Financial Services (Banking Reform) Bill

Page 9, leave out lines 26 to 39 and insert—

“Reviews

142J          Reviews of ring-fencing

(1)   The Treasury must make arrangements for the carrying out of
reviews of the effects of the operation of the provision made by or
under this Part in relation to ring-fenced bodies, including ring-
fencing rules made by the PRA and the FCA and any rules made by
the PRA and the FCA under section 192JA (rules applying to parent
undertakings of ring-fenced bodies).

(2)   The first review must be completed before the end of the period of
4 years beginning with the date on which section 4 of the Financial
Services (Banking Reform) Act 2013, so far as it inserts this section,
comes into force.

(3)   Subsequent reviews must be completed before the end of the period
of 5 years beginning with the date on which the previous review
was completed.

(4)   Not less than 9 months, nor more than 12 months, before the date
on which a review is due to be completed, the PRA and the FCA
must publish a joint assessment of the impact of the operation of
their ring-fencing rules.

(5)   For the purposes of this section a review is completed when the
report of it is published.

142JA       Persons by whom reviews are to be conducted

(1)   The Treasury shall appoint not fewer than 5 persons to conduct a
review of whom one is to chair it.

(2)   A person may not be appointed to chair a review unless the
chairman of the Treasury Committee of the House of Commons has
notified the Treasury that, in the chairman’s opinion, the person is
likely to act independently of the Treasury, the PRA and the FCA in
carrying out the review.

(3)   The persons appointed to conduct a review must include at least
one person with substantial experience in central banking or
financial regulation at a senior level.

(4)   The reference in subsection (2) to the Treasury Committee of the
House of Commons—

(a)   if the name of that Committee is changed, is to be treated as
a reference to that Committee by its new name, and

(b)   if the functions of that Committee (or substantially
corresponding functions) become functions of a different
Committee of the House of Commons, is to be treated as a
reference to the Committee by which the functions are
exercisable;

and any question arising under paragraph (a) or (b) is to be and any question arising under paragraph (a) or (b) is to be
determined by the Speaker of the House of Commons.determined by the Speaker of the House of Commons.

142JB       Reports of review

(1)   The persons appointed to conduct a review must give the Treasury
a report of the review.

(2)   The report must include an assessment of the extent to which the
provision made by or under this Part in relation to ring-fenced
bodies, including ring-fencing rules made by the PRA and by the
FCA, are facilitating the advancement by the PRA of the objective
in section 2B(3)(c) and by the FCA of the continuity objective.

(3)   If the report is made before section 4 of the Financial Services
(Banking Reform) Act 2013, so far as it inserts section 142JD, has
come into force it must also include a recommendation as to
whether or not section 4 of that Act should be brought into force to
that extent.

(4)   The report must include—

(a)   recommendations to the Treasury as to the provision that
should be included in orders and regulations under this
Part, and

(b)   recommendations to the PRA and FCA about the provision
that should be included in ring-fencing rules.

(5)   The Treasury must lay a copy of the report before Parliament and
publish it in such manner as it thinks fit.”

Page 12, line 39, at end insert—

“(4A)    The preliminary notice must name an independent reviewer who is
to report on the conduct of the ring-fenced body and the members
of its group and on the appropriateness of the giving of the
preliminary notice by the appropriate regulator.

(4B)   A person may not be named as the independent reviewer without
the consent of the chairman of the Treasury Committee of the
House of Commons; and the reference in this subsection to the
Treasury Committee of the House of Commons—

(a)   if the name of that Committee is changed, is to be treated as
a reference to that Committee by its new name, and

(b)   if the functions of that Committee (or substantially
corresponding functions) become functions of a different
Committee of the House of Commons, is to be treated as a
reference to the Committee by which the functions are
exercisable;

and any question arising under this subsection is to be determined and any question arising under this subsection is to be determined
by the Speaker of the House of Commons.”by the Speaker of the House of Commons.”

Page 13, line 15, after “if” insert “after receiving the report of the independent
reviewer,”

Page 17, line 17, at end insert—

“Full separation

142VA        General requirement of separation

(1)   Where the members of any group include one or more ring-fenced
bodies and one or more other bodies, the members of the group
must, before the end of the period of 5 years beginning with the
relevant commencement date, take steps to secure that there are no
members of the group that are ring-fenced bodies.

(2)   If in the case of any group steps to secure that there are no members
of the group that are ring-fenced bodies are not taken within the
period specified in subsection (1)—

(a)   at the end of that period the Part 4A permission of each
member of the group that is a ring-fenced body shall be
treated as having been cancelled to the extent that it relates
to a core activity, and

(b)   after the end of that period the appropriate regulator must
refuse to give any member of the group a Part 4A
permission to carry on a core activity.

(3)   At the end of the period specified in subsection (1)—

(a)   in section 142H, subsections (1)(b) and (4) to (7) and, in
subsection (8), the definition of “specified”, and

(b)   sections 142K to 142V,

cease to have effect.cease to have effect.

(4)   In subsection (1) “the relevant commencement date” means the day
appointed for the coming into force of section 4 of the Financial
Services (Banking Reform) Act 2013 so far as it inserts this section.”

Page 29, line 36, at end insert—

“( )   No order may be made appointing a day for the coming into force of
section 4 so far as it inserts section 142VA of FSMA 2000 unless—

(a)   the day is later than that on which there is published the report of a
review under section 142J of that Act containing a recommendation
that section 4 of that Act should be brought into force to that extent,
and

(b)   a draft of the order has been laid before, and approved by a
resolution of, each House of Parliament.”

Page 29, line 36, at end insert—

“( )   No order may be made appointing a day for the coming into force of
section 4 so far as it inserts sections 142K to 142V of FSMA 2000 unless the
day is later than that on which the report of the first review under section
142J of that Act is published.”