Financial Services Bill (HL Bill 60)

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

(6) In subsection (5), for “(3)” substitute “(3A) or (3B)”.

(7) After subsection (5) insert—

“(5A) 5In 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.”

(8) In subsection (6), for “(3)” substitute “(3B)”.

(9) After subsection (7) insert—

“(8) 10The 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) 15in the case of the PRA, for the purpose of advancing any of its
objectives.”

4 (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) 20In subsection (3)—

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

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

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

(4) 25In 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
“a regulator”.

5 (1) 30Section 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
investment exchange,”, and

(b) 35in 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) after “authorised person” insert “or recognised investment
40exchange”, 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
exchange”.

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

(7) 5For “the Authority”, in each other place (including the heading), substitute
“a regulator”.

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

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

(3) 10In subsection (2)(a), after “authorised person” insert “or recognised
investment exchange”.

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

(5) After subsection (3) insert—

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

(a) 15in the case of an auditor of, or an actuary acting for, a PRA-
authorised person, the PRA;

(b) in any other case, the FCA.”

7 (1) For section 345 (disqualification of auditor or actuary) and the italic heading
before it substitute—

20“Disciplinary measures

345 Disciplinary measures: FCA

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

(a) has failed to comply with a duty imposed on the auditor or
25actuary 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) The FCA may do one or more of the following—

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

(b) disqualify the auditor from being the auditor of any
recognised investment exchange or any particular class of
35recognised 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
comply with the duty;

(d) impose on the auditor or actuary a penalty, payable to the
40FCA, 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
long 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) 5any 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
10being 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) 15notify 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
20person 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
25Treasury, by order made after consultation with the PRA, so provide.

(2) Subsection (3) applies if it appears to the PRA that an auditor or
actuary 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) 30has failed to comply with a duty imposed under this Act to
communicate information to the PRA.

(3) The 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) 35to disqualify the auditor or actuary from being the auditor of,
or (as the case may be) from acting as an actuary for, any
PRA-authorised person or any particular class of PRA-
authorised person;

(b) to publish a statement to the effect that it appears to the PRA
40that the auditor or (as the case may be) actuary has failed to
comply with the duty;

(c) to 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
45must—

(a) notify the FCA, and

(b) notify 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
5PRA-authorised person is also, or any person within that class is also,
a 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
10under paragraph (a).

(7) The 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) 15If the FCA proposes to act under section 345(2) or the PRA proposes
to 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) 20A warning notice about a proposal to publish a statement must set
out 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) 25A decision notice about the imposition of a penalty must state the
amount 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
30act under section 345A(3), the auditor or actuary concerned may
refer 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) 35the auditor or actuary, and

(b) any 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
40respect to—

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

(b) 5the 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) the extent to which the contravention was deliberate or
10reckless.

(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
regulator must issue the altered or replacement statement.

(6) 15A 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
to bring it to the attention of the public.

(8) 20In 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
25the 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) A regulator may charge a reasonable fee for providing a person with
a copy of the statement.

345E 30Statements 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
appearing to the regulator to be best calculated to bring it to the
attention of the public.

(2) 35The 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
regard to any representations made to it in accordance with
subsection (2).

(4) 40If 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
(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))
publish details of the difference.

(6) 5A 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.”

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

(2) In paragraph (a), for “345(2) (whether as a result of subsection (1) of that
10section” 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 44

SCHEDULE 14 Amendments of Part 24 of FSMA 2000: insolvency

1 15Part 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,

  (b)

  is or has been an appointed representative whose
  20principal (or one of whose principals) is, or was, a
  PRA-authorised person, or

  (c)

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

3 (1) Section 356 (powers to participate in proceedings: company voluntary
25arrangements) is amended as follows.

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

(3) In subsection (3)—

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

(b) 30for “the Authority”, in the second place, substitute “the appropriate
regulator”.

(4) After subsection (3) insert—

“(4) The appropriate regulator” means—

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

(i) 35for the purposes of subsections (1) and (2), the FCA or
the PRA, and

(ii) for the purposes of subsection (3), each of the FCA
and 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
application.”

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

(3) 10In 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) After subsection (6) insert—

“(7) 15The 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) for the purposes of subsection (3), the FCA or the
20PRA;

(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
25hearing relating to the application.”

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

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

(2) 30In 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) In subsection (5)—

(a) for “the Authority”, in the first place, substitute “the appropriate
35regulator”, and

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

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

(6) After subsection (6) insert—

“(6A) The appropriate regulator” means—

(a) 40in 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) for 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
5PRA”.

6 (1) Section 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
10investment exchange”.

(3) After 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
15person.”

(4) In 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) 20For subsection (2) substitute—

“(2) If the administrator thinks that the company or partnership is
carrying on, or has carried on—

(a) a regulated activity in contravention of the general
prohibition, or

(b) 25a credit-related regulated activity in contravention of section
20,

the administrator must report the matter to the appropriate regulator
without delay.”

(3) After subsection (2) insert—

“(2A) 30The 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) 35Subsection (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
40contravention 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) In subsection (1)—

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

(b) 5in paragraph (a), after “authorised person” insert “or recognised
investment exchange”.

(3) After subsection (1A) insert—

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

(a) the appointment under paragraph 22 of Schedule B1 to the
101986 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
an administrator of a partnership of a kind described in
subsection (1)(a) to (c), or

(b) 15the filing with the court of a copy of notice of intention to
appoint an administrator under either of those paragraphs
(as so applied).”

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

(5) After subsection (6) insert—

“(7) 20The appropriate regulator” means—

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

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

(ii) in any other case, the FCA;

(b) 25for the purposes of subsection (5)—

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

(ii) in any other case, the FCA.

(8) But where the administration application was made by a regulator
30“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) 35In subsection (1), after “company” insert “or partnership”.

(3) For subsection (2) substitute—

“(2) An 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) 40Those provisions are—

(a) paragraph 22 of Schedule B1 to the 1986 Act (including that
paragraph 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) “The appropriate regulator” means—

(a) 5where 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
as follows.

(2) 10In 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) The appropriate regulator” means—

(a) 15for 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) for the purposes of subsection (5)—

(i) 20where 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
PRA”.

11 25In section 364 (receiver’s duty to report to Authority)—

(a) in paragraph (b), after “prohibition” insert “or a credit-related
regulated activity in contravention of section 20”,

(b) for “to the Authority without delay” substitute “without delay to the
FCA and, if the regulated activity concerned is a PRA-regulated
30activity, to the PRA”, and

(c) in 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
35investment exchange”.

(3) In subsections (2) to (7), for “Authority” substitute “appropriate regulator”.

(4) After subsection (7) insert—

“(8) The appropriate regulator” means—

(a) for the purposes of subsections (2) to (4), (6) and (7)—

(i) 40where the company is a PRA-authorised person, each
of the FCA and the PRA, and

(ii) in any other case, the FCA;

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