Financial Services (Banking Reform) Bill

Insert the following new Clause—

“Meetings between regulators and bank auditors

(1)   The FCA and the PRA must make arrangements to meet the auditors of
each bank at least twice in each calendar year.

(2)   The FCA and the PRA may conduct meetings under subsection (1) jointly
or separately (but each bank’s auditors must be met separately).

(3)   The purpose of each meeting is to discuss matters about which the FCA or
the PRA believe that the auditors may have views or information.

(4)   A bank has a duty to ensure that its auditors attend meetings in accordance
with this section (and compliance with that duty may be considered for
purposes of the exercise of functions under FSMA 2000).”

Insert the following new Clause—

“Leverage ratio

(1)   The Treasury must make an order under section 9L of the Bank of England
Act 1998 (macro-prudential measures) enabling the Financial Policy
Committee to give a direction under section 9H in respect of a leverage
ratio for banks.

(2)   The direction above may specify the leverage ratio to be used.

(3)   For the purposes of this section “leverage ratio” has the meaning which the
Financial Policy Committee considers that it has in European Union law or
procedure from time to time.

(4)   The order under subsection (1) must be made within the period of 6 months
beginning with the date on which this Act receives Royal Assent.”

Insert the following new Clause—

“Proprietary trading

(1)   The PRA and the FCA must carry out a review of proprietary trading by
banks.

(2)   The review must be completed before the end of the period of 3 years
beginning with the day on which this Act is passed.

(3)   The PRA and the FCA must give the Treasury a report of the review.

(4)   The report must include—

(a)   an analysis of any action taken by the PRA and the FCA to monitor
whether and to what extent banks engage in proprietary trading
and any action taken by the PRA or the FCA to discourage banks
from doing so;

(b)   an account of any difficulties encountered by the PRA or the FCA
in taking that action and an assessment of its efficacy;

(c)   an account of any requirement imposed on banks which the PRA or
the FCA consider may be engaging in proprietary trading to
publish a statement of the banks’ exposure to risk in their trading
operations and of the controls applied to limit that risk;

(d)   an assessment of the impact of the ring-fencing rules on proprietary
trading by banks;

(e)   an assessment, drawing on experience in countries other than the
United Kingdom, of the feasibility of prohibiting banks from
engaging in proprietary trading or limiting the extent to which, or
circumstances in which, they may do so (having regard, in
particular, to any difficulties of definition); and

(f)   a comprehensive analysis of the advantages and disadvantages of
prohibiting banks from engaging in proprietary trading or limiting
the extent to which, or circumstances in which, they may do so.

(5)   The Treasury must lay a copy of the report before Parliament.

(6)   The PRA and the FCA must publish the report in such manner as they think
fit.

(7)   The Treasury must, following receipt of the report, make arrangements for
the carrying out of an independent review to consider the case for the
taking of action in relation to proprietary trading by banks.

(8)   The appointment by the Treasury of persons to carry out the review
requires the consent of the Treasury Committee of the House of Commons.

(9)   The reference in subsection (8) 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 determined by
the Speaker of the House of Commons.

(10)   The persons appointed to carry out the review must give the Treasury a
report of the review once it has been concluded.

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

(12)   In this section—

(a)   “proprietary trading”, in relation to a bank, means trading with
funds on markets on the bank’s own account (whether or not in
connection with business with the bank’s customers),

(b)   “ring-fencing rules” has the meaning given by section 417 of FSMA
2000.”

Insert the following new Clause—

“Remuneration code

(1)   The FCA and the PRA must prepare (and may from time to time revise) a
remuneration code.

(2)   The remuneration code is to apply to all persons who have approval under
section 59 of FSMA 2000 to perform a function in relation to the carrying on
by a bank of a regulated activity which is designated under subsection (6B)
or (6C) of that section as a senior management function.

(3)   The remuneration code must—

(a)   require that persons to whom the remuneration code applies are,
except in specified circumstances, to receive a proportion of their
remuneration in the form of variable remuneration,

(b)   require that a specified measure of profits is to be used in
calculating any variable remuneration which is calculated by
reference to profits,

(c)   require that the nature and amount of variable remuneration is to
strike an appropriate balance between risk to the bank providing it
and fair reward for the receipient of it,

(d)   require a proportion of variable remuneration to be deferred for
such period, not exceeding 10 years, as is appropriate to strike a
balance between risk to the bank providing it and fair reward for
the recipient of it,

(e)   require that no, or only a limited amount of, variable remuneration
of a person to whom the remuneration code applies is to be
calculated by reference to sales made by the person or by any group
of persons employed by the bank providing it, and

(f)   require that non-executive directors of a bank are not to receive
variable remuneration.

(4)   A requirement imposed by the remuneration code is a relevant
requirement for the purposes of Part 14 of FSMA 2000.

(5)   In this section “variable remuneration” means remuneration (whether in
money or in securities or any other form of money’s worth) the amount or
value of which varies in accordance with profits, sales or other matters.”

