
Clause 37
Schedule 10
Clause 38
Schedule 11
Clauses 39 and 40
Schedule 12
Clause 41
Schedule 13
Clauses 42 and 43
Schedule 14
Clause 44
Schedule 15
Clause 45
Schedule 16
Clauses 46 to 97
Schedule 17
Clauses 98 to 103
Schedules 18 and 19
Clauses 104 to 108
Schedules 20 and 21
Clauses 109 to 112

[Amendments marked * are new or have been altered]

Clause 6

LORD FLIGHT

25A

Page 20, line 37, at end insert—

“(5A) In discharging its general functions the FCA must have regard to the desirability of not requiring the persons whom it regulates to observe any principles, rules or requirements that extend beyond those directly arising under the requirements of the EU single market legislation and of any other EU obligation (as defined in the European Communities Act 1972) or any directly applicable EU legislation, or of any related technical standards or guidance.”

BARONESS HAYTER OF KENTISH TOWN

LORD EATWELL

25B

Page 20, line 41, after “codes” insert “, including a code of conduct, as set out in section 1LA (Code of conduct), for the financial services industry”

25C

Page 21, line 8, at end insert—

“( ) As part of upholding the FCA’s consumer protection and integrity objectives, and in order to support a cultural change across the UK financial system, the FCA shall also have a general duty to take into account firms’ professional standards.

( ) This must include—

(a) an assessment of firms’ competencies including the extent to which professional qualifications and continuing professional development are embedded across core functions; and

(b) an assessment of firms’ conduct including adherence to a code of conduct or code of ethics, and the extent to which employees are members of a recognised professional body.”

BARONESS HAYTER OF KENTISH TOWN

LORD EATWELL

LORD STONEHAM OF DROXFORD

25D

Page 21, line 13, at end insert—

“( ) the general principle that, where consumers properly repose trust in a firm’s discretion and are vulnerable to the exercise of that discretion, the firm has a duty to act in the consumer’s best interests”

BARONESS HAYTER OF KENTISH TOWN

LORD EATWELL

25E

Page 21, line 17, at end insert—

“( ) the professionalism of firms and practitioners”

LORD BLACKWELL

BARONESS NOAKES

LORD HODGSON OF ASTLEY ABBOTTS

LORD FLIGHT

25F

Page 21, line 19, at end insert—

“( ) the need to balance protection for consumers against the desirability of consumers having affordable access to appropriate products with appropriate information or advice or both”

LORD SASSOON

26

Page 21, line 26, at end insert—

“(ea) the differing expectations that consumers may have in relation to different kinds of investment or other transaction;”

BARONESS HAYTER OF KENTISH TOWN

LORD EATWELL

26ZA

Page 21, line 31, at end insert—

“( ) the need of the Consumer Panel to have its views heard by the PRA”

LORD FLIGHT

26A

Page 21, line 31, at end insert—

“(3) In discharging the consumer protection objective, the FCA shall work with the Department of Education to secure the provision of teaching on financial literacy at both primary and secondary level as part of the core curriculum.”

BARONESS HAYTER OF KENTISH TOWN

LORD EATWELL

LORD STONEHAM OF DROXFORD

26B

Page 21, line 31, at end insert—

“( ) The FCA must publish further guidance on factors determining the appropriate level of care to be applied by providers of regulated financial services.

( ) In particular the guidance must deal with—

(a) the circumstances under which regulated entities may owe fiduciary duties under common law;

(b) the respects in which any such duties may entail a higher standard of care than FCA rules; and

(c) the legitimacy or otherwise of contractual mechanisms intended to restrict or limit the application of any such duties.”

BARONESS HAYTER OF KENTISH TOWN

LORD EATWELL

26C

Page 21, line 42, at end insert—

“( ) the professionalism of firms and practitioners”

LORD PHILLIPS OF SUDBURY

26D*

Page 21, line 42, at end insert—

“( ) the fairness and integrity of policy and conduct of those directing or operating in the financial markets”

LORD SASSOON

27

Page 22, line 9, at end insert—

“( ) the ease with which consumers who may wish to use those services, including consumers in areas affected by social or economic deprivation, can access them,”

LORD PHILLIPS OF SUDBURY

BARONESS KRAMER

27A

Page 22, line 13, at end insert—

“( ) how far the methods or culture of any competition may undermine the integrity objective”

28

[Withdrawn]

LORD SHARKEY

BARONESS KRAMER

THE LORD BISHOP OF DURHAM

BARONESS HAYTER OF KENTISH TOWN

[In substitution for Amendment 28]

28A*

Page 22, line 13, at end insert—

“(3) In order to facilitate the objective set out in subsection (1), the FCA must require each holder of a banking licence to publish relevant data each quarter, by post code, including the total amount of lending to small and medium sized enterprises.”

LORD SASSOON

29

Page 23, line 32, leave out “or”

30

Page 23, line 33, at end insert “, or

(d) the financing of terrorism.”

LORD HODGSON OF ASTLEY ABBOTTS

LORD PHILLIPS OF SUDBURY

31

Page 24, line 41, at end insert—

“Consumer protection: further objectives

1JA Consumer protection: further objectives

The Treasury may by order—

(a) amend or supplement the factors set out in section 1C(2) to which the FCA must have regard when considering what degree of protection may be appropriate for consumers, where one of the principal aims of consumers engaging in investment activity is to benefit society or the environment; and

(b) specify circumstances in which the FCA may regard consumers to be engaging in investment activity with the aims set out in paragraph (a).”

BARONESS HAYTER OF KENTISH TOWN

LORD EATWELL

31A

Page 25, line 21, at end insert—

“1LA Code of conduct

The FCA and PRA shall, within three months after the passing of this Act, bring forward proposals to introduce provisions for an independent and mandatory code of conduct that will have the general function of promoting and enforcing high standards of ethical behaviour and professional standards of individuals working in the financial services industry.”

LORD SASSOON

32

Page 25, line 28, after “The” insert “FCA”

33

Page 25, line 30, after “the” insert “FCA”

34

Page 25, line 32, after third “the” insert “FCA”

35

Page 25, line 36, after second “the” insert “FCA”

36

Page 25, line 40, after second “the” insert “FCA”

LORD FLIGHT

BARONESS KRAMER

36A

Page 29, line 19, at end insert—

“(c) seeking to sustain and encourage a competitive banking industry”

36B

Page 29, line 42, at end insert—

“2CA Banking objective

(1) In discharging its general functions so far as relating to a PRA regulated activity relating to accepting deposits or PRA-authorised persons carrying on that activity, the PRA must, so far as is reasonably possible, act in a way—

(a) which is compatible with its general objective and is designed to enhance the competitiveness of banks in their provision of banking and associated services to UK customers, and

(b) which the PRA considers most appropriate for the purpose of advancing those objectives.

(2) This section applies only if the effecting of deposits is to any extent a PRA-regulated activity.”

LORD SASSOON

37

Page 31, line 11, at end insert “, and

(b) the need to minimise any adverse effect on competition in the relevant markets that may result from the manner in which the PRA discharges those functions.

