Session 2013-14
Other Public Bills before Parliament
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Financial Services (Banking Reform) Bill
to be moved
in Committee
Clause 4
LORD DEIGHTON
Page 9, leave out lines 7 to 9 and insert—
“(a) in relation to a PRA-authorised person, the PRA,
(b) in relation to any other authorised person, the FCA.”
Page 9, line 27, at end insert “and of any rules made by it under section 192JA (rules
applying to parent undertakings of ring-fenced bodies).”
Page 12, line 19, leave out from “a” to end of line 24 and insert “notice (a
“preliminary notice”).
The preliminary notice must—
(a) state that it is a preliminary notice,
(b) state that the regulator proposes to exercise the group
restructuring powers,
(c) state the action which the regulator proposes to take in the
exercise of those powers,
(d) be in writing, and
(e) give reasons for the proposed action (which must include
the regulator’s reasons for being satisfied as to the matters
mentioned in section 142K(1)).”
Page 12, leave out lines 25 to 30 and insert—
“(2) The appropriate regulator must give a copy of the preliminary
notice to the Treasury.”
Page 12, line 31, leave out “first”
Page 12, line 40, leave out from beginning to end of line 11 on page 13
Page 13, line 13, leave out “third preliminary notice” and insert “preliminary notice
under section 142M”
Page 13, line 15, after “if” insert “, having considered any representations made by
any of the relevant persons,”
Page 13, line 19, after “a” insert “written”
Page 13, line 19, at end insert “and give a copy of that notice to the Treasury.”
Page 13, line 20, leave out from second “period” to end of line 22 and insert—
“(a) beginning 3 months after the end of the period specified
under section 142M(3) as that within which any
representations must be made, and
(b) ending 6 months after the end of that period.”
Page 13, line 31, leave out “third”
Page 13, line 34, leave out “third”
Page 13, line 38, leave out “third”
Page 13, line 43, leave out from “must” to end of line 44 and insert “specify the date
or dates by which each of the following must be completed—”
Page 13, line 46, leave out “or”
Page 17, leave out lines 20 to 44 and insert—
“(1A) The Treasury may by regulations require a ring-fenced body to
make arrangements for any one or more of the following
purposes—
(a) ensuring that, except in prescribed cases, the ring-fenced
body cannot become liable to meet, or contribute to the
meeting of, pension liabilities which arise in connection
with persons’ service on or after a date specified in the
regulations (“the specified date”) in any employment, other
than service in an employment in respect of which the
employer is a ring-fenced body;
(b) ensuring that, except in prescribed cases, the default of a
person other than another ring-fenced body would not
result in the ring-fenced body becoming liable to meet, or
contribute to the meeting of, pension liabilities arising in
connection with persons’ service in any employment before
the specified date;
(c) to the extent that it is not possible to ensure the result
mentioned in paragraph (a) or (b), minimising any potential
liability falling within paragraph (a) or (b).
The regulations may make provision enabling the trustees or
managers of a relevant pension scheme in respect of which the
employer or one of the employers is a ring-fenced body—
(a) to transfer to another relevant pension scheme part of the
pension liabilities arising in connection with persons’
service before the specified date together with part of the
assets of the scheme, or
(b) to divide the scheme into two or more sections in relation to
which prescribed conditions are met.
The regulations may make provision—
(a) enabling a ring-fenced body to apply to the court in a case
where the ring-fenced body has been unable to reach
agreement with another person (“P”) about the making of
arrangements with P on commercial terms for one or more
of the purposes in subsection (1A), and
(b) enabling the court on such an application to order P to enter
into arrangements with the ring-fenced body for those
purposes on such terms as the court considers fair and
reasonable in the circumstances.
The regulations must provide that any terms specified by the court
by virtue of provision made under subsection (1C)—
(a) must be terms which, in the court’s opinion, represent terms
on which the arrangements might be entered into if they
were being entered into for commercial reasons between
willing parties dealing at arm’s length, and
(b) may involve the payment of any sum by instalments.
The regulations may make other provision—
(a) about the making by a ring-fenced body of arrangements for
one or more of the purposes in subsection (1A);
(b) about any transfer or division falling within subsection
(1B).”
Page 18, line 11, leave out “a ring-fenced body from making” and insert “the
making of”
Page 18, line 18, leave out “a ring-fenced body to make the arrangements” and
insert “the arrangements to be made”
Page 18, line 19, at end insert—
“( ) require the trustees or managers of a relevant pension
scheme or any employer in relation to a relevant pension
scheme to give notice of prescribed matters to prescribed
persons,”
Page 18, line 25, leave out “the ring-fenced body to make the arrangements” and
insert “the arrangements to be made”
Page 18, leave out lines 27 and 28
Page 18, line 34, at end insert—
“( ) modify, exclude or apply (with or without modification)
any primary or subordinate legislation.”
Page 18, line 34, at end insert—
“(3A) The Treasury may by regulations require an authorised person who
will or may be a ring-fenced body or an authorised person who will
or may be a member of a ring-fenced body’s group to do all it can
to obtain from the Pensions Regulator a clearance statement in
relation to any arrangements to be made for the purpose of
complying with—
(a) regulations under this section, or
(b) any provision made by or under this Part (other than this
section) when the provision comes into force.”
Page 18, line 35, leave out from beginning to “the” and insert “A “clearance
statement” is a statement issued by”
Page 18, line 49, leave out “The regulations” and insert “Regulations under this
section”
Page 19, line 5, at end insert “and this section”
Page 19, line 5, at end insert—
“(1A) “Relevant pension scheme” means an occupational pension scheme
that is not a money purchase scheme.”
Page 19, line 9, leave out ““employer”,”
Page 19, line 14, at end insert—
“(3A) “Employer”, in relation to a relevant pension scheme, means—
(a) a person who is for the purposes of Part 1 of the Pensions
Act 1995 or Part 2 of the Pensions (Northern Ireland) Order
1995 an employer in relation to the scheme, and
(b) any other person who has or may have any liability under
the scheme.
“Employment” has the meaning given in section 181(1) of the
Pension Schemes Act 1993 or section 176(1) of the Pension Schemes
(Northern Ireland) Act 1993.
“Pension liabilities” means liabilities attributable to or associated
with the provision under a relevant pension scheme of pensions or
other benefits.”
Clause 5
LORD DEIGHTON
Page 21, line 36, leave out “In”
Page 21, line 36, leave out “after” and insert “is amended as follows.”
Page 21, line 37, leave out from beginning to end of line 3 on page 22 and insert—
“( ) After subsection (6) insert—
“(6A) In relation to the carrying on of a regulated activity by an
authorised person which is a ring-fenced body, the function of
acting as a director of the body must be specified as a controlled
function in rules made—
(a) in a case where the body is a PRA-authorised person, by the
PRA, or
(b) in any other case, by the FCA.”
( ) After subsection (10) insert—
“(10A) In relation to a body which does not have a board of directors,
“director” means a member of its equivalent management body.””
Clause 6
LORD DEIGHTON
Page 22, line 13, after “provisions,” insert—
“( ) the extent to which ring-fenced bodies are carrying on the
regulated activity of dealing in investments as principal
(whether in the United Kingdom or elsewhere) in
circumstances where as a result of an order under section
142D(2) that activity is not an excluded activity,
( ) the extent to which ring-fenced bodies are carrying on
activities that would be excluded activities by virtue of an
order under section 142D(4) but for an exemption or
exclusion made by such an order,
( ) the extent to which ring-fenced bodies are doing things that
they would be prohibited from doing by an order under
section 142E but for an exemption made by such an order,”
After Clause 12
LORD DEIGHTON
Insert the following new Clause—
“PART 3
BAIL-IN STABILISATION OPTION
Bail-in stabilisation option
(1) Schedule (Bail-in stabilisation optionBail-in stabilisation option) (which contains amendments relating
to a new stabilisation option in Part 1 of the Banking Act 2009) has effect.
(2) The Treasury may by order make any provision they consider appropriate
in consequence of the application to building societies of the amendments
made by this Part.
(3) An order may, in particular, amend section 84 of the Banking Act 2009, or
amend or modify the effect of any other enactment to which this subsection
applies.
(4) Subsection (3) applies to any enactment (including a fiscal enactment)
passed or made—
(a) before the passing of this Act, or
(b) on or before the last day of the Session in which this Act is passed.
(5) In this section “building society” has the same meaning as in section 84 of
the Banking Act 2009.”
Insert the following new Clause—
“PART 4
CONDUCT OF PERSONS WORKING IN FINANCIAL SERVICES SECTOR
Functions for which approval is required
(1) Section 59 of FSMA 2000 (approval for particular arrangements) is
amended as follows.
(2) Omit subsection (5).
(3) For subsection (6) substitute—
“(6) The PRA may specify a description of function under subsection
(3)(a) only if, in relation to the carrying on of a regulated activity by
a PRA-authorised person, it is satisfied that the function is a senior
management function as defined in section 59ZA.”
(4) After subsection (6A) (inserted by section 5 above) insert—
“(6B) If—
(a) a function of a description specified in rules made by the
FCA under subsection (3)(a) or (b) is a controlled function in
relation to the carrying on of a regulated activity by a bank,
and
(b) the FCA is satisfied that, in relation to the carrying on of a
regulated activity by a bank, the function is a senior
management function as defined in section 59ZA,
the FCA must designate the function in the rules as a senior the FCA must designate the function in the rules as a senior
management function.management function.
(a)
The administrator must obtain the
approval of the Bank of England to
any proposals under sub-para. (1).
(b)
Treat the reference in sub-para.
(2)(b) to the objective mentioned in
para. 3(1)(a) or (b) as a reference to
the objective in section (Objective of Objective of
FMI administrationFMI administration) of this Act.
(c) Ignore sub-para. (3)(b).
(a)
Before making an application in
reliance on this paragraph the FMI
administrator must give notice to
the Bank of England, which is to be
entitled to participate in the
proceedings.
(b)
In making directions the court must
have regard to the objective in
section (Objective of FMI Objective of FMI
administrationadministration) of this Act.
(a) Ignore sub-paras. (1) and (3).
(b)
The Bank of England may apply to
the court for the variation or
revocation of any directions given
by the court.
()
“(2) Where a company is in FMI
administration, a creditor or
member of the company may apply
to the court claiming that the FMI
administrator is conducting himself
or herself in a manner preventing
the achievement of the objective of
the FMI administration as quickly
and efficiently as is reasonably
practicable.”
()
“(1) On an application made by a
person mentioned in sub-paragraph
(2), the court may provide for the
appointment of an FMI
administrator of a company to cease
to have effect from a specified time.
()
(2) The persons who may apply to
the court under sub-paragraph (1)
are—
() (a) the Bank of England;
()
(b) with the consent of the Bank, the
FMI administrator.”
(a)
Para. 91(1) applies as if the only
person who could make an
application were the Bank of
England.
(b) Ignore para. 91(2).
(a)
in accordance with directions of the
Bank of England, and
(b)
if the Bank is satisfied that they will
not prejudice the objective in section
(Objective of FMI administration)Objective of FMI administration) of
this Act.
(a)
In considering making an order in
reliance on section 241 the court
must have regard to the objective in
section (Objective of FMI Objective of FMI
administrationadministration) of this Act.
(b)
Ignore subsections (2A)(a) and (3) to
(3C).
If a function of a description specified in rules made by the PRA
under subsection (3)(a) is a controlled function in relation to the
carrying on of a regulated activity by a bank, the PRA must
designate the function in the rules as a senior management
function.”
(5) Omit subsections (7) to (7B) and (11).”
Insert the following new Clause—
After section 59 of FSMA 2000 insert—
“59ZA Senior management functions
(1) This section has effect for determining whether a function is for the
purposes of section 59(6) and (6B) a senior management function.
(2) A function is a “senior management function”, in relation to the
carrying on of a regulated activity by an authorised person, if—
(a) the function will require the person performing it to be
responsible for managing one or more aspects of the
authorised person’s affairs, so far as relating to the activity,
and
(b) those aspects involve, or might involve, a risk of serious
consequences—
(i) for the authorised person, or
(ii)
for business or other interests in the United
Kingdom.
(3) In subsection (2)(a) the reference to managing one or more aspects
of an authorised person’s affairs includes a reference to taking
decisions, or participating in the taking of decisions, about how one
or more aspects of those affairs should be carried on.””
Insert the following new Clause—
(1) Section 60 of FSMA 2000 (applications for approval) is amended as follows.
(2) After subsection (2) insert—
“(2A) If—
(a) the application is for the approval of a person to perform a
designated senior management function, and
(b) the authorised person concerned is a bank,
the appropriate regulator must require the application to contain, the appropriate regulator must require the application to contain,
or be accompanied by, a statement setting out the aspects of the or be accompanied by, a statement setting out the aspects of the
affairs of the authorised person concerned which it is intended that affairs of the authorised person concerned which it is intended that
the person will be responsible for managing in performing the the person will be responsible for managing in performing the
function.function.
(a)
The administrator must obtain the
approval of the Bank of England to
any proposals under sub-para. (1).
(b)
Treat the reference in sub-para.
(2)(b) to the objective mentioned in
para. 3(1)(a) or (b) as a reference to
the objective in section (Objective of Objective of
FMI administrationFMI administration) of this Act.
(c) Ignore sub-para. (3)(b).
(a)
Before making an application in
reliance on this paragraph the FMI
administrator must give notice to
the Bank of England, which is to be
entitled to participate in the
proceedings.
(b)
In making directions the court must
have regard to the objective in
section (Objective of FMI Objective of FMI
administrationadministration) of this Act.
(a) Ignore sub-paras. (1) and (3).
(b)
The Bank of England may apply to
the court for the variation or
revocation of any directions given
by the court.
()
“(2) Where a company is in FMI
administration, a creditor or
member of the company may apply
to the court claiming that the FMI
administrator is conducting himself
or herself in a manner preventing
the achievement of the objective of
the FMI administration as quickly
and efficiently as is reasonably
practicable.”
()
“(1) On an application made by a
person mentioned in sub-paragraph
(2), the court may provide for the
appointment of an FMI
administrator of a company to cease
to have effect from a specified time.
()
(2) The persons who may apply to
the court under sub-paragraph (1)
are—
() (a) the Bank of England;
()
(b) with the consent of the Bank, the
FMI administrator.”
(a)
Para. 91(1) applies as if the only
person who could make an
application were the Bank of
England.
(b) Ignore para. 91(2).
(a)
in accordance with directions of the
Bank of England, and
(b)
if the Bank is satisfied that they will
not prejudice the objective in section
(Objective of FMI administration)Objective of FMI administration) of
this Act.
(a)
In considering making an order in
reliance on section 241 the court
must have regard to the objective in
section (Objective of FMI Objective of FMI
administrationadministration) of this Act.
(b)
Ignore subsections (2A)(a) and (3) to
(3C).
A statement provided under subsection (2A) is known as a
“statement of responsibilities”.
In subsection (2A) “designated senior management function”
means a function designated as a senior management function
under section 59(6B) or (6C).”
(3) After subsection (6) insert—
“(6A) Subsection (6) applies to references to a bank as it applies to
references to the authorised person concerned.””
Insert the following new Clause—
(1) Section 61 of FSMA 2000 (determination of applications) is amended as
follows.
(2) For subsection (1) substitute—
“(1) The regulator to which an application for approval is made under
section 60 may grant the application only if—
(a) it is satisfied that the person in respect of whom the
application is made (“the candidate”) is a fit and proper
person to perform the function to which the application
relates, or
(b) in a case where the application is for approval to perform a
designated senior management function in relation to the
carrying on of a regulated activity by a bank (a “bank-
related senior management application”), it is satisfied that
the condition in paragraph (a) will be met if the application
is granted subject to one or more conditions (as to which, see
subsection (2B)).”
(3) In subsection (2), for “deciding that question” substitute “determining the
application”.
(4) After subsection (2A) insert—
“(2B) The regulator to which a bank-related senior management
application is made under section 60 may in particular—
(a) grant the application subject to any conditions that the
regulator considers appropriate, and
(b) grant the application so as to give approval only for a
limited period.
A regulator may exercise the power under paragraph (a) or (b) of
subsection (2B) only if—
(a) where the regulator is the FCA, it appears to the FCA that it
is desirable to do so in order to advance one or more of its
operational objectives, and
(b) where the regulator is the PRA, it appears to the PRA that it
is desirable to do so in order to advance any of its objectives.
Consent given by the FCA for the granting of the application may
be conditional on the manner in which the PRA exercises its power
under subsection (2B).”
(5) After subsection (3) insert—
“(3ZA) In the case of a bank-related senior management application, the
reference in subsection (3)(a) to granting the application is a
reference to granting it without imposing conditions or limiting the
period for which the approval has effect.”
(6) After subsection (5) insert—
“(6) In this section—
(a) “designated senior management function” means a function
designated as a senior management function under section
59(6B) or (6C);
(b) any reference to a bank includes a reference to a person who
has applied for permission under Part 4A and will be a bank
if permission is given.”
(7) In section 62 of FSMA 2000 (applications for approval: procedure and right
to refer to Tribunal)—
(a) in subsection (2), after “the application” insert “, or to grant the
application subject to conditions or for a limited period (or both)”;
(b) in subsection (3), after “the application” insert “, or to grant the
application subject to conditions or for a limited period (or both)”;
(c) in subsection (4), after “the application” insert “, or to grant the
application subject to conditions or for a limited period (or both)”.”
Insert the following new Clause—
After section 62 of FSMA 2000 insert—
“62A Changes in responsibilities of senior managers
(1) This section applies where—
(a) an authorised person has made an application to the
appropriate regulator for approval under section 59 for a
person to perform a designated senior management
function,
(b) the application contained, or was accompanied by, a
statement of responsibilities under section 60(2A), and
(c) the application has been granted.
(2) If, since the granting of the application, there has been any
significant change in the aspects of the authorised person’s affairs
which the person is responsible for managing in performing the
function, the authorised person must provide the appropriate
regulator with a revised statement of responsibilities.
(3) The appropriate regulator may require the authorised person—
(a) to provide information which the person is required to give
under this section in such form as the appropriate regulator
may direct, or
(b) to verify such information in such a way as the appropriate
regulator may direct.
(4) In this section—
“the appropriate regulator” has the same meaning as in section
60;
“designated senior management function” means a function
designated as a senior management function under section
59(6B) or (6C).””
Insert the following new Clause—
After section 63 of FSMA 2000 insert—
“63ZA Variation of senior manager’s approval at request of bank
(1) Where an application for approval under section 59 is granted
subject to conditions, the authorised person concerned may apply
to the appropriate regulator to vary the approval by—
(a) varying a condition,
(b) removing a condition, or
(c) imposing a new condition.
(2) “The appropriate regulator”—
(a) in the case of an application for variation of an approval in
a way described in subsection (1)(a) or (b), means whichever
of the FCA or the PRA imposed the condition concerned;
(b) in the case of an application for variation of an approval in
the way described in subsection (1)(c), means the regulator
who gave the approval.
(3) The PRA must consult the FCA before determining an application
under this section, unless the application relates to the variation or
removal of a condition which was imposed by the PRA in exercise
of its power under section 63ZB.
(4) The regulator to which an application is made under this section
must, before the end of the period for consideration, determine
whether—
(a) to grant the application; or
(b) to give a warning notice under section 62(2).
(5) “The period for consideration” means the period of 3 months
beginning with the date on which the regulator receives the
application.
(6) The FCA may refuse an application under this section if it appears
to the FCA that it is desirable to do so in order to advance one or
more of its operational objectives.
(7) The PRA may refuse an application under this section if it appears
to the PRA that it is desirable to do so in order to advance any of its
objectives.
(8) The following provisions apply to an application made under this
section for variation of an approval as they apply to an application
for approval made under section 60—
(none) section 60(2) to (8),
(none) section 61(4) and (5),
(none) section 62.
63ZB Variation of senior manager’s approval on initiative of regulator
(1) The FCA may vary an approval under section 59 given by the FCA
or the PRA for the performance of a designated senior management
function in relation to the carrying on of a regulated activity by a
bank if the FCA considers that it is desirable to do so in order to
advance one or more of its operational objectives.
(2) The PRA may vary an approval under section 59 for the
performance of a designated senior management function in
relation to the carrying on of a regulated activity by a bank if—
(a) either—
(i) the PRA gave the approval, or
(ii)
the FCA gave the approval and the bank is a PRA-
authorised person, and
(b) the PRA considers that it is desirable to do so in order to
advance any of its objectives.
(3) A regulator may vary an approval by—
(a) imposing a condition,
(b) varying a condition,
(c) removing a condition, or
(d) limiting the period for which the approval is to have effect.
(4) Before one regulator varies an approval given by the other
regulator, it must consult the other regulator.
(5) In this section “designated senior management function” means a
function designated as a senior management function under section
59(6B) or (6C).
63ZC Exercise of power under section 63ZB: procedure
(1) This section applies to an exercise, by either regulator, of the power
to vary an approval under section 63ZB.
(2) A variation takes effect—
(a) immediately, if the notice given under subsection (4) states
that that is the case,
(b) on such date as is specified in the notice, or
(c) if no date is specified in the notice, when the matter to which
the notice relates is no longer open to review.
(3) A variation may be expressed to take effect immediately (or on a
specified date) only if the regulator concerned, having regard to the
ground on which it is exercising the power to vary, reasonably
considers that it is necessary for the variation to take effect
immediately (or on that date).
(4) If either regulator proposes to vary an approval or varies an
approval with immediate effect, it must give each of the interested
parties written notice.
(5) The notice must—
(a) give details of the variation,
(b) state the regulator’s reasons for the variation,
(c) inform the interested parties that each of them may make
representations to the regulator within such period as may
be specified in the notice (whether or not any of the
interested parties has referred the matter to the Tribunal),
(d) inform the interested parties of when the variation takes
effect, and
(e) inform the interested parties of the right of each of them to
refer the matter to the Tribunal.
(6) “The interested parties”, in relation to an approval, are—
(a) the person on whose application it was given (“A”),
(b) the person in respect of whom it was given (“B”), and
(c) the person by whom B’s services are retained, if not A.
(7) The regulator giving the notice may extend the period allowed
under the notice for making representations.
(8) If having considered the representations made by the interested
parties, the regulator decides—
(a) to vary the approval, or
(b) if the variation has taken effect, not to rescind it,
it must give each of the interested parties written notice.it must give each of the interested parties written notice.
(a)
The administrator must obtain the
approval of the Bank of England to
any proposals under sub-para. (1).
(b)
Treat the reference in sub-para.
(2)(b) to the objective mentioned in
para. 3(1)(a) or (b) as a reference to
the objective in section (Objective of Objective of
FMI administrationFMI administration) of this Act.
(c) Ignore sub-para. (3)(b).
(a)
Before making an application in
reliance on this paragraph the FMI
administrator must give notice to
the Bank of England, which is to be
entitled to participate in the
proceedings.
(b)
In making directions the court must
have regard to the objective in
section (Objective of FMI Objective of FMI
administrationadministration) of this Act.
(a) Ignore sub-paras. (1) and (3).
(b)
The Bank of England may apply to
the court for the variation or
revocation of any directions given
by the court.
()
“(2) Where a company is in FMI
administration, a creditor or
member of the company may apply
to the court claiming that the FMI
administrator is conducting himself
or herself in a manner preventing
the achievement of the objective of
the FMI administration as quickly
and efficiently as is reasonably
practicable.”
()
“(1) On an application made by a
person mentioned in sub-paragraph
(2), the court may provide for the
appointment of an FMI
administrator of a company to cease
to have effect from a specified time.
()
(2) The persons who may apply to
the court under sub-paragraph (1)
are—
() (a) the Bank of England;
()
(b) with the consent of the Bank, the
FMI administrator.”
(a)
Para. 91(1) applies as if the only
person who could make an
application were the Bank of
England.
(b) Ignore para. 91(2).
(a)
in accordance with directions of the
Bank of England, and
(b)
if the Bank is satisfied that they will
not prejudice the objective in section
(Objective of FMI administration)Objective of FMI administration) of
this Act.
(a)
In considering making an order in
reliance on section 241 the court
must have regard to the objective in
section (Objective of FMI Objective of FMI
administrationadministration) of this Act.
(b)
Ignore subsections (2A)(a) and (3) to
(3C).
(9) If having considered the representations made by the interested
parties, the regulator decides—
(a) not to vary the approval,
(b) to vary the approval in a different way, or
(c) if the variation has taken effect, to rescind it,
it must give each of the interested parties written notice.it must give each of the interested parties written notice.
(a)
The administrator must obtain the
approval of the Bank of England to
any proposals under sub-para. (1).
(b)
Treat the reference in sub-para.
(2)(b) to the objective mentioned in
para. 3(1)(a) or (b) as a reference to
the objective in section (Objective of Objective of
FMI administrationFMI administration) of this Act.
(c) Ignore sub-para. (3)(b).
(a)
Before making an application in
reliance on this paragraph the FMI
administrator must give notice to
the Bank of England, which is to be
entitled to participate in the
proceedings.
(b)
In making directions the court must
have regard to the objective in
section (Objective of FMI Objective of FMI
administrationadministration) of this Act.
(a) Ignore sub-paras. (1) and (3).
(b)
The Bank of England may apply to
the court for the variation or
revocation of any directions given
by the court.
()
“(2) Where a company is in FMI
administration, a creditor or
member of the company may apply
to the court claiming that the FMI
administrator is conducting himself
or herself in a manner preventing
the achievement of the objective of
the FMI administration as quickly
and efficiently as is reasonably
practicable.”
()
“(1) On an application made by a
person mentioned in sub-paragraph
(2), the court may provide for the
appointment of an FMI
administrator of a company to cease
to have effect from a specified time.
()
(2) The persons who may apply to
the court under sub-paragraph (1)
are—
() (a) the Bank of England;
()
(b) with the consent of the Bank, the
FMI administrator.”
(a)
Para. 91(1) applies as if the only
person who could make an
application were the Bank of
England.
(b) Ignore para. 91(2).
(a)
in accordance with directions of the
Bank of England, and
(b)
if the Bank is satisfied that they will
not prejudice the objective in section
(Objective of FMI administration)Objective of FMI administration) of
this Act.
(a)
In considering making an order in
reliance on section 241 the court
must have regard to the objective in
section (Objective of FMI Objective of FMI
administrationadministration) of this Act.
(b)
Ignore subsections (2A)(a) and (3) to
(3C).
(10) A notice under subsection (8) must inform the interested parties of
the right of each of them to refer the matter to the Tribunal.
(11) A notice under subsection (9)(b) must comply with subsection (5).
(12) If a notice informs the interested parties of the right to refer a matter
to the Tribunal, it must give an indication of the procedure on such
a reference.
(13) For the purposes of subsection (2)(c), whether a matter is open to
review is to be determined in accordance with section 391(8).
(14) “Approval” means an approval under section 59.””
Insert the following new Clause—
After section 63ZC of FSMA 2000 (inserted by section (Variation of approvalVariation of approval)
above) insert—
“63ZD Statement of policy relating to conditional approval and variation
(1) Each regulator must prepare and issue a statement of its policy with
respect to—
(a) its giving of approval under section 59 subject to conditions
or for a limited period only, and
(b) its variation under section 63ZA or 63ZB of an approval
given under section 59.
(2) A regulator may at any time alter or replace a statement issued by
it under this section.
(3) If a statement issued under this section is altered or replaced by a
regulator, the regulator must issue the altered or replacement
statement.
(4) A statement issued under this section must be published by the
regulator concerned in the way appearing to the regulator to be best
calculated to bring it to the attention of the public.
(5) A regulator may charge a reasonable fee for providing a person
with a copy of a statement published under this section.
(6) A regulator must, without delay, give the Treasury a copy of any
statement which it publishes under this section.
63ZE Statement of policy: procedure
(1) Before issuing a statement of policy under section 63ZD, a regulator
(“the issuing regulator”) must—
(a) consult the other regulator, and
(b) publish a draft of the proposed statement in the way
appearing to the issuing regulator to be best calculated to
bring it to the attention of the public.
(2) The duty of the FCA to consult the PRA under subsection (1)(a)
applies only in so far as the statement of policy applies to persons
whose approval under section 59 relates to the performance of a
function designated by the FCA as a senior management function
under section 59(6B) in relation to the carrying on by PRA-
authorised persons of regulated activities.
(3) The draft must be accompanied by notice that representations
about the proposal may be made to the issuing regulator within a
specified time.
(4) Before issuing the proposed statement, the issuing regulator must
have regard to any representations made to it in accordance with
subsection (3).
(5) If the issuing regulator issues the proposed statement it must
publish an account, in general terms, of—
(a) the representations made to it in accordance with subsection
(3), and
(b) its response to them.
(6) If the statement differs from the draft published under subsection
(1) in a way which is in the opinion of the issuing regulator
significant, the issuing regulator—
(a) must before issuing it carry out any consultation required
by subsection (1)(a), and
(b) must (in addition to complying with subsection (5)) publish
details of the difference.
(7) The issuing regulator may charge a reasonable fee for providing a
person with a draft published under subsection (1)(b).
(8) This section also applies to a proposal to alter or replace a
statement.””
Insert the following new Clause—
(1) Section 63A of FSMA 2000 (power to impose penalties) is amended as
follows.
(2) In subsection (4), for “period of three years” substitute “relevant period”.
(3) After subsection (5A) insert—
“(5B) “The relevant period” is—
(a) in relation to the performance of a controlled function
without approval before the day on which this subsection
comes into force, the period of 3 years, and
(b) in relation to the performance of a controlled function
without approval on or after that day, the period of 6 years.”
(4) Section 66 of FSMA 2000 (disciplinary powers) is amended as follows.
(5) In subsection (4), for “period of three years” substitute “relevant period”.
(6) After subsection (5) insert—
“(5ZA) “The relevant period” is—
(a) in relation to misconduct which occurs before the day on
which this subsection comes into force, the period of 3 years,
and
(b) in relation to misconduct which occurs on or after that day,
the period of 6 years.””
Insert the following new Clause—
(1) Part 5 of FSMA 2000 (performance of regulated activities) is amended as
follows.
(2) Omit sections 64 and 65 (and the italic cross-heading preceding them).
(3) Before section 66 insert—
“Conduct of approved persons and others
64A Rules of conduct
(1) If it appears to the FCA to be necessary or expedient for the purpose
of advancing one or more of its operational objectives, the FCA may
make rules about the conduct of the following persons—
(a) persons in relation to whom either regulator has given its
approval under section 59;
(b) persons who are employees of banks.
(2) If it appears to the PRA to be necessary or expedient for the purpose
of advancing any of its objectives, the PRA may make rules about
the conduct of the following persons—
(a) persons in relation to whom it has given its approval under
section 59;
(b) persons in relation to whom the FCA has given its approval
under section 59 in respect of the performance by them of a
relevant senior management function in relation to the
carrying on by a PRA-authorised person of a regulated
activity;
(c) persons who are employees of PRA-authorised banks.
(3) In subsection (2)—
“PRA-authorised bank” means a bank that is a PRA-
authorised person, and
“relevant senior management function” means a function
which the PRA is satisfied is a senior management function
as defined in section 59ZA (whether or not the function has
been designated as such by the FCA).
(4) Rules made under this section must relate to the conduct of persons
in relation to the performance by them of qualifying functions.
(5) In subsection (4) “qualifying function”, in relation to a person,
means a function relating to the carrying on of activities (whether
or not regulated activities) by—
(a) in the case of an approved person, the person on whose
application approval was given, and
(b) in any other case, the person’s employer.
(6) In this section any reference to an employee of a person (“P”)
includes a reference to a person who—
(a) personally provides, or is under an obligation personally to
provide, services to P under an arrangement made between
P and the person providing the services or another person,
and
(b) is subject to (or to the right of) supervision, direction or
control by P as to the manner in which those services are
provided,
and “employer” is to be read accordingly.””and “employer” is to be read accordingly.””
(a)
The administrator must obtain the
approval of the Bank of England to
any proposals under sub-para. (1).
(b)
Treat the reference in sub-para.
(2)(b) to the objective mentioned in
para. 3(1)(a) or (b) as a reference to
the objective in section (Objective of Objective of
FMI administrationFMI administration) of this Act.
(c) Ignore sub-para. (3)(b).
(a)
Before making an application in
reliance on this paragraph the FMI
administrator must give notice to
the Bank of England, which is to be
entitled to participate in the
proceedings.
(b)
In making directions the court must
have regard to the objective in
section (Objective of FMI Objective of FMI
administrationadministration) of this Act.
(a) Ignore sub-paras. (1) and (3).
(b)
The Bank of England may apply to
the court for the variation or
revocation of any directions given
by the court.
()
“(2) Where a company is in FMI
administration, a creditor or
member of the company may apply
to the court claiming that the FMI
administrator is conducting himself
or herself in a manner preventing
the achievement of the objective of
the FMI administration as quickly
and efficiently as is reasonably
practicable.”
()
“(1) On an application made by a
person mentioned in sub-paragraph
(2), the court may provide for the
appointment of an FMI
administrator of a company to cease
to have effect from a specified time.
()
(2) The persons who may apply to
the court under sub-paragraph (1)
are—
() (a) the Bank of England;
()
(b) with the consent of the Bank, the
FMI administrator.”
(a)
Para. 91(1) applies as if the only
person who could make an
application were the Bank of
England.
(b) Ignore para. 91(2).
(a)
in accordance with directions of the
Bank of England, and
(b)
if the Bank is satisfied that they will
not prejudice the objective in section
(Objective of FMI administration)Objective of FMI administration) of
this Act.
(a)
In considering making an order in
reliance on section 241 the court
must have regard to the objective in
section (Objective of FMI Objective of FMI
administrationadministration) of this Act.
(b)
Ignore subsections (2A)(a) and (3) to
(3C).
Insert the following new Clause—
(1) In section 66 of FSMA 2000 (disciplinary powers)—
(a) after subsection (1) insert—
“(1A) For provision about when a person is guilty of misconduct
for the purposes of action by a regulator—
(a) see section 66A, in the case of action by the FCA, and
(b) see section 66B, in the case of action by the PRA.”;
(b) omit subsections (2), (2A), (6) and (7).
(2) After that section insert—
“66A Misconduct: action by the FCA
(1) For the purposes of action by the FCA under section 66, a person is
guilty of misconduct if any of conditions A to C is met in relation to
the person.
(2) Condition A is that—
(a) the person has at any time failed to comply with rules made
by the FCA under section 64A, and
(b) at that time the person was—
(i) an approved person, or
(ii) an employee of a bank.
(3) Condition B is that—
(a) the person has at any time been knowingly concerned in a
contravention of a relevant requirement by an authorised
person, and
(b) at that time the person was—
(i)
an approved person in relation to the authorised
person, or
(ii)
in the case of an authorised person that is a bank, an
employee of the bank.
(4) In this section “relevant requirement” means a requirement—
(a) imposed by or under this Act, or
(b) imposed by any qualifying EU provision specified, or of a
description specified, for the purposes of this subsection by
the Treasury by order.
(5) Condition C is that—
(a) the person has at any time been a senior manager in relation
to an authorised person that is a bank,
(b) there has at that time been (or continued to be) a
contravention of a relevant requirement by the bank, and
(c) the senior manager was at that time responsible for the
management of any of the bank’s activities in relation to
which the contravention occurred.
(6) But a person (“P”) is not guilty of misconduct by virtue of
subsection (5) if P satisfies the FCA that P had taken such steps as a
person in P’s position could reasonably be expected to take to avoid
the contravention occurring (or continuing).
(7) For the purposes of subsection (5)—
“senior manager”, in relation to an authorised person that is a
bank, means a person who has approval under section 59 to
perform a designated senior management function in
relation to the carrying on by the bank of a regulated
activity;
“designated senior management function” means a function
designated as a senior management function under section
59(6B) or (6C).
(8) In this section—
“approved person”—
(a) means a person in relation to whom an approval is
given under section 59, and
(b) in relation to an authorised person, means a person
in relation to whom such approval is given on the
application of the authorised person;
“employee”, in relation to a person, has the same meaning as
in section 64A.
“66B Misconduct: action by the PRA
(1) For the purposes of action by the PRA under section 66, a person is
guilty of misconduct if any of conditions A to C is met in relation to
the person.
(2) Condition A is that—
(a) the person has at any time failed to comply with rules made
by the PRA under section 64A, and
(b) at that time the person was—
(i) an approved person, or
(ii) an employee of a PRA-authorised bank.
(3) Condition B is that—
(a) the person has at any time been knowingly concerned in a
contravention of a relevant requirement by a PRA-
authorised person, and
(b) at that time the person was—
(i)
an approved person in respect of the performance of
a relevant senior management function in relation to
the carrying on by the PRA-authorised person of a
regulated activity, or
(ii)
in the case of an authorised person that is a bank, an
employee of the bank.
(4) In this section “relevant requirement” means a requirement—
(a) imposed by or under this Act, or
(b) imposed by any qualifying EU provision specified, or of a
description specified, for the purposes of this subsection by
the Treasury by order.
(5) Condition C is that—
(a) the person has at any time been a senior manager in relation
to a PRA-authorised bank,
(b) there has at that time been (or continued to be) a
contravention of a relevant requirement by the bank, and
(c) the senior manager was at that time responsible for the
management of any of the bank’s activities in relation to
which the contravention occurred.
(6) But a person (“P”) is not guilty of misconduct by virtue of
subsection (5) if P satisfies the PRA that P had taken such steps as a
person in P’s position could reasonably be expected to take to avoid
the contravention occurring (or continuing).
(7) For the purposes of subsection (5)—
“senior manager”, in relation to an authorised person that is a
bank, means a person who has approval under section 59 to
perform a designated senior management function in
relation to the carrying on by the bank of a regulated
activity;
“designated senior management function” means a function
designated as a senior management function under section
59(6B) or (6C).
(8) In this section—
“approved person”—
(a) means a person in relation to whom—
(a) the PRA has given its approval under section
59, or
(b) the FCA has given its approval under section
59 in respect of the performance by the
person of a relevant senior management
function in relation to the carrying on by a
PRA-authorised person of a regulated
activity, and
(b) in relation to an authorised person, means a person
in relation to whom approval under section 59 is
given on the application of the authorised person;
“employee”, in relation to a person, has the same meaning as
in section 64A;
“PRA-authorised bank” means a bank that is a PRA-
authorised person;
“relevant senior management function” means a function
which the PRA is satisfied is a senior management function
as defined in section 59ZA (whether or not the function has
been designated as such by the FCA).””
Insert the following new Clause—
(none) In Part 5 of FSMA 2000 (performance of regulated activities), after section
71 insert—
““Bank”
71A Meaning of “bank”
(1) In this Part “bank” means a UK institution which has permission
under Part 4A to carry on the regulated activity of accepting
deposits.
(2) But “bank” does not include an insurer.
(3) In this section—
(a) “UK institution” means an institution which is incorporated
in, or formed under the law of any part of, the United
Kingdom;
(b) “insurer” means an institution which is authorised under
this Act to carry on the regulated activity of effecting or
carrying out contracts of insurance as principal.
(4) Subsections (1) and (3)(b) are to be read in accordance with section
22, taken with Schedule 2 and any order under section 22.””
Insert the following new Clause—
(1) Section 347 of FSMA 2000 (the record of authorised persons etc.) is
amended as follows.
(2) In subsection (2)—
(a) in paragraph (g), after sub-paragraph (iii) insert—
“(iv)
in a case where the relevant authorised
person is a bank, whether or not the person is
a senior manager;”;
(b) after that paragraph insert—
“(h) in the case of an approved person who is a senior
manager in relation to an authorised person that is a
bank—
(i)
whether a final notice has been given to the
person under section 390; and
(ii)
if so, any information about the matter to
which the notice relates which has been
published under section 391(4).”
(3) After subsection (8) insert—
“(8A) In this section—
“senior manager”, in relation to an authorised person that is a
bank, means a person who has approval under section 59 to
perform a designated senior management function in
relation to the carrying on by the bank of a regulated
activity,
“bank” has the same meaning as in Part 5 (see section 71A),
and
“designated senior management function” means a function
designated as a senior management function under section
59(6B) or (6C).””
Insert the following new Clause—
(none) Schedule (Consequential amendments relating to Part 4Consequential amendments relating to Part 4) (which contains
further amendments relating to the provisions of this Part) has effect.”
Insert the following new Clause—
(1) A person (“S”) commits an offence if—
(a) at a time when S is a senior manager in relation to a bank (“B”), S—
(i)
takes, or agrees to the taking of, a decision by or on behalf of
B as to the way in which the business of a group bank is to
be carried on, or
(ii)
fails to take steps that S could take to prevent such a decision
being taken,
(b) at the time of the decision, S is aware of a risk that the
implementation of the decision may cause the failure of the group
bank,
(c) in all the circumstances, S’s conduct in relation to the taking of the
decision falls far below what could reasonably be expected of a
person in S’s position, and
(d) the implementation of the decision causes the failure of the group
bank.
(2) A “group bank”, in relation to a bank (“B”), means B or any other bank that
is a member of B’s group for the purpose of FSMA 2000 (see section 421 of
that Act).
(3) Subsections (1) and (2) are to be read with the interpretative provisions in
section (Interpretation of terms used in offenceInterpretation of terms used in offence).
(4) A person guilty of an offence under this section is liable—
(a) on summary conviction—
(i)
in England and Wales, to imprisonment for a term not
exceeding 12 months (or 6 months, if the offence was
committed before the commencement of section 154(1) of
the Criminal Justice Act 2003) or a fine, or both;
(ii)
in Scotland, to imprisonment for a term not exceeding 12
months or a fine not exceeding the statutory maximum, or
both;
(iii)
in Northern Ireland, to imprisonment for a term not
exceeding 6 months 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.”
Insert the following new Clause—
(1) This section has effect for the interpretation of section (Offence relating to Offence relating to
decision that results in bank failuredecision that results in bank failure).
(2) “Bank” means a UK institution which has permission under Part 4A of
FSMA 2000 to carry on the regulated activity of accepting deposits.
(3) But “bank” does not include—
(a) an insurer, or
(b) a credit union.
(4) In subsections (2) and (3)—
(a) “UK institution” means an institution which is incorporated in, or
formed under the law of any part of, the United Kingdom;
(b) “insurer” means an institution which is authorised under FSMA
2000 to carry on the regulated activity of effecting or carrying out
contracts of insurance as principal;
(c) “credit union” means a credit union as defined by section 31 of the
Credit Unions Act 1979 or a credit union as defined by Article 2(2)
of the Credit Unions (Northern Ireland) Order 1985.
(5) Subsections (2) and (4)(b) are to be read in accordance with section 22 of
FSMA 2000, taken with Schedule 2 to that Act and any order under that
section.
(6) A person is a “senior manager” in relation to a bank if, under an
arrangement entered into by the bank, or by a contractor of the bank, in
relation to the carrying on by the bank of a regulated activity, the person
performs a function that is designated as a senior management function—
(a) by the FCA under subsection (6B) of section 59 of FSMA 2000
(approval for particular arrangements), or
(b) by the PRA under subsection (6C) of that section.
(7) A bank (“B”) is to be regarded as failing where—
(a) B enters insolvency,
(b) any of the stabilisation options in Part 1 of the Banking Act 2009 is
achieved in relation to B, or
(c) B is taken for the purposes of the Financial Services Compensation
Scheme to be unable, or likely to be unable, to satisfy claims against
B.
(8) In subsection (7)(a) “insolvency” includes—
(a) bankruptcy,
(b) liquidation,
(c) bank insolvency,
(d) administration,
(e) bank administration,
(f) receivership,
(g) a composition between B and B’s creditors, and
(h) a scheme of arrangement of B’s affairs.”
Insert the following new Clause—
(1) In this section “an offence” means an offence under section (Offence relating Offence relating
to decision that results in bank failureto decision that results in bank failure).
(2) Proceedings for an offence may be instituted in England and Wales only—
(a) by the FCA, the PRA or the Secretary of State, or
(b) by or with the consent of the Director of Public Prosecutions.
(3) Proceedings for an offence may be instituted in Northern Ireland only—
(a) by the FCA, the PRA or the Secretary of State, or
(b) by or with the consent of the Director of Public Prosecutions for
Northern Ireland.
(4) In exercising its power to institute proceedings for an offence, the FCA or
the PRA must comply with any conditions or restrictions imposed in
writing by the Treasury.
(5) Conditions or restrictions may be imposed under subsection (4) in relation
to—
(a) proceedings generally, or
(b) such proceedings, or categories of proceedings, as the Treasury
may direct.”
Insert the following new Clause—
“PART 6
SPECIAL ADMINISTRATION FOR OPERATORS OF CERTAIN INFRASTRUCTURE SYSTEMS
Financial market infrastructure administration
This Part—
(a) provides for a procedure to be known as FMI administration, and
(b) restricts the powers of persons other than the Bank of England in
relation to the insolvency of infrastructure companies.”
Insert the following new Clause—
(1) In this Part “infrastructure company” has the meaning given by this
section.
(2) “Infrastructure company” means a company which is—
(a) the operator of a recognised inter-bank payment system, other than
an operator excluded by subsection (3),
(b) approved under regulations under section 785 of the Companies
Act 2006 (provision enabling procedures for evidencing and
transferring title) as the operator of a securities settlement system,
or
(c) a company designated by the Treasury under subsection (4).
(3) But a company is not an infrastructure company if it is a recognised central
counterparty, as defined by section 285 of FSMA 2000.
(4) The Treasury may by order designate a company for the purposes of
subsection (2)(c) if—
(a) the company provides services to a person falling within subsection
(2)(a) or (b), and
(b) the Treasury are satisfied that an interruption in the provision of
those services would have a serious adverse effect on the effective
operation of the recognised inter-bank payment system or
securities settlement system in question.
(5) An order under subsection (4) must specify the recognised inter-bank
payment system or securities settlement system in connection with which
the company is designated.
(6) Before designating a company under subsection (4), the Treasury must
consult—
(a) the company to be designated,
(b) the person within subsection (2)(a) or (b) to whom the company
provides services,
(c) the Bank of England,
(d) if the company is a PRA-authorised person, the PRA and the FCA,
and
(e) if the company is an authorised person other than a PRA-
authorised person, the FCA.”
