Financial Services Bill (HL Bill 60)

(6) After section 187 insert—

“187A Assessment: consultation by PRA with FCA

(1) The PRA must consult the FCA before acting under section 185.

(2) 10The FCA may make representations to the PRA in relation to any of the
matters set out in sections 185(2) and 186.

(3) If the FCA considers that on the basis of the matters set out in section
186(f) there are reasonable grounds to object to the acquisition, the FCA
may—

(a) 15direct the PRA to object to the acquisition, or

(b) direct the PRA not to approve the acquisition unless it does so
subject to conditions specified in the direction (with or without
other conditions).

(4) Before giving a direction under subsection (3), the FCA must notify the
20PRA of its proposal to do so.

(5) In order to comply with the obligation under subsection (1), the PRA
must provide the FCA with—

(a) copies of—

(i) the section 178 notice, and

(ii) 25any document included with that notice,

(b)
any further information provided pursuant to section 190, and

(c) any other information in the possession of the PRA which—

(i) in the opinion of the PRA, is relevant to the application,
or

(ii) 30is reasonably requested by the FCA.

(c)(c)any other information in the possession of the PRA which—

(i) in the opinion of the PRA, is relevant to the application,
or

(ii) is reasonably requested by the FCA.

(6) 35If the PRA acts under section 185(1)(b), it must indicate to the section
178 notice-giver any representations or directions received from the
FCA.

(7) Directions given by the FCA under this section are subject to any
directions given to the FCA under section 3I or 3J.

187B 40Assessment: consultation by FCA with PRA

(1) The FCA must consult the PRA before acting under section 185 if—

(a) the UK authorised person to which the section 178 notice relates
has as a member of its immediate group a PRA-authorised
person, or

(b) 45the section 178 notice-giver is a PRA-authorised person.

(2) The PRA may make representations to the FCA in relation to any of the
matters set out in sections 185(2) and 186.

(3) If the PRA considers that on the basis of relevant matters there are
reasonable grounds to object to the acquisition, the PRA may direct the
FCA not to approve the acquisition unless it does so subject to
conditions specified in the direction (with or without other conditions).

(4) 5In subsection (3) “relevant matters”—

(a) means the matters in paragraphs (d) and (e)(i) of section 186,
and

(b) in a case falling within subsection (1)(b) of this section, also
includes the matter in paragraph (c) of section 186.

(5) 10In order to comply with the obligation under subsection (1), the FCA
must provide the PRA with—

(a) copies of—

(i) the section 178 notice, and

(ii) any document included with that notice,

(b)
15any further information provided pursuant to section 190, and

(c) any other information in the possession of the FCA which—

(i) in the opinion of the FCA, is relevant to the application,
or

(ii) is reasonably requested by the PRA.

(6) 20If the FCA acts under section 185(1)(b), it must indicate to the section
178 notice-giver any representations or directions received from the
PRA.

187C Variation etc of conditions

(1) Where the PRA has imposed conditions required by a direction given
25by the FCA under section 187A(3)—

(a) the FCA may direct the PRA to exercise its power under section
187(4) to vary or cancel any of those conditions;

(b) the PRA must consult the FCA before it exercises that power in
relation to those conditions otherwise than in accordance with
30a direction under paragraph (a).

(2) Where the FCA has imposed conditions required by a direction given
by the PRA under section 187B(3)—

(a) the PRA may direct the FCA to exercise its power under section
187(4) to vary or cancel any of those conditions;

(b) 35the FCA must consult the PRA before it exercises that power in
relation to those conditions otherwise than in accordance with
a direction under paragraph (a).”

(7) In section 191A (objection to control), after subsection (4) insert—

“(4A) Where the appropriate regulator is the PRA, it must consult the FCA
40before giving a warning notice under this section.

(4B) Where the appropriate regulator is the FCA, it must consult the PRA
before giving a warning notice under this section if—

(a) the UK authorised person has as a member of its immediate
group a PRA-authorised person, or

(b) 45the person to whom the warning notice is to be given is a PRA-
authorised person.”

(8) In section 191B (restriction notices), after subsection (2) insert—

“(2A) Where the appropriate regulator is the PRA, it must consult the FCA
before giving a restriction notice under this section.

(2B) Where the appropriate regulator is the FCA, it must consult the PRA
5before giving a restriction notice under this section if—

(a) the UK authorised person has as a member of its immediate
group a PRA-authorised person, or

(b) the person to whom the restriction notice is to be given is a PRA-
authorised person.”

(9) 10In section 191C (orders for the sale of shares), after subsection (2) insert—

“(2A) Where the appropriate regulator is the PRA, it must consult the FCA
before making an application to the court under this section.

(2B) Where the appropriate regulator is the FCA, it must consult the PRA
before making an application to the court under this section if—

(a) 15the UK authorised person has as a member of its immediate
group a PRA-authorised person, or

(b) the person holding the shares or voting power is a PRA-
authorised person.”

(10) In section 191D (obligation to notify of disposition of control), after subsection
20(1) insert—

“(1A) The PRA must give the FCA a copy of any notice it receives under this
section.

(1B) The FCA must give the PRA a copy of any notice it receives under this
section which—

(a) 25relates to a UK authorised person who has as a member of its
immediate group a PRA-authorised person, or

(b) is given by a PRA-authorised person.”

(11) In section 191E (requirements for notices under section 191D), in subsection (2),
for “The Authority” substitute “Each regulator”.

(12) 30In section 191G (interpretation), in subsection (1), after the definition of
“acquisition” insert—

• ““the appropriate regulator” is to be read in accordance with
  section 178(2A);”.

