Financial Services Bill (HL Bill 48)

(4) This section is without prejudice to any other power to disclose
information.

(5) The Bank’s financial stability objective is the objective set out in
section 2A(1) of the Bank of England Act 1998.

(6) 5In this section “enactment” includes—

(a) an Act of the Scottish Parliament,

(b) Northern Ireland legislation, and

(c) a Measure or Act of the National Assembly for Wales.”

Section 41

SCHEDULE 13 10Auditors and actuaries

1 FSMA 2000 is amended as follows.

2 (1) Section 340 (appointment) is amended as follows.

(2) In subsection (1), for “Rules may require” substitute “The appropriate
regulator may make rules requiring”.

(3) 15In subsection (2), for “Rules may require” substitute “The appropriate
regulator may make rules requiring”.

(4) In subsection (3), for “Rules may impose” substitute “The appropriate
regulator may make rules imposing”.

(5) In subsection (4), for “Authority”, in each place, substitute “regulator
20making the rules”.

(6) After subsection (5) insert—

“(5A) In subsections (1) and (2) “the appropriate regulator” means—

(a) in the case of a PRA-authorised person, the PRA;

(b) in any other case, the FCA.

(5B) 25In subsection (3) “the appropriate regulator” means—

(a) in the case of an auditor of, or an actuary acting for, a PRA-
authorised person, the PRA or the FCA;

(b) in any other case, the FCA.”

(7) After subsection (7) insert—

“(8) 30The powers conferred by this section enable only the making of such
rules as appear to the regulator making them to be necessary or
expedient—

(a) in the case of the FCA, for the purpose of advancing one or
more of its operational objectives, or

(b) 35in the case of the PRA, for the purpose of advancing any of its
objectives.”

3 (1) Section 342 (information given by auditor or actuary) is amended as follows.

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

(3) In subsection (3)—

(a) for “the Authority”, in the first place, substitute “a regulator”,

(b) after “authorised person” insert “or recognised investment
exchange”, and

(c) 5for “the Authority”, in the second place, substitute “that regulator”.

(4) In subsection (4), for “Authority” substitute “regulator”.

(5) In subsection (7), after “authorised person” insert “or recognised investment
exchange”.

(6) For “the Authority”, in each other place (including the heading), substitute
10“a regulator”.

4 (1) Section 343 (information given by auditor or actuary: persons with close
links) is amended as follows.

(2) In subsection (1)—

(a) in paragraph (a), after “authorised person” insert “or recognised
15investment exchange,”, and

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

(3) In subsection (3)—

(a) for “the Authority”, in the first place, substitute “a regulator”,

(b) 20after “authorised person” insert “or recognised investment
exchange”, and

(c) for “the Authority”, in the second place, substitute “that regulator”.

(4) In subsection (4), for “Authority” substitute “regulator”.

(5) in subsection (7), after “authorised person” insert “or recognised investment
25exchange”.

(6) In subsection (8), after “authorised person” insert “or recognised investment
exchange”.

(7) For “the Authority”, in each other place (including the heading), substitute
“a regulator”.

5 (1) 30Section 344 (duty of auditor or actuary resigning to give notice) is amended
as follows.

(2) In each place for “Authority” substitute “appropriate regulator”.

(3) In subsection (2)(a), after “authorised person” insert “or recognised
investment exchange”.

(4) 35In subsection (3)(a), for “Authority’s” substitute “regulator’s”.

(5) After subsection (3) insert—

“(4) In this section “the appropriate regulator” means—

(a) in the case of an auditor of, or an actuary acting for, a PRA-
authorised person, the PRA;

(b) 40in any other case, the FCA.”

6 (1) For section 345 (disqualification of auditor or actuary) and the italic heading

before it substitute—

“Disciplinary measures

345 Disciplinary measures: FCA

(1) Subsection (2) applies if it appears to the FCA that an auditor or
5actuary to whom section 342 applies—

(a) has failed to comply with a duty imposed on the auditor or
actuary by rules made by the FCA, or

(b) has failed to comply with a duty imposed under this Act to
communicate information to the FCA.

