Financial Services Bill (HL Bill 60)

(6) A direction under this section is enforceable on an application made by
the Treasury, by injunction or, in Scotland, by an order for specific
performance under section 45 of the Court of Session Act 1988.

(7) A direction may specify circumstances in which the bank administrator
5is immune from liability in damages.

(8) Immunity by virtue of subsection (7) does not extend to action—

(a) in bad faith, or

(b) in contravention of section 6(1) of the Human Rights Act 1998.

(9) If the United Kingdom has made, or proposes to make, an application
10to the Council of the European Union under Article 108 of TFEU,
references in subsection (3) to the Commission are to be read as
including references to the Council.

(10) In this section “TFEU” means the Treaty on the Functioning of the
European Union.”

15Inter-bank payment systems

104 Inter-bank payment systems

(1) Part 5 of the Banking Act 2009 (inter-bank payment systems) is amended as
follows.

(2) After section 186 insert—

“186A 20 Amendment of recognition order

(1) The Treasury may amend a recognition order.

(2) Before amending a recognition order the Treasury must—

(a) consult the Bank of England,

(b) notify the operator of the recognised inter-bank payment
25system, and

(c) consider any representations made.

(3) In addition, the Treasury—

(a) must consult the FCA before amending a recognition order in
respect of a payment system the operator of which—

(i) 30is, or has applied to become, a recognised investment
exchange, or

(ii) has, or has applied for, a Part 4A permission, and

(b) if the operator has, or has applied for, a Part 4A permission for
the carrying on of a PRA-regulated activity, must also consult
35the PRA.

(4) The Treasury must consider any request by the operator of a recognised
inter-bank payment system for the amendment of its recognition
order.”

(3) For section 191 substitute—

“191 Directions

(1) The Bank of England may give directions in writing to the operator of
a recognised inter-bank system.

(2) 5A direction may—

(a) require or prohibit the taking of specified action in the operation
of the system;

(b) set standards to be met in the operation of the system.

(3) If a direction is given for the purpose of resolving or reducing a threat
10to the stability of the UK financial system, the operator (including its
officers and staff) has immunity from liability in damages in respect of
action or inaction in accordance with the direction.

(4) A direction given for the purpose mentioned in subsection (3) must—

(a) include a statement that it is given for that purpose, and

(b) 15inform the operator of the effect of that subsection.

(5) The Treasury may by order confer immunity on any person from
liability in damages in respect of action or inaction in accordance with
a direction (including a direction given for the purpose mentioned in
subsection (3)).

(6) 20An order—

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

(b) is subject to annulment in pursuance of a resolution of either
House of Parliament.

(7) An immunity conferred by or under this section does not extend to
25action or inaction—

(a) in bad faith, or

(b) in contravention of section 6(1) of the Human Rights Act 1998.”

(4) In section 186 (procedure)—

(a) for subsection (2) substitute—

“(2) 30In addition, the Treasury—

(a) must consult the FCA before making a recognition order
in respect of a payment system the operator of which—

(i) is, or has applied to become, a recognised
investment exchange, or

(ii) 35has, or has applied for, a Part 4A permission, and

(b) if the operator has, or has applied for, a Part 4A
permission for the carrying on of a PRA-regulated
activity, must also consult the PRA.”, and

(b) in subsection (3), for “or the FSA” substitute “, the FCA or the PRA”.

(5) 40In section 187 (de-recognition), for subsection (4) substitute—

“(4) In addition, the Treasury—

(a) must consult the FCA before revoking a recognition order in
respect of a payment system the operator of which—

(i) is, or has applied to become, a recognised investment
exchange, or

(ii) has, or has applied for, a Part 4A permission, and

(b) if the operator has, or has applied for, a Part 4A permission for
5the carrying on of a PRA-regulated activity, must also consult
the PRA.”