(2) In subsection (1)(b) “the relevant markets” means the markets for services provided by PRA-authorised persons in carrying on regulated activities.”

BARONESS HAYTER OF KENTISH TOWN

LORD EATWELL

37ZA

Page 32, line 8, at end insert “and consumers”

37ZB

Page 32, line 12, after “persons” insert “, including the panels established under sections 1N to 1Q,”

LORD FLIGHT

37A

Page 32, line 14, at end insert—

“( ) Those arrangements shall include the establishment and maintenance of a panel of persons (to be known as “the Practitioner Panel”) to represent the interests of practitioners.

( ) The PRA must appoint one of the members of the Practitioner Panel to be its chair.

( ) The Treasury’s approval is required for the appointment or dismissal of the chair.

( ) The PRA must appoint to the Practitioner Panel such persons representing deposit takers, insurers and other firms that it regulates as it considers appropriate.

( ) The FCA may appoint to the Practitioner Panel such other persons as it considers appropriate.”

LORD SASSOON

38

Page 32, leave out lines 15 to 18

39

Page 32, line 18, at end insert—

“2LA The PRA Practitioner Panel

(1) Arrangements under section 2L must include the establishment and maintenance of a panel of persons (to be known as “the PRA Practitioner Panel”) to represent the interests of practitioners.

(2) The PRA must appoint one of the members of the PRA Practitioner Panel to be its chair.

(3) The Treasury’s approval is required for the appointment or dismissal of the chair.

(4) The PRA must appoint to the PRA Practitioner Panel such persons representing PRA-authorised persons as it considers appropriate.

(5) The PRA may appoint to the PRA Practitioner Panel such other persons as it considers appropriate.”

BARONESS HAYTER OF KENTISH TOWN

LORD EATWELL

39A

Page 32, line 21, at end insert—

“( ) The PRA must consider and respond to representations made by the Consumer Panel established by the FCA under section 1Q.”

LORD SASSOON

40

Page 33, line 37, leave out “2H” and insert “2H(1)(a)”

LORD HODGSON OF ASTLEY ABBOTTS

LORD SHARMAN

41

Page 34, line 1, leave out “or restriction which is” and insert “, restriction or operational rules which are”

42

Page 34, line 3, after “proportionate” insert “, reasonable and fair”

43

Page 34, line 5, leave out “or restriction” and insert “, restriction or operational rules”

LORD SASSOON

44

Page 34, line 5, at end insert—

“( ) the desirability of sustainable growth in the economy of the United Kingdom in the medium or long term;”

45

Page 34, line 11, at end insert—

“(da) the desirability where appropriate of each regulator exercising its functions in a way that recognises differences in the nature of, and objectives of, businesses carried on by different persons subject to requirements imposed by or under this Act;”

BARONESS HAYTER OF KENTISH TOWN

LORD EATWELL

LORD STONEHAM OF DROXFORD

45A

Page 34, line 18, at end insert—

“( ) the principle that authorised persons should act honestly, fairly and professionally in the best interests of consumers who are their clients”

LORD SASSOON

46

Page 34, line 43, leave out “2H” and insert “2H(1)(a)”

BARONESS HAYTER OF KENTISH TOWN

LORD EATWELL

46A

Page 36, line 9, at end insert—

“( ) the exercise of their functions in relation to the stewardship of listed companies by institutional investors, with a view to controlling systemic risk and protecting consumer interests”

LORD SASSOON

47

Page 36, line 30, leave out from beginning to end of line 11 on page 37 and insert—

“(1) The regulators must prepare and maintain a memorandum which describes in general terms—

(a) the role of each regulator in relation to the exercise of functions conferred by or under this Act so far as they relate to with-profits insurers, and

(b) how the regulators intend to comply with section 3D in relation to the exercise of those functions so far as they relate to the effecting or carrying out of with-profits policies by with-profits insurers.

(2) The memorandum required by this section may be combined with the memorandum required by section 3E.

(3) If the memorandum required by this section is contained in a separate document, the PRA and the FCA must publish the memorandum as currently in force in such manner as they think fit.

(4) Subsections (1) to (3) apply only if the effecting or carrying out of with-profits policies is a PRA-regulated activity.

(5) For the purposes of this section—

(a) a “with-profits policy” is a contract of insurance under which the policyholder is eligible to receive a financial benefit at the discretion of the insurer;

(b) a “with-profits insurer” is a PRA-authorised person who has a Part 4A permission, or permission resulting from any other provision of this Act, relating to the effecting or carrying out of with-profits policies (whether or not the permission also relates to contracts of insurance of other kinds).

(6) The Treasury may by order amend the definition of “with-profits policy” applying for the purposes of this section.”

48

Page 37, leave out line 21

49

Page 38, line 39, at end insert—

“3IA Power of PRA in relation to with-profits policies

(1) Where the first, second and third conditions are met, the PRA may give a direction under this section to the FCA.

(2) The first condition is that the FCA is proposing to exercise any of its regulatory powers in relation to with-profits insurers, a class of with-profits insurers or a particular with-profits insurer.

(3) In subsection (2) “regulatory powers”, in relation to the FCA, means its powers in relation to the regulation of authorised persons, including its powers under Part 24 (insolvency) but not its powers in relation to consent for the purposes of section 55F or 55I.

(4) The second condition is that the proposed exercise of the power relates to the provision of financial benefits under with-profits policies at the discretion of the insurer, or affects or may affect the amount, timing or distribution of financial benefits that are so provided or the entitlement to future benefits that are so provided.

(5) The third condition is that the PRA is of the opinion that the giving of the direction is desirable in order to advance the PRA’s general objective or its insurance objective.

(6) A direction under this section is a direction requiring the FCA not to exercise the power or not to exercise it in a specified manner.

(7) The direction may be expressed to have effect during a specified period or until revoked.

(8) The FCA is not required to comply with a direction under this section if or to the extent that in the opinion of the FCA compliance would be incompatible with any EU obligation or any other international obligation of the United Kingdom.

(9) Subsections (1) to (8) apply only if the effecting or carrying out of with-profits policies is a PRA-regulated activity.

(10) In this section “with-profits insurer” and “with-profits policy” have the same meaning as they have for the purposes of section 3F.”

50

Page 38, line 40, at end insert “or 3IA”

51

Page 38, line 42, at end insert “or 3IA”

52

Page 38, line 43, after “3I” insert “ or 3IA”

53

Page 39, line 1, at end insert “or 3IA”

54

Page 39, line 2, after “3I” insert “ or 3IA”

55

Page 39, line 4, after “3I” insert “ or 3IA”

56

Page 39, line 6, after “3I” insert “ or 3IA”

57

Page 39, line 7, at end insert—

“(3A) The PRA must—

(a) publish the direction and statement, or the notice, in such manner as it thinks fit, and

(b) where the direction or notice relates to a particular authorised person or a particular with-profits insurer, give a copy of the direction and statement, or the notice, to that person.”

58

Page 39, leave out lines 14 to 19

59

Page 39, leave out lines 20 to 28 and insert—

“(7) Subsection (3A) does not apply where the PRA, after consulting the Treasury, decides that compliance with that subsection would be against the public interest, and at any time when this subsection excludes the application of subsection (3A) in relation to a direction under section 3I, subsection (5) also does not apply.

