Financial Services [HL] Bill

Page 141, line 8, at end insert—

“( ) The first case requires the Bank of England, FPC, FCA or PRA to provide the Treasury or the Secretary of State with an early warning of the possibility that a notification of a material risk to public funds may be given, and full information about the circumstance.”

Page 141, line 9, leave out “first” and insert “second”

Page 141, line 11, at end insert “or where there is a risk to relevant markets functioning well, fairly, efficiently and transparently”

Page 141, line 12, leave out “second” and insert “third”

Page 141, line 21, leave out “third” and insert “fourth”

Page 144, line 35, at end insert “which must include risks which significantly impact upon the safety and soundness of PRA-authorised persons, or which put at risk relevant markets functioning well”

Page 145, line 3, after “and” insert “comprehensive”

Page 145, line 21, leave out subsection (7) and insert—

“( ) The memorandum is a measure prescribed by the Treasury by order which shall not be made unless a draft of the order has been laid before and approved by resolution of each House of Parliament.”

Page 152, line 6, leave out from beginning to “give” in line 7 and insert—

“(1) This section applies where—

(a) the Treasury consider that it is in the public interest that either regulator should undertake an investigation into any relevant events, and

(b) it does not appear to the Treasury that the regulator has undertaken or is undertaking an investigation (under this Part or otherwise) into those events.

(1A) The Treasury must”

Page 152, line 18, leave out “(1)” and insert “(1A)”

Insert the following new Clause—

“Publication of directions

(1) This section applies to a direction given by the Treasury under any of the following provisions—

(a) section 72(4);

(b) section 73(5);

(c) section 77(5).

(2) As soon as practicable after giving the direction, the Treasury must—

(a) lay before Parliament a copy of the direction, and

(b) publish the direction in such manner as the Treasury think fit.

(3) Subsection (2) does not apply where the Treasury consider that publication of the direction would be against the public interest.”

Insert the following new Clause—

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.”

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.”

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.”

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.”

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.”

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.”

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.”

Page 186, line 37, at end insert—

“(fa) provide for any provision of sections 162 to 165 and 174A of CCA 1974 which relates to—

(i) the powers of a local weights and measures authority in Great Britain or the Department of Enterprise, Trade and Investment in Northern Ireland in relation to compliance with any provision made by or under CCA 1974,

(ii) the powers of such an authority or that Department in relation to the commission or suspected commission of offences under any provision made by or under CCA 1974,

(iii) the powers that may be conferred by warrant on an officer of such an authority or that Department, or

(iv) things done in the exercise of any of those powers,

to apply in relation to compliance with FSMA 2000 so far as relating to relevant regulated activities, in relation to the commission or suspected commission of a relevant offence or in relation to things done in the exercise of any of those powers as applied by the order;”

Page 187, line 8, leave out from “subsection” to “by” in line 10 and insert “(2)(fa) to (h)—

(a) “relevant regulated activity” means an activity that is a regulated activity for the purposes of FSMA 2000”

Page 187, line 14, at end insert—

“(b) “relevant offence” means an offence under FSMA 2000 committed in relation to such an activity.”

Insert the following new Clause—

“Power of the FCA to make further provision about regulation of consumer credit

(1) The FCA may make rules or apply a sanction to authorised persons who offer credit on terms that the FCA judge to cause consumer detriment.

(2) This may include rules that determine a maximum total cost for consumers of a product and determine the maximum duration of a supply of a product or service to an individual consumer.”

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.”

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.”

Insert the following new Clause—

“Power of the FCA to make provision about regulation of commercial debt management

The FCA may make rules or apply a sanction to authorised persons who offer debt management services on commercial terms, or on terms that the FCA judge to cause consumer detriment.”

Insert the following new Clause—

“Continuous Payment Authorities: debtor’s rights

(1) This section applies where a debtor has granted to a creditor a continuous payment authority for payment of any debt arising under a regulated agreement.

(2) Prior to the debtor granting the continuous payment authority, a creditor must give the debtor a statement of the debtor’s rights in relation to the continuous payment authority.

(3) A debtor may at any time cancel or vary a continuous payment authority.

(4) A cancellation or variation of a continuous payment authority must be signed by the debtor and bear the date of the signature.

(5) A bank is obliged to comply with immediate effect to a cancellation or variation of a continuous payment authority signed by the debtor.

(6) A debtor must inform the creditor within 24 hours of signing the cancellation or variation that the continuous payment authority has been cancelled or varied.

(7) In this section “continuous payment authority” means an instruction or mandate given by a debtor to a bank to pay a fixed or variable sum to a creditor.”

Insert the following new Clause—

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.”

Insert the following new Clause—

“The levy

(1) Section 173 of the Legal Services Act 2007 (the levy) is amended as follows.

(2) In subsection (7)(a) at the end insert “except for the purposes of section 161 (in relation to claims management services) which is to be deducted from its expenditure incurred under or for the purposes of the Act (section 173(7)(a), as with the amounts paid into the Consolidated Fund pursuant to 173(7)(b)), and”.”

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.”

[Withdrawn]

Page 346, line 3, at end insert—

Page 193, line 20, at end insert—

“( ) an order under section 36(2) (power to amend sections 391 and 395 of FSMA 2000);”

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

Page 349, line 6, at end insert—

“(1A) The FSA may disclose to the Bank of England any information which the FSA considers that it is necessary or expedient to disclose to the Bank in preparation for the commencement of any provision of this Act conferring functions on the Bank.”

Page 349, line 8, leave out “sub-paragraph (1)” and insert “sub-paragraphs (1) and (1A)”

Page 196, line 9, at end insert—

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

Page 196, line 9, at end insert—

“section (The levy);”