(6) In section 192 (role of FSA)—

(a) in subsection (1), for “the FSA” substitute “the FCA or the PRA”,

(b) for subsection (2) substitute—

“(2) 10The Bank of England—

(a) must consult the FCA before taking action under this
Part in respect of a recognised inter-bank payment
system the operator of which satisfies section 186(2)(a),
and

(b) 15must consult the PRA before taking action under this
Part in respect of a recognised inter-bank payment
system the operator of which satisfies section
186(2)(b).”,

(c) in subsection (3)—

(i) 20for “the FSA”, in the first place, substitute “the FCA or the PRA”,

(ii) for “the FSA”, in the second place, substitute “it”,

(iii) for “section 186(2)” substitute “section 186(2)(a) or (b)”, and

(iv) in paragraph (a), for “the FSA” substitute “the FCA or (as the
case may be) the PRA”, and

(d) 25in the heading, for “FSA” substitute “FCA and PRA”.

(7) After section 202 insert—

“202A Injunctions

(1) If, on the application of the Bank of England, the court is satisfied—

(a) that there is a reasonable likelihood that there will be a
30compliance failure, or

(b) that there has been a compliance failure and there is a
reasonable likelihood that it will continue or be repeated,

the court may make an order restraining the conduct constituting the
failure.

(2) 35If, on the application of the Bank of England, the court is satisfied—

(a) that there has been a compliance failure by the operator of a
recognised inter-bank payment system, and

(b) that there are steps which could be taken for remedying the
failure,

40the court may make an order requiring the operator, and anyone else
who appears to have been knowingly concerned in the failure, to take
such steps as the court may direct to remedy it.

(3) If, on the application of the Bank of England, the court is satisfied—

(a) that there may have been a compliance failure by the operator
45of a recognised inter-bank payment system, or

(b) that a person may have been knowingly concerned in a
compliance failure,

the court may make an order restraining the operator or person from
dealing with any assets which it is satisfied the operator or person is
reasonably likely to deal with.

(4) The jurisdiction conferred by this section is exercisable—

(a) 5in England and Wales and Northern Ireland, by the High Court,
and

(b) in Scotland, by the Court of Session.

(5) In this section—

(a) references to an order restraining anything are, in Scotland, to
10be read as references to an interdict prohibiting that thing,

(b) references to remedying a failure include mitigating its effect,
and

(c) references to dealing with assets include disposing of them.”

(8) After section 203 insert—

“203A 15Records

(1) The Bank of England must maintain satisfactory arrangements for—

(a) recording decisions made in the exercise of its functions under
this Part, and

(b) the safe-keeping of those records which it considers ought to be
20preserved.

(2) The duty in subsection (1) does not apply to a decision to issue a notice
under section 204(1).

203B Annual report

(1) At least once a year the Bank of England must make a report to the
25Treasury on—

(a) the discharge of its functions under this Part,

(b) the extent to which, in its opinion, in discharging those
functions its financial stability objective has been met, and

(c) such other matters as the Treasury may from time to time direct.

(2) 30Subsection (1) does not require the inclusion in the report of any
information whose publication would in the opinion of the Bank of
England be against the public interest.

(3) The Treasury must lay before Parliament a copy of each report received
by them under this section.”

(9) 35In section 204 (information)—

(a) after subsection (1), insert—

“(1A) The Bank of England may by notice in writing require the
operator of a recognised inter-bank payment system to provide
information which the Bank requires in connection with the
40exercise of its functions (whether under this Part or otherwise)
in pursuance of its financial stability objective.”,

(b) in subsections (2) and (3), after “notice” insert “under subsection (1) or
(1A)”,

(c) in subsection (4), for paragraph (b) substitute—

“(b) 45the FCA;

(ba) the PRA;”, and

(d) in paragraph (c) of that subsection, for “or the FSA” substitute “, the
FCA or the PRA”.

(10) In section 206A (services forming part of recognised inter-bank payment
5systems)—

(a) in subsection (4)(a), for “and the FSA” substitute “, the FCA and the
PRA”, and

(b) in subsection (6), for paragraph (b) (and the “and” at the end of it)
substitute—

“(b) 10the FCA,

(ba) the PRA, and”.

105 International obligations

In Part 5 of the Banking Act 2009, after section 206A insert—

206B   International obligations

(1) 15If it appears to the Treasury that any action proposed to be taken by the
Bank of England in exercising its powers under this Part would be
incompatible with EU obligations or any other international obligations
of the United Kingdom, the Treasury may direct the Bank not to take
that action.