(2) 10The FCA may do one or more of the following—

(a) disqualify the auditor or actuary from being the auditor of, or
(as the case may be) from acting as an actuary for, any
authorised person or any particular class of authorised
person;

(b) 15disqualify the auditor from being the auditor of any
recognised investment exchange or any particular class of
recognised investment exchange;

(c) publish a statement to the effect that it appears to the FCA
that the auditor or (as the case may be) actuary has failed to
20comply with the duty;

(d) impose on the auditor or actuary a penalty, payable to the
FCA, of such amount as the FCA considers appropriate.

(3) If an auditor or actuary has been disqualified by the PRA under
section 345A(4)(a), the FCA may disqualify the auditor or actuary, so
25long as the disqualification under that provision remains in force,
from being the auditor of, or (as the case may be) from acting as an
actuary for—

(a) any FCA-authorised person,

(b) any particular class of FCA-authorised person,

(c) 30any recognised investment exchange, or

(d) any particular class of recognised investment exchange.

(4) In subsection (3) “FCA-authorised person” means an authorised
person who is not a PRA-authorised person.

(5) Where under subsection (2) or (3) the FCA disqualifies a person from
35being the auditor of an authorised person or recognised investment
exchange or class of authorised person or recognised investment
exchange and that authorised person or recognised investment
exchange is also, or any person within that class is also, a recognised
clearing house, the FCA must —

(a) 40notify the Bank of England, and

(b) notify the disqualified person that it has made a notification
under paragraph (a).

(6) The FCA may remove any disqualification imposed under
paragraph (a) or (b) of subsection (2) if satisfied that the disqualified
45person will in future comply with the duty in question.

(7) The FCA may at any time remove any disqualification imposed
under subsection (3).

345A Disciplinary measures: PRA

(1) The following provisions of this section have effect only if the
Treasury, by order made after consultation with the PRA, so provide.

(2) Subsection (3) applies if it appears to the PRA that an auditor or
5actuary to whom section 342 applies—

(a) has failed to comply with a duty imposed on the auditor or
actuary by rules made by the PRA, or

(b) has failed to comply with a duty imposed under this Act to
communicate information to the PRA.

(3) 10The PRA may exercise one or more of the specified powers.

(4) The specified powers are such one or more of the following as may
be specified in the order under subsection (1)—

(a) to disqualify the auditor or actuary from being the auditor of,
or (as the case may be) from acting as an actuary for, any
15PRA-authorised person or any particular class of PRA-
authorised person;

(b) to publish a statement to the effect that it appears to the PRA
that the auditor or (as the case may be) actuary has failed to
comply with the duty;

(c) 20to impose on the auditor or actuary a penalty, payable to the
PRA, of such amount as the PRA considers appropriate.

(5) Where the PRA disqualifies a person under subsection (4)(a) it
must—

(a) notify the FCA, and

(b) 25notify the person concerned that it has made a notification
under paragraph (a).

(6) Where the PRA disqualifies a person from being the auditor of a
PRA-authorised person or class of PRA-authorised person, and that
PRA-authorised person is also, or any person within that class is also,
30a recognised clearing house, the PRA must, in addition to complying
with subsection (5)—

(a) notify the Bank of England, and

(b) notify the disqualified person that it has made a notification
under paragraph (a).

(7) 35The PRA may remove any disqualification imposed under
subsection (4)(a) if satisfied that the disqualified person will in future
comply with the duty in question.

345B Procedure and right to refer to Tribunal

(1) If the FCA proposes to act under section 345(2) or the PRA proposes
40to act under section 345A(3), it must give the auditor or actuary to
whom the action would relate a warning notice.

(2) A warning notice about a proposal to impose a penalty must state the
amount of the penalty.

(3) A warning notice about a proposal to publish a statement must set
45out the terms of the statement.