Insert the following new Clause—
(1) In this Part—
“company” means a company registered under the Companies Act
2006;
“operator”, in relation to a recognised inter-bank payment system, is
to be read in accordance with section 183 of the Banking Act 2009;
“recognised inter-bank payment system” means an inter-bank
payment system, as defined by section 182 of the Banking Act 2009,
in respect of which a recognition order under section 184 of that Act
is in force;
“the relevant system” means—
(a) in relation to an infrastructure company falling within
subsection (2)(a) of section (Interpretation: infrastructure Interpretation: infrastructure
companiescompanies), the recognised inter-bank payment system,
(b) in relation to an infrastructure company falling within
subsection (2)(b) of that section, the securities settlement
system,
(c) in relation to a company designated under subsection (4) of
that section, the recognised inter-bank payment system or
securities settlement system falling within paragraph (b) of
that subsection;
“securities settlement system” means a computer-based system, and
procedures, which enable title to units of a security to be evidenced
and transferred without a written instrument, and which facilitate
supplementary and incidental matters.
(2) Expressions used in the definition of “securities settlement system” in
subsection (1) are to be read in accordance with section 783 of the
Companies Act 2006.”
Insert the following new Clause—
(1) In this Part “FMI administration order” means an order which—
(a) is made by the court in relation to an infrastructure company, and
(b) directs that, while the order is in force, the affairs, business and
property of the company are to be managed by a person appointed
by the court.
(2) A person appointed as mentioned in subsection (1)(b) is referred to in this
Part as an FMI administrator.
(3) The FMI administrator of a company must manage its affairs, business and
property, and exercise and perform the FMI administrator’s functions, so
as to achieve the objective in section (Objective of FMI administration(Objective of FMI administration).”
Insert the following new Clause—
(1) Where an FMI administrator is appointed in relation to the operator of a
recognised inter-bank payment system or a securities settlement system,
the objective of the FMI administration is—
(a) to ensure that the system is and continues to be maintained and
operated as an efficient and effective system,
(b) where the operator of the system is also a clearing house falling
within section 285(1)(b)(ii) of FSMA 2000 (recognised clearing
house that is not a recognised central counterparty), to ensure that
the protected activities continue to be carried on, and
(c) to ensure by one or both of the specified means that it becomes
unnecessary for the FMI administration order to remain in force for
that purpose or those purposes.
(2) Where an FMI administrator is appointed in relation to a company
designated under subsection (4) of section (Interpretation: infrastructure Interpretation: infrastructure
companiescompanies), the objective of the FMI administration is—
(a) to ensure that services falling within that subsection continue to be
provided, and
(b) to ensure by one or both of the specified means that it becomes
unnecessary for the FMI administration order to remain in force for
that purpose.
(3) The protected activities referred to in subsection (1)(b) are such activities as
the Bank of England may from time to time direct, which must be—
(a) regulated activities falling within section 285(3)(a) or (b) of FSMA
2000, or
(b) related activities which are necessary for the efficient carrying on of
any of those regulated activities.
(4) The specified means are—
(a) the rescue as a going concern of the company subject to the FMI
administration order, and
(b) transfers falling within subsection (5).
(5) A transfer falls within this subsection if it is a transfer as a going concern—
(a) to another company, or
(b) as respects different parts of the undertaking of the company
subject to the FMI administration order, to two or more different
companies,
of so much of that undertaking as it is appropriate to transfer for the of so much of that undertaking as it is appropriate to transfer for the
purpose of achieving the objective of the FMI administration.purpose of achieving the objective of the FMI administration.
(a)
The administrator must obtain the
approval of the Bank of England to
any proposals under sub-para. (1).
(b)
Treat the reference in sub-para.
(2)(b) to the objective mentioned in
para. 3(1)(a) or (b) as a reference to
the objective in section (Objective of Objective of
FMI administrationFMI administration) of this Act.
(c) Ignore sub-para. (3)(b).
(a)
Before making an application in
reliance on this paragraph the FMI
administrator must give notice to
the Bank of England, which is to be
entitled to participate in the
proceedings.
(b)
In making directions the court must
have regard to the objective in
section (Objective of FMI Objective of FMI
administrationadministration) of this Act.
(a) Ignore sub-paras. (1) and (3).
(b)
The Bank of England may apply to
the court for the variation or
revocation of any directions given
by the court.
()
“(2) Where a company is in FMI
administration, a creditor or
member of the company may apply
to the court claiming that the FMI
administrator is conducting himself
or herself in a manner preventing
the achievement of the objective of
the FMI administration as quickly
and efficiently as is reasonably
practicable.”
()
“(1) On an application made by a
person mentioned in sub-paragraph
(2), the court may provide for the
appointment of an FMI
administrator of a company to cease
to have effect from a specified time.
()
(2) The persons who may apply to
the court under sub-paragraph (1)
are—
() (a) the Bank of England;
()
(b) with the consent of the Bank, the
FMI administrator.”
(a)
Para. 91(1) applies as if the only
person who could make an
application were the Bank of
England.
(b) Ignore para. 91(2).
(a)
in accordance with directions of the
Bank of England, and
(b)
if the Bank is satisfied that they will
not prejudice the objective in section
(Objective of FMI administration)Objective of FMI administration) of
this Act.
(a)
In considering making an order in
reliance on section 241 the court
must have regard to the objective in
section (Objective of FMI Objective of FMI
administrationadministration) of this Act.
(b)
Ignore subsections (2A)(a) and (3) to
(3C).
(6) The means by which transfers falling within subsection (5) may be effected
include, in particular—
(a) a transfer of the undertaking of the company subject to the FMI
administration order, or of part of its undertaking, to a wholly-
owned subsidiary of that company, and
(b) the transfer to a company of securities of a wholly-owned
subsidiary to which there has been a transfer falling within
paragraph (a).
(7) The objective of the FMI administration may be achieved by transfers
falling within subsection (5) only to the extent that—
(a) the rescue as a going concern of the company subject to the FMI
administration order is not reasonably practicable or is not
reasonably practicable without such transfers,
(b) the rescue of that company as a going concern will not achieve that
objective or will not do so without such transfers, or
(c) such transfers would produce a result for the company’s creditors
as a whole that is better than the result that would be produced
without them.”
Insert the following new Clause—
(1) An application for an FMI administration order may be made to the court
by the Bank of England.
(2) An application must nominate a person to be appointed as the FMI
administrator.
(3) The infrastructure company must be given notice of an application, in
accordance with rules under section 411 of the 1986 Act (as applied in
relation to FMI administration).”
Insert the following new Clause—
(1) The court may make an FMI administration order in relation to an
infrastructure company if satisfied—
(a) that the company is unable to pay its debts,
(b) that the company is likely to be unable to pay its debts, or
(c) that, on a petition presented by the Secretary of State under section
124A of the 1986 Act (petition for winding up on grounds of public
interest), it would be just and equitable (disregarding the objective
of the FMI administration) to wind up the company.
(2) The court may not make an FMI administration order on the ground set out
in subsection (1)(c) unless the Secretary of State has certified to the court
that the case is one in which the Secretary of State considers (disregarding
the objective of the FMI administration) that it would be appropriate to
petition under section 124A of the 1986 Act.
(3) On an application for an FMI administration order, the court may—
(a) grant the application;
(b) dismiss the application;
(c) adjourn the application (generally or to a specified date);
(d) make an interim order;
(e) treat the application as a winding-up petition and make any order
which the court could make under section 125 of the 1986 Act;
(f) make any other order which the court thinks appropriate.
(4) An interim order under subsection (3)(d) may, in particular—
(a) restrict the exercise of a power of the company or of its directors;
(b) make provision conferring a discretion on the court or on a person
qualified to act as an insolvency practitioner in relation to the
company.
(5) For the purposes of this section a company is unable to pay its debts if it is
treated as being so unable under section 123 of the 1986 Act (definition of
inability to pay debts).”
Insert the following new Clause—
(1) The FMI administrator of a company—
(a) is an officer of the court, and
(b) in exercising and performing powers and duties in relation to the
company, is the company’s agent.
(2) The management by the FMI administrator of a company of any of its
affairs, business or property must be carried out for the purpose of
achieving the objective of the FMI administration as quickly and efficiently
as is reasonably practicable.
(3) The FMI administrator of a company must exercise and perform powers
and duties in the way which, so far as it is consistent with the objective of
the FMI administration to do so, best protects—
(a) the interests of the company’s creditors as a whole, and
(b) subject to those interests, the interests of the company’s members as
a whole.”
Insert the following new Clause—
(1) This section applies where, before the commencement of FMI
administration, the infrastructure company had entered into arrangements
with a supplier for the provision of a supply to the infrastructure company.
(2) After the commencement of FMI administration, the supplier—
(a) must not terminate a supply unless—
(i)
any charges in respect of the supply which relate to a supply
given after the commencement of FMI administration
remain unpaid for more than 28 days,
(ii) the FMI administrator consents to the termination, or
(iii)
the supplier has the permission of the court, which may be
given if the supplier can show that the continued provision
of the supply would cause the supplier to suffer hardship,
(b) must not make it a condition of a supply that any charges in respect
of the supply which relate to a supply given before the
commencement of FMI administration are paid, and
(c) must not do anything which has the effect of making it a condition
of the giving of a supply that any charges within paragraph (b) are
paid.
(3) Where, before the commencement of FMI administration, a contractual
right to terminate a supply has arisen but has not been exercised, then, for
the purposes of this section, the commencement of FMI administration
causes that right to lapse and the supply is only to be terminated if a
ground in subsection (2)(a) applies.
(4) Any provision in a contract between the infrastructure company and the
supplier that purports to terminate the agreement if any action is taken to
put the infrastructure company in FMI administration is void.
(5) Any expenses incurred by the infrastructure company on the provision of
a supply after the commencement of FMI administration are to be treated
as necessary disbursements in the course of the FMI administration.
(6) In this section—
“commencement of FMI administration” means the making of the FMI
administration order;
“supplier” means the person controlling the provision of a supply to
the infrastructure company, and includes a company that is a group
undertaking (as defined by section 1161(5) of the Companies Act
2006) in respect of the infrastructure company;
“supply” means a supply of any of the following—
(a) computer hardware or software used by the infrastructure
company in connection with the operation of the relevant
system;
(b) financial data;
(c) infrastructure permitting electronic communication
services;
(d) data processing;
(e) access to secure data networks used by the infrastructure
company in connection with the operation of the relevant
system.”
Insert the following new Clause—
(1) If the Bank of England considers it necessary to do so for the purpose of
achieving the objective of an FMI administration, the Bank may direct the
FMI administrator to take, or refrain from taking, specified action.
(2) In deciding whether to give a direction under this section, the Bank of
England must have regard to the public interest in—
(a) the protection and enhancement of the stability of the financial
system of the United Kingdom, and
(b) the maintenance of public confidence in that system.
(3) A direction under this section must not be incompatible with a direction of
the court that is in force under Schedule B1 to the 1986 Act.
(4) The Bank of England must, within a reasonable time of giving the direction,
give the FMI administrator a statement of its reasons for giving the
direction.
(5) A person listed in subsection (6) has immunity from liability in damages in
respect of action or inaction in accordance with a direction under this
section.
(6) Those persons are—
(a) the FMI administrator;
(b) the company in FMI administration;
(c) the officers or staff of the company.
(7) Immunity conferred by this section does not extend to action or inaction—
(a) in bad faith, or
(b) in contravention of section 6(1) of the Human Rights Act 1998.
(8) This section does not limit the powers conferred on the Bank of England by
section 191 of the Banking Act 2009 (directions) in relation to a recognised
inter-bank payment system.”
Insert the following new Clause—
(1) Schedule (Conduct of FMI administrationConduct of FMI administration) (which applies the provisions of
Schedule B1 to the 1986 Act about ordinary administration orders and
certain other enactments to FMI administration orders) has effect.
(2) Schedule (Financial market infrastructure transfer schemesFinancial market infrastructure transfer schemes) (which makes
provision for transfer schemes to achieve the objective of an FMI
administration) has effect.
(3) The power to make rules conferred by section 411(1B) of the 1986 Act (rules
relating to bank administration) is to apply for the purpose of giving effect
to this Part as it applies for the purposes of giving effect to Part 3 of the
Banking Act 2009 (and, accordingly, as if the reference in section 411(1B) to
that Part included a reference to this Part).”
Insert the following new Clause—
(1) A petition by a person other than the Bank of England for a winding up
order in respect of an infrastructure company may not be determined
unless—
(a) the petitioner has notified the Bank of England that the petition has
been presented, and
(b) the period of 14 days beginning with the day on which the notice is
received by the Bank has ended.
(2) A resolution for the voluntary winding up of an infrastructure company
may not be made unless—
(a) the infrastructure company has applied to the court under this
section,
(b) the company has notified the Bank of England that the application
has been made, and
(c) after the end of the period of 14 days beginning with the day on
which the notice is received by the Bank, the court gives permission
for the resolution to be made.”
Insert the following new Clause—
(1) This section applies where an ordinary administration application is made
in relation to an infrastructure company by a person other than the Bank of
England.
(2) The court must dismiss the application if—
(a) an FMI administration order is in force in relation to the company,
or
(b) an FMI administration order has been made in relation to the
company but is not yet in force.
(3) Where subsection (2) does not apply, the court, on hearing the application,
must not exercise its powers under paragraph 13 of Schedule B1 to the 1986
Act (other than its power of adjournment) unless—
(a) the applicant has notified the Bank of England that the application
has been made, and
(b) the period of 14 days beginning with the day on which the notice is
received by the Bank has ended.
(4) On the making of an FMI administration order in relation to an
infrastructure company, the court must dismiss any ordinary
administration application made in relation to the company which is
outstanding.
(5) “Ordinary administration application” means an application under
paragraph 12 of Schedule B1 to the 1986 Act.”
Insert the following new Clause—
A person may not take any step to enforce a security over property of an
infrastructure company unless—
(a) notice of the intention to do so has been given to the Bank of
England, and
(b) the period of 14 days beginning with the day on which the notice
was received by the Bank has ended.”
Insert the following new Clause—
(1) This section applies where an FMI administration order has been made in
relation to an infrastructure company.
(2) The Treasury may, out of money provided by Parliament, make loans to
the company for achieving the objective in section (Objective of FMI Objective of FMI
administrationadministration).
(3) A loan under this section may be made on such terms as the Treasury think
fit.
(4) The Treasury must pay into the Consolidated Fund sums received by them
as a result of this section.”
Insert the following new Clause—
(1) This section applies where an FMI administration order has been made in
relation to an infrastructure company.
(2) The Treasury may agree to indemnify persons in respect of one or both of
the following—
(a) liabilities incurred in connection with the exercise of powers and
duties by the FMI administrator;
(b) loss or damage sustained in that connection.
(3) The agreement may be made in whatever manner, and on whatever terms,
the Treasury think fit.
(4) As soon as practicable after agreeing to indemnify persons under this
section, the Treasury must lay before Parliament a statement of the
agreement.
(5) If sums are paid by the Treasury in consequence of an indemnity agreed to
under this section, the infrastructure company must pay the Treasury—
(a) such amounts in or towards the repayment to them of those sums
as the Treasury may direct, and
(b) interest, at such rates as they may direct, on amounts outstanding
under this subsection.
(6) Subsection (5) does not apply in the case of a sum paid by the Treasury for
indemnifying a person in respect of a liability to the infrastructure
company.
(7) Where a sum has been paid out by the Treasury in consequence of an
indemnity agreed to under this section, the Treasury must lay a statement
relating to that sum before Parliament—
(a) as soon as practicable after the end of the financial year in which
that sum is paid out, and�
(b) (except where subsection (5) does not apply in the case of the sum)
as soon as practicable after the end of each subsequent relevant
financial year.
(8) In relation to a sum paid out in consequence of an indemnity, a financial
year is a relevant financial year for the purposes of subsection (7) unless—
(a) before the beginning of that year, the whole of that sum has been
repaid to the Treasury under subsection (5), and
(b) the infrastructure company is not at any time during that year
subject to liability to pay interest on amounts that became due
under that subsection in respect of that sum.
(9) The power of the Treasury to agree to indemnify persons—
(a) is confined to a power to agree to indemnify persons in respect of
liabilities, loss and damage incurred or sustained by them as
relevant persons, but
(b) �includes power to agree to indemnify persons (whether or not they
are identified or identifiable at the time of the agreement) who
subsequently become relevant persons.�
(10) For the purposes of this section each of the following is a relevant person—
(a) the FMI administrator;
(b) an employee of the FMI administrator;
(c) a member or employee of a firm of which the FMI administrator is
a member;
(d) a member or employee of a firm of which the FMI administrator is
an employee;
(e) a member or employee of a firm of which the FMI administrator
was an employee or member at a time when the order was in force;
(f) a body corporate which is the employer of the FMI administrator;
(g) an officer, employee or member of such a body corporate.
(11) For the purposes of subsection (10)—
(a) the references to the FMI administrator are to be read, where two or
more persons are appointed to act as the FMI administrator, as
references to any one or more of them, and
(b) the references to a firm of which a person was a member or
employee at a particular time include references to a firm which
holds itself out to be the successor of a firm of which the person was
a member or employee at that time.�
(12) The Treasury must pay into the Consolidated Fund sums received by them
as a result of subsection (5).”
Insert the following new Clause—
(1) In this Part—
“the 1986 Act” means the Insolvency Act 1986;
“business”, “member”, “property” and “security” have the same
meaning as in the 1986 Act;
“company” has the meaning given by section (Interpretation: other Interpretation: other
expressionsexpressions);
“the court” means—
(a) in England and Wales and Northern Ireland, the High
Court;
(b) in Scotland, the Court of Session;
“FMI administration order” and “FMI administrator” are to be read in
accordance with section (FMI administration ordersFMI administration orders);
“infrastructure company” has the meaning given by section
(Interpretation: infrastructure companiesInterpretation: infrastructure companies);
“operator”, in relation to a recognised inter-bank payment system, has
the meaning given by section (Interpretation: other expressionsInterpretation: other expressions);
“recognised inter-bank payment system” has the meaning given by
section (Interpretation: other expressionsInterpretation: other expressions);
“regulated activity” has the same meaning as in FSMA 2000;
“the relevant system” has the meaning given by section (Interpretation: Interpretation:
other expressionsother expressions);
“securities settlement system” has the meaning given by section
(Interpretation: other expressionsInterpretation: other expressions).
(2) In this Part references to the FMI administrator of a company include a
person appointed under paragraph 91 or 103 of Schedule B1 to the 1986
Act, as applied by Schedule (Conduct of FMI administrationConduct of FMI administration) to this Act, to be
the FMI administrator of a company.
(3) In this Part references to a person qualified to act as an insolvency
practitioner in relation to a company are to be read in accordance with Part
13 of the 1986 Act, but as if references in that Part to a company included a
company registered under the Companies Act 2006 in Northern Ireland.”
Insert the following new Clause—
(1) This section makes provision about this Part in its application to Northern
Ireland.
(2) Any reference to any provision of the 1986 Act is to have effect as a
reference to the corresponding provision of the Insolvency (Northern
Ireland) Order 1989.
(3) Section (Interpretation: generalInterpretation: general)(3) is to have effect as if the reference to
Northern Ireland were a reference to England and Wales or Scotland.”
Before Clause 13
LORD DEIGHTON
Insert the following new Clause—
“PART 7
MISCELLANEOUS
Functions of FCA under competition legislation
Schedule (Functions of FCA under competition legislationFunctions of FCA under competition legislation) (which contains
provision conferring on the FCA functions under competition legislation)
has effect.”
Insert the following new Clause—
(1) For section 2H of FSMA 2000 substitute—
“2H
Secondary competition objective and duty to have regard to
regulatory principles
(1) When discharging its general functions in a way that advances its
objectives (see section 2F), the PRA must so far as is reasonably
possible act in a way which, as a secondary objective, facilitates
effective competition in the markets for services provided by PRA-
authorised persons in carrying on regulated activities.
(2) In discharging its general functions, the PRA must also have regard
to the regulatory principles in section 3B.”
(2) In section 3B (regulatory principles to be applied by both regulators), in
subsection (1), for “2H(1)(a)” substitute “2H(2)”.
(3) In Schedule 1ZB to FSMA 2000 (the Prudential Regulation Authority)—
(a) in paragraph 19 (annual report), in sub-paragraph (1)—
(i) after paragraph (b) insert—
“(ba) how it has complied with section 2H(1),”, and
(ii)
in paragraph (c), omit the words from “and of” onwards,
and
(b) in paragraph 20 (consultation about annual report), in sub-
paragraph (1)(c), for the words from “and the PRA” onwards
substitute “and the PRA has facilitated effective competition in
accordance with section 2H and has considered the regulatory
principles in section 3B”.”
Insert the following new Clause—
(1) After section 192J of FSMA 2000 insert—
“Rules applying to parent undertakings of ring-fenced bodies
192JA Rules applying to parent undertakings of ring-fenced bodies
(1) The appropriate regulator may make such rules applying to bodies
corporate falling within subsection (2) as appear to the regulator to
be necessary or expedient for the group ring-fencing purposes.
(2) A body corporate falls within this subsection if—
(a) it is incorporated in the United Kingdom or has a place of
business in the United Kingdom,
(b) it is a parent undertaking of a ring-fenced body, and
(c) it is not itself an authorised person.
(3) The “group ring-fencing purposes” are the purposes set out in
section 142H(4).
(4) “The appropriate regulator” means—
(a) in relation to the parent undertaking of a ring-fenced body
that is a PRA-authorised person, the PRA;
(b) in any other case, the FCA.
Rules requiring parent undertakings to facilitate resolution
192JB Rules requiring parent undertakings to facilitate resolution
(1) The appropriate regulator may make rules requiring a qualifying
parent undertaking to make arrangements that would in the
opinion of the regulator allow or facilitate the exercise of the
resolution powers in relation to the qualifying parent undertaking
or any of its subsidiary undertakings in the event of a situation
arising where all or part of the business of the parent undertaking
or the subsidiary undertaking encounters or is likely to encounter
financial difficulties.
(2) The “resolution powers” are—
(a) the powers conferred on the Treasury and the Bank of
England by or under Parts 1 to 3 of the Banking Act 2009,
and
(b) any similar powers exercisable by an authority outside the
United Kingdom.
(3) The arrangements that may be required include arrangements
relating to—
(a) the issue of debt instruments by the parent undertaking;
(b) the provision to a subsidiary undertaking (“S”) or a
transferee by the parent undertaking, or by any other
subsidiary undertaking of the parent undertaking, of such
services and facilities as would be required to enable S or the
transferee to operate the business, or part of the business,
effectively.
(4) In subsection (3)(b) “transferee” means a person to whom all or part
of the business of the parent undertaking or the subsidiary
undertaking could be transferred as a result of the exercise of the
resolution powers.
(5) “Debt instrument” has the same meaning as in section 142Y.
(6) “The appropriate regulator” means—
(a) where the subsidiary undertakings of the qualifying parent
undertaking include a ring-fenced body that is a PRA-
authorised person, the PRA;
(b) where the subsidiary undertakings of the qualifying parent
undertaking include one or more PRA-authorised persons
but do not include any authorised person that is not a PRA-
authorised person, the PRA;
(c) where the subsidiary undertakings of the qualifying parent
undertaking do not include any PRA-authorised person, the
FCA;
(d) in any other case, the PRA or the FCA.”
(2) In section 192K of FSMA 2000 (power to impose penalty or issue censure)—
(a) in subsection (1), after “section 192J” insert “or 192JB”, and
(b) after that subsection insert—
“(1A) This section also applies if a regulator is satisfied that a
person (“P”) who is or has been a parent undertaking of a
ring-fenced body has contravened a provision of rules made
by that regulator under section 192JA.””
Clause 14
LORD DEIGHTON
Page 27, line 11, at end insert “and
(b) after “213(1A),” insert “234I(2),”.”
After Clause 15
LORD DEIGHTON
Insert the following new Clause—
Schedule (Building societiesBuilding societies) (which contains provision about building
societies) has effect.”
Before Schedule 2
LORD DEIGHTON
Insert the following new Schedule—
“SCHEDULE
BAIL-IN STABILISATION OPTION
PART 1
AMENDMENTS OF BANKING ACT 2009
1 The Banking Act 2009 is amended as follows.
New stabilisation option: bail-in
2 After section 12 insert—
“12A Bail-in option
(1) The third stabilisation option is exercised by the use of the power
in subsection (2).
(2) The Bank of England may make one or more resolution
instruments (which may contain provision or proposals of any
kind mentioned in subsections (3) to (6)).
(3) A resolution instrument may—
(a) make special bail-in provision with respect to a specified
bank;
(b) make other provision for the purposes of, or in
connection with, any special bail-in provision made by
that or another instrument.
(4) A resolution instrument may—
(a) provide for securities issued by a specified bank to be
transferred to a bail-in administrator (see section 12B) or
another person;
(b) make other provision for the purposes of, or in
connection with, the transfer of securities issued by a
specified bank (whether or not the transfer has been or is
to be effected by that instrument, by another resolution
instrument or otherwise).
(5) A resolution instrument may set out proposals with regard to the
future ownership of a specified bank or of the business of a
specified bank, and any other proposals (for example, proposals
about making special bail-in provision) that the Bank of England
may think appropriate.
(6) A resolution instrument may make any other provision the Bank
of England may think it appropriate to make in exercise of
specific powers under this Part.
(7) Provision made in accordance with subsection (4) may relate to—
(a) specified securities, or
(b) securities of a specified description.
(8) Where the Bank of England has exercised the power in
subsection (4) to transfer securities to a bail-in administrator, the
Bank of England must exercise its functions under this Part (see,
in particular, section 48V) with a view to ensuring that any
securities held by a person in the capacity of a bail-in
administrator are so held only for so long as is, in the Bank of
England’s opinion, appropriate having regard to the special
resolution objectives.
(9) References in this Part to “special bail-in provision” are to
provision made in reliance on section 48B.
12B Bail-in administrators
(1) The Bank of England may, in a resolution instrument, appoint an
individual or body corporate as a bail-in administrator.
(2) A bail-in administrator is appointed—
(a) to hold any securities that may be transferred or issued to
that person in the capacity of bail-in administrator;
(b) to perform any other functions that may be conferred
under any provision of this Part.
(3) The Bank of England may appoint more than one bail-in
administrator to perform functions in relation to a bank (but no
more than one of them may at any one time be authorised to hold
securities as mentioned in subsection (2)(a)).
(4) Securities held by a bail-in administrator (in that capacity, and
whether as a result of a resolution instrument or otherwise) are
to be held in accordance with the terms of a resolution
instrument that transfers those, or other, securities to the bail-in
administrator.
(5) For example, the following provision may be made by virtue of
subsection (4)—
(a) provision that specified rights of a bail-in administrator
with respect to all or any of the securities are to be
exercisable only as directed by the Bank of England;
(b) provision specifying rights or obligations that the bail-in
administrator is, or is not, to have in relation to some or
all of the securities.
(6) A bail-in administrator must have regard, in performing any
functions of the office, to any objectives that may be specified in
a resolution instrument.
(7) Where one or more objectives are specified in accordance with
subsection (6), the objectives are to be taken to have equal status
with each other, unless the contrary is stated in the resolution
instrument.
(8) See sections 48I to 48K for further provision about bail-in
administrators.”
3 After section 8 insert—
“8A Specific condition: bail-in
(1) The Bank of England may exercise a stabilisation power in
respect of a bank in accordance with section 12A(2) only if
satisfied that the condition in subsection (2) is met.
(2) The condition is that the exercise of the power is necessary,
having regard to the public interest in—
(a) the stability of the financial systems of the United
Kingdom,
(b) the maintenance of public confidence in the stability of
those systems,
(c) the protection of depositors, or
(d) the protection of any client assets that may be affected.
(3) Before determining whether that condition is met, and if so how
to react, the Bank of England must consult—
(a) the PRA,
(b) the FCA, and
(c) the Treasury.
(4) The condition in this section is in addition to the conditions in
section 7.”
Further provision about the bail-in option
4 After section 48A insert—
“Bail-in option
48B Special bail-in provision
(1) “Special bail-in provision”, in relation to a bank, means any of the
following (or any combination of the following)—
(a) provision cancelling a liability owed by the bank;
(b) provision modifying, or changing the form of, a liability
owed by the bank;
(c) provision that a contract under which the bank has a
liability is to have effect as if a specified right had been
exercised under it.
(2) A power to make special bail-in provision—
(a) may be exercised only for the purpose of, or in connection
with, reducing, deferring or cancelling a liability of the
bank;
(b) may not be exercised so as to affect any excluded liability.
(3) The following rules apply to the interpretation of subsection (1).
1. The reference to cancelling a liability owed by the bank
includes a reference to cancelling a contract under which
the bank has a liability.
2. The reference to modifying a liability owed by the bank
includes a reference to modifying the terms (or the effect
of the terms) of a contract under which the bank has a
liability.
3. The reference to changing the form of a liability owed by
the bank, includes, for example—
(a) converting an instrument under which the bank
owes a liability from one form or class to another,
(b) replacing such an instrument with another
instrument of a different form or class, or
(c) creating a new security (of any form or class) in
connection with the modification of such an
instrument.
(4) Examples of special bail-in provision include—
(a) provision that transactions or events of any specified kind
have or do not have (directly or indirectly) specified
consequences or are to be treated in a specified manner
for specified purposes;
(b) provision discharging persons from further performance
of obligations under a contract and dealing with the
consequences of persons being so discharged.
(5) The form and class of the instrument (“the resulting instrument”)
into which an instrument is converted, or with which it is
replaced, do not matter for the purposes of paragraphs (a) and (b)
of rule 3 in subsection (3); for instance, the resulting instrument
may (if it is a security) fall within Class 1 or any other Class in
section 14.
(6) The following liabilities of the bank are “excluded liabilities”—
(a) liabilities representing protected deposits;
(b) any liability, so far as it is secured;
(c) liabilities that the bank has by virtue of holding client
assets;
(d) liabilities with an original maturity of less than 7 days
owed by the bank to a credit institution or investment
firm;
(e) liabilities arising from participation in designated
settlement systems and owed to such systems or to
operators of, or participants in, such systems;
(f) liabilities owed to central counterparties recognised by
the European Securities and Markets Authority in
accordance with Article 25 of Regulation (EU) 648/2012
of the European Parliament and the Council;
(g) liabilities owed to an employee or former employee in
relation to salary or other remuneration, except variable
remuneration;
(h) liabilities owed to an employee or former employee in
relation to rights under a pension scheme, except rights to
discretionary benefits;
(i) liabilities owed to creditors arising from the provision to
the bank of goods or services (other than financial
services) that are critical to the daily functioning of the
bank’s operations.
(7) The following special rules apply in cases involving banking
group companies—
(a) a liability mentioned in subsection (6)(d) is not an
excluded liability if the credit institution or investment
firm to which the liability is owed is a banking group
company in relation to the bank (see section 81D);
(b) in subsection (6)(i) the reference to creditors does not
include companies which are banking group companies
in relation to the bank.
48C Meaning of “protected deposit”
(1) A deposit is “protected” so far as it is covered by the Financial
Services Compensation Scheme.
(2) A deposit is “protected” so far as it is covered by a scheme
which—
(a) operates outside the United Kingdom, and
(b) is comparable to the Financial Services Compensation
Scheme.
(3) If one or both of subsections (1) and (2) apply to a deposit, the
amount of the deposit “protected” is the highest amount which
results from either of those subsections.
(4) In subsections (1) and (2) and section 48B(6)(a), “deposit” has the
meaning given by article 5(2) of the Financial Services and
Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/
544), but ignoring the exclusions in article 6.
48D General interpretation of section 48B
(1) In section 48B—
“client assets” means assets which the bank has undertaken
to hold on trust for, or on behalf of, a client;
“contract” includes any instrument;
“credit institution” means any credit institution as defined
in Article 4.1(1) of Regulation (EU) No 575/2013 of the
European Parliament and of the Council, other than an
entity mentioned in Article 2.5(2) to (23) of Directive
2013/36/EU of the European Parliament and of the
Council;
“designated settlement system” means a system designated
in accordance with Directive 98/26/EC of the European
Parliament and of the Council (as amended by Directives
2009/44/EC and 2010/78/EU);
“employee” includes the holder of an office;
“investment firm” means an investment firm as defined in
Article 4.1(2) of Regulation (EU) No 575/2013 of the
European Parliament and of the Council that is subject to
the initial capital requirement specified in Article 28(2) of
Directive 2013/36/EU of the European Parliament and of
the Council;
“pension scheme” includes any arrangement for the
payment of pensions, allowances and gratuities;
“secured” means secured against property or rights, or
otherwise covered by collateral arrangements.
(2) In subsection (1)—
“assets” has the same meaning as in section 232(4) (ignoring
for these purposes section 232(5A)(b));
“collateral arrangements” includes arrangements which are
title transfer collateral arrangements for the purposes of
section 48.
(3) For the purposes of section 48B(6)(h), a benefit under a pension
scheme is discretionary so far as the employee’s right to the
benefit was a result of the exercise of a discretion.
48E Report on special bail-in provision
(1) This section applies where the Bank of England makes a
resolution instrument containing special bail-in provision (see
section 48B(1)).
(2) The Bank of England must report to the Chancellor of the
Exchequer stating the reasons why that provision has been made
in the case of the liabilities concerned.
(3) If the provision departs from the insolvency treatment principles,
the report must state the reasons why it does so.
(4) The insolvency treatment principles are that where an
instrument includes special bail-in provision—
(a) the provision made by the instrument must be consistent
with treating all the liabilities of the bank in accordance
with the priority they would enjoy on a liquidation, and
(b) any creditors who would have equal priority on a
liquidation are to bear losses on an equal footing with
each other.
(5) A report must comply with any other requirements as to content
that may be specified by the Treasury.
(6) A report must be made as soon as reasonably practicable after the
making of the resolution instrument to which it relates.
(7) The Chancellor of the Exchequer must lay a copy of each report
under subsection (2) before Parliament.
48F Power to amend definition of “excluded liabilities”
(1) The Treasury may by order amend section 48B(6) by—
The Treasury may by order amend section 48C or 48D.
(a) adding to the list of excluded liabilities;
(b) amending or omitting any paragraph of that subsection,
other than paragraphs (a) to (c).
(3) The powers conferred by subsections (1) and (2) include power
to make consequential and transitional provision.
(4) An order under this section—
(a) must be made by statutory instrument, and
(b) may not be made unless a draft has been laid before and
approved by resolution of each House of Parliament.
(5) The Treasury must consult before laying a draft order under this
section before Parliament.
48G Priority between creditors
(1) The Treasury may, for the purpose of ensuring that the treatment
of liabilities in any instrument that contains special bail-in
provision is aligned to an appropriate degree with the treatment
of liabilities on an insolvency, by order specify matters or
principles to which the Bank of England is to be required to have
regard in making any such instrument.
(2) An order may, for example, specify the insolvency treatment
principles (as defined in section 48E(4)) or alternative principles.
(3) An order may specify the meaning of “insolvency” for one or
more purposes of the order.
(4) An order may amend sections 44C(4) and 48E(4).
(5) An order —
(a) is to be made by statutory instrument, and
(b) may not be made unless a draft has been laid before and
approved by resolution of each House of Parliament.
48H Business reorganisation plans
(1) A resolution instrument may require a bail-in administrator, or
one or more directors of the bank, to—
(a) draw up a business reorganisation plan with respect to
the bank, and
(b) submit it to the Bank of England within the period
allowed by (or under) the instrument.
(2) “Business reorganisation plan” means a plan that includes—
(a) an assessment of the factors that caused Condition 1 in
section 7 to be met in the case of the bank,
(b) a description of the measures to be adopted with a view
to restoring the viability of the bank, and
(c) a timetable for the implementation of those measures.
(3) Where a person has submitted a business reorganisation plan to
the Bank of England under subsection (1) (or has re-submitted a
plan under subsection (4)), the Bank of England—
(a) must approve the plan if satisfied that the plan is
appropriately designed for meeting the objective
mentioned in subsection (2)(b);
(b) must otherwise require the person to amend the plan in a
specified manner.
(4) Where the Bank of England has required a person to amend a
business re-organisation plan, the person must re-submit the
amended plan within the period allowed by (or under) the
resolution instrument.
(5) Before deciding what action to take under subsection (3) the Bank
of England must (for each submission or re-submission of a plan)
consult—
(a) the PRA, and
(b) the FCA.
(6) A business reorganisation plan may include recommendations
by the person submitting the plan as to the exercise by the Bank
of England of any of its powers under this Part in relation to the
bank.
(7) Where a resolution instrument contains provision under
subsection (1), the instrument may—
(a) specify further matters (in addition to those mentioned in
subsection (2)) that must be dealt with in the business
reorganisation plan;
(b) make provision about the timing of actions to be taken in
connection with the making and approval of the plan;
(c) enable any provision that the Bank of England has power
under paragraph (a) or (b) to make in the instrument to be
made instead in an agreement between the Bank of
England and the bail-in administrator.
(8) For the purposes of subsection (2)(b) the viability of a bank is to
be assessed by reference to whether the bank satisfies, and (if so)
for how long it may be expected to continue to satisfy, the
threshold conditions (as define in section 55B of the Financial
Services and Markets Act 2000).”
48I Bail-in administrator: further functions
(1) A resolution instrument may—
(a) authorise a bail-in administrator to manage the bank’s
business (or confer on a bail-in administrator any other
power with respect to the management of the bank’s
business);
(b) authorise a bail-in administrator to exercise any other
powers of the bank;
(c) confer on a bail-in administrator any other power the
Bank of England may consider appropriate;
(d) provide that the exercise of any power conferred by the
instrument in accordance with this section is to be subject
to conditions specified in the instrument.
(2) A resolution instrument may require a bail-in administrator to
make reports to the Bank of England—
(a) on any matter specified in the instrument, and
(b) at the times or intervals specified in the instrument.
(3) If a resolution instrument specifies a matter in accordance with
subsection (2)(a), it may provide for further requirements as to
the contents of the report on that matter to be specified in an
agreement between the Bank of England and the bail-in
administrator.
(4) A resolution instrument may—
(a) require a bail-in administrator to consult specified
persons before exercising specified functions (and may
specify particular matters on which the specified person
must be consulted);
(b) provide that a bail-in administrator is not to exercise
specified functions without the consent of a specified
person.
48J Bail-in administrator: supplementary
(1) A bail-in administrator may do anything necessary or desirable
for the purposes of or in connection with the performance of the
functions of the office.
(2) A bail-in administrator is not a servant or agent of the Crown
(and, in particular, is not a civil servant).
(3) Where a bail-in administrator is appointed under this Part, the
Bank of England—
(a) must make provision in a resolution instrument for
resignation and replacement of the bail-in administrator;
(b) may remove the bail-in administrator from office only (i)
on the ground of incapacity or misconduct, or (ii) on the
ground that there is no further need for a person to
perform the functions conferred on the bail-in
administrator.
48K Bail-in administrator: money
(1) A resolution instrument may provide for the payment of
remuneration and allowances to a bail-in administrator.
(2) Provision made under subsection (1) may provide that the
amounts are—
(a) to be paid by the Bank of England, or
(b) to be determined by the Bank of England and paid by the
bank.
(3) A bail-in administrator is not liable for damages in respect of
anything done in good faith for the purposes of or in connection
with the functions of the office (subject to section 8 of the Human
Rights Act 1998).
48L Powers in relation to securities
(1) A resolution instrument may—
(a) cancel or modify any securities to which this subsection
applies;
(b) convert any such securities from one form or class into
another.
(2) Subsection (1) applies to securities issued by the bank that fall
within Class 1 in section 14.
(3) A resolution instrument may—
(a) make provision with respect to rights attaching to
securities issued by the bank;
(b) provide for the listing of securities issued by the bank to
be discontinued.
(4) The reference in subsection (1)(b) to converting securities from
one form or class into another includes creating a new security in
connection with the modification of an existing security.
(5) The provision that may be made under subsection (3)(a)
includes, for example—
(a) provision that specified rights attaching to securities are
to be treated as having been exercised;
(b) provision that the Bank of England, or a bail-in
administrator, is to be treated as authorised to exercise
specified rights attaching to securities;
(c) provision that specified rights attaching to securities may
not be exercised for a period specified in the instrument.
(6) In subsection (3)(b) the reference to “listing” is to listing under
section 74 of the Financial Services and Markets Act 2000.
(7) The provision that may be made under this section in relation to
any securities is in addition to any provision that the Bank of
England may have power to make in relation to them under
section 48B.
48M Termination rights, etc
(1) In this section “default event provision” has the same meaning as
in section 22.
(2) A resolution instrument may provide for subsection (3) or (4) to
apply (but need not apply either).
(3) If this subsection applies, the resolution instrument is to be
disregarded in determining whether a default event provision
applies.
(4) If this subsection applies, the resolution instrument is to be
disregarded in determining whether a default event provision
applies except so far as the instrument provides otherwise.
(5) In subsections (3) and (4) a reference to the resolution instrument
is a reference to—
(a) the making of the instrument,
(b) anything that is done by the instrument or is to be, or may
be, done under or by virtue of the instrument, and
(c) any action or decision taken or made under this or
another enactment in so far as it resulted in, or was
connected to, the making of the instrument.
(6) Provision under subsection (2) may apply subsection (3) or (4)—
(a) generally or only for specified purposes, cases or
circumstances, or
(b) differently for different purposes, cases or circumstances.
(7) A thing is not done by virtue of a resolution instrument for the
purposes of subsection (5)(b) merely by virtue of being done
under a contract or other agreement rights or obligations under
which have been affected by the instrument.
48N Directors
(1) A resolution instrument may enable the Bank of England—
(a) to remove a director of a specified bank;
(b) to vary the service contract of a director of a specified
bank;
(c) to terminate the service contract of a director of a
specified bank;
(d) to appoint a director of a specified bank.
(2) Subsection (1) also applies to a director of any undertaking which
is a banking group company in respect of a specified bank.
(3) Appointments under subsection (1)(d) are to be on terms and
conditions agreed with the Bank of England.
48O Directions in or under resolution instrument
(1) A resolution instrument may—
(a) require one or more directors of the bank to comply with
any general or specific directions that may be set out in
the instrument;
(b) enable the Bank of England to give written directions
(whether general or specific) to one or more directors of
the bank.
(2) A director—
(a) is not to be regarded as failing to comply with any duty
owed to any person (for example, a shareholder, creditor
or employee of the bank) by virtue of any action or
inaction in compliance with a direction given under
subsection (1)(a) or (b);
(b) is to be immune from liability in damages in respect of
action or inaction in accordance with a direction.
(3) A director must comply with a direction within the period of
time specified in the direction, or if no period of time is specified,
as soon as reasonably practicable.
(4) A direction under subsection (1)(a) or (b) is enforceable on an
application made by the Bank of England, by injunction or, in
Scotland, by an order for specific performance under section 45
of the Court of Session Act 1988.
48P Orders for safeguarding certain financial arrangements
(1) In this section “protected arrangements” means security
interests, title transfer collateral arrangements, set-off
arrangements and netting arrangements.
(2) In subsection (1)—
“netting arrangements” means arrangements under which a
number of claims or obligations can be converted into a
net claim or obligation, and includes, in particular, “close-
out” netting arrangements, under which actual or
theoretical debts are calculated during the course of a
contract for the purpose of enabling them to be set off
against each other or to be converted into a net debt;
“security interests” means arrangements under which one
person acquires, by way of security, an actual or
contingent interest in the property of another;
“set-off arrangements” means arrangements under which
two or more debts, claims or obligations can be set off
against each other;
“title transfer collateral arrangements” means arrangements
under which Person 1 transfers assets to Person 2 on
terms providing for Person 2 to transfer assets if specified
obligations are discharged.
(3) The Treasury may by order—
(a) restrict the exercise of any power within the scope of this
paragraph in cases that involve, or where the exercise of
the power might affect, protected arrangements;
(b) impose conditions on the exercise of any power within
the scope of this paragraph in cases that involve, or where
the exercise of the power might affect, protected
arrangements;
(c) require any instrument that makes special bail-in
provision to include specified provision, or provision to a
specified effect, in respect of or for purposes connected
with protected arrangements;
(d) provide for an instrument to be void or voidable, or for
other consequences to arise, if or in so far as the
instrument is made or purported to be made in
contravention of a provision of the order (or of another
order under this section);
(e) specify principles to which the Bank of England is to be
required to have regard in exercising specified powers—
(i) that involve protected arrangements, or
(ii)
where the exercise of the powers might affect
protected arrangements.
(4) References to exercising a power within the scope of paragraph
(a) or (b) of subsection (3) are to making an instrument containing
provision made in reliance on section 12A(3)(a) or 44B (special
bail-in provision).
(5) An order may apply to protected arrangements generally or only
to arrangements—
(a) of a specified kind, or
(b) made or applying in specified circumstances.
(6) An order may include provision for determining which
arrangements are to be, or not to be, treated as protected
arrangements; in particular, an order may provide for
arrangements to be classified not according to their description
by the parties but according to one or more indications of how
they are treated, or are intended to be treated, in commercial
practice.
(7) In this section “arrangements” includes arrangements which—
(a) are formed wholly or partly by one or more contracts or
trusts;
(b) arise under or are wholly or partly governed by the law
of a country or territory outside the United Kingdom;
(c) wholly or partly arise automatically as a matter of law;
(d) involve any number of parties;
(e) operate partly by reference to other arrangements
between parties.
(8) An order —
(a) is to be made by statutory instrument, and
(b) may not be made unless a draft has been laid before and
approved by resolution of each House of Parliament.
48Q Continuity
(1) A resolution instrument may provide for anything (including
legal proceedings) that relates to anything affected by the
instrument and is in the process of being done immediately
before the instrument takes effect to be continued from the time
the instrument takes effect.
(2) A resolution instrument may modify references (express or
implied) in an instrument or document.
(3) A resolution instrument may require or permit any person to
provide information and assistance to the Bank of England or
another person, for the purposes of or in connection with
provision made or to be made in that or another resolution
instrument.
48R Execution and registration of instruments etc
(1) A resolution instrument (other than an instrument that provides
for securities to be transferred) may permit or require the
execution, issue or delivery of an instrument.