(2) 20If it appears to the Treasury that any action which the Bank of England
has power under this Part to take is required for the purpose of
implementing any such obligation, the Treasury may direct the Bank to
take that action.

(3) A direction under this section—

(a) 25may include such supplemental or incidental requirements as
the Treasury consider necessary or expedient, and

(b) is enforceable on an application by the Treasury, by injunction
or, in Scotland, by an order for specific performance under
section 45 of the Court of Session Act 1988.”

30Further amendments

106 Amendments relating to new regulators

Schedule 17 contains amendments of the Banking Act 2009 related to the
provisions of Part 2 of this Act.

Part 9 Miscellaneous

Consumer credit

107 Power to make further provision about regulation of consumer credit

(1) 5Subsection (2) applies on or at any time after the making after the passing of
this Act of an order under section 22 of FSMA 2000 which has the effect that an
activity (a “transferred activity”)—

(a) ceases to be an activity in respect of which a licence under section 21 of
CCA 1974 is required or would be required but for the exemption
10conferred by subsection (2), (3) or (4) of that section or paragraph 15(3)
of Schedule 3 to FSMA 2000, and

(b) becomes a regulated activity for the purposes of FSMA 2000.

(2) The Treasury may by order do any one or more of the following—

(a) transfer to the FCA functions of the OFT under any provision of CCA
151974 that remains in force;

(b) provide that any specified provision of FSMA 2000 which relates to the
powers or duties of the FCA in connection with the failure of any
person to comply with a requirement imposed by or under FSMA 2000
is to apply, subject to any specified modifications, in connection with
20the failure of any person to comply with a requirement imposed by or
under a specified provision of CCA 1974;

(c) require the FCA to issue a statement of policy in relation to the exercise
of powers conferred on it by virtue of paragraph (b);

(d) in connection with provision made by virtue of paragraph (b), provide
25that failure to comply with a specified provision of CCA 1974 no longer
constitutes an offence or that a person may not be convicted of an
offence under a specified provision of CCA 1974 in respect of an act or
omission in a case where the FCA has exercised specified powers in
relation to that person in respect of that act or omission;

(e) 30provide for the transfer to the Treasury of any functions under CCA
1974 previously exercisable by the Secretary of State;

(f) provide that functions of the Secretary of State under CCA 1974 are
exercisable concurrently with the Treasury;

(g) provide for any provision of sections 162 to 165 and 174A of CCA 1974
35which 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) 40the 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) 45things 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;

(h) enable local weights and measures authorities to institute proceedings
in England and Wales for a relevant offence;

(i) 5enable the Department of Enterprise, Trade and Investment in
Northern Ireland to institute proceedings in Northern Ireland for a
relevant offence;

(j) provide that references in a specified enactment to the FCA’s functions
under FSMA 2000 include references to its functions resulting from any
10order under this section.

(3) If an order under this section makes provision by virtue of subsection (2)(b)
enabling the FCA to exercise any of its powers under sections 205 to 206A of
FSMA 2000 (disciplinary measures) by reference to an act or omission that
constitutes an offence under CCA 1974, the order must also make provision by
15virtue of subsection (2)(d) ensuring that a person in respect of whom the power
has been exercised cannot subsequently be convicted of the offence by
reference to the same act or omission.

(4) In subsection (2)(g) to (i)—

(a) “relevant regulated activity” means an activity that is a regulated
20activity for the purposes of FSMA 2000 by virtue of—

(i) an order made under section 22(1) of that Act in relation to an
investment of a kind falling within paragraph 23 or 23B of
Schedule 2 to that Act, or

(ii) an order made under section 22(1A) of that Act;

(b) 25“relevant offence” means an offence under FSMA 2000 committed in
relation to such an activity.

(5) The Treasury may make provision by virtue of subsection (2)(i) only with the
consent of the Department of Enterprise, Trade and Investment in Northern
Ireland.

(6) 30On or at any time after the making of an order under section 22 of FSMA 2000
of the kind mentioned in subsection (1), the Treasury may by order—

(a) exclude the application of any provision of CCA 1974 in relation to a
transferred activity, or

(b) repeal any provision of CCA 1974 which relates to a transferred
35activity.

(7) In exercising their powers under this section, the Treasury must have regard
to—

(a) the importance of securing an appropriate degree of protection for
consumers, and

(b) 40the principle that a burden or restriction which is imposed on a person,
or on the carrying on of an activity, should be proportionate to the
benefits, considered in general terms, which are expected to result from
the imposition of that burden or restriction.

(8) The additional powers conferred by section 115(2) on a person making an
45order under this Act include power for the Treasury, when making an order
under this section—

(a) to make such consequential provision as the Treasury consider
appropriate,

(b) to amend any enactment, including any provision of, or made under,
this Act.

(9) The provisions of this section do not limit—

(a) the powers conferred by section 118 or by section 22 of FSMA 2000, or

(b) 5the powers exercisable under Schedule 21 in connection with the
transfer of functions from the OFT.

(10) In this section—

• “CCA 1974” means the Consumer Credit Act 1974;

• “consumers” has the meaning given in section 1G of FSMA 2000;

• 10“the OFT” means the Office of Fair Trading.

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

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

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

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

(b) 15in subsection (2)—

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

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

(c) in subsection (3)—

(i) 20in paragraph (a), omit “, as the case may be,” and “, or suspend
it until a specified date or indefinitely,”, and

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

(d) in subsection (4)—

(i) in paragraph (a), omit “, as the case may be,” and “, or suspend
25it until a specified date or indefinitely,”, and

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

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

(f) omit subsection (8),

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

(h) 30for the title, omit “Suspension and”.

(3) After section 32 insert—

“32A Power to suspend licence

(1) If during the currency of a licence it appears to the OFT to be urgently
necessary for the protection of consumers that the licence should cease
35to have effect immediately or on a specified date, the OFT is to proceed
as follows.

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

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

(b) 40state the OFT’s reasons for the suspension,

(c) state either—

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

beginning with the day on which the suspension takes
effect, or

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

(d) 5specify any provision to be made under section 34A, and

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

(i) as to the suspension, and

(ii) about the provision (if any) that is or should be made
10under section 34A.

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

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

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

(c) 15state in the notice either—

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

(ii) 20that the duration of the suspension is to be as provided
by section 32B,

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

(e) in the notice invite any licensee to submit to the OFT in
25accordance with section 34ZA representations as to the
suspension.

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

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

(c) 30state in the notice either—

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

(ii) 35that the duration of the suspension is to be as provided
by section 32B,

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

(e) in the notice invite any licensee to submit to the OFT in
40accordance with section 34ZA representations as to the
suspension.

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

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

(b) 45invite the original applicant to submit to the OFT in accordance
with section 34ZA representations as to the suspension.

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

(6) 50The suspension may, if the OFT thinks fit, be ended by notice given by
it to the licensee or, in the case of a group licence, by general notice.

(7) In this section “consumers”, in relation to a licence, means individuals
who have been or may be affected by the carrying on of the business to
which the licence relates, other than individuals who are themselves
55licensees.

32B Duration of suspension

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

(2) 60The suspension ends at the end of the period of 12 months beginning
with the day on which it takes effect, but this is subject to—

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

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

(3) Subsection (4) applies where—

(a) 5the OFT gives notice under section 32 that it is minded to revoke
the licence, and

(b) it gives that notice—

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

(ii) after giving that notice but before the end of the period
10of 12 months mentioned in subsection (2).

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

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

(b) where the OFT determines to revoke the licence in pursuance of
15the notice, the end of the appeal period.”

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

“(1) On an application made by a licensee the OFT may, if it thinks fit, by
notice to the licensee end the suspension of a licence under section 32A,
whether the suspension was for a fixed period or for a period
20determined in accordance with section 32B.”

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

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

(6) 25After section 34 insert—

34ZA   Representations to OFT: suspension under section 32A

(1) Where this section applies to an invitation by the OFT to any person
(“P”) to submit representations, the OFT must invite P, within 21 days
after the notice containing the invitation is given to P or published, or
30such longer period as the OFT may allow—

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

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

and where notice is given under paragraph (b) the OFT must arrange
35for the oral representations to be heard.

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

(3) 40The OFT must give notice of its determination under this section to the
persons who were required to be invited to submit representations
about the original determination under section 32A or, where the
invitation to submit representations was required to be given by
general notice, must give general notice of the confirmation or
45revocation.”