27 Powers of regulators in relation to parent undertakings

After section 192 of FSMA 2000 insert—

“ Part 12A Powers exercisable in relation to parent undertakings

5Introductory

192A Meaning of “qualifying authorised person”

(1) In this Part “qualifying authorised person” means an authorised person
satisfying the following conditions.

(2) Condition A is that the authorised person is a body corporate
10incorporated in the United Kingdom.

(3) Condition B is that the authorised person is—

(a) a PRA-authorised person, or

(b) an investment firm.

(4) The Treasury may by order—

(a) 15amend subsection (3) so as to add to or restrict the descriptions
of authorised person who can be qualifying authorised persons,
or

(b) provide that while the order is in force subsection (3) is not to
have effect.

(5) 20Except as provided by subsection (6), an order under subsection (4) is
not to be made unless a draft of the order has been laid before
Parliament and approved by a resolution of each House.

(6) An order under subsection (4) may be made without a draft having
been laid and approved as mentioned in subsection (5) if the order
25contains a statement that the Treasury are of the opinion that, by reason
of urgency, it is necessary to make the order without a draft being so
laid and approved.

(7) An order under subsection (4) made in accordance with subsection
(6)—

(a) 30must be laid before Parliament after being made, and

(b) ceases to have effect at the end of the relevant period unless
before the end of that period the order is approved by a
resolution of each House of Parliament (but without affecting
anything done under the order or the power to make a new
35order).

(8) The “relevant period” is a period of 28 days beginning with the day on
which the order is made.

(9) In calculating the relevant period no account is to be taken of any time
during which Parliament is dissolved or prorogued or during which
40both Houses are adjourned for more than 4 days.

192B Meaning of “qualifying parent undertaking”

(1) The parent undertaking of a qualifying authorised person or
recognised UK investment exchange is for the purposes of this Part a
“qualifying parent undertaking” if the following conditions are
5satisfied in relation to it.

(2) Condition A is that the parent undertaking is a body corporate which—

(a) is incorporated in the United Kingdom, or

(b) has a place of business in the United Kingdom.

(3) Condition B is that the parent undertaking is not itself an authorised
10person, a recognised investment exchange or a recognised clearing
house.

(4) Condition C is that the parent undertaking is a financial institution of a
kind prescribed by the Treasury by order.

(5) “Recognised UK investment exchange” means a recognised investment
15exchange that is not an overseas investment exchange as defined in
section 313(1).

(6) The Treasury may by order—

(a) amend subsection (4) by omitting the words “a financial
institution”, and

(b) 20make any amendment of subsection (2) that they consider
desirable in connection with an amendment made under
paragraph (a).

Power of direction

192C Power to direct qualifying parent undertaking

(1) 25The appropriate regulator may give a direction under this section to a
qualifying parent undertaking if either the general condition or the
consolidated supervision condition is satisfied.

(2) The general condition is that the appropriate regulator considers that it
is desirable to give the direction in order to advance—

(a) 30in the case of the FCA, one or more of its operational objectives;

(b) in the case of the PRA, any of its objectives.

(3) The consolidated supervision condition is that—

(a) the appropriate regulator is the competent authority for the
purpose of consolidated supervision that is required, in relation
35to some or all of the members of the group of a qualifying
authorised person, in pursuance of any of the directives
mentioned in section 3M(3), and

(b) the appropriate regulator considers that the giving of the
direction is desirable for the purpose of the effective
40consolidated supervision of the group.

(4) In subsection (3)(a) “consolidated supervision” includes supplemental
supervision.

(5) In deciding whether to give a direction under this section, a regulator
must have regard—

(a) to the desirability where practicable of exercising its powers in
relation to authorised persons or recognised investment
exchanges rather than its powers under this section, and

(b) to the principle that a burden or restriction which is imposed on
5a person should be proportionate to the benefits, considered in
general terms, which are expected to result from its imposition.

(6) “The appropriate regulator” means—

(a) where a direction relates to a qualifying authorised person or
recognised investment exchange who is a PRA-authorised
10person, the FCA or the PRA;

(b) in any other case, the FCA.

192D Requirements that may be imposed

(1) A direction under section 192C may require the parent undertaking—

(a) to take specified action, or

(b) 15to refrain from taking specified action.

(2) A requirement may be imposed by reference to the parent
undertaking’s relationship with—

(a) its group, or

(b) other members of its group.

(3) 20A requirement may refer to the past conduct of the parent undertaking
(for example, by requiring the parent undertaking to review or take
remedial action in respect of past conduct).

(4) A requirement imposed by the direction may be expressed to expire at
the end of a specified period, but the imposition of a requirement that
25expires at the end of a specified period does not affect the power to give
a further direction imposing a new requirement.

(5) The direction—

(a) may be revoked by the regulator which gave it by written notice
to the body to which it is given, and

(b) 30ceases to be in force if the body to which it is given ceases to be
a qualifying parent undertaking.

192E Direction: procedure

(1) If a regulator proposes to give a direction under section 192C, or gives
such a direction with immediate effect, it must give written notice to—

(a) 35the parent undertaking to which the direction is given (or to be
given) (“P”), and

(b) any authorised person or recognised investment exchange who
will, in the opinion of the regulator, be significantly affected by
the direction.

(2) 40In the following provisions of this section “notified person” means a
person to whom notice under subsection (1) is given.

(3) A direction under section 192C takes effect—

(a) immediately, if the notice under subsection (1) states that that is
the case,

(b) 45on such other date as may be specified in the notice, or