(2) A resolution instrument may provide for any provision in the
instrument to have effect irrespective of—
(a) whether an instrument has been produced, delivered,
transferred or otherwise dealt with;
(b) registration.
(3) A resolution instrument may provide for the effect of an
instrument executed, issued or delivered in accordance with the
resolution instrument.
(4) A resolution instrument may—
(a) entitle a person to be registered in respect of a security;
(b) require a person to effect registration.
48S Resolution instruments: general matters
(1) Provision made in a resolution instrument takes effect despite
any restriction arising by virtue of contract or legislation or in
any other way.
(2) A resolution instrument may include incidental, consequential
or transitional provision.
(3) In relying on subsection (2) a resolution instrument—
(a) may make provision generally or only for specified
purposes, cases or circumstances, and
(b) may make different provision for different purposes,
cases or circumstances.
48T Procedure
(1) As soon as is reasonably practicable after making a resolution
instrument in respect of a bank the Bank of England must send a
copy to—
(a) the bank,
(b) the Treasury,
(c) the PRA,
(d) the FCA, and
(e) any other person specified in the code of practice under
section 5.
(2) As soon as is reasonably practicable after making a resolution
instrument the Bank of England must publish a copy—
(a) on the Bank’s internet website, and
(b) in two newspapers, chosen by the Bank of England to
maximise the likelihood of the instrument coming to the
attention of persons likely to be affected.
(3) Where the Treasury receive a copy of a resolution instrument
under subsection (1) they must lay a copy before Parliament.
48U Supplemental resolution instruments
(1) This section applies where the Bank of England has made a
resolution instrument (“the original instrument”) with respect to
a bank.
(2) The Bank of England may make, with respect to the bank, one or
more resolution instruments designated by the Bank of England
as supplemental resolution instruments.
(3) Sections 7 and 8A do not apply to a supplemental resolution
instrument (but it is to be treated in the same way as a resolution
instrument for all other purposes, including for the purposes of
the application of a power under this Part).
(4) Before making a supplemental resolution instrument the Bank of
England must consult—
(a) the PRA,
(b) the FCA, and
(c) the Treasury.
(5) The possibility of making a supplemental resolution instrument
in reliance on subsection (2) is without prejudice to the possibility
of making a new instrument in accordance with section 12A(2)
(and not in reliance on subsection (2) above).
48V Onward transfer
(1) This section applies where the Bank of England has made a
resolution instrument (“the original instrument”) providing for
securities issued by a specified bank to be transferred to any
person.
(2) The Bank of England may make one or more onward transfer
resolution instruments.
(3) An onward transfer resolution instrument is a resolution
instrument which—
(a) provides for the transfer of—
(i)
securities which were issued by the bank before
the original instrument and have been transferred
by the original instrument or a supplemental
resolution instrument, or
(ii)
securities which were issued by the bank after the
original instrument;
(b) makes other provision for the purposes of, or in
connection with, the transfer of securities issued by the
bank (whether the transfer has been or is to be effected by
that instrument, by another instrument or otherwise).
(4) An onward transfer resolution instrument may not transfer
securities to the transferor under the original instrument.
(5) Sections 7 and 8A do not apply to an onward transfer resolution
instrument (but it is to be treated in the same way as any other
resolution instrument for all other purposes, including for the
purposes of the application of a power under this Part).
(6) Before making an onward transfer resolution instrument the
Bank of England must consult—
(a) the PRA,
(b) the FCA, and
(c) the Treasury.
(7) Section 48U applies where the Bank of England has made an
onward transfer resolution instrument.
48W Reverse transfer
(1) This section applies where the Bank of England has made an
instrument (“the original instrument”) that is either—
(a) a resolution instrument providing for the transfer of
securities issued by a bank to a person (“the transferee”),
or
(b) an onward transfer resolution instrument (see section
48V) providing for the transfer of securities issued by a
bank to a person (“the onward transferee”).
(2) In a case falling within subsection (1)(a) the Bank of England may
make one or more reverse transfer resolution instruments in
respect of securities issued by the bank and held by the transferee
(whether or not they were transferred by the original
instrument).
(3) In a case falling within subsection (1)(b), the Bank of England
may make one or more reverse transfer resolution instruments in
respect of securities issued by the bank and held by the onward
transferee.
(4) A reverse transfer resolution instrument is a resolution
instrument which—
(a) provides for transfer to the transferor under the original
instrument;
(b) makes other provision for the purposes of, or in
connection with, the transfer of securities which are, or
could be or could have been, transferred under
paragraph (a).
(5) Except where subsection (6) applies, the Bank of England may
make a reverse transfer resolution instrument under subsection
(2) only with the written consent of the transferee.
(6) This subsection applies where the transferee is—
(a) a bail-in administrator, or
(b) a person who is not to be authorised to exercise any rights
attaching to the securities except on the Bank of
England’s instructions.
(7) The Bank of England may make a reverse transfer resolution
instrument under subsection (3) only with the written consent of
the onward transferee.
(8) Sections 7 and 8A do not apply to a reverse transfer resolution
instrument (but it is to be treated in the same way as any other
resolution instrument for all other purposes including for the
purposes of an application of a power under this Part).
(9) Before making a reverse transfer resolution instrument the Bank
of England must consult—
(a) the PRA,
(b) the FCA, and
(c) the Treasury.
(10) Section 48U applies where the Bank of England has made a
reverse transfer resolution instrument.”
Transfers of property
5 (1) After section 41 insert—
“41A Transfer of property subsequent to resolution instrument
(1) This section applies where the Bank of England has made a
resolution instrument.
(2) The Bank of England may make one or more property transfer
instruments in respect of property, rights or liabilities of the
bank.
(3) Sections 7 and 8A do not apply to a property transfer instrument
under subsection (2).
(4) Before making a property transfer instrument under subsection
(2) the Bank of England must consult—
(a) the PRA,
(b) the FCA, and
(c) the Treasury.”
(2) In section 42 (supplemental property transfer instruments)—
(a) in subsection (1) for “12(2)” substitute “12(2) or 41A(2)”;
(b) in subsection (4) for “and 8” substitute “, 8 and 8A”;
(c) in subsection (6) for “or 12(2)” substitute “, 12(2) or 41A(2)”.
(3) After section 44 insert—
“44A Bail in: reverse property transfer
(1) This section applies where the Bank of England has made a
property transfer instrument in accordance with section 41A(2)
(“the original instrument”).
(2) The Bank of England may make one or more bail-in reverse
property transfer instruments in respect of property, rights or
liabilities of the transferee under the original instrument.
(3) A bail-in reverse property transfer instrument is a property
transfer instrument which—
(a) provides for a transfer to the transferor under the original
instrument;
(b) makes other provision for the purposes of, or in
connection with, the transfer of property, rights or
liabilities which are, or could be or could have been,
transferred under paragraph (a) (whether the transfer has
been or is to be effected by that instrument or otherwise).
(4) The Bank of England may make a bail-in reverse property
transfer instrument only with the written consent of the
transferee under the original instrument.
(5) Sections 7 and 8A do not apply to a bail-in reverse property
transfer instrument (but it is to be treated in the same way as any
other property transfer instrument for all other purposes,
including for the purposes of the application of a power under
this Part).
(6) Before making a bail-in reverse property transfer instrument the
Bank of England must consult—
(a) the PRA,
(b) the FCA, and
(c) the Treasury.
(7) Section 42 (supplemental instruments) applies where the Bank of
England has made a bail-in reverse property transfer instrument.
44B Property transfer instruments: special bail-in provision
(1) A property transfer instrument under section 12(2) or 41A(2)
may make special bail-in provision with respect to the bank (see
section 48B).
(2) In the case of a property transfer instrument under section 12(2),
the power under subsection (1) to make the provision described
in section in section 48B(1)(b) (see also rule 3(a) and (b) of section
48B(3)) includes power to make provision replacing a liability (of
any form) of the bank mentioned in subsection (1) with a security
(of any form or class) of the bridge bank mentioned in section
12(1).
(3) Where securities of the bridge bank (“B”) are, as a result of
subsection (2), held by a person other than the Bank of England,
that does not prevent B from being regarded for the purposes of
this Part (see particularly section 12(1)) as being wholly owned
by the Bank of England, as long as the Bank of England continues
to hold all the ordinary shares issued by B.
44C Report on special bail-in provision
(1) This section applies where the Bank of England makes a property
transfer instrument containing provision made in reliance on
section 44B.
(2) The Bank of England must report to the Chancellor of the
Exchequer stating the reasons why that provision was made in
the case of the liabilities concerned.
(3) If the provision departs from the insolvency treatment principles,
the report must state the reasons why it does so.
(4) The insolvency treatment principles are that where an
instrument includes special bail-in provision—
(a) the provision made by the instrument must be consistent
with treating all the liabilities of the bank in accordance
with the priority they would enjoy on a liquidation, and
(b) any creditors who would have equal priority on a
liquidation are to bear losses on an equal footing with
each other.
(5) A report must comply with any other requirements as to content
that may be specified by the Treasury.
(6) A report must be made as soon as reasonably practicable after the
making of the property transfer instrument to which it relates.
(7) The Chancellor of the Exchequer must lay a copy of each report
under subsection (2) before Parliament.”
(4) In section 48A (creation of liabilities), in subsection (1), after “44(4)(c)”
insert “, 44A(3)(b)”.
Compensation
6 (1) In section 49 (orders)—
(a) in subsection (1), for “three” substitute “four” and for “and
property transfer instruments” substitute “, property transfer
instruments and orders and resolution instruments”;
(b) after subsection (2) insert—
“(2A) A “bail-in compensation order” is an order establishing a
scheme for determining, in accordance with section 52A,
whether any transferors or others should be paid
compensation.”
(2) After section 52 insert—
“52A Bail-in option
(1) Subsection (2) applies if the Bank of England makes—
(a) a resolution instrument under section 12A(2),
(b) a property transfer instrument under section 41A(2), or
(c) a supplemental resolution instrument under section
48U(2).
(2) The Treasury must make a bail-in compensation order (see
section 49(2A)).
(3) A bail-in compensation order may include provision for—
(a) an independent valuer (in which case sections 54 to 56 are
to apply);
(b) valuation principles (in which case section 57(2) to (5) is
to apply).”
(3) In section 53 (onward and reverse transfers), in subsection (1)—
(a) after paragraph (f) insert—
“(fa)
the Bank of England makes a reverse property
transfer instrument under section 44A(2),
(fb)
the Bank of England makes a supplemental
property transfer instrument by virtue of section
44A(7),”;
(b) omit the “or” after paragraph (g);
(c) after paragraph (h) insert—
“(i)
the Bank of England makes an onward transfer
resolution instrument under section 48V(2),
(j)
the Bank of England makes a reverse transfer
resolution instrument under section 48W(2) or (3),
or
(k)
the Bank of England makes a supplemental
resolution instrument by virtue of section 48V(7)
or 48W(10).”
(4) In section 54 (independent valuer)—
(a) in subsection (1), after “compensation scheme order” insert “or
bail-in compensation order”;
(b) in subsection (4)(b), after “order” insert “or bail-in compensation
order”.
(5) In section 56 (independent valuer: money), in subsection (2)(b) for “or
third party compensation order” substitute “, third party compensation
order or bail-in compensation order”.
(6) In section 57 (valuation principles), in subsection (1), after “order” insert
“or bail-in compensation order”.
(7) After section 60 insert—
“60A Further mandatory provision: bail-in provision
(1) The Treasury may make regulations about compensation
arrangements in the case of—
(a) resolution instruments under section 12A(2) and
supplemental resolution instruments under section
48U(2), and
(b) instruments (made under any provision) that include
special bail-in provision.
(2) Regulations may—
(a) require a compensation scheme order, a third party
compensation order or a bail-in compensation order to
include provision of a specified kind or to specified effect;
(b) make provision that is to be treated as forming part of any
such order (whether (i) generally, (ii) only if applied, (iii)
unless disapplied, or (iv) subject to express modification).
(3) Regulations may provide for whether compensation is to be
paid, and if so what amount is to be paid, to be determined by
reference to any factors or combination of factors; in particular,
the regulations may provide for entitlement—
(a) to be contingent upon the occurrence or non-occurrence
of specified events;
(b) to be determined wholly or partly by an independent
valuer (within the meaning of sections 54 to 56)
appointed in accordance with a compensation scheme
order or bail-in compensation order.
(4) Regulations may make provision about payment including, in
particular, provision for payments—
(a) on account subject to terms and conditions;
(b) by instalment.
(5) Regulations—
(a) are to be made by statutory instrument, and
(b) may not be made unless a draft has been laid before and
approved by resolution of each House of Parliament.
60B Principle of no less favourable treatment
(1) In making regulations under section 60A the Treasury must, in
particular, have regard to the desirability of ensuring that pre-
resolution shareholders and creditors of a bank do not receive
less favourable treatment than they would have received had the
bank entered insolvency immediately before the coming into
effect of the initial instrument.
(2) References in this section to the initial instrument are—
(a) in relation to compensation arrangements in the case of
property transfer instruments under section 12(2), to the
first instrument to be made under that provision with
respect to the bank;
(b) in relation to compensation arrangements in other cases,
to the first resolution instrument to be made under
section 12A with respect to the bank.
(3) The “pre-resolution shareholders and creditors” of a bank are the
persons who held securities issued by the bank, or were creditors
of the bank, immediately before the coming into effect of the
initial instrument.
(4) References in this section to insolvency include a reference to (i)
liquidation, (ii) bank insolvency, (iii) administration, (iv) bank
administration, (v) receivership, (vi) composition with creditors,
and (vii) a scheme of arrangement.”
(8) In section 61(1) (sources of compensation),—
(a) omit the “and” at the end of paragraph (c);
(b) after paragraph (c) insert—
“(ca) bail-in compensation orders,”;
(c) after paragraph (d) insert, “, and
(e) regulations under section 60A.”
(9) In section 62(1) (procedure), omit the “and” at the end of paragraph (b),
and after that paragraph insert—
“(ba) bail-in compensation orders, and”.
Groups
7 (1) After section 81B insert—
“81BA Bail-in option
(1) The Bank of England may exercise a stabilisation power in
respect of a banking group company in accordance with section
12A(2) if the following conditions are met.
(2) Condition 1 is that the PRA is satisfied that the general conditions
for the exercise of a stabilisation power set out in section 7 are
met in respect of a bank in the same group.
(3) Condition 2 is that the Bank of England is satisfied that the
exercise of the power in respect of the banking group company is
necessary, having regard to the public interest in—
(a) the stability of the financial systems of the United
Kingdom,
(b) the maintenance of public confidence in the stability of
those systems,
(c) the protection of depositors, or
(d) the protection of any client assets that may be affected.
(4) Condition 3 is that the banking group company is an
undertaking incorporated in, or formed under the law of any
part of, the United Kingdom.
(5) Before determining whether Condition 2 is met, and if so how to
react, the Bank of England must consult—
(a) the Treasury,
(b) the PRA, and
(c) the FCA.
(6) In exercising a stabilisation power in reliance on this section the
Bank of England must have regard to the need to minimise the
effect of the exercise of the power on other undertakings in the
same group.”
(2) After section 81C insert—
“81CA Section 81BA: supplemental
(1) This section applies where the Bank of England has power under
section 81BA to exercise a stabilisation power in respect of a
banking group company.
(2) The provisions relating to the stabilisation powers and the bank
administration procedure contained in this Act (except sections 7
and 8A) and any other enactment apply (with any necessary
modifications) as if the banking group company were a bank.
(3) Where the banking group company mentioned in subsection (1)
is a parent undertaking of the bank mentioned in section 81BA(2)
(“the bank”)—
(a) the provisions in this Act relating to resolution
instruments are to be read in accordance with the general
rule in subsection (4), but
(b) that is subject to the modifications in subsection (5);
and provisions in this Act and any other enactment are to be read and provisions in this Act and any other enactment are to be read
with any modifications that may be necessary as a result of with any modifications that may be necessary as a result of
paragraphs (a) and (b).paragraphs (a) and (b).
(a)
The administrator must obtain the
approval of the Bank of England to
any proposals under sub-para. (1).
(b)
Treat the reference in sub-para.
(2)(b) to the objective mentioned in
para. 3(1)(a) or (b) as a reference to
the objective in section (Objective of Objective of
FMI administrationFMI administration) of this Act.
(c) Ignore sub-para. (3)(b).
(a)
Before making an application in
reliance on this paragraph the FMI
administrator must give notice to
the Bank of England, which is to be
entitled to participate in the
proceedings.
(b)
In making directions the court must
have regard to the objective in
section (Objective of FMI Objective of FMI
administrationadministration) of this Act.
(a) Ignore sub-paras. (1) and (3).
(b)
The Bank of England may apply to
the court for the variation or
revocation of any directions given
by the court.
()
“(2) Where a company is in FMI
administration, a creditor or
member of the company may apply
to the court claiming that the FMI
administrator is conducting himself
or herself in a manner preventing
the achievement of the objective of
the FMI administration as quickly
and efficiently as is reasonably
practicable.”
()
“(1) On an application made by a
person mentioned in sub-paragraph
(2), the court may provide for the
appointment of an FMI
administrator of a company to cease
to have effect from a specified time.
()
(2) The persons who may apply to
the court under sub-paragraph (1)
are—
() (a) the Bank of England;
()
(b) with the consent of the Bank, the
FMI administrator.”
(a)
Para. 91(1) applies as if the only
person who could make an
application were the Bank of
England.
(b) Ignore para. 91(2).
(a)
in accordance with directions of the
Bank of England, and
(b)
if the Bank is satisfied that they will
not prejudice the objective in section
(Objective of FMI administration)Objective of FMI administration) of
this Act.
(a)
In considering making an order in
reliance on section 241 the court
must have regard to the objective in
section (Objective of FMI Objective of FMI
administrationadministration) of this Act.
(b)
Ignore subsections (2A)(a) and (3) to
(3C).
(4) The general rule is that the provisions in this Act relating to
resolution instruments (including supplemental resolution
instruments) are to be read (so far as the context permits)—
(a) as applying in relation to the bank as they apply in
relation to the parent undertaking, and
(b) so, in particular, as allowing any provision that may be
made in a resolution instrument in relation to the parent
undertaking to be made (also or instead) in relation to the
bank.
(5) Where the banking group company mentioned in subsection (1)
is a parent undertaking of the bank mentioned in section 81BA(2)
(“the bank”)—
(a) section 41A (transfer of property subsequent to resolution
instrument) applies as if the reference in subsection (2) to
the bank were to the parent undertaking, the bank and
any other bank which is or was in the same group;
(b) section 48V (onward transfer)—
(i)
applies as if the references in subsection (3) to “the
bank” included the bank, the parent undertaking
and any other bank which is or was in the same
group, and with the omission of subsection (4) of
that section, and
(ii)
is to be read as permitting the transfer of securities
only if they are held by (or for the benefit of) the
parent undertaking or a subsidiary company of
the parent undertaking;
(c) section 48W (reverse transfer) applies as if the references
in subsections (2) and (3) to “the bank” included the bank,
the parent undertaking and any other bank which is or
was in the same group.
(6) Where section 48B (special bail-in provision) applies in
accordance with subsection (4) (so that section 48B applies in
relation to the bank mentioned in section 81BA(2) as it applies in
relation to the parent undertaking mentioned in subsection (3)),
the provision that may be made in accordance with section
48B(1)(b) (see also rule 3(a) and (b) of section 48B(3)) includes
provision replacing a liability (of any form) of that bank with a
security (of any form or class) of the parent undertaking.
(7) Where the banking group company mentioned in subsection (1)
is a parent undertaking of the bank mentioned in section
81BA(2)—
(a) section 214B of the Financial Services and Markets Act
2000 (contribution to costs of special resolution regime)
applies, and
(b) the reference in subsection (1)(b) of that section to the
bank, and later references in that section, are treated as
including references to any other bank which is a
subsidiary undertaking of the parent undertaking (but
not the parent undertaking itself).”
(3) In section 81D (interpretation: “banking group company” etc)—
(a) in subsection (6), for “, 81C” substitute “to 81CA”;
(b) in subsection (7) for “section 81B” substitute “sections 81B to
81CA”.
Banks regulated by the Financial Conduct Authority
8 In section 83A (modifications of Part 1 as it applies to banks not
regulated by the Prudential Regulation Authority), in the table in
subsection (2) insert the following entries at the appropriate places—
|
“Section 8A |
Subsection (3)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.” |
|
“Section 41A |
Subsection (4)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person. |
|
Section 44A |
Subsection (6)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.” |
|
“Section 48H |
Subsection (5)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person. |
|
Section 48U |
Subsection (4)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person. |
|
Section 48V |
Subsection (6)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person. |
|
Section 48W |
Subsection (9)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.” |
|
“Section 81BA |
Subsection (5)(b) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.” |
RECOGNISED CENTRAL COUNTERPARTIES
9 In section 89B (application of Part 1 of the Act to recognised central
counterparties)—
(a) in subsection (1), before paragraph (a) insert—
“(za) subsection (1A),”;
(b) after subsection (1) insert—
“(1A) The provisions relating to the third stabilisation option
(bail-in) are to be disregarded in the application of this
Part to recognised central counterparties.”;
(c) in subsection (2), in the substituted section 13(1), for “third”
substitute “fourth”.
Insolvency proceedings
10 In section 120 (notice to Prudential Regulation Authority of preliminary
steps to certain insolvency proceedings)—
(a) in subsection (7)(b)(ii), after “Part 1” insert “(and Condition 5 has
been met, if applicable)”;
(b) after subsection (8) insert—
“(8A) Condition 5—
(a) applies only if a resolution instrument has been
made under section 12A with respect to the bank
in the 3 months ending with the date on which the
PRA receives the notification under Condition 1,
and
(b) is that the Bank of England has informed the
person who gave the notice that it consents to the
insolvency procedure to which the notice relates
going ahead.”
(c) in subsection (10), omit the “and” at the end of paragraph (b), and
after paragraph (c) insert “, and
(d)
if Condition 5 applies, the Bank of England must,
within the period in Condition 3(a), inform the
person who gave the notice whether or not it
consents to the insolvency procedure to which the
notice relates going ahead.”;
(d) After subsection (10) insert—
“(11) References in this section to the insolvency procedure to
which the notice relates are to the procedure for the
determination, resolution or appointment in question
(see subsections (1) to (4)).”
State aid
11 After section 256 insert—
“256A State aid
(1) This section applies where—
(a) the Treasury are of the opinion that anything done, or
proposed to be done, in connection with the exercise in
relation to an institution of one or more of the
stabilisation powers may constitute the granting of aid to
which any of the provisions of Article 107 or 108 of the
Treaty on the Functioning of the European Union applies
(“State aid”), and
(b) section 145A (power to direct bank administrator) does
not apply.
(2) The Treasury may, in writing, direct any bail-in administrator, or
any director of the institution, to take specified action to enable
the United Kingdom to pursue any of the purposes specified in
subsection (3) of section 145A (read with subsection (9) of that
section).
(3) Before giving a direction under this section the Treasury must
consult the person to whom the direction is to be given.
(4) The person must comply with the direction within the period of
time specified in the direction, or, if no period of time is specified,
as soon as is reasonably practicable.
(5) 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.”
Other amendments of the Act
12 (1) Section 1 (overview) is amended as follows.
(2) In subsection (2)(a), for “three” substitute “four”.
(3) For subsection (3) substitute—
“(3) The four “stabilisation options” are—
(a) transfer to a private sector purchaser (section 11),
(b) transfer to a bridge bank (section 12),
(c) the bail-in option (section 12A), and
(d) transfer to temporary public ownership (section 13).”
(4) In subsection (4)—
(a) for “three” substitute “four”;
(b) before paragraph (a) insert—
“(za)
the resolution instrument powers (sections 12A(2)
and 48U to 48W),”;
(c) in paragraph (b), after “33” insert “, 41A”.
13 In section 13 (temporary public ownership), in subsection (1), for “third”
substitute “fourth”.
14 In section 17 (share transfers: effect)—
(a) in subsection (1), after “order” insert, “or by a resolution
instrument”;
(b) in subsection (5), after “order” insert “or a resolution
instrument”;
(c) in subsection (6), after “order” insert “or a resolution
instrument”.
15 In section 18 (share transfers: continuity), after subsection (5) insert—
“(6) This section applies to a resolution instrument that provides for
a transfer of securities as it applies to a share transfer instrument
(and references to transfers, transferors and transferees are to be
read accordingly).”
16 In section 21 (ancillary instruments: production, registration etc), after
subsection (5) insert—
“(6) This section applies to a resolution instrument that provides for
a transfer of securities as it applies to a share transfer
instrument.”
17 In section 44 (reverse property transfer)—
(a) in subsection (2), after “more” insert “bridge bank”;
(b) in subsection (3), after “more” insert “bridge bank”;
(c) in subsection (4), for “A reverse” substitute “A bridge bank
reverse”;
(d) in subsection (4A)—
(i) after “make a” insert “bridge bank”, and
(ii)
in paragraph (b), for “the reverse” substitute “the bridge
bank reverse”;
(e) in subsection (5), for “a reverse” substitute “a bridge bank
reverse”;
(f) in subsection (6), for “a reverse” substitute “a bridge bank
reverse”;
(g) in subsection (7), for “a reverse” substitute “a bridge bank
reverse”;
(h) in the heading, for “
18 In section 63 (general continuity obligation: property transfers), in
subsection (1)(a), for “or 12(2)” substitute “, 12(2) or 41A(2)”.
19 In section 66 (general continuity obligation: share transfers)—
(a) in subsection (1)(a), after “13(2)” insert “, or which falls within
subsection (1A)”;
(b) in subsection (1)(d)(i), after “11(2)(a)” insert “, or in a case falling
within subsection (1A)”;
(c) after subsection (1) insert—
“(1A) A bank falls within this subsection if a resolution
instrument (or supplemental resolution instrument) has
changed the ownership of the bank (wholly or partly) by
providing for the transfer, cancellation or conversion
from one form or class to another of securities issued by
the bank (and the reference in subsection (1)(b) to “the
transfer” includes such a cancellation or conversion).”
20 In section 67 (special continuity obligation: share transfers), in
subsection (4)(c), after “order” insert “or resolution instrument”.
21 In section 68 (continuity obligations: onward share transfers), in
subsection (1)(a), after “transferred by” insert “a resolution instrument
under section 12A(2) or supplemental resolution instrument under
section 48U(2) or a”.
22 In section 71 (pensions), in subsection (1)—
(a) omit the “and” at the end of paragraph (b);
(b) after paragraph (c) insert “, and
(d) resolution instruments.”
23 In section 72 (enforcement), in subsection (1)—
(a) omit the “or” at the end of paragraph (b);
(b) after paragraph (c) insert “, and
(d) a resolution instrument.”
24 In section 73 (disputes), in subsection (1)—
(a) omit the “and” at the end of paragraph (b);
(b) after paragraph (c) insert “, and
(d) resolution instruments.”
25 In section 74 (tax), in subsection (6), for “or 45” substitute “, 45, 48U or
48V”.
26 After section 80 insert—
“80A Transfer for bail-in purposes: report
(1) This section applies where the Bank of England makes one or
more resolution instruments under section 12A(2) in respect of a
bank.
(2) The Bank of England must, on request by the Treasury, report to
the Chancellor of the Exchequer about—
(a) the exercise of the power to make a resolution instrument
under section 12A(2),
(b) the activities of the bank, and
(c) any other matters in relation to the bank that the Treasury
may specify.
(3) In relation to the matters in subsection (2)(a) and (b), the report
must comply with any requirements that the Treasury may
specify.
(4) The Chancellor of the Exchequer must lay a copy of each report
under subsection (2) before Parliament.”
27 In section 81A (accounting information to be included in reports under
sections 80 and 81)—
(a) in subsection (1), for “or 81” substitute “, 80A(2)(b) or 81”;
(b) in the heading, for “
28 In section 85 (temporary public ownership), in subsection (1), for “third”
substitute “fourth”.
29 In section 136 (overview), in the Table in subsection (3), for “152”
substitute “152A”.
30 After section 152 insert—
“152A Property transfer from transferred institution
(1) This section applies where the Bank of England—
(a) makes a resolution instrument that transfers securities
issued by a bank (or a bank’s parent undertaking), in
accordance with section 12A(2), and
(b) later makes a property transfer instrument from the bank
or from another bank which is or was in the same group
as the bank, in accordance with section 41A(2).
(2) This Part applies to the transferor under the property transfer
instrument made in accordance with section 41A(2) as to the
transferor under a property transfer instrument made in
accordance with section 12(2).
(3) For that purpose this Part applies with any modifications
specified by the Treasury in regulations; and any regulations—
(a) are to be made by statutory instrument, and
(b) may not be made unless a draft has been laid before and
approved by resolution of each House of Parliament.”
31 In section 220 (insolvency etc), after subsection (4) insert—
“(4A) The fact that ownership of an authorised bank is transferred or
otherwise changed as a result of a resolution instrument (or an
instrument treated as a resolution instrument) does not itself
prevent the bank from relying on section 213.”
32 In section 259 (statutory instruments)—
(a) in the Table in subsection (3), in Part 1, in the entry relating to
section 60 for “Third party compensation” substitute “Third
party compensation: partial property transfers”;
(b) in the Table in subsection (3), in Part 1, at the appropriate places
insert—
|
“48F(1) and (2) |
Power to amend definition of “excluded liabilities” |
Draft affirmative resolution |
|
48G |
Insolvency treatment principles |
Draft affirmative resolution |
|
48P |
Safeguarding of certain financial arrangements |
Draft affirmative resolution |
|
52A |
Bail-in compensation orders |
Draft affirmative resolution” |
|
“Section 60A |
Third party compensation: instruments containing special bail-in provision |
Draft affirmative resolution”; |
(c) in the Table in subsection (3), in Part 3, at the appropriate places
insert—
|
“Section 152A |
Property transfer from transferred institution |
Draft affirmative resolution”; |
(d) in subsection (5), after paragraph (d) insert—
“(da)
section 60A (special resolution regime:
instruments containing special bail-in
provision),”;
(e) in subsection (5), after paragraph (k) insert—
“(ka)
section 152A (bank administration: property
transfer from transferred institution),”.
33 In section 261 (index of defined terms), in the Table, at the appropriate
places insert—
|
“Resolution instrument |
12A” |
|
“Special bail- in provision |
48B” |
|
“Bail-in compensation order |
49”. |
PART 2
MODIFICATION OF INVESTMENT BANK SPECIAL ADMINISTRATION REGULATIONS 2011
34
(1) This section modifies the application of the Investment Bank Special
Administration Regulations 2011 (S.I. 2011/245) (“the regulations”) in
cases where a resolution instrument has been made under section 12A of
the Banking Act 2009 with respect to the investment bank in the relevant
3-month period.
(2) In subsection (1) “the relevant 3-month period” means the 3 months
ending with the date on which the FCA receives the notification under
Condition 1 in regulation 8 of the regulations.
(3) In their application to those cases, the regulations have effect with the
modifications in sub-paragraph (4); and any enactment that refers to the
regulations is to be read accordingly.
(4) In regulation 8 (in its application to those cases)—
(a) in paragraph (5)(c)(ii), for “appropriate regulator” substitute
“Bank of England” and after “notice” insert “and the appropriate
regulator”;
(b) in paragraph (6), omit sub-paragraph (a) (but continue to read
“that” in sub-paragraph (b) as a reference to the insolvency
procedure to which the notice relates);
(c) after paragraph (6) insert—
“(6A) Where the FCA receives notice under Condition 1, it must
also inform the Bank of England of the contents of the
notice.
Where the Bank of England receives notice under
subsection (6A), it must, within the period in Condition 3,
inform the person who gave the notice and the
appropriate regulator whether or not it consents to the
insolvency procedure to which the notice relates going
ahead.””
Insert the following new Schedule—
“SCHEDULE
CONSEQUENTIAL AMENDMENTS RELATING TO PART 4
Financial Services and Markets Act 2000
1
(1) Section 59 of FSMA 2000 (approval for particular arrangements) is
amended as follows.
(2) In subsection (1), for the words from “the appropriate regulator” to the
end substitute “that person is acting in accordance with an approval
given by the appropriate regulator under this section.”
(3) In subsection (2), for the words from “the appropriate regulator” to the
end substitute “that person is acting in accordance with an approval
given by the appropriate regulator under this section.”
2
(1) Section 59A of FSMA 2000 (specifying functions as controlled functions:
supplementary) is amended as follows.
(2) In subsection (1)(a) and (b), for “significant-influence” substitute “senior
management”.
(3) After subsection (3) insert—
“(3A) “Senior management function” has the meaning given by section
59ZA.””
3
(1) Section 63 of FSMA 2000 (withdrawal of approval) is amended as
follows.
(2) In subsection (1A)(a), for “significant-influence function” substitute
“relevant senior management function”.
(3) For subsection (1B) substitute—
“(1B) In subsection (1A) “relevant senior management function”
means a function which the PRA is satisfied is a senior
management function as defined in section 59ZA (whether or not
the function has been designated as such by the FCA).”
4 In section 63A of FSMA 2000 (power to impose penalties), in subsection
(2), for paragraph (b) substitute—
“(b) P, when performing the function, is not acting in
accordance with an approval given under section 59.”
5 (1) Section 66 of FSMA 2000 (disciplinary powers) is amended as follows.
(2) In subsection (3), for paragraph (ab) (and the “or” following it)
substitute—
“(ab) impose, for such period as it considers appropriate, any
conditions in relation to any such approval which it
considers appropriate;
(ac) limit the period for which any such approval is to have
effect;”.
(3) In subsection (3A), for “restriction” substitute “condition”.
(4) In subsection (3B), for “or restriction” substitute “, condition or
limitation”.
(5) In subsection (3C), for “restriction” substitute “condition”.
(6) In subsection (3D)—
(a) in paragraph (a), for “or restriction” substitute “, condition or
limitation”,
(b) omit the “or” at the end of paragraph (a),
(c) in paragraph (b), for “restriction” substitute “condition”, and
(d) after that paragraph insert—
“(c)
vary a limitation so as to increase the period for
which the approval is to have effect.”
(7) In subsection (9), for “restriction” substitute “condition”.
6
(1) Section 67 of FSMA 2000 (disciplinary measures: procedure and right to
refer to Tribunal) is amended as follows.
(2) In subsection (1), for “or (ab)” substitute “, (ab) or (ac)”.
(3) In subsection (2A), for “restriction” (in both places) substitute
“condition”.
(4) After subsection (2A) insert—
“(2B) A warning notice about a proposal to limit the period for which
an approval is to have effect must state the length of that period.”
(5) In subsection (4), for “or (ab)” substitute “, (ab) or (ac)”.
(6) In subsection (5A), for “restriction” (in both places) substitute
“condition”.
(7) After subsection (5A) insert—
“(5B) A decision notice about limiting the period for which an
approval is to have effect must state the length of that period.”
(8) In subsection (7), for “or (ab)” substitute “, (ab) or (ac)”.
7 In section 69 of FSMA 2000 (statement of policy), in subsection (1)—
(a) in paragraph (a), for “or restrictions” substitute “, conditions or
limitations”;
(b) omit the “and” at the end of paragraph (b);
(c) in paragraph (c), for “restrictions” substitute “conditions”;
(d) at the end of paragraph (c) insert “; and
(d)
the period for which approvals under section 59
are to have effect as a result of a limitation under
section 66.”
8 In section 138A of FSMA 2000 (modification or waiver of rules), in
subsection (2), before paragraph (a) insert—
“(za) rules made by either regulator under section 64A (rules of
conduct);”.
9 In section 138D of FSMA 2000 (actions for damages), in subsection (5),
before paragraph (a) insert—
“(za) rules under section 64A (rules of conduct);”.
10 In section 140A of FSMA 2000 (interpretation), in the definition of
“regulating provisions”—
(a) in paragraph (a)—
(i) omit sub-paragraph (iii), and
(ii) in sub-paragraph (iv), omit “64 or”;
(b) in paragraph (b), omit sub-paragraphs (ii) and (iii).
11 In section 347 of FSMA 2000 (the record of authorised persons etc.), for
subsection (9) substitute—
“(9) “Relevant authorised person”, in relation to an approved person,
means the person on whose application approval was given.”
12 In section 387 of FSMA 2000 (warning notices), in subsection (1A), for “or
55I(8)” substitute “, 55I(8) or 61(2D)”.
13 In section 388 of FSMA 2000 (decision notices), in subsection (1A), for “or
55I(8)” substitute “, 55I(8) or 61(2D)”.
14 In section 395 of FSMA 2000 (supervisory notices), in subsection (13),
after paragraph (a) insert—
“(aa) 63ZC(4), (8) or (9)(b);”.
15
(1) Section 415B of FSMA 2000 (consultation in relation to taking certain
enforcement action) is amended as follows.
(2) In subsection (4)—
(a) in paragraph (b), for “significant-influence” substitute “relevant
senior management”, and
(b) omit the definitions appearing after that paragraph.
(3) After subsection (4) insert—
“(5) In subsection (4)—
“arrangement” has the same meaning as in section 59;
“relevant senior management function” means a function
which the FCA is satisfied is a senior management
function as defined in section 59ZA (whether or not it has
been designated as such under section 59(6B) or (6C)).”
16 In Schedule 1ZA to FSMA 2000 (the Financial Conduct Authority), in
paragraph 8(3)—
(a) in paragraph (b), omit “64 or”;
(b) in paragraph (c)(i)—
(i) after “section” insert “63ZD,”, and
(ii) omit “64,”.
17 In Schedule 1ZB to FSMA 2000 (the Prudential Regulation Authority), in
paragraph 16(3)—
(a) omit paragraph (b);
(b) in paragraph (c)(i)—
(i) after “section” insert “63ZD,”, and
(ii) omit “64,”.
Financial Services Act 2012
18 In section 14 of the Financial Services Act 2012, omit subsection (4).
19
(1) Section 85 of the Financial Services Act 2012 (relevant functions in
relation to complaints scheme) is amended as follows.
(2) In subsection (4)—
(a) in paragraph (b), omit “64 or”;
(b) in paragraph (c)(i)—
(i) after “section” insert “63ZD,”, and
(ii) omit “64,”.
(3) In subsection (5)—
(a) omit paragraph (b);
(b) in paragraph (c)(i)—
(i) after “section” insert “63ZD,”, and
(ii) omit “64,”.”
Insert the following new Schedule—
“SCHEDULE
CONDUCT OF FMI ADMINISTRATION
1 The following provisions of this Schedule provide for—
(a) the general powers and duties of FMI administrators (by
application of provisions about administrators), and
(b) the general process and effects of FMI administration (by
application of provisions about administration).
2 The provisions set out in the Tables apply in relation to FMI
administration as in relation to administration, with—
(a) the modifications set out in paragraph 3,
(b) any other modification specified in the Tables, and
(c) any other necessary modification.
3 The modifications are that—
(a) a reference to the administrator is a reference to the FMI
administrator,
(b) a reference to administration is a reference to FMI
administration,
(c) a reference to an administration application is a reference to an
FMI administration application,
(d) a reference to an administration order is a reference to an FMI
administration order,
(e) a reference to a company is a reference to the infrastructure
company, and
(f) a reference to the purpose of administration (other than the
reference in paragraph 111(1) of Schedule B1) is a reference to the
objective in section (Objective of FMI administrationObjective of FMI administration).
4 Powers conferred by this Part of this Act and by the 1986 Act (as applied)
are in addition to, and not in restriction of, any existing powers of
instituting proceedings against any contributory or debtor of an
infrastructure company, or the estate of any contributory or debtor, for
the recovery of any call or other sum.
5 A reference in an enactment or other document to anything done under
a provision applied by this Part of this Act includes a reference to the
provision as applied.
TABLE 1 OF APPLIED PROVISIONSSCHEDULE B1 TO THE INSOLVENCY ACT 1986
|
Provision of Schedule B1 |
Subject |
Modification |
|
Para. 40(1)(a) |
Dismissal of pending winding- up petition |
|
|
Para. 41 |
Dismissal of administrative or other receiver |
|
|
Para. 42 |
Moratorium on insolvency proceedings |
Ignore sub-paras. (4) and (5). |
|
Para. 43 |
Moratorium on other legal process |
|
|
Para. 44(1)(a) and (5) |
Interim moratorium |
|
|
Para. 46 |
Announcement of appointment |
Ignore sub-para. (6)(b) and (c). |
|
Paras. 47 and 48 |
Statement of affairs |
|
|
Para. 49 |
Administrator’s proposals |
The administrator must obtain the approval of the Bank of England to any proposals under sub-para. (1). Treat the reference in sub-para. (2)(b) to the objective mentioned in para. 3(1)(a) or (b) as a reference to the objective in section (Objective of Objective of FMI administrationFMI administration) of this Act. Ignore sub-para. (3)(b). |
|
Para. 59 |
General powers |
|
|
Para. 60 and Schedule 1 |
General powers |
The exercise of powers under Schedule 1 is subject to section (Objective of FMI Objective of FMI administrationadministration) of this Act. |
|
Para. 61 |
Directors |
|
|
Para. 62 |
Power to call meetings of creditors |
|
|
Para. 63 |
Application to court for directions |
Before making an application in reliance on this paragraph the FMI administrator must give notice to the Bank of England, which is to be entitled to participate in the proceedings. In making directions the court must have regard to the objective in section (Objective of FMI Objective of FMI administrationadministration) of this Act. |
|
Para. 64 |
Management powers. |
|
|
Para. 65 |
Distribution to creditors |
|
|
Para. 66 |
Payments |
|
|
Para. 67 |
Taking custody of property |
|
|
Para. 68 |
Management |
Ignore sub-paras. (1) and (3). The Bank of England may apply to the court for the variation or revocation of any directions given by the court. |
|
Para. 69 |
Agency |
|
|
Para. 70 |
Floating charges |
|
|
Para. 71 |
Fixed charges |
|
|
Para. 72 |
Hire-purchase property |
|
|
Para. 73 |
Protection for secured and preferential creditors |
|
|
Para. 74 |
Challenge to administrator’s conduct |
For sub-para. (2) there is to be taken to be substituted— “(2) Where a company is in FMI administration, a creditor or member of the company may apply to the court claiming that the FMI administrator is conducting himself or herself in a manner preventing the achievement of the objective of the FMI administration as quickly and efficiently as is reasonably practicable.” |
|
Para. 75 |
Misfeasance |
In addition to applications that may anyway be made under para. 75, an application may be made by the FMI administrator or the Bank of England. |
|
Para. 79 |
Court ending administration on application of administrator |
For sub-paras. (1) to (3) there are to be taken to be substituted— “(1) On an application made by a person mentioned in sub-paragraph (2), the court may provide for the appointment of an FMI administrator of a company to cease to have effect from a specified time. (2) The persons who may apply to the court under sub-paragraph (1) are— (a) the Bank of England; (b) with the consent of the Bank, the FMI administrator.” |
|
Para. 84 |
Termination: no more assets for distribution |
|
|
Para. 85 |
Discharge of administration order |
|
|
Para. 86 |
Notice to Companies Registrar of end of administration |
|
|
Para. 87 |
Resignation |
An FMI administrator may not resign under para. 87 without giving 28 days’ notice of the intention to do so to the Bank of England. |
|
Para. 88 |
Removal |
An application for an order removing an FMI administrator from office may be made only by or with the consent of the Bank of England. |
|
Para. 89 |
Disqualification |
The notice under sub-para. (2) must be given to the Bank of England. |
|
Paras. 90 and 91 |
Replacement |
Para. 91(1) applies as if the only person who could make an application were the Bank of England. Ignore para. 91(2). |
|
Para. 98 |
Discharge |
Ignore sub-paras. (2)(b) and (3). |
|
Para. 99 |
Vacation of office: charges and liabilities |
In the application of sub-para. (3), payments may be made only— in accordance with directions of the Bank of England, and if the Bank is satisfied that they will not prejudice the objective in section (Objective of FMI administration)Objective of FMI administration) of this Act. |
|
Paras. 100 to 103 |
Joint administrators |
An application under para. 103 may be made only by the Bank of England. |
|
Para. 104 |
Validity |
|
|
Para. 106 (and section 430 and Schedule 10) |
Fines |
|
|
Paras. 107 to 109 |
Extension of time limits |
|
|
Para. 110 |
Amendment of provisions about time |
An order under para. 110 may amend a provision of the Schedule as it applies by virtue of this Act (whether or not in the same way as it amends the provision as it applies otherwise). |
|
Para. 111 |
Interpretation |
|
|
Paras. 112 to 116 |
Scotland |
TABLE 2 OF APPLIED PROVISIONSOTHER PROVISIONS OF THE INSOLVENCY ACT 1986
|
Section |
Subject |
Modification or comment |
|
Section 233 |
Utilities |
|
|
Section 234 |
Getting in company’s property |
|
|
Section 235 |
Duty to co-operate with office- holder |
|
|
Section 236 |
Inquiry into company’s dealings |
|
|
Section 237 |
Section 236: enforcement by court |
|
|
Section 238 |
Transactions at an undervalue (England and Wales) |
|
|
Section 239 |
Preferences (England and Wales) |
|
|
Section 240 |
Ss. 238 and 239: relevant time |
|
|
Section 241 |
Orders under ss. 238 and 239 |
In considering making an order in reliance on section 241 the court must have regard to the objective in section (Objective of FMI Objective of FMI administrationadministration) of this Act. Ignore subsections (2A)(a) and (3) to (3C). |
|
Section 242 |
Gratuitous alienations (Scotland) |
|
|
Section 243 |
Unfair preferences (Scotland) |
In considering the grant of a decree under subsection (5) the court must have regard to the objective in section (Objective of FMI Objective of FMI administrationadministration) of this Act. |
|
Section 244 |
Extortionate credit transactions |
|
|
Section 245 |
Avoidance of floating charges |
|
|
Section 246 |
Unenforceability of liens |
|
|
Sections 386 and 387, and Schedule 6 (and Schedule 4 to the Pension Schemes Act 1993) |
Preferential debts |
|
|
Section 389 |
Offence of acting without being qualified |
Treat references to acting as an insolvency practitioner as references to acting as an FMI administrator. |
|
Section 390 |
Persons not qualified to act |
Treat references to acting as an insolvency practitioner as references to acting as an FMI administrator. |
|
Section 391 |
Recognised professional bodies |
An order under section 391 has effect in relation to any provision applied for the purposes of FMI administration. |
|
Sections 423 to 425 |
Transactions defrauding creditors |
In considering granting leave under section 424(1) or making an order in reliance on section 425, the court must have regard to the objective in section (Objective of FMI Objective of FMI administration)administration) of this Act. |
|
Sections 430 to 432 and Schedule 10 |
Offences |
6
(1) The Treasury may by order amend this Schedule so as to make further
modifications.