(4) If the FCA decides to act under section 345(2) or the PRA decides to
act under section 345A(3), it must give the auditor or actuary to
whom the action would relate a decision notice.

(5) A decision notice about the imposition of a penalty must state the
5amount of the penalty.

(6) A decision notice about the publication of a statement must set out
the terms of the statement. “If the FCA decides to act under section 345(2) or the PRA decides to
act under section 345A(3), the auditor or actuary concerned may
10refer the matter to the Tribunal.”

345C Duty on publication of statement

After a statement under section 345(2)(c) or 345A(4)(b) is published,
the regulator that published it must send a copy of the statement to—

(a) the auditor or actuary, and

(b) 15any person to whom a copy of the decision notice was given
under section 393(4).

345D Imposition of penalties on auditors or actuaries: statement of policy

(1) The FCA must prepare and issue a statement of its policy with
respect to—

(a) 20the imposition of penalties under section 345(2)(d), and

(b) the amount of penalties under that provision.

(2) If by virtue of an order under section 345A(1), the PRA has power to
impose penalties under section 345A(4)(c), the PRA must prepare
and issue a statement of its policy with respect to—

(a) 25the imposition of penalties under section 345A(4)(c), and

(b) the amount of penalties under that provision.

(3) A regulator’s policy in determining what the amount of a penalty
should be must include having regard to—

(a) the seriousness of the contravention, and

(b) 30the extent to which the contravention was deliberate or
reckless.

(4) A regulator may at any time alter or replace a statement issued under
this section.

(5) If a statement issued under this section is altered or replaced, the
35regulator must issue the altered or replacement statement.

(6) A regulator must, without delay, give the Treasury a copy of any
statement which it publishes under this section.

(7) A statement issued under this section must be published by the
regulator in the way appearing to the regulator to be best calculated
40to bring it to the attention of the public.

(8) In deciding whether to exercise a power under section 345(2)(d) in
the case of any particular contravention, the FCA must have regard
to any statement of policy published by it under this section and in
force at a time when the contravention occurred.

(9) In deciding whether to exercise a power under section 345A(4)(c) in
the case of any particular contravention, the PRA must have regard
to any statement of policy published by it under this section and in
force at a time when the contravention occurred.

(10) 5A regulator may charge a reasonable fee for providing a person with
a copy of the statement.

345E Statements of policy: procedure

(1) Before a regulator issues a statement under section 345D, the
regulator must publish a draft of the proposed statement in the way
10appearing to the regulator to be best calculated to bring it to the
attention of the public.

(2) The draft must be accompanied by notice that representations about
the proposal may be made to the regulator within a specified time.

(3) Before issuing the proposed statement, the regulator must have
15regard to any representations made to it in accordance with
subsection (2).

(4) If the regulator issues the proposed statement it must publish an
account, in general terms, of—

(a) the representations made to it in accordance with subsection
20(2), and

(b) its response to them.

(5) If the statement differs from the draft published under subsection (1)
in a way which is, in the opinion of the regulator, significant, the
regulator must (in addition to complying with subsection (4))
25publish details of the difference.

(6) A regulator may charge a reasonable fee for providing a person with
a copy of a draft under subsection (1).

(7) This section also applies to a proposal to alter or replace a statement.”

7 (1) Section 392 (application of sections 393 and 394) is amended as follows.

(2) 30In paragraph (a), for “345(2) (whether as a result of subsection (1) of that
section” substitute “345B(1) (whether as a result of section 345(2), 345A(3)”.

(3) In paragraph (b), for “345(3) (whether as a result of subsection (1) of that
section” substitute “345B(4) (whether as a result of section 345(2), 345A(3)”.