Insert the following new Clause—

“Powers of regulator where Bank receiving State support

(1)   This section applies where—

(a)   all or part of the business of a bank has been transferred to a bridge
bank under section 12 of the Banking Act 2009,

(b)   a bank has been taken into public ownership under section 13 of
that Act, or

(c)   the Treasury has acquired shares or other securities in a bank or has
provided a guarantee in respect of the liabilities of a bank.

(2)   The appropriate regulator may make an order under subsection (3).

(3)   An order under this subsection may do all or any of the following—

(a)   cancel any entitlement to deferred remuneration payable (but not
yet paid) to persons covered by the licensing regime who are
employed by the Bank,

(b)   remove any entitlement of such persons to payments for loss of
office or payments on a change in control of the bank, or

(c)   remove rights to pension benefits to or in respect of such persons
which have not yet become payable.

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

(a)   if the bank is a PRA-authorised person (within the meaning of
FSMA 2000), the PRA, and

(b)   otherwise, the FCA.”

Insert the following new Clause—

“Special measures

(1)   This section applies where the FCA or the PRA—

(a)   has reason to believe that a bank’s systems or professional
standards or culture do not provide sufficient safeguards against
the commission of actions in respect of which the FCA or the PRA
has power to take action, but

(b)   do not have reason to believe that any such action has been
committed (ignoring any action which is already being investigated
or in respect of which action has been or is being taken).

(2)   The FCA or the PRA may give notice to the bank of the belief mentioned in
subsection (1)(a).

(3)   If the FCA or the PRA gives a notice under subsection (2), it must invite the
bank to make representations showing that sufficient safeguards are in
place.

(4)   Following the giving of a notice under subsection (2) and the receipt of
representations under subsection (3) (if any are made), the FCA or the PRA
may commission an independent investigation into the bank’s systems and
professional standards and culture with a view to establishing whether
sufficient safeguards are in place; and for that purpose—

(a)   “independent” means independent of the FCA, the PRA and the
bank, and

(b)   an investigation may not be commissioned from a person involved
in the auditing of companies.

(5)   The bank must cooperate with the investigation.

(6)   Following receipt of the report of the investigation under subsection (4), the
FCA or the PRA may by notice require the bank to take measures to
provide sufficient safeguards and to monitor their effectiveness.

(7)   The bank must—

(a)   comply with the notice, and

(b)   appoint an appropriately senior member of the bank’s staff to
oversee compliance.

(8)   Compliance by a bank with a duty under this section may be considered for
the purposes of the exercise by the FCA or the PRA of functions under
FSMA 2000.”

Insert the following new Clause—

“Whistleblowers’ compensation

(1)   After section 206A of FSMA 2000 (suspending permission to carry on
regulated activities) insert—

“206B           Whistleblowers’ compensation

(1)   If as a result of an investigation carried out in accordance with this
Act the appropriate regulator is satisfied that an authorised person
has mistreated a whistleblower, the appropriate regulator may
require the authorised person to pay to the whistleblower
compensation of an amount determined by the appropriate
regulator to be appropriate having regard to the financial
implications of the mistreatment for the whistleblower.

(2)   In this section “whistleblower” means an individual who works or
worked for the authorised person (whether or not as an employee)
and who—

16

(a)   gave information to the appropriate regulator for the
purpose of initiating or facilitating the carrying out of an
investigation in accordance with this Act, or

19

(b)   gave to a colleague information relating to any matter which
might be relevant if the appropriate regulator were deciding
whether to initiate the carrying out of such an investigation
or were carrying out such an investigation.

(3)   In this section a reference to mistreatment includes a reference to
any form of discriminatory or unfavourable treatment.

(4)   A payment under subsection (1) is to be made only if the
whistleblower chooses to accept it; and a whistleblower who
accepts compensation under this section may not bring civil
proceedings (including, but not limited to, proceedings before an
employment tribunal) in respect of, or in reliance on, the
mistreatment in respect of which the compensation is offered.

(5)   The procedural provisions of this Act in relation to the imposition
of a penalty under section 206 apply to an award of compensation
under this section.””

Line 16, at beginning insert “directly or indirectly”

Line 19, at beginning insert “directly or indirectly”

Insert the following new Clause—

“Abolition of UKFI

(1)   All property, rights and liabilities of UKFI are, by virtue of this section,
transferred to the Treasury.

(2)   Immediately after the transfer effected by subsection (1) UKFI is dissolved.

(3)   “UKFI” means UK Financial Investments Limited, company registered
number 06720891.”

Insert the following new Clause—

“Professional standards

After section 65 of FSMA 2000 insert—

“65A          Professional standards

(1)   The regulator will raise standards of professionalism in financial
services by mandating a licensing regime based on training and
competence.