(2) The further modifications that may be made are confined to such
modifications of—
(a) the 1986 Act, or
(b) other enactments passed or made before this Act that relate to
insolvency or make provision by reference to anything that is or
may be done under the 1986 Act,
(3) An order under this paragraph may also make modifications of the
provisions of this Schedule.”
Insert the following new Schedule—
“SCHEDULE
FINANCIAL MARKET INFRASTRUCTURE TRANSFER SCHEMES
Application of Schedule
1 This Schedule applies where—
(a) the court has made an FMI administration order in relation to a
company (“the old company”), and
(b) it is proposed that a transfer within section (Objective of FMI Objective of FMI
administrationadministration)(5) be made to another company (“the new
company”).
Interpretation of Schedule
2 In this Schedule—
“FMI transfer scheme” has the meaning given by paragraph 4(1);
“the new company” and “the old company” are to be read in
accordance with paragraph 1;
“third party”, in relation to an FMI transfer scheme or a
modification of such a scheme, means a person other than the old
company or the new company.
FMI administrator to act on behalf of old company
3 It is for the FMI administrator, while the FMI administration order is in
force, to act on behalf of the old company in the doing of anything that it
is authorised or required to do by or under this Schedule.
Making of FMI transfer schemes
4 (1) The old company may—
(a) with the consent of the new company, and�
(b) for the purpose of giving effect to the proposed transfer,
make a scheme under this Schedule for the transfer of property, rights make a scheme under this Schedule for the transfer of property, rights and liabilities from the old company to the new company (an “FMI and liabilities from the old company to the new company (an “FMI transfer scheme”).transfer scheme”).
(2) Such a scheme may be made only at a time when the FMI administration
order is in force in relation to the old company.
(3) An FMI transfer scheme may set out the property, rights and liabilities
to be transferred in one or more of the following ways—�
(a) by specifying or describing them in particular,
(b) by identifying them generally by reference to, or to a specified
part of, the undertaking of the old company, or�
(c) by specifying the manner in which they are to be determined.
(4) An FMI transfer scheme is to take effect in accordance with paragraph 7
at the time appointed by the court.
(5) But the court must not appoint a time for a scheme to take effect unless
that scheme has been approved by the Bank of England.
(6) The Bank of England may modify an FMI transfer scheme before
approving it, but only modifications to which both the old company and
the new company have consented may be made.
(7) In deciding whether to approve an FMI transfer scheme, the Bank of
England must have regard, in particular, to—
Before approving an FMI transfer scheme, the Bank of England must
consult the Treasury.
The old company and the new company each have a duty to provide the
Bank of England with all information and other assistance that the Bank
may reasonably require for the purposes of, or in connection with, the
exercise of the powers conferred on it by this paragraph.
(a) the public interest, and
(b) any effect that the scheme is likely to have on the interests of third
parties.
Provision that may be made by a scheme
5 (1) An FMI transfer scheme may contain provision—
(a) for the creation, in favour of the old company or the new
company, of an interest or right in or in relation to property
transferred in accordance with the scheme;
(b) for giving effect to a transfer to the new company by the creation,
in favour of that company, of an interest or right in or in relation
to property retained by the old company;
(c) for the creation of new rights and liabilities (including rights of
indemnity and duties to indemnify) as between the old company
and the new company;
(d) in connection with any provision made under this sub-
paragraph, provision making incidental provision as to the
interests, rights and liabilities of other persons with respect to the
property, rights and liabilities to which the scheme relates.
(2) The property, rights and liabilities of the old company that may be
transferred in accordance with an FMI transfer scheme include—
(a) property, rights and liabilities that would not otherwise be
capable of being transferred or assigned by the old company;
(b) property acquired, and rights and liabilities arising, in the period
after the making of the scheme but before it takes effect;
(c) rights and liabilities arising after it takes effect in respect of
matters occurring before it takes effect;
(d) property situated anywhere in the United Kingdom or
elsewhere;
(e) rights and liabilities under the law of a part of the United
Kingdom or of a place outside the United Kingdom;
(f) rights and liabilities under an enactment, EU instrument or
subordinate legislation.
(3) The transfers to which effect may be given by an FMI transfer scheme
include transfers of interests and rights that are to take effect in
accordance with the scheme as if there were—
(a) no such requirement to obtain a person’s consent or concurrence,
(b) no such liability in respect of a contravention of any other
requirement, and
(c) no such interference with any interest or right,�
as there would be, in the case of a transaction apart from this Act, by as there would be, in the case of a transaction apart from this Act, by reason of a provision falling within sub-paragraph (4).reason of a provision falling within sub-paragraph (4).
(4) A provision falls within this sub-paragraph to the extent that it has effect
(whether under an enactment or agreement or otherwise) in relation to
the terms on which the old company is entitled, or subject, to anything
to which the transfer relates.�
(5) Sub-paragraph (6) applies where (apart from that sub-paragraph) a
person would be entitled, in consequence of anything done or likely to
be done by or under this Act in connection with an FMI transfer
scheme—
(a) to terminate, modify, acquire or claim an interest or right, or�
(b) to treat an interest or right as modified or terminated.�
(6) That entitlement—
(a) is not enforceable in relation to that interest or right until after the
transfer of the interest or right by the scheme, and
(b) is then enforceable in relation to the interest or right only in so far
as the scheme contains provision for the interest or right to be
transferred subject to whatever confers that entitlement.
(7) Sub-paragraphs (3) to (6) have effect where shares in a subsidiary of the
old company are transferred—
(a) as if the reference in sub-paragraph (4) to the terms on which the
old company is entitled or subject to anything to which the
transfer relates included a reference to the terms on which the
subsidiary is entitled or subject to anything immediately before
the transfer takes effect, and
(b) in relation to an interest or right of the subsidiary, as if the
references in sub-paragraph (6) to the transfer of the interest or
right included a reference to the transfer of the shares.
(8) Sub-paragraphs (3) and (4) apply to the creation of an interest or right by
an FMI transfer scheme as they apply to the transfer of an interest or
righ�t.
Further provision about transfers
6
(1) An FMI transfer scheme may make incidental, supplemental,
consequential and transitional provision in connection with the other
provisions of the scheme.
(2) An FMI transfer scheme may in particular make provision, in relation to
a provision of the scheme—
Sub-paragraph (2)(c) does not apply to references in an enactment or in
subordinate legislation.
(a) for the new company to be treated as the same person in law as
the old company;�
(b) for agreements made, transactions effected or other things done
by or in relation to the old company to be treated, so far as may
be necessary for the purposes of or in connection with a transfer
in accordance with the scheme, as made, effected or done by or
in relation to the new company;
(c) for references in an agreement, instrument or other document to
the old company or to an employee or office holder with the old
company to have effect, so far as may be necessary for the
purposes of or in connection with a transfer in accordance with
the scheme, with such modifications as are specified in the
scheme;
(d) that the effect of any transfer in accordance with the scheme in
relation to contracts of employment with the old company is not
to terminate any of those contracts but is to be that periods of
employment with that company are to count for all purposes as
periods of employment with the new company;
(e) for proceedings commenced by or against the old company to be
continued by or against the new company.
(4) An FMI transfer scheme may make provision for disputes between the
old company and the new company as to the effect of the scheme to be
referred to such arbitration as may be specified in or determined under
the scheme.�
(5) Where a person is entitled, in consequence of an FMI transfer scheme, to
possession of a document relating in part to the title to land or other
property in England and Wales, or to the management of such land or
other property—�
(a) the scheme may provide for that person to be treated as having
given another person an acknowledgement in writing of the right
of that other person to production of the document and to
delivery of copies of it, and�
(b) section 64 of the Law of Property Act 1925 (production and safe
custody of documents) is to have effect accordingly, and on the
basis that the acknowledgement did not contain an expression of
contrary intention.�
(6) Where a person is entitled, in consequence of an FMI transfer scheme, to
possession of a document relating in part to the title to land or other
property in Scotland or to the management of such land or other
property, subsections (1) and (2) of section 16 of the Land Registration
(Scotland) Act 1979 (omission of certain clauses in deeds) is to have effect
in relation to the transfer—�
(a) as if the transfer had been effected by deed, and�
(b) as if the words “unless specially qualified” were omitted from
each of those subsections.
(7) Where a person is entitled, in consequence of an FMI transfer scheme, to
possession of a document relating in part to the title to land or other
property in Northern Ireland or to the management of such land or other
property—
(a) the scheme may provide for that person to be treated as having
given another person an acknowledgement in writing of the right
of that other person to production of the document and to
delivery of copies of it, and�
(b) section 9 of the Conveyancing Act 1881 is to have effect
accordingly, and on the basis that the acknowledgement does not
contain an expression of contrary intention.�
(8) �In this paragraph references to a transfer in accordance with an FMI
transfer scheme include references to the creation in accordance with
such a scheme of an interest, right or liability.
Effect of scheme
7
(1) In relation to each provision of an FMI transfer scheme for the transfer of
property, rights or liabilities, or for the creation of interests, rights or
liabilities—�
(a) the property, interests, rights or liabilities become by virtue of
this Schedule the property, interests, rights or liabilities of the
transferee at the time appointed by the court for the purposes of
paragraph 4(4), and
(b) the provisions of that scheme in relation to that property or those
interests, rights or liabilities, have effect from that time.
(2) In this paragraph “the transferee” means—
(a) in relation to property, rights or liabilities transferred by an FMI
transfer scheme, the new company;
(b) in relation to interests, rights or liabilities created by such a
scheme, the person in whose favour, or in relation to whom, they
are created.
Subsequent modification of scheme
8
(1) The Bank of England may by notice to the old company and the new
company modify an FMI transfer scheme after it has taken effect, but
only modifications to which both the old company and the new
company have consented may be made.�
(2) The notice must specify the time at which it is to take effect (the
“modification time”).�
(3) Where a notice is issued under this paragraph in relation to an FMI
transfer scheme, as from the modification time, the scheme is for all
purposes to be treated as having taken effect, at the time appointed for
the purposes of paragraph 4(4), with the modifications made by the
notice.
(4) Those modifications may make—
(a) any provision that could have been included in the scheme when
it took effect at the time appointed for the purposes of paragraph
4(4), and�
transitional provision in connection with provision falling within
paragraph (a).
(5) In deciding whether to modify an FMI transfer scheme, the Bank of
England must have regard, in particular, to—
(a) the public interest, and
(b) any effect that the modification is likely to have on the interests
of third parties.
(6) Before modifying an FMI transfer scheme that has taken effect, the Bank
of England must consult the Treasury.�
The old company and the new company each have a duty to provide the
Bank of England with all information and other assistance that the Bank
may reasonably require for the purposes of, or in connection with, the
exercise of the powers conferred on it by this paragraph.�
Provision relating to foreign property
9 (1) An FMI transfer scheme may contain provision about—
(a) the transfer of foreign property, right and liabilities, and
(b) the creation of foreign property, rights and liabilities.
(2) For this purpose property, or a right, interest or liability, is “foreign” if
an issue relating to it arising in any proceedings would (in accordance
with the rules of private international law) be determined under the law
of a country or territory outside the United Kingdom.
Application of Schedule to transfers to subsidiaries
10 Where a proposed transfer falling within subsection (5) of section
(Objective of FMI administrationObjective of FMI administration) is a transfer of the kind mentioned in
subsection (6)(a) of that section, this Schedule has effect in relation to the
transfer as if—
(a) paragraph 4(1)(a) were omitted, and
(b) in paragraph 4(6), for the words from “both” onwards there were
substituted “the old company has consented may be made”.”
Insert the following new Schedule—
“SCHEDULE
FUNCTIONS OF FCA UNDER COMPETITION LEGISLATION
PART 1
AMENDMENTS OF FINANCIAL SERVICES AND MARKETS ACT 2000
1 Part 16A of FSMA 2000 (consumer protection and competition) is
amended as follows.
2 Omit section 234H (power of FCA to make request to Office of Fair
Trading).
3 After section 234H insert—
“234I Matters in relation to which the FCA has competition functions
(1) In sections 234J and 234K “financial sector activities” means the
provision of financial services.
(2) The Treasury may by order amend this section.
234J The FCA’s functions under Part 4 of the Enterprise Act 2002
(1) The functions to which this subsection applies (“the concurrent
functions”) are to be concurrent functions of the FCA and the
Competition and Markets Authority (referred to in this Part as
“the CMA”).
(2) Subsection (1) applies to the functions of the CMA under Part 4
of the Enterprise Act 2002 (market investigations), so far as those
functions—
(a) are exercisable by the CMA Board (within the meaning of
Schedule 4 to the Enterprise and Regulatory Reform Act
2013), and
(b) relate to financial sector activities.
(3) But subsection (1) does not apply to functions under the
following sections of that Act—
(none) section 166 (duty to maintain register of undertakings
and orders);
(none) section 171 (duty to publish guidance).
(4) So far as is necessary for the purposes of, or in connection with,
subsections (1) and (2)—
(a) references in Part 4 of the Enterprise Act 2002 to the CMA
(including references in provisions of that Act applied by
that Part) are to be read as including references to the
FCA, and
(b) references in that Part to section 5 of that Act are to be
read as including references to section 234N of this Act.
(5) But subsection (4) does not apply—
(a) in relation to section 166 or 171 of that Act, or
(b) where the context otherwise requires.
(6) Section 130A of the Enterprise Act 2002 has effect in relation to
the FCA by virtue of subsections (1) and (2) as if—
(a) in subsection (2)(a) of that section, the reference to the
acquisition or supply of goods or services of one or more
than one description in the United Kingdom were a
reference to financial sector activities involving services
provided or received in the United Kingdom, and
(b) in subsection (2)(b) of that section, the reference to the
extent to which steps can and should be taken were a
reference to the extent to which steps that might include
steps under Part 4 of that Act can and should be taken.
(7) Before the CMA or the FCA first exercises any of the concurrent
functions in relation to any matter, it must consult the other.
(8) Neither the CMA nor the FCA may exercise any of the concurrent
functions in relation to any matter if any of those functions have
been exercised in relation to that matter by the other.
234K The FCA’s functions under the Competition Act 1998
(1) The functions to which this subsection applies (“the concurrent
functions”) are to be concurrent functions of the FCA and the
Competition and Markets Authority.
(2) Subsection (1) applies to the functions of the CMA under the
provisions of Part 1 of the Competition Act 1998, so far as relating
to any of the following that relate to financial sector activities—
(a) agreements, decisions or concerted practices of the kind
mentioned in section 2(1) of that Act,
(b) conduct of the kind mentioned in section 18(1) of that Act,
(c) agreements, decisions or concerted practices of the kind
mentioned in Article 101(1) of the Treaty on the
Functioning of the European Union, and
(d) conduct which amounts to abuse of the kind mentioned
in Article 102 of the Treaty on the Functioning of the
European Union.
(3) But subsection (1) does not apply to functions under the
following provisions of that Act—
(none) section 31D(1) to (6) (duty to publish guidance);
(none) section 38(1) to (6) (duty to publish guidance about
penalties);
(none) section 40B(1) to (4) (duty to publish statement of policy
on penalties);
(none) section 51 (rules).
(4) So far as necessary for the purposes of, or in connection with, the
provisions of subsections (1) and (2), references to the CMA in
Part 1 of the Competition Act 1998 are to be read as including
references to the FCA.
(5) But subsection (4) does not apply—
(a) in relation to sections 31D(1) to (6), 38(1) to (6), 40B(1) to
(4), 51, 52(6) and (8) and 54 of that Act, or
(b) where the context otherwise requires.
234L Duty to consider exercise of powers under Competition Act 1998
(1) Before exercising a power listed in subsection (3), the FCA must
consider whether it would be more appropriate to proceed under
the Competition Act 1998.
(2) The FCA must not exercise such a power if it considers that it
would be more appropriate to proceed under the Competition
Act 1998.
(3) Those powers are—
(a) the power under section 55J(2) to vary or cancel a Part 4A
permission;
(b) the power under section 55L to impose a requirement on
an authorised person with a Part 4A permission, or to
vary a requirement imposed under that section;
(c) the power to take action under section 88E;
(d) the power to take action under section 89U;
(e) the power to give a direction under section 192C;
(f) the power to impose a requirement under section 196.
234M Provision of information and assistance to a CMA group
(1) For the purpose of assisting a CMA group in carrying out a
relevant investigation, the FCA must give the CMA group—
(a) any relevant information which the FCA has in its
possession, and
(b) any other assistance which the CMA group may
reasonably require in relation to any matters falling
within the scope of the investigation.
(2) A “relevant investigation” is an investigation carried out on a
reference made by the FCA under section 131 of the Enterprise
Act 2002 by virtue of section 234J.
(3) “Relevant information”, in relation to a relevant investigation, is
information—
(a) which relates to matters falling within the scope of the
investigation, and
(b) which—
(i)
is requested by the CMA group for the purpose of
the investigation, or
(ii)
in the FCA’s opinion, it would be appropriate to
give to the CMA group for that purpose.
(4) A CMA group, in carrying out a relevant investigation, must take
into account any information given to it under this section.
(5) In this section “CMA group” has the same meaning as in
Schedule 4 to the Enterprise and Regulatory Reform Act 2013.
234N Information relating to FCA’s competition functions
(1) For the purpose of the functions conferred on it by sections 234J
to 234M the FCA is to have the function of keeping under review
the market in financial services.
(2) The function conferred by subsection (1) is to be carried out with
a view to (among other things) ensuring that the FCA has
sufficient information to take informed decisions and to carry out
its other functions effectively.
234O Exclusion of general duties
(1) Section 1B (the FCA’s general duties) does not apply in relation
to anything done by the FCA in the carrying out of its functions
by virtue of sections 234J to 234M.
(2) But in the carrying out of any functions by virtue of sections 234J
to 234M, the FCA may have regard to any of the matters in
respect of which a duty is imposed by section 1B if it is a matter
to which the CMA is entitled to have regard in the carrying out
of those functions.
234P Supplementary provision
(1) If any question arises as to whether, by virtue of sections 234J and
234K, any functions fall to be, or are capable of being, carried out
by the FCA in relation to any particular case, that question is to
be referred to, and determined by, the Treasury.
(2) No objection is to be taken to anything done under the
Competition Act 1998 or Part 4 of the Enterprise Act 2002 by or
in relation to the FCA on the ground that it should have been
done by or in relation to the CMA.”
4 In section 3I of FSMA 2000 (power of PRA to require FCA to refrain from
specified action), in subsection (3)(a), after “55I” insert “, a power
conferred on it by sections 234J to 234N”.
5 In section 354A of FSMA 2000 (FCA’s duty to co-operate with others),
after subsection (2) insert—
“(2A) Subsection (1) does not apply in relation to the Competition and
Markets Authority in a case where the FCA has made a reference
under section 131 of the Enterprise Act 2002 as a result of section
234J (but see section 234M).”
6
(1) Schedule 1ZA to FSMA 2000 (the Financial Conduct Authority) is
amended as follows.
(2) In paragraph 8 (arrangements for discharging functions), after sub-
paragraph (4) insert—
“(5) In respect of the exercise of a function under Part 1 of the
Competition Act 1998, the power in sub-paragraph (1) is
subject to provision in rules made under section 51 of that Act
by virtue of paragraph 1A of Schedule 9 to that Act.”
(3) In paragraph 23 (fees), after sub-paragraph (2) insert—
“(2A) The functions referred to in sub-paragraph (1)(a) include
functions of the FCA under the Competition Act 1998 or the
Enterprise Act 2002 as a result of Part 16A of this Act.”
PART 2
AMENDMENTS OF OTHER LEGISLATION
Company Directors Disqualification Act 1986
7 In section 9E of the Company Directors Disqualification Act 1986
(interpretation of sections 9A to 9D), in subsection (2), after paragraph (f)
insert—
“(g) the Financial Conduct Authority.”
Competition Act 1998
8 In section 54 of the Competition Act 1998 (regulators), in subsection (1),
omit the “and” at the end of paragraph (g) and after paragraph (h)
insert—
“(i) the Financial Conduct Authority.”
Enterprise Act 2002
9
(1) Section 136 of the Enterprise Act 2002 (investigations and reports on
market investigation references) is amended as follows.
(2) In subsection (7), after paragraph (e) insert—
“(ea) in relation to the Financial Conduct Authority, section
234J of the Financial Services and Markets Act 2000;”.
(3) In subsection (8), after “the Office of Rail Regulation,” insert “the
Financial Conduct Authority,”.
Enterprise and Regulatory Reform Act 2013
10 In section 52(4) of the Enterprise and Regulatory Reform Act 2013
(power to remove concurrent competition functions of sectoral
regulators) after paragraph (f) insert—
“(g) the Financial Conduct Authority.”
11 In Schedule 4 to the Enterprise and Regulatory Reform Act 2013 (the
Competition and Markets Authority), in paragraph 16 (concurrency
report), at the end of sub-paragraph (7) insert—
“(h) the Financial Conduct Authority.””
Insert the following new Schedule—
“SCHEDULE
BUILDING SOCIETIES
Introductory
1 The Building Societies Act 1986 is amended as follows.
Exclusion of small business deposits from funding limit
2 (1) Section 7 (the funding limit) is amended as follows.
(2) In subsection (3), omit the “and” at the end of paragraph (a) and after that
paragraph insert—
“(aa) subject to subsection (3A), the principal of, and interest
accrued on, sums deposited with the society or any
subsidiary undertaking of the society by a small business
(see subsection (10));”.
(3) After subsection (3) insert—
“(3A) In respect of any day by reference to which the value of X falls to
be calculated for the purposes of subsection (1) in relation to the
society, the total amount to be disregarded under subsection
(3)(aa) may not exceed 10% of the amount that would, in the
absence of subsection (3)(aa), be the value of X on that day.”
(4) After subsection (6) insert—
“(6ZA) Where a person declares that the person is a small business, the
person shall, unless the contrary is shown, be conclusively
presumed for the purposes of this section to be a small business.”
(5) After subsection (9) insert—
“(10) In this section “small business” means any person (other than an
individual acting as a sole trader) carrying on a business which
had a turnover in the relevant financial year of less than
£1,000,000.
“(11) For the purposes of subsection (10)—
(a) the “relevant financial year”, in relation to any day by
reference to which the value of X falls to be calculated for
the purposes of subsection (1) in relation to a building
society, means the last financial year ending before that
day;
(b) “turnover”, in relation to a small business, means the
amount derived from the provision of goods and services
falling within the business’s ordinary activities, after
deduction of trade discounts, value added tax and any
other taxes based on the amounts so derived;
(c) in respect of any relevant financial year, the reference to
£1,000,000 includes the equivalent amount in any other
currency, calculated as at the last day of that year.