Section 43

SCHEDULE 14 35Amendments of Part 24 of FSMA 2000: insolvency

1 Part 24 of FSMA 2000 is amended as follows.

2 In section 355 (interpretation of Part 24) at the end of subsection (1) insert—

• “ “PRA-regulated person” means a person who—

  (a)

  is or has been a PRA-authorised person,

  Financial Services BillPage 296

  (b)

  is or has been an appointed representative whose
  principal (or one of whose principals) is, or was, a
  PRA-authorised person, or

  (c)

  is carrying on or has carried on a PRA-regulated
  5activity in contravention of the general prohibition.”

3 (1) Section 356 (powers to participate in proceedings: company voluntary
arrangements) is amended as follows.

(2) In subsections (1) and (2), for “the Authority” substitute “or recognised
investment exchange, the appropriate regulator”.

(3) 10In subsection (3)—

(a) for “the Authority”, in the first place, substitute “a regulator”, and

(b) for “the Authority”, in the second place, substitute “the appropriate
regulator”.

(4) After subsection (3) insert—

“(4) 15The appropriate regulator” means—

(a) in the case of a PRA-authorised person—

(i) for the purposes of subsections (1) and (2), the FCA or
the PRA, and

(ii) for the purposes of subsection (3), each of the FCA
20and the PRA;

(b) in any other case, the FCA.

(5) If either regulator makes an application to the court under any of
those provisions in relation to a PRA-authorised person, the other
regulator is entitled to be heard at any hearing relating to the
25application.”

(5) In the heading, for “Authority’s powers” substitute “Powers of FCA and
PRA”.

4 (1) Section 357 (powers to participate in proceedings: individual voluntary
arrangements) is amended as follows.

(2) 30In subsections (1) to (5), for “Authority” substitute “appropriate regulator”.

(3) In subsection (6)—

(a) for “the Authority”, in the first place, substitute “a regulator”, and

(b) for “the Authority”, in the second place, substitute “the appropriate
regulator”.

(4) 35After subsection (6) insert—

“(7) The appropriate regulator” means—

(a) in the case of a PRA-authorised person—

(i) for the purposes of subsections (1) and (4) to (6), each
of the FCA and the PRA, and

(ii) 40for the purposes of subsection (3), the FCA or the
PRA;

(b) in any other case, the FCA.

(8) If either regulator makes an application to the court under any of the
provisions mentioned in subsection (5) in relation to a PRA-

authorised person, the other regulator is entitled to be heard at any
hearing relating to the application.”

(5) In the heading, for “Authority’s powers” substitute “Powers of FCA and
PRA”.

5 (1) 5Section 358 (powers to participate in proceedings: trust deeds for creditors
in Scotland) is amended as follows.

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

(3) In subsections (2) to (4), for “Authority” substitute “appropriate regulator”.

(4) 10In subsection (5)—

(a) for “the Authority”, in the first place, substitute “the appropriate
regulator”, and

(b) for “the Authority”, in the second place, substitute “that regulator”.

(5) In subsection (6), for “the Authority” substitute “a regulator”.

(6) 15After subsection (6) insert—

“(6A) The appropriate regulator” means—

(a) in the case of a PRA-authorised person—

(i) for the purposes of subsections (2), (3) and (4), each of
the FCA and the PRA, and

(ii) 20for the purposes of subsection (5), the FCA or the
PRA;

(b) in any other case, the FCA.”

(7) In the heading, for “Authority’s powers” substitute “Powers of FCA and
PRA”.

6 (1) 25Section 359 (administration order) is amended as follows.

(2) In subsection (1)—

(a) for “Authority” substitute “FCA”, and

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

(3) 30After subsection (1) insert—

“(1A) The PRA may make an administration application under Schedule
B1 to the 1986 Act or Schedule B1 to the 1989 Order in relation to a
company or insolvent partnership which is a PRA-regulated
person.”

(4) 35In subsection (2), for “the Authority” substitute “a regulator”.

(5) In subsection (4), in the definition of “authorised deposit taker”, for “Part
IV”, in both places, substitute “Part 4A”.

7 (1) Section 361 (administrator’s duty to report) is amended as follows.