(8) Where the PRA decides that compliance with subsection (3A) would be against the public interest, it must from time to time review that decision and if it subsequently decides that compliance is no longer against the public interest it must—

(a) comply with that subsection, and

(b) in the case of a direction under section 3I, notify the Treasury for the purposes of subsection (5).”

60

Page 40, line 37, at end insert “or 3IA”

Schedule 3

LORD SASSOON

61

Page 207, line 28, after “3I” insert “or 3IA”

BARONESS HAYTER OF KENTISH TOWN

LORD EATWELL

61A

Page 207, line 31, at end insert—

“( ) an assessment as to how well markets are meeting the needs of businesses and households in lower income communities,”

61B

Page 207, line 37, at end insert—

“( ) In conducting the assessment referred to in sub-paragraph 11(1)(ia), the FCA should undertake research into—

(a) the needs of small businesses and households in lower income communities for credit, savings, and insurance products;

(b) how far these needs are being met by firms under its supervision, including analysis of the market shares of individual firms and the reasons for any variation in these;

(c) the price of financial services in lower income communities relative to the costs of providing such provision.

( ) Where, as a result of the assessment referred to in sub-paragraph 11(1)(ia), the FCA identifies that markets are not working well for consumers in lower income communities, the annual report shall include a statement from the FCA as to how these problems are to be addressed.”

LORD SASSOON

62

Page 210, leave out lines 8 to 21 and insert—

“19A (1) The FCA must in respect of each of its financial years pay to the Treasury its penalty receipts after deducting its enforcement costs.

(2) The FCA’s “penalty receipts” in respect of a financial year are any amounts received by it during the year by way of penalties imposed under this Act.

(3) The FCA’s “enforcement costs” in respect of a financial year are the expenses incurred by it during the year in connection with—

(a) the exercise, or consideration of the possible exercise, of any of its enforcement powers in particular cases, or

(b) the recovery of penalties imposed under this Act.

(4) For this purpose the FCA’s enforcement powers are—

(a) its powers under any of the provisions mentioned in section 133(7A),

(b) its powers under section 56 (prohibition orders),

(c) its powers under Part 25 of this Act (injunctions and restitution),

(d) its powers under any other enactment specified by the Treasury by order,

(e) its powers in relation to the investigation of relevant offences, and

(f) its powers in England and Wales or Northern Ireland in relation to the prosecution of relevant offences.

(5) “Relevant offences” are—

(a) offences under FSMA 2000,

(b) offences under subordinate legislation made under that Act,

(c) offences falling within section 402(1) of that Act,

(d) offences under Part 6A of the Financial Services Act 2012, and

(e) any other offences specified by the Treasury by order.

(6) The Treasury may give directions to the FCA as to how the FCA is to comply with its duty under sub-paragraph (1).

(7) The directions may in particular—

(a) specify descriptions of expenditure that are, or are not, to be regarded as incurred in connection with either of the matters mentioned in sub-paragraph (3),

(b) relate to the calculation and timing of the deduction in respect of the FCA’s enforcement costs, and

(c) specify the time when any payment is required to be made to the Treasury.

(8) The directions may also require the FCA to provide the Treasury at specified times with specified information relating to—

(a) penalties that the FCA has imposed under this Act, or

(b) the FCA’s enforcement costs.

(9) The Treasury must pay into the Consolidated Fund any sums received by them under this paragraph.

19B (1) The FCA must prepare and operate a scheme (“the financial penalty scheme”) for ensuring that the amounts that, as a result of the deduction for which paragraph 19A(1) provides, are retained by the FCA in respect of amounts paid to it by way of penalties imposed under this Act are applied for the benefit of regulated persons.

(2) “Regulated persons” means—

(a) authorised persons,

(b) recognised investment exchanges,

(c) issuers of securities admitted to the official list, and

(d) issuers who have requested or approved the admission of financial instruments to trading on a regulated market.

(3) The financial penalty scheme may, in particular, make different provision with respect to different classes of regulated person.

(3A) The financial penalty scheme must ensure that those who have become liable to pay a penalty to the FCA in any financial year of the FCA do not receive any benefit under the scheme in the following financial year.”

63

Page 212, line 34, at end insert—

“(1A) Anything done or omitted by a person mentioned in sub-paragraph (1)(a) or (b) while acting, or purporting to act, as a result of an appointment under any of sections 166 to 169 is to be taken for the purposes of sub-paragraph (1) to have been done or omitted in the discharge, or as the case may be purported discharge, of the FCA’s functions.”

LORD FLIGHT

63A

Page 214, line 24, at end insert “and to the desirability of ensuring that at least two non-executive members have experience of insurance business”

LORD SASSOON

64

Page 216, leave out line 13

64A

Page 216, line 14, at end insert “and of the matter mentioned in section 2H(1)(b)”

65

Page 216, line 16, after “3I” insert “or 3IA”

65A

Page 216, line 45, at end insert “and the matter mentioned in section 2H(1)(b)”

66

Page 218, leave out lines 23 to 26 and insert—

“27A (1) The PRA must in respect of each of its financial years pay to the Treasury its penalty receipts after deducting its enforcement costs.

(2) The PRA’s “penalty receipts” in respect of a financial year are any amounts received by it during the year by way of penalties imposed under this Act.

(3) The PRA’s “enforcement costs” in respect of a financial year are the expenses incurred by it during the year in connection with—

(a) the exercise, or consideration of the possible exercise, of any of its enforcement powers in particular cases, or

(b) the recovery of penalties imposed under this Act.

(4) For this purpose the PRA’s enforcement powers are—

(a) its powers under any of the provisions mentioned in section 133(7A),

(b) its powers under section 56 (prohibition orders),

(c) its powers under Part 25 of this Act (injunctions and restitution),

(d) its powers under any other enactment specified by the Treasury by order,

(e) its powers in relation to the investigation of relevant offences, and

(f) its powers in England and Wales or Northern Ireland in relation to the prosecution of relevant offences.

(5) “Relevant offences” are—

(a) offences under FSMA 2000,

(b) offences under subordinate legislation made under that Act, and

(c) any other offences specified by the Treasury by order.

(6) The Treasury may give directions to the PRA as to how the PRA is to comply with its duty under sub-paragraph (1).

(7) The directions may in particular—

(a) specify descriptions of expenditure that are, or are not, to be regarded as incurred in connection with either of the matters mentioned in sub-paragraph (3),

(b) relate to the calculation and timing of the deduction in respect of the PRA’s enforcement costs, and

(c) specify the time when any payment is required to be made to the Treasury.

(8) The directions may also require the PRA to provide the Treasury at specified times with information relating to—

(a) penalties that the PRA has imposed under FSMA 2000, or

(b) the PRA’s enforcement costs.

(9) The Treasury must pay into the Consolidated Fund any sums received by them under this paragraph.