(12) The Treasury may, by order made by statutory instrument,
amend the figure for the time being specified in subsections (10)
and (11)(c).
(13) A statutory instrument containing an order under subsection (12)
is subject to annulment in pursuance of a resolution of either
House of Parliament.”
3
(1) In article 3 of the Building Societies Act 1986 (Substitution of Specified
Amounts and Modification of the Funding Limits Calculation) Order
2007 (S.I. 2007/860), in paragraph 3, for “the modification required by
this article” substitute “the modifications required by this article and by
section 7(3)(aa)”.
(2) The amendment by this paragraph of a provision contained in
subordinate legislation is without prejudice to any power to amend that
provision by subordinate legislation.
Ability to create floating charges
4 (1) Omit section 9B (restriction on creation of floating charges).
(2) In Schedule 15A (application of other companies insolvency legislation
to building societies), omit the following paragraphs—
(a) paragraph 18 (which modifies section 15 of the Insolvency Act
1986);
(b) paragraph 20 (which modifies section 19 of that Act);
(c) paragraph 40 (which modifies Article 28 of the Insolvency
(Northern Ireland) Order 1989);
(d) paragraph 42 (which modifies Article 31 of that Order).
(3) In consequence of the amendment made by sub-paragraph (1)—
(a) in section 1(1A)(b), for “, 9A and 9B” substitute “and 9A”;
(b) in the Building Societies Act 1997, omit section 11;
(c) in section 11(3) of the Banking (Special Provisions) Act 2008, for
paragraph (c) substitute—
“(c)
sections 8 and 9A of the Building Societies Act
1986 (restrictions on raising funds and borrowing
and on transactions involving derivative
instruments etc);”;
(d) in section 251 of the Banking Act 2009, omit subsection (7);
(e) in the Financial Services Act 2012, omit section 55.
Annual business statements
5
(1) Section 74 (duty of directors to prepare annual business statement) is
amended as follows.
(2) In subsection (4), omit the words from “and other officers” to “them”.
(3) In subsection (8), omit “or other officer”.
Summary financial statements
6
(1) Section 76 (summary financial statement for members and depositors) is
amended as follows.
(2) After subsection (8A) insert—
“(8AA) The society shall also—
(a) publish the summary financial statement and (where
applicable) the auditor’s report on a web site, and
(b) ensure that the statement and (where applicable) the
report may be accessed on the web site until the
publication of the next summary financial statement.”
(3) After subsection (8D) insert—
“(8E) If, at any time during the period beginning with the publication
of the summary financial statement and ending with the
publication of the next summary financial statement, an
individual for the first time subscribes for shares in the society,
the society shall at that time notify the individual of the
information in subsection (8C)(c)(i) to (iii).
In a case where subsection (8E) applies, the society is not
required under section 115B (right to hard copy version) to send
the individual a version of the summary financial statement or
(where applicable) the auditor’s report in hard copy form (within
the meaning of that section).”
(4) Omit subsections (9) to (9E).
(5) In subsection (11), for “subsection (9)” substitute “subsection (8AA) or
(8E)”.
7 In consequence of the amendments made by paragraph 6—
(a) in section 78(6), for “subsections (8) and (9) of section 76 extend”
substitute “subsection (8) of section 76 extends”;
(b) in paragraphs 7(3) and 8(3) of Schedule 2, omit “the summary
financial statement,”.
Transfers of business: distributions and share rights
8
(1) Section 100 (regulated terms etc: distributions and share rights) is
amended as follows.
(2) For subsection (8) substitute—
“(8) The terms of a transfer of a society’s business may confer a right
to acquire shares in the successor on a member of the society only
if the member—
(a) held shares in the society throughout the period of two
years ending with the qualifying day, or
(b) on that day, holds deferred shares in the society that are
of a class described in the transfer agreement;
and it is unlawful for any right in relation to shares to be and it is unlawful for any right in relation to shares to be
conferred in contravention of this subsection.”conferred in contravention of this subsection.”
(a)
The administrator must obtain the
approval of the Bank of England to
any proposals under sub-para. (1).
(b)
Treat the reference in sub-para.
(2)(b) to the objective mentioned in
para. 3(1)(a) or (b) as a reference to
the objective in section (Objective of Objective of
FMI administrationFMI administration) of this Act.
(c) Ignore sub-para. (3)(b).
(a)
Before making an application in
reliance on this paragraph the FMI
administrator must give notice to
the Bank of England, which is to be
entitled to participate in the
proceedings.
(b)
In making directions the court must
have regard to the objective in
section (Objective of FMI Objective of FMI
administrationadministration) of this Act.
(a) Ignore sub-paras. (1) and (3).
(b)
The Bank of England may apply to
the court for the variation or
revocation of any directions given
by the court.
()
“(2) Where a company is in FMI
administration, a creditor or
member of the company may apply
to the court claiming that the FMI
administrator is conducting himself
or herself in a manner preventing
the achievement of the objective of
the FMI administration as quickly
and efficiently as is reasonably
practicable.”
()
“(1) On an application made by a
person mentioned in sub-paragraph
(2), the court may provide for the
appointment of an FMI
administrator of a company to cease
to have effect from a specified time.
()
(2) The persons who may apply to
the court under sub-paragraph (1)
are—
() (a) the Bank of England;
()
(b) with the consent of the Bank, the
FMI administrator.”
(a)
Para. 91(1) applies as if the only
person who could make an
application were the Bank of
England.
(b) Ignore para. 91(2).
(a)
in accordance with directions of the
Bank of England, and
(b)
if the Bank is satisfied that they will
not prejudice the objective in section
(Objective of FMI administration)Objective of FMI administration) of
this Act.
(a)
In considering making an order in
reliance on section 241 the court
must have regard to the objective in
section (Objective of FMI Objective of FMI
administrationadministration) of this Act.
(b)
Ignore subsections (2A)(a) and (3) to
(3C).
(3) In subsection (9), for the words from “who” to “and” substitute “who—
(a) held shares in the society throughout the period of two
years ending with the qualifying day, or
(b) on that day, hold deferred shares in the society that are of
a class described in the transfer agreement;
and”.and”.
(a)
The administrator must obtain the
approval of the Bank of England to
any proposals under sub-para. (1).
(b)
Treat the reference in sub-para.
(2)(b) to the objective mentioned in
para. 3(1)(a) or (b) as a reference to
the objective in section (Objective of Objective of
FMI administrationFMI administration) of this Act.
(c) Ignore sub-para. (3)(b).
(a)
Before making an application in
reliance on this paragraph the FMI
administrator must give notice to
the Bank of England, which is to be
entitled to participate in the
proceedings.
(b)
In making directions the court must
have regard to the objective in
section (Objective of FMI Objective of FMI
administrationadministration) of this Act.
(a) Ignore sub-paras. (1) and (3).
(b)
The Bank of England may apply to
the court for the variation or
revocation of any directions given
by the court.
()
“(2) Where a company is in FMI
administration, a creditor or
member of the company may apply
to the court claiming that the FMI
administrator is conducting himself
or herself in a manner preventing
the achievement of the objective of
the FMI administration as quickly
and efficiently as is reasonably
practicable.”
()
“(1) On an application made by a
person mentioned in sub-paragraph
(2), the court may provide for the
appointment of an FMI
administrator of a company to cease
to have effect from a specified time.
()
(2) The persons who may apply to
the court under sub-paragraph (1)
are—
() (a) the Bank of England;
()
(b) with the consent of the Bank, the
FMI administrator.”
(a)
Para. 91(1) applies as if the only
person who could make an
application were the Bank of
England.
(b) Ignore para. 91(2).
(a)
in accordance with directions of the
Bank of England, and
(b)
if the Bank is satisfied that they will
not prejudice the objective in section
(Objective of FMI administration)Objective of FMI administration) of
this Act.
(a)
In considering making an order in
reliance on section 241 the court
must have regard to the objective in
section (Objective of FMI Objective of FMI
administrationadministration) of this Act.
(b)
Ignore subsections (2A)(a) and (3) to
(3C).
Methods of communicating with members etc
9 After section 115 insert—
“115A Deemed agreement to use of web site
(1) For the purposes of this Act, a person is to be taken to have
agreed with a building society to access a document, information
or facility on a web site if—
(a) the person has been asked individually by the society to
agree to access documents, information or facilities
generally, or documents, information or facilities of the
description in question, on a web site, and
(b) the society has not received a response within the period
of 28 days beginning with the date on which the society’s
request was received.
This is subject to subsections (2) to (4).This is subject to subsections (2) to (4).
(a)
The administrator must obtain the
approval of the Bank of England to
any proposals under sub-para. (1).
(b)
Treat the reference in sub-para.
(2)(b) to the objective mentioned in
para. 3(1)(a) or (b) as a reference to
the objective in section (Objective of Objective of
FMI administrationFMI administration) of this Act.
(c) Ignore sub-para. (3)(b).
(a)
Before making an application in
reliance on this paragraph the FMI
administrator must give notice to
the Bank of England, which is to be
entitled to participate in the
proceedings.
(b)
In making directions the court must
have regard to the objective in
section (Objective of FMI Objective of FMI
administrationadministration) of this Act.
(a) Ignore sub-paras. (1) and (3).
(b)
The Bank of England may apply to
the court for the variation or
revocation of any directions given
by the court.
()
“(2) Where a company is in FMI
administration, a creditor or
member of the company may apply
to the court claiming that the FMI
administrator is conducting himself
or herself in a manner preventing
the achievement of the objective of
the FMI administration as quickly
and efficiently as is reasonably
practicable.”
()
“(1) On an application made by a
person mentioned in sub-paragraph
(2), the court may provide for the
appointment of an FMI
administrator of a company to cease
to have effect from a specified time.
()
(2) The persons who may apply to
the court under sub-paragraph (1)
are—
() (a) the Bank of England;
()
(b) with the consent of the Bank, the
FMI administrator.”
(a)
Para. 91(1) applies as if the only
person who could make an
application were the Bank of
England.
(b) Ignore para. 91(2).
(a)
in accordance with directions of the
Bank of England, and
(b)
if the Bank is satisfied that they will
not prejudice the objective in section
(Objective of FMI administration)Objective of FMI administration) of
this Act.
(a)
In considering making an order in
reliance on section 241 the court
must have regard to the objective in
section (Objective of FMI Objective of FMI
administrationadministration) of this Act.
(b)
Ignore subsections (2A)(a) and (3) to
(3C).
(2) A person is not to be taken to have so agreed if the society’s
request—
(a) did not state clearly what the effect of a failure to respond
would be, or
(b) was sent less than 12 months after a previous request
made to the person for the purposes of this section in
respect of the same or a similar description of document,
information or facility.
(3) A person who is taken to have made an agreement by virtue of
subsection (1) may revoke the agreement.
(4) Subsection (1) does not apply in relation to the following
documents—
(a) a statement required to be sent to members by paragraph
1(1) of Schedule 16 (statements in connection with
proposed mergers);
(b) a merger statement (within the meaning of Part 2 of that
Schedule) required to be sent to members by paragraph 3
of that Schedule;
(c) a transfer statement or transfer summary (within the
meaning of Part 1 of Schedule 17) required to be sent to
members by paragraph 4(1) or (2) of that Schedule;
(d) a transfer proposal notification (within the meaning of
Part 1A of Schedule 17) required to be sent to members by
paragraph 5B(1) of that Schedule.
115B Right to hard copy version
(1) Where a person has received a document or information from a
building society otherwise than in hard copy form, the person is
entitled to require the society to send the person a version of the
document or information in hard copy form.
(2) The society must send the document or information in hard copy
form within 21 days of receipt of the request from the person.
(3) The society may not make a charge for providing the document
or information in that form.
(4) Subsection (1) does not apply if the recipient of the document or
information is the FCA or the PRA.
(5) A building society that fails to comply with this section is to be
treated as having contravened rules made under section 137A of
the Financial Services and Markets Act 2000.
(6) For the purposes of this section a person is treated as receiving a
document or information from a building society if—
(a) the society is required by this Act to send the document
or information to the person, and
(b) the requirement to send it is treated as satisfied.
(7) For the purposes of this section—
(a) a document or information is sent or supplied in hard
copy form if it is sent or supplied in a paper copy or
similar form capable of being read, and
(b) a document or information can be read only if it can be
read with the naked eye, or (to the extent that it consists
of images) it can be seen with the naked eye.
115C Other agreed forms of communication
(1) A document or information that is sent or supplied by a building
society otherwise than in hard copy form or electronically or by
means of a web site is validly sent or supplied if it is sent or
supplied in a form or manner that has been agreed by the
intended recipient.
(2) For the purposes of this section “hard copy form” is to be read in
accordance with section 115B(7).”
10 In the following provisions, omit “, in a manner agreed between him and
the society,”—
section 60(7B)(c),
section 61(7D)(c),
section 68(6B)(c),
section 69(15B)(c),
section 76(8C)(c).
11 In section 81(3B)(c), omit “, in a manner agreed for the purpose between
him and the society,”.
12 (1) Schedule 2 is amended as follows.
(2) In paragraph 20A(1B)(c), omit “, in a manner agreed between him and
the society,”.
(3) In paragraphs 22B(2)(c) and 33(5C)(c), omit “, in a manner agreed
between him and the society for that purpose,”.
(4) In paragraph 24(1B)(b), omit “in a manner agreed between the society
and that member,”.
(5) In paragraph 32(2D)(c), omit “, in a manner agreed between the society
and the member,”.
(6) In paragraph 33A(9)(c), omit “, in a manner agreed for the purpose
between him and the society”.
13 In paragraphs 3(2B)(c) and 9(2B)(c) of Schedule 8A, omit “in a manner
agreed between the society and that person,”.
14 (1) Schedule 11 is amended as follows.
(2) In paragraph 4(9C)(c), omit “, in a manner agreed between him and the
society,”.
(3) In paragraph 7(7C)(c), for “in a manner agreed between the society and
that person, he” substitute “the person”.
(4) In paragraph 8(3B)(c), omit “, in a manner agreed between him and the
society for the purpose,”.
Financial year
15 (1) Section 117 (financial year of building societies) is amended as follows.
(2) For subsection (1) substitute—
“(1) A building society’s financial years (apart from its final financial
year) are determined according to its year-end date in each
calendar year.
For provision about a building society’s final financial year, see For provision about a building society’s final financial year, see
subsection (1G).subsection (1G).
(a)
The administrator must obtain the
approval of the Bank of England to
any proposals under sub-para. (1).
(b)
Treat the reference in sub-para.
(2)(b) to the objective mentioned in
para. 3(1)(a) or (b) as a reference to
the objective in section (Objective of Objective of
FMI administrationFMI administration) of this Act.
(c) Ignore sub-para. (3)(b).
(a)
Before making an application in
reliance on this paragraph the FMI
administrator must give notice to
the Bank of England, which is to be
entitled to participate in the
proceedings.
(b)
In making directions the court must
have regard to the objective in
section (Objective of FMI Objective of FMI
administrationadministration) of this Act.
(a) Ignore sub-paras. (1) and (3).
(b)
The Bank of England may apply to
the court for the variation or
revocation of any directions given
by the court.
()
“(2) Where a company is in FMI
administration, a creditor or
member of the company may apply
to the court claiming that the FMI
administrator is conducting himself
or herself in a manner preventing
the achievement of the objective of
the FMI administration as quickly
and efficiently as is reasonably
practicable.”
()
“(1) On an application made by a
person mentioned in sub-paragraph
(2), the court may provide for the
appointment of an FMI
administrator of a company to cease
to have effect from a specified time.
()
(2) The persons who may apply to
the court under sub-paragraph (1)
are—
() (a) the Bank of England;
()
(b) with the consent of the Bank, the
FMI administrator.”
(a)
Para. 91(1) applies as if the only
person who could make an
application were the Bank of
England.
(b) Ignore para. 91(2).
(a)
in accordance with directions of the
Bank of England, and
(b)
if the Bank is satisfied that they will
not prejudice the objective in section
(Objective of FMI administration)Objective of FMI administration) of
this Act.
(a)
In considering making an order in
reliance on section 241 the court
must have regard to the objective in
section (Objective of FMI Objective of FMI
administrationadministration) of this Act.
(b)
Ignore subsections (2A)(a) and (3) to
(3C).
The year-end date of a building society established before 25th
August 1894 is—
(a) the date up to which, as at 1st January 1987, the accounts
of the society were annually made up, or
(b) if the society has, at any time before the day on which
subsection (1) comes into force (“the relevant day”),
altered its financial year in exercise of a power within
subsection (1B), 31st December.
The powers referred to in subsection (1A)(b) are—
(a) the power conferred by section 70(2) of the Building
Societies Act 1960,
(b) the power conferred by section 128(2) of the Building
Societies Act 1962, and
(c) the power conferred by subsection (3) of this section (as it
had effect immediately before the relevant day).
The year-end date of a building society established on or after
25th August 1894 and before the relevant day is 31st December.
The year-end date of a building society established on or after the
relevant day is the last day of the month in which the anniversary
of its establishment falls.
The financial year of a building society established before the
relevant day is the period of 12 months ending with the year-end
date of the society (but see subsection (1G)).
In the case of a building society established on or after the
relevant day—
(a) the initial financial year of the society shall be the period
of more than 6 months, but not more than 18 months,
beginning with the date of its establishment and ending
with its year-end date, and
(b) its subsequent financial years are successive periods of 12
months beginning immediately after the end of the
previous financial year and ending with its year-end date
(but see subsection (1G)).
The final financial year of a building society is a period of less
than 12 months that begins immediately after the end of the
previous financial year and ends with the date as at which the
society makes up its final accounts.
This section has effect subject to section 117A (alteration of
financial year).”
(3) Omit subsections (2) and (3).
16 After section 117 insert—
“117A Alteration of financial year
(1) A building society may by notice given to the FCA specify a new
year-end date.
(2) A notice given under subsection (1) has effect in relation to—
(a) the financial year in which the notice is given (“the
current financial year”), and
(b) subsequent financial years.
(3) The notice must state whether the current financial year—
(a) is to be shortened, so as to come to an end on the first
occasion on which the new year-end date falls or fell after
the beginning of the current financial year, or
(b) is to be extended, so as to come to an end on the second
occasion on which that date falls or fell after the
beginning of the current financial year.
(4) A notice extending a building society’s financial year is not
effective if given less than 5 years after the end of an earlier
financial year of the society that was extended under this section.
(5) A financial year of a building society may not be extended so as
to exceed 18 months and a notice under subsection (1) is
ineffective if the current financial year as extended in accordance
with the notice would exceed that limit.”
17 In Schedule 20 (transitional and saving provisions), omit paragraph 16
(existing financial years).
18 The amendments made by paragraphs 15 to 17 have effect in relation to
financial years beginning on or after the day on which those
amendments come into force.”
Schedule 2
LORD DEIGHTON
Page 34, line 11, at end insert—
“2A
(1) Part 25 of FSMA 2000 (injunctions and restitution) is amended as
follows.
(2) In section 380 (injunctions), in subsection (6)(a), omit the “or” at the end
of sub-paragraph (i) and after sub-paragraph (ii) insert “or
(iii)
which is imposed by Part 7 of the Financial
Services Act 2012 (offences relating to financial
services) and whose contravention constitutes an
offence under that Part;”.
“(3) In section 382 (restitution orders), in subsection (9)(a), omit the “or” at
the end of sub-paragraph (i) and after sub-paragraph (ii) insert “or
(iii)
which is imposed by Part 7 of the Financial
Services Act 2012 (offences relating to financial
services) and whose contravention constitutes an
offence under that Part;”.
(4) In section 384 (power of FCA or PRA to require restitution), in subsection
(7), omit the “and” at the end of paragraph (a) and after paragraph (b)
insert “or
(c) a requirement which is imposed by Part 7 of the Financial
Services Act 2012 (offences relating to financial services)
and whose contravention constitutes an offence under
that Part.””
Page 34, line 11, at end insert—
“2B
(1) In Schedule 1ZA to FSMA 2000 (the Financial Conduct Authority),
paragraph 20 (penalties) is amended as follows.
(2) In sub-paragraph (3)(b), after “this Act” insert “or under a provision
mentioned in sub-paragraph (4A)”.
(3) In sub-paragraph (4), after paragraph (c) insert—
“(ca) its powers under the relevant competition provisions
(as applied by Part 16A of this Act),”.
(4) After sub-paragraph (4) insert—
“(4A) “The relevant competition provisions” are—
(a) section 31E of the Competition Act 1998 (enforcement
of commitments);
(b) section 34 of that Act (enforcement of directions);
(c) section 36 of that Act (penalties);
(d) section 40A of that Act (penalties: failure to comply
with requirements);
(e) section 174A of the Enterprise Act 2002 (penalties).”
(5) In sub-paragraph (5)—
(a) in paragraph (a), for “FSMA 2000” substitute “this Act”,
(b) in paragraph (b), for “that Act” substitute “this Act”,
(c) in paragraph (c), omit “of that Act”, and
(d) after paragraph (c) insert—
“(ca)
offences under Part 1 of the Competition Act
1998,
(cb)
offences under Part 4 of the Enterprise Act
2002,”.”
Clause 17
LORD DEIGHTON
Page 28, line 38, leave out subsections (2) and (3) and insert—
“(2) A statutory instrument containing an order or regulations under this Act is
subject to annulment in pursuance of a resolution of either House of
Parliament, unless—
(a) the instrument contains only provision made under section 21
(commencement), or
(b) the instrument is required by subsection (4) or any other enactment
to be laid in draft before, and approved by a resolution of, each
House.
(3) Subsection (4) applies to a statutory instrument that contains (with or
without other provisions)—
(a) regulations under section 8 (building societies: power to make
provision about ring-fencing);
(b) an order under section (Power to make further consequential Power to make further consequential
amendmentsamendments) (power to make further consequential amendments)
that amends or repeals primary legislation;
(c) an order under paragraph 6 of Schedule (Conduct of FMI Conduct of FMI
administrationadministration) (conduct of FMI administration).
(4) A statutory instrument to which this subsection applies may not be made
unless a draft of the instrument has been laid before, and approved by a
resolution of, each House of Parliament.
(5) In subsection (3)(b) “primary legislation” means—
(a) an Act of Parliament,
(b) an Act of the Scottish Parliament,
(c) a Measure or Act of the National Assembly for Wales, or
(d) Northern Ireland legislation.”
After Clause 18
LORD DEIGHTON
Insert the following new Clause—
(1) The Treasury may by order make such provision amending, repealing,
revoking or applying with modifications any enactment to which this
section applies as they consider necessary or expedient in consequence of
any provision made by or under this Act.
(2) This section applies to—
(a) any enactment passed or made before the passing of this Act, and
(b) any enactment passed or made on or before the last day of the
Session in which this Act is passed.
(3) Amendments and repeals made under this section are additional to those
made by or under any other provision of this Act.”
Clause 21
LORD DEIGHTON
Page 29, line 33, at end insert—
“( ) Section (Building societiesBuilding societies) and Schedule (Building societiesBuilding societies), apart from
paragraph 4 of that Schedule, come into force at the end of the period of 2
months beginning with the day on which this Act is passed.”
In the Title
LORD DEIGHTON
Line 4, after “insolvency;” insert “to make further provision about payment
systems and securities settlement systems;”