(2) In subsection (2), for “Authority” substitute “appropriate regulator”.

(3) 40After subsection (2) insert—

“(2A) The appropriate regulator” means—

(a) where the regulated activity is a PRA-regulated activity, the
FCA and the PRA;

(b) in any other case, the FCA.”

(4) For subsection (3) substitute—

“(3) 5Subsection (2) does not apply where—

(a) the administration arises out of an administration order
made on an application made or petition presented by a
regulator, and

(b) the regulator’s application or petition depended on a
10contravention by the company or partnership of the general
prohibition.”

(5) In the heading, for “Authority” substitute “FCA and PRA”.

8 (1) Section 362 (powers to participate in proceedings: administration orders) is
amended as follows.

(2) 15In subsection (1)—

(a) omit “other than the Authority”, and

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

(3) After subsection (1A) insert—

“(1B) 20This section also applies in relation to—

(a) the appointment under paragraph 22 of Schedule B1 to the
1986 Act (as applied by order under section 420 of the 1986
Act), or under paragraph 23 of Schedule B1 to the 1989 Order
(as applied by order under Article 364 of the 1989 Order), of
25an administrator of a partnership of a kind described in
subsection (1)(a) to (c), or

(b) the filing with the court of a copy of notice of intention to
appoint an administrator under either of those paragraphs
(as so applied).”

(4) 30In subsections (2) to (6), for “Authority” substitute “appropriate regulator”,

(5) After subsection (6) insert—

“(7) The appropriate regulator” means—

(a) for the purposes of subsections (2) to (4) and (6)—

(i) where the company or partnership is a PRA-
35regulated person, each of the FCA and the PRA, and

(ii) in any other case, the FCA;

(b) for the purposes of subsection (5)—

(i) where the company or partnership is a PRA-
regulated person, the FCA or the PRA, and

(ii) 40in any other case, the FCA.

(8) But where the administration application was made by a regulator
“the appropriate regulator” does not include that regulator.”

(6) In the heading, for “Authority’s powers” substitute “Powers of FCA and
PRA”.

9 (1) Section 362A (administrator appointed by company or directors) is
amended as follows.

(2) In subsection (1), after “company” insert “or partnership”.

(3) For subsection (2) substitute—

“(2) 5An administrator of the company or partnership may not be
appointed under a provision specified in subsection (2A) without the
consent of the appropriate regulator.

(2A) Those provisions are—

(a) paragraph 22 of Schedule B1 to the 1986 Act (including that
10paragraph as applied in relation to partnerships by order
under section 420 of that Act);

(b) paragraph 23 of Schedule B1 to the 1989 Order (including that
paragraph as applied in relation to partnerships by order
under article 364 of that Order).

(2B) 15“The appropriate regulator” means—

(a) where the company or partnership is a PRA-regulated
person, the PRA, and

(b) in any other case, the FCA.”

10 (1) Section 363 (powers to participate in proceedings: receivership) is amended
20as follows.

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

(3) In subsections (2) to (5), for “Authority” substitute “appropriate regulator”.

(4) After subsection (5) insert—

“(6) 25The appropriate regulator” means—

(a) for the purposes of subsections (2) to (4)—

(i) where the company is a PRA-regulated person, each
of the FCA and the PRA, and

(ii) in any other case, the FCA;

(b) 30for the purposes of subsection (5)—

(i) where the company is a PRA-regulated person, the
FCA or the PRA, and

(ii) in any other case, the FCA.”

(5) In the heading, for “Authority’s powers” substitute “Powers of FCA and
35PRA”.

11 In section 364 (receiver’s duty to report to Authority)—

(a) for “to the Authority without delay” substitute “without delay to the
FCA and, if the regulated activity concerned is a PRA-regulated
activity, to the PRA”, and

(b) 40in the heading, for “Authority” substitute “FCA and PRA”.

12 (1) Section 365 (powers to participate in proceedings: voluntary winding up) is
amended as follows.

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