27B The PRA must prepare and operate a scheme (“the financial penalty scheme”) for ensuring that the amounts that, as a result of the deduction for which paragraph 27A(1) provides, are retained by the PRA in respect of amounts paid to it by way of penalties imposed under this Act are applied for the benefit of PRA-authorised persons.”

67

Page 218, line 28, leave out “authorised” and insert “PRA-authorised”

68

Page 218, line 28, at end insert—

“( ) The financial penalty scheme must ensure that those who have become liable to pay a penalty to the PRA in any financial year of the PRA do not receive any benefit under the scheme in the following financial year.”

69

Page 220, line 38, at end insert—

“(1A) Anything done or omitted by a person mentioned in sub-paragraph (1)(a) or (b) while acting, or purporting to act, as a result of an appointment under any of sections 97, 166 to 169 and 284 is to be taken for the purposes of sub-paragraph (1) to have been done or omitted in the discharge, or as the case may be purported discharge, of the PRA’s functions.”

Clause 7

LORD SASSOON

70

Page 43, line 33, at end insert “, or

(b) the setting of a specified benchmark.”

71

Page 43, line 34, after “(1A),” insert—

“( ) after subsection (5) insert—

“(6) “Benchmark” means an index, rate or price that—

(a) is determined from time to time by reference to the state of the market,

(b) is made available to the public (whether free of charge or on payment), and

(c) is used for reference for purposes that include one or more of the following—

(i) determining the interest payable, or other sums due, under loan agreements or under other contracts relating to investments;

(ii) determining the price at which investments may be bought or sold or the value of investments;

(iii) measuring the performance of investments.””

72

Page 44, line 18, leave out “22(1A)” and insert “22(1A)(a)”

73

Page 44, line 35, at end insert—

“Part 2B Regulated activities relating to the setting of benchmarks General

24E The matters with respect to which provisions may be made under section 22(1A)(b) include, in particular, those described in general terms in this Part of this Schedule.

Providing information

24F Providing any information or expression of opinion that—

(a) is required by another person in connection with the determination of a benchmark, and

(b) is provided to that person for that purpose.

Administration

24G (1) Administering the arrangements for determining a benchmark.

(2) Collecting, analysing or processing information or expressions of opinion for the purpose of the determination of a benchmark.

Determining or publishing benchmark or publishing connected information

24H (1) Determining a benchmark.

(2) Publishing a benchmark or information connected with a benchmark.””

Clause 10

LORD SASSOON

74

Page 47, line 35, after “in” insert “or specified under”

75

Page 47, line 39, after “in” insert “or specified under”

LORD FLIGHT

75A

Page 49, line 23, after “FCA” insert “, which shall not be required where the applicant seeks permission to carry on the regulated activity of accepting deposits,”

75B

Page 51, line 25, after “FCA” insert “, which shall not be required where the applicant holds permission to carry on the regulated activity of accepting deposits,”

75C

Page 51, line 34, after “FCA” insert “, which shall not be required where the applicant holds permission to carry on the regulated activity of accepting deposits,”

75D

Page 52, line 4, after “FCA” insert “, which shall not be required where immediately before the variation the applicant held permission to carry on the regulated activity of accepting deposits,”

75E

Page 53, line 8, after “FCA” insert “, which shall not be required where the applicant holds permission to carry on the regulated activity of accepting deposits,”

75F

Page 53, line 13, at end insert “, which shall not be required where the applicant holds permission to carry on the regulated activity of accepting deposits,”

75G

Page 55, line 41, after “FCA” insert “, which shall not be required where the applicant holds permission to carry on the regulated activity of accepting deposits,”

LORD SASSOON

76

Page 56, line 9, leave out “expires” and insert “may be expressed to expire”

77

Page 56, line 10, leave out “this” and insert “the imposition of a requirement that expires at the end of a specified period”

LORD FLIGHT

77A

Page 61, line 8, after “FCA” insert “, which shall not be required where the applicant holds permission to carry on the regulated activity of accepting deposits,”

Clause 13

LORD FLIGHT

77B

Page 67, line 32, at end insert “, which shall not be required where the application for approval relates to an individual who is, or is applying to be, approved to perform the function of acting as a director at a firm that holds or is seeking to hold permission to carry on the regulated activity of accepting deposits”

Clause 15

LORD SASSOON

78

Page 70, line 8, leave out paragraph (c) and insert—

“( ) section 87B to 87D;”

LORD FLIGHT

78A

Page 70, line 15, at end insert—

“( ) For section 73 substitute—

“73 General duty of the FCA

In discharging its functions under this Part, the FCA should, so far is compatible with its strategic and operational objectives, have regard to the international character of capital markets and the desirability of maintaining the competitive position of the United Kingdom.””

LORD SASSOON

79

Page 70, line 18, at end insert—

“( ) In section 87A (criteria for approval of prospectus)—

(a) in subsection (1), for “competent authority” substitute ““FCA”,

(b) in subsection (7)(a), for “competent authority”, in the first place, substitute “FCA”, and

(c) in the heading, for “competent authority” substitute “FCA”.”

LORD FLIGHT

79A

Page 71, line 15, leave out paragraph (a)

Clause 23

BARONESS HAYTER OF KENTISH TOWN

LORD EATWELL

79B

Page 85, line 9, at end insert—

“137AA FCA general rules: stewardship

The power of the FCA to make general rules includes the power to make such rules (“stewardship rules”) relating to the exercise of shareholder rights, including voting rights, by authorised persons.”

LORD SASSOON

80

Page 87, line 28, at end insert—

“137DA Rules requiring participation in benchmark

(1) The power of the FCA to make general rules includes power to make rules requiring authorised persons to take specified steps in connection with the setting by a specified person of a specified benchmark.

(2) The rules may in particular—

(a) require authorised persons to whom the rules apply to provide information of a specified kind, or expressions of opinion as to specified matters, to persons determined in accordance with the rules;

(b) make provision about the form in which and the time by which any information or expression of opinion is to be provided;

(c) make provision by reference to any code or other document published by the person responsible for the setting of the benchmark or by any other person determined in accordance with the rules, as the code or other document has effect from time to time.

(3) Rules making provision of the kind mentioned in subsection (2)(c) may provide that the code of practice or other document is to be capable of affecting obligations imposed by the rules only if specified requirements are met in relation to it.

(4) In this section—

“benchmark” has the meaning given in section 22(6);

“specified” means specified in or determined in accordance with the rules.”

81

Page 92, line 10, after “in” insert “or specified under”

82

Page 93, line 12, leave out “section 397(5)(b)” and insert “the relevant exemption provisions”

83

Page 93, line 19, at end insert—

“(4) “The relevant exemption provisions” are the following provisions of the Financial Services Act 2012—

(a) section (Misleading impressions)(9)(b);

(b) section (Misleading statements etc in relation to benchmarks)(4)(a).”

LORD FLIGHT

83A

Page 95, line 45, at end insert—

“137S Limitation

Neither regulator may make rules that require any person to review, take action with regard to, pay compensation for or otherwise effect redress in relation to any transaction, sale, provision of advice, exercise of discretion or other act or omission where an action based on that event would fall outside the time limits prescribed under the Limitation Act 1980.”

LORD SASSOON

84

Page 98, leave out line 14

LORD HODGSON OF ASTLEY ABBOTTS

84A

Page 99, line 40, at end insert “or under section 138KA(2)”

84B

Page 102, line 46, at end insert—

“138KA Consultation: common investment funds and common deposit funds

(1) Subsection (2) applies where a regulator proposes to make a rule (“the proposed rule”) which would apply to both—

(a) common investment funds or common deposit funds, and

(b) collective investment schemes other than common investment funds.

(2) The regulator must prepare a statement setting out—

(a) its opinion on whether or not the impact of the proposed rule on fund structures within subsection (1)(a) will be different from its impact on fund structures within subsection (1)(b), and

(b) if so, details of the difference.

(3) Subsection (4) applies where a regulator makes a rule which—

(a) applies both to—

(i) common investment funds or common deposit funds, and

(ii) collective investment schemes other than common investment funds, and

(b) differs from the draft of the proposed rule published under section 138I(1)(b) or section 138(J)(1)(b) (as the case may be).

(4) The regulator must prepare a statement setting out—

(a) its opinion whether or not the impact of the rule is different from the impact of the proposed rule on—

(i) the fund structures within subsection (3)(a)(i), and

(ii) those fund structures as compared with fund structures within subsection (3)(a)(ii), and

(b) if so, details of the difference.

(5) A “common investment fund” is a fund established under—

(a) section 22(5) of the Charities Act 1960;

(b) section 24(5) of the Charities Act 1993; or

(c) section 96 of the Charities Act 2011.

(6) A “common deposit fund” is a fund established under—

(a) section 22A of the Charities Act 1960;

(b) section 25 of the Charities Act 1993; or

(c) section 100 of the Charities Act 2011.”

LORD SASSOON

85

Page 103, leave out lines 13 and 14

86

Page 105, leave out lines 20 and 21 and insert “to its functions under the short selling regulation.”

Clause 24

LORD SASSOON

87

Page 110, line 2, leave out from “Authority”” to end of line 3 and insert “or “Authority’s” in each place substitute “FCA” or “FCA’s”.”

88

Page 110, line 4, leave out subsection (2) and insert—

“(2) Subsection (1) does not affect references to “the competent authority”.”

Clause 25

LORD SASSOON

89

Page 111, line 20, at end insert “or 3IA”

LORD WHITTY

90

Page 114, leave out lines 24 to 26

91

Page 114, leave out lines 35 to 40

Schedule 7

LORD SASSOON

92

Page 251, leave out lines 30 to 32

Clause 30

LORD SHARKEY

BARONESS KRAMER

92A*

Page 122, leave out lines 3 to 26 and 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).

296B Additional power to direct UK clearing houses

(1) The Bank of England shall ensure that each authorised Clearing House draws up and maintains a recovery plan providing, through measures taken by the management of the Clearing House or by a group entity, for the restoration of its financial situation following significant deterioration.

(2) The Bank of England shall ensure that the Clearing Houses update their recovery plans at least annually or after change to the legal or organisational structure of the Clearing House, its business or its financial situation, which could have a material effect on, or necessitates a change to the recovery plan. The Bank of England may require authorised Clearing Houses to update their recovery plans more frequently.

(3) Recovery plans shall not assume any access to or receipt of extraordinary public financial support but shall include, where applicable, an analysis of how and when a Clearing House may apply for the use of central bank facilities in stressed conditions and available collateral.

(4) The Bank of England shall ensure that authorised Clearing Houses include in recovery plans appropriate conditions and procedures to ensure the timely implementation of recovery actions as well as a wide range of recovery options. The Bank of England shall ensure that firms test their recovery plans against a range of scenarios of financial distress, varying in their severity including system wide events, legal-entity specific stress and group-wide stress.

296C Additional power to direct UK clearing houses

(1) The Bank of England shall require authorised Clearing Houses to submit recovery plans to it for review.

(2) The Bank of England shall review those plans and assess the extent to which each plan the following criteria—

(a) the implementation of the arrangements proposed in the plan would be likely to restore the viability and financial soundness of the Clearing House, taking into account the preparatory measures that the Clearing House has taken or has planned to take;

(b) the plan or specific options could be implemented effectively in situations of financial stress and without causing any significant adverse effect on the financial system, including in the event that other Clearing Houses implemented recovery plans within the same time period.

(3) Where the Bank of England assess that there are deficiencies in the recovery plan, or potential impediments to its implementation, they shall notify the Clearing House of their assessment and require the Clearing House to submit, within three months, a revised plan demonstrating how those deficiencies or impediments have been addressed.

(4) If the Clearing House fails to submit a revised recovery plan, or if the Bank of England determines that the revised recovery plan does not adequately remedy the deficiencies or potential impediments identified in its original assessment, the Bank of England shall require the Clearing House to take any measure it considers necessary to ensure that the deficiencies or impediments are removed. The Bank of England may, in particular, require the Clearing House to take actions to—

(a) facilitate the reduction of the risk profile of the Clearing House;

(b) enable timely recapitalisation measures;

(c) make changes to the firm strategy;

(d) make changes to the funding strategy so as to improve the resilience of the core business lines and critical operations;

(e) make changes to the governance structure of the Clearing House.”

LORD SASSOON

93

Page 122, leave out lines 24 to 26

LORD FLIGHT

93A

Leave out Clause 30 and 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, the specified actions in subsection (4) if all the conditions in subsections (2), (3) and (6) are met and 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,

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

(e) maintaining the integrity of property rights in accordance with a Convention right (within the meaning of the Human Rights Act 1998),

which together, constitute the “public interest factors”, and no public interest factor shall be given priority over any other unless the Bank has grounds to determine otherwise.

(2) The conditions are that—

(a) the clearing house, has, or is likely, to fail to meet the requirements of paragraph 16 or 27 of Part III of the Schedule to the Recognition Regulations;

(b) a serious threat exists to the stability of the financial system of the United Kingdom arising from central counterparty clearing services provided by the relevant UK clearing house; and

(c) in the opinion of the Bank, the specified action would ameliorate the threat referred to in paragraph (b), having regard to the public interest factors.

(3) Before determining whether the conditions in subsection (2) are met, the Bank shall consult the PRA, the Treasury, and the relevant CCP or CCPs.

(4) The specified actions are requiring the clearing house to take or refrain from taking, for a specified period and in relation to specified transactions, steps in relation to margining, eligible collateral, risk management arrangements and continuity of clearing services and other functions as may be determined, for any market contracts cleared by the CCP.

(5) 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).

(6) The Bank shall not issue any direction under this section unless it has obtained an order from the court; and 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.

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

(8) If the Bank gives a direction to a UK clearing house under this section, the clearing house may apply to the court to amend or revoke the direction; and the court may make an order revoking the direction with immediate effect on any or all of the following grounds—

(a) the order is not for a specified action;

(b) the conditions were or are not met; or

(c) the satisfaction of the public interest factors.

(9) Section 47 of the Banking Act 2009 (as applied to clearing houses pursuant to section 89B of the Banking Act 2009) shall apply to directions given under this section where the direction involves a partial property transfer.

(10) Section 48 of the Banking Act 2009 (as applied to clearing houses pursuant to section 89B of the Banking Act 2009) shall apply to directions given under this section where the direction involves protected arrangements as therein defined.

(11) Section 89F of the Banking Act 2009 (as applied to clearing houses pursuant to section 89B of the Banking Act 2009) shall apply to directions given under this section where the direction may result in financial loss to the clearing house.

(12) 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).””

Schedule 8

LORD SASSOON

94

Page 257, line 8, after “(1)” insert—

“(a) after the definition of “applicant” insert—

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

(b) ”

Schedule 9

LORD SASSOON

95

Page 258, line 36, at end insert—

“( ) In section 130 (guidance), in subsection (1)(b), for “section 397 of this Act” substitute “Part 6A of the Financial Services Act 2012”.”

96

Page 261, line 8, leave out from beginning to “qualifying” in line 9 and insert “for sub-paragraph (i) (but not the “or” following it) substitute—

“(i) which is imposed by or under this Act or by a”

97

Page 262, line 6, leave out from beginning to “qualifying” in line 7 and insert “for sub-paragraph (i) (but not the “or” following it) substitute—

“(i) which is imposed by or under this Act or by a”

LORD FLIGHT

97A

Page 269, line 2, at end insert—

“(16) After subsection (13) insert—

“(14) Neither regulator may publish any information about the matter to which a warning notice given under section 67 relates unless—

(a) it has provided to the individual to which it relates (“the relevant individual”) a draft of the warning notice and the information that it intends to publish (“the relevant material”);

(b) the relevant individual is notified in writing that he may, within a period of not less than 14 days from receipt of the relevant information, make written or written and oral representations to the relevant regulator; and

(c) the relevant regulator has, subsequent to receiving any representations that the relevant individual has made within the specified period, given the relevant individual a written statement containing its reasons for determining whether to publish the relevant material in the form and manner proposed by the relevant regulator or as it otherwise determines.

(15) Each regulator shall constitute a body to take the decision to publish the information to which this section relates and to consider representations made by a relevant individual, which body shall comprise persons of whom the majority are not employees of either regulator.””

LORD SASSOON

98

Page 269, line 32, at end insert—

“30A In section 400 (offences by a body corporate etc) after subsection (6) insert—

“(6A) References in this section to an offence under this Act include a reference to an offence under Part 6A of the Financial Services Act 2012 (offences relating to financial services).””

99

Page 269, line 33, at end insert—

“( ) For subsection (1) substitute—

“(1) In this section “offence” means—

(a) an offence under this Act,

(b) an offence under subordinate legislation made under this Act, or

(c) an offence under Part 6A of the Financial Services Act 2012 (offences relating to financial services).””

100

Page 270, line 19, leave out from “of” to end of line 20 and insert “any other offence”

101

Page 270, line 25, at end insert—

“32A In section 403 (jurisdiction and procedure in respect of offences), in subsection (7), at the end insert “or an offence under Part 6A of the Financial Services Act 2012 (offences relating to financial services).”

Clause 38

LORD KENNEDY OF SOUTHWARK

101A

Page 126, line 21, at end insert—

“( ) The Treasury or the Secretary of State may by order amend Schedule 17 to FSMA 2000 to require a scheme operator acting under the Schedule to make rules relating to the behaviour of a person who has entered into an agreement with a complainant to represent the complainant with respect to a complaint under the compulsory jurisdiction, the consumer credit jurisdiction or the voluntary jurisdiction pursuant to which any fee has been, will be or may be paid by the complainant.”

Schedule 11

LORD KENNEDY OF SOUTHWARK

101B

Page 276, line 13, at end insert—

“2A (1) The FCA must require any body corporate established under this Schedule to make rules (“complainant representative rules”) requiring a person who has entered into an agreement with a complainant to represent the complainant with respect to a complaint under the compulsory jurisdiction, the consumer credit jurisdiction or the voluntary jurisdiction pursuant to which any fee has been, will be or may be paid by the complainant to act transparently and promptly to assist both the complainant and the ombudsman.

(2) The FCA shall allow scheme operators adequate time to undertake consultation on draft complainant representative rules, and shall specify the nature of the consultation to be undertaken.

(3) The consent of the FCA is required before any complainant representative rules may be made.”

101C*

Page 278, line 35, at end insert —

“31 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 23.

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 24 when a complaint within paragraph 23 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 29.

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

Schedule 12

LORD SASSOON

102

Page 282, line 25, at end insert—

“( ) In subsection (2)(a), for “or 397” substitute “or under Part 6A of the Financial Services Act 2012”.”

103

Page 282, line 39, leave out paragraph (f)

104

Page 282, leave out line 41 and insert—

“(h) for paragraph (k) substitute—”

105

Page 287, line 30, leave out “directors,”

Clause 42

LORD WHITTY

106

Page 134, line 13, at end insert—

“234GA Complaints and proceedings: collective actions and redress

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

(a) to introduce provisions for collective proceedings before the court in respect of financial service claims made by consumers; such proceedings to provide for both ‘opt in’ or ‘opt out’ procedures;

(b) to introduce provision for collective proceedings before the court in respect of financial service claims made by small and medium sized businesses; and such proceedings to provide for both ‘opt in’ and ‘opt out’ procedures;

(c) to introduce provision for complaints made by or on behalf of consumers or by or on behalf of small and medium sized businesses 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, damaging to the interests of small business or significant groups of consumers.”

Clause 48

LORD SASSOON

107

Page 136, line 43, after “3B(4),” insert “3F(6),”

After Clause 86

LORD SASSOON

108

Insert the following new Clause—

“PART 6A Offences relating to financial services

Misleading statements

(1) Subsection (2) applies to a person (“P”) who—

(a) makes a statement which P knows to be false or misleading in a material respect,

(b) makes a statement which is false or misleading in a material respect, being reckless as to whether it is, or

(c) dishonestly conceals any material facts whether in connection with a statement made by P or otherwise.

(2) P commits an offence if P makes the statement or conceals the facts with the intention of inducing, or is reckless as to whether making it or concealing them may induce, another person (whether or not the person to whom the statement is made)—

(a) to enter into or offer to enter into, or to refrain from entering or offering to enter into, a relevant agreement, or

(b) to exercise, or refrain from exercising, any rights conferred by a relevant investment.

(3) In proceedings for an offence under subsection (2) brought against a person to whom that subsection applies as a result of paragraph (a) of subsection (1), it is a defence for the person charged (“D”) to show that the statement was made in conformity with—

(a) price stabilising rules,

(b) control of information rules, or

(c) the relevant provisions of Commission Regulation (EC) No 2273/2003 of 22 December 2003 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards exemptions for buy-back programmes and stabilisation of financial instruments.

(4) Subsections (1) and (2) do not apply unless—

(a) the statement is made in or from, or the facts are concealed in or from, the United Kingdom or arrangements are made in or from the United Kingdom for the statement to be made or the facts to be concealed,

(b) the person on whom the inducement is intended to or may have effect is in the United Kingdom, or

(c) the agreement is or would be entered into or the rights are or would be exercised in the United Kingdom.”

109

Insert the following new Clause—

“Misleading impressions

(1) A person (“P”) who does any act or engages in any course of conduct which creates a false or misleading impression as to the market in or the price or value of any relevant investments commits an offence if—

(a) P intends to create the impression, and

(b) the case falls within subsection (2) or (3) (or both).

(2) The case falls within this subsection if P intends, by creating the impression, to induce another person to acquire, dispose of, subscribe for or underwrite the investments or to refrain from doing so or to exercise or refrain from exercising any rights conferred by the investments.

(3) The case falls within this subsection if—

(a) P knows that the impression is false or misleading or is reckless as to whether it is, and

(b) P intends by creating the impression to produce any of the results in subsection (4) or is aware that creating the impression is likely to produce any of the results in that subsection.

(4) Those results are—

(a) the making of a gain for P or another, or

(b) the causing of loss to another person or the exposing of another person to the risk of loss.

(5) References in subsection (4) to gain or loss are to be read in accordance with subsections (6) to (8).

(6) “Gain” and “loss”—

(a) extend only to gain or loss in money or other property of any kind;

(b) include such gain or loss whether temporary or permanent.

(7) “Gain” includes a gain by keeping what one has, as well as a gain by getting what one does not have.

(8) “Loss” includes a loss by not getting what one might get, as well as a loss by parting with what one has.

(9) In proceedings brought against any person (“D”) for an offence under subsection (1) it is a defence for D to show—

(a) to the extent that the offence results from subsection (2), that D reasonably believed that D’s conduct would not create an impression that was false or misleading as to the matters mentioned in subsection (1),

(b) that D acted or engaged in the conduct—

(i) for the purpose of stabilising the price of investments, and

(ii) in conformity with price stabilising rules,

(c) that D acted or engaged in the conduct in conformity with control of information rules, or

(d) that D acted or engaged in the conduct in conformity with the relevant provisions of Commission Regulation (EC) No 2273/2003 of 22 December 2003 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards exemptions for buy-back programmes and stabilisation of financial instruments.

(10) This section does not apply unless—

(a) the act is done, or the course of conduct is engaged in, in the United Kingdom, or

(b) the false or misleading impression is created there.”

110

Insert the following new Clause—

“Misleading statements etc in relation to benchmarks

(1) A person (“A”) who makes to another person (“B”) a false or misleading statement commits an offence if—

(a) A makes the statement in the course of arrangements for the setting of a relevant benchmark,

(b) A intends that the statement should be used by B for the purpose of the setting of a relevant benchmark, and

(c) A knows that the statement is false or misleading or is reckless as to whether it is.

(2) A person (“C”) who does any act or engages in any course of conduct which creates a false or misleading impression as to the price or value of any investment or as to the interest rate appropriate to any transaction commits an offence if—

(a) C intends to create the impression,

(b) the impression may affect the setting of a relevant benchmark,

(c) C knows that the impression is false or misleading or is reckless as to whether it is, and

(d) C knows that the impression may affect the setting of a relevant benchmark.

(3) In proceedings for an offence under subsection (1), it is a defence for the person charged (“D”) to show that the statement was made in conformity with—

(a) price stabilising rules,

(b) control of information rules, or

(c) the relevant provisions of Commission Regulation (EC) No 2273/2003 of 22 December 2003 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards exemptions for buy-back programmes and stabilisation of financial instruments.

(4) In proceedings brought against any person (“D”) for an offence under subsection (2) it is a defence for D to show—

(a) that D acted or engaged in the conduct—

(i) for the purpose of stabilising the price of investments, and

(ii) in conformity with price stabilising rules,

(b) that D acted or engaged in the conduct in conformity with control of information rules, or

(c) that D acted or engaged in the conduct in conformity with the relevant provisions of Commission Regulation (EC) No 2273/2003 of 22 December 2003 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards exemptions for buy-back programmes and stabilisation of financial instruments.

(5) Subsection (1) does not apply unless the statement is made in or from the United Kingdom or to a person in the United Kingdom.

(6) Subsection (2) does not apply unless—

(a) the act is done, or the course of conduct is engaged in, in the United Kingdom, or

(b) the false or misleading impression is created there.”

111

Insert the following new Clause—

“Penalties

(1) A person guilty of an offence under this Part is liable—

(a) on summary conviction, to imprisonment for a term not exceeding the applicable maximum term or a fine not exceeding the statutory maximum, or both;

(b) on conviction on indictment, to imprisonment for a term not exceeding 7 years or a fine, or both.

(2) For the purpose of subsection (1)(a) “the applicable maximum term” is—

(a) in England and Wales, 12 months (or 6 months, if the offence was committed before the commencement of section 154(1) of the Criminal Justice Act 2003);

(b) in Scotland, 12 months;

(c) in Northern Ireland, 6 months.”

112

Insert the following new Clause—

“Interpretation of Part 6A

(1) This section has effect for the interpretation of this Part.

(2) “Investment” includes any asset, right or interest.

(3) “Relevant agreement” means an agreement—

(a) the entering into or performance of which by either party constitutes an activity of a kind specified in an order made by the Treasury, and

(b) which relates to a relevant investment.

(4) “Relevant benchmark” means a benchmark of a kind specified in an order made by the Treasury.

(5) “Relevant investment” means an investment of a kind specified in an order made by the Treasury.

(6) Schedule 2 to FSMA 2000 (except paragraphs 25 and 26) applies for the purposes of subsections (3) and (5) with references to section 22 of that Act being read as references to each of those subsections.

(7) Nothing in Schedule 2 to FSMA 2000, as applied by subsection (6), limits the power conferred by subsection (3) or (5).

(8) “Price stabilising rules” and “control of information rules” have the same meaning as in FSMA 2000.

(9) In this section “benchmark” has the meaning given in section 22(6) of FSMA 2000.”

113

Insert the following new Clause—

“Affirmative procedure for certain orders

(1) This section applies to the first order made under section (“Interpretation of Part 6A”).

(2) This section also applies to any subsequent order made under that section which contains a statement by the Treasury that the effect of the proposed order would include one or more of the following—

(a) that an activity which is not specified for the purposes of subsection (2)(a) of that section would become one so specified,

(b) that an investment which is not a relevant investment would become a relevant investment;

(c) that a benchmark which is not a relevant benchmark would become a relevant benchmark.

(3) A statutory instrument containing (alone or with other provisions) an order to which this section applies may not be made unless a draft of the instrument has been laid before Parliament and approved by a resolution of each House.”

114

Insert the following new Clause—

“Consequential repeal

Section 397 of FSMA 2000 (which relates to misleading statements and practices and is superseded by the provisions of this Part) is repealed.”

After Clause 99

LORD SASSOON

115

Insert the following new Clause—

“Payment to Treasury of penalties received by Financial Services Authority

(1) The Financial Services Authority (“the FSA”) must in respect of its financial year beginning with 1 April 2012 and each subsequent financial year pay to the Treasury its penalty receipts after deducting its enforcement costs.

(2) The FSA’s “penalty receipts” in respect of a financial year are any amounts received by it during the year by way of penalties imposed under FSMA 2000.

(3) The FSA’s “enforcement costs” in respect of a financial year are the expenses incurred by it during the year in connection with—

(a) the exercise, or consideration of the possible exercise, of any of its enforcement powers in particular cases, or

(b) the recovery of penalties imposed under FSMA 2000.

(4) For this purpose the FSA’s enforcement powers are—

(a) its powers under any of the provisions mentioned in subsection (5),

(b) its powers under any other enactment specified by the Treasury by order,

(c) its powers in relation to the investigation of relevant offences, and

(d) its powers in England and Wales or Northern Ireland in relation to the prosecution of relevant offences.

(5) The provisions referred to in subsection (4)(a) are the following provisions of FSMA 2000—

(a) section 56 (prohibition orders),

(b) section 63A (penalties relating to performance of controlled functions without approval),

(c) section 66 (disciplinary powers in relation to approved persons),

(d) section 87M (public censure of issuer),

(e) section 89 (public censure of sponsor),

(f) section 89K (public censure of issuer),

(g) section 91 (penalties for breach of Part 6 rules),

(h) section 123 (penalties in case of market abuse),

(i) section 131G (short selling etc: power to impose penalty or issue censure),

(j) sections 205, 206 and 206A (disciplinary measures),

(k) section 249 (disqualification of auditor for breach of trust scheme rules),

(l) section 345 (disqualification of auditor or actuary), and

(m) Part 25 (injunctions and restitution).

(6) “Relevant offences” are—

(a) offences under FSMA 2000,

(b) offences under subordinate legislation made under that Act,

(c) offences falling within section 402(1) of that Act, and

(d) any other offences specified by the Treasury by order.

(7) The Treasury may give directions to the FSA as to how the FSA is to comply with its duty under subsection (1).

(8) The directions may in particular—

(a) specify descriptions of expenditure that are, or are not, to be regarded as incurred in connection with either of the matters mentioned in subsection (3),

(b) relate to the calculation and timing of the deduction in respect of the FSA’s enforcement costs, and

(c) specify the time when any payment is required to be made to the Treasury.

(9) The directions may also require the FSA to provide the Treasury at specified times with information relating to—

(a) penalties that the FSA has imposed under FSMA 2000, or

(b) the FSA’s enforcement costs.

(10) The Treasury must pay into the Consolidated Fund any sums received by them under this section.

(11) The scheme operated by the FSA under paragraph 16 of Schedule 1 to FSMA 2000 is, in the case of penalties received by the FSA on or after 1 April 2012, to apply only in relation to sums retained by the FSA as a result of the deduction for which subsection (1) provides.

(12) When section 6(2) is fully in force, the Treasury may by order repeal this section.”

116

Insert the following new Clause—

“Payment to Treasury of penalties received by Bank of England

(1) The Bank of England (“the Bank”) must in respect of each of its financial years pay to the Treasury its penalty receipts after deducting its enforcement costs.

(2) The Bank’s “penalty receipts” in respect of a financial year are any amounts received by the Bank during the year by way of penalties imposed under any of the following provisions—

(a) sections 192K and 312F of FSMA 2000, and

(b) section 198 of the Banking Act 2009.

(3) The Bank’s “enforcement costs” in respect of a financial year are the expenses incurred by it during the year in connection with—

(a) the exercise, or consideration of the possible exercise, of any of its enforcement powers in particular cases, or

(b) the recovery of penalties imposed under any of the provisions mentioned in subsection (2).

(4) For this purpose the Bank’s enforcement powers are—

(a) its powers under any of the provisions mentioned in subsection (5),

(b) its powers under any other enactment specified by the Treasury by order,

(c) its powers in relation to the investigation of offences under FSMA 2000 or of any other offences specified by the Treasury by order, and

(d) its powers in England and Wales or Northern Ireland in relation to the prosecution of offences under FSMA 2000 or of any other offences specified by the Treasury by order.

(5) The provisions referred to in subsection (4)(a) are as follows—

(a) sections 192K to 192N of FSMA 2000 (parent undertakings), as applied to the Bank by Schedule 17A to that Act,

(b) sections 312E and 312F of that Act (disciplinary measures in relation to clearing houses),

(c) sections 380, 382 and 384 of that Act (injunctions and restitution), as applied to the Bank by Schedule 17A to that Act, and

(d) sections 197 to 200 and 202A of the Banking Act 2009 (inter-bank payment systems).

(6) The Treasury may give directions to the Bank as to how the Bank is to comply with its duty under subsection (1).

(7) The directions may in particular—

(a) specify descriptions of expenditure that are, or are not, to be regarded as incurred in connection with either of the matters mentioned in subsection (3),

(b) relate to the calculation and timing of the deduction in respect of the Bank’s enforcement costs, and

(c) specify the time when any payment is required to be made to the Treasury.

(8) The directions may also require the Bank to provide the Treasury at specified times with specified information relating to—

(a) penalties that the Bank has imposed under the provisions mentioned in subsection (2), or

(b) the Bank’s enforcement costs.

(9) The Treasury must pay into the Consolidated Fund any sums received by them under this section.”

Before Clause 100

LORD HODGSON OF ASTLEY ABBOTTS

116A

Insert the following new Clause—

“Common investment funds and common deposit funds

Power to exempt from provision made by or under FSMA 2000

(1) The Treasury may by order provide for common investment funds and common deposit funds to be exempt from any relevant provision that applies to collective investment schemes.

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

After Clause 102

LORD FLIGHT

116B

Insert the following new Clause—

“Bank account transferability

(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 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, save where it has grounds for suspicion, accept the material provided under paragraph (a) 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 permission for deposit taking granted by the PRA.”

Schedule 18

LORD SHARKEY

BARONESS KRAMER

116C*

Page 342, line 34, at end insert—

“( ) In Part 5 of Schedule 3 to that Act, for paragraph 20A substitute—

“Age

20A (1) Subject to sub-paragraph (4), a person (“A”) does not contravene section 29, so far as relating to age discrimination, by doing anything in connection with the provision of a financial service.

(2) Where A conducts an assessment of risk for the purposes of providing the financial service to another person (“B”), A may rely on sub-paragraph (1) only if the assessment of risk, so far as it involves a consideration of B’s age, is carried out by reference to information which is relevant to the assessment of risk and from a source on which it is reasonable to rely.

(3) In this paragraph, “financial service” includes a service of a banking, credit, insurance, personal pension, investment or payment nature.

(4) A person seeking to rely on this exception must establish and provide to the public a written policy stating the terms and the basis of their reliance of this exception.””

Schedule 19

LORD SASSOON

117

Page 346, line 3, at end insert—

“Bank of England Act 1998 Section 1(3).”

Clause 105

LORD SASSOON

118

Page 193, line 27, after “which” insert “section (Affirmative procedure for certain orders) or”

Clause 111

LORD SASSOON

119

Page 196, line 9, at end insert—

“section (Payment to Treasury of penalties received by Financial Services Authority);”

Prepared 12th November 2012