(2)   This licensing regime must—

(a)   apply to all approved persons exercising controlled
functions, regardless of financial sector;

(b)   specify minimum thresholds of competence including
integrity, professional qualifications, continuous
professional development and adherence to a recognised
code of conduct and revised Banking Standards Rules;

(c)   make provisions in connection with—

(i)   the granting of a licence;

(ii)   the refusal of a licence;

(iii)   the withdrawal of a licence; and

(iv)   the revalidation of a licensed person of a prescribed
description whenever the appropriate regulator sees
fit, either as a condition of the person continuing to
hold a licence or of the person’s licence being
restored;

(d)   be evidenced by individuals holding an annual validation
of competence;

(e)   include specific provision for a Senior Persons Regime in
relation to activities involving the exercise of a significant
influence over a controlled function under section 59 of the
Act.

(3)   In section 59, for “authorised” substitute “licensed” throughout the
section.””

Insert the following new Clause—

“Duty of care

At all times when carrying out core activities, a ring-fenced body shall—

(a)   be subject to a fiduciary duty towards its customers in the operation
of core services; and

(b)   be subject to a duty of care towards its customers across the
financial services sector.”

Insert the following new Clause—

“Competition and Markets Authority review into competitiveness

(1)   The Chancellor of the Exchequer shall instruct the Competition and
Markets Authority to begin a full market study, according to its powers
under the Enterprise Act 2002, into UK financial services institutions
involved in the provision of core services.

(2)   The full market study will consider—

(a)   the level of competition among UK institutions involved in the
provision of core services;

(b)   the obstacles to increasing competition for UK institutions involved
in the provision of core services; and

(c)   possible actions that could be taken to facilitate new UK institutions
being competitive in the provision of core services.”

Insert the following new Clause—

“Sale of state-owned banking assets

(1)   Before any sale of banking assets in the ownership of HM Treasury, the
Treasury shall lay before Parliament a report setting out—

(a)   the manner in which the best interests of the taxpayer are to be
protected in connection with such sale;

(b)   the expected impact that any sale might have on competition for the
provision of core services, customer choice and the rate of economic
growth; and

(c)   an appraisal of the options for potential structural changes in the
bank concerned including—

(i)   the separation of the provision of core services from the
provision of investment activities,

(ii)   the retention of a class of assets in the ownership of HM
Treasury,

(iii)   the impact of any sale on the creation of a regional banking
network.

(2)   A copy of the report in subsection (1) shall be laid before Parliament and
sufficient time shall be given for the appropriate committees of both
Houses of Parliament to consider its findings before any sale decision.”

Insert the following new Clause—

“Portable account numbers

(1)   Within 12 months of the passing of this Act, the Treasury shall lay before
Parliament a report considering—

(a)   the adequacy of voluntary arrangements made by UK ring-fenced
bodies to facilitate easier customer switching of bank account
services; and

(b)   legislative options for the introduction of portable account numbers
and sort codes for retail bank accounts provided by UK ring-fenced
bodies.

(2)   The Chancellor of the Exchequer may, by affirmative resolution procedure,
confer powers upon the appropriate regulator to require UK ring-fenced
bodies to comply with any specified scheme to establish the use of portable
account numbers and sort codes.”

Insert the following new Clause—

“High-cost credit agreements

(1)   The Secretary of State shall by order provide for each local authority in
England and Wales to regulate high cost credit agreements entered into by
any person whose registered address for the purpose of obtaining credit is
within the area of that authority.

(2)   An order under this section shall—

(a)   set a maximum level for—

(i)   the amount of any loan;

(ii)   the rate of interest that may be charged; and

(iii)   the associated fees that may be levied

  as part of any such agreement;

(b)   limit the number of times and specify the terms on which such an
agreement can be rolled over for any individual to whom this
section applies; and

(c)   require the lender to demonstrate that the borrower has no
outstanding high-cost loans.

(3)   Any local authority choosing not to exercise its powers of regulation once
an order is made under this section shall publish a report setting out its
reasons for not doing so, and shall make a similar report in each subsequent
year in which it chooses not to exercise its powers of regulation.

(4)   For the purposes of this section—

(a)   “high-cost credit agreement” means a regulated credit agreement as
defined by section 137C of the Financial Services and Markets Act
2000 (as inserted by the Financial Services Act 2012) that provides
for—

(i)   the payment by the borrower of charges of a description
from time to time specified by the FCA; or

(ii)   the payment by the borrower over the duration of the
agreement of charges that, taken with the charges paid
under one or more other agreements which are treated by
the FCA’s rules as being connected with it, exceed, or are
capable of exceeding, an amount specified by the FCA;

(b)   “charges” means charges payable, by way of interest or otherwise,
in connection with the provision of credit under the regulated
credit agreement, whether or not the agreement itself makes
provision for them and whether or not the person to whom they are
payable is a party to the regulated credit agreement or an
authorised person;

(c)   “authorised person” has the same meaning as in the Financial
Services and Markets Act 2000.

(5)   An order under this section shall be made by statutory instrument subject
to approval by resolution of each House of Parliament.”

Insert the following new Clause—

“Restriction on disclosure of confidential information by FCA, PRA etc

In section 348 of FSMA 2000 (restriction on disclosure of confidential
information by (FCA, PRA) etc), after subsection (4)(b) insert—

“(c)   it is made available, without imposing any requirement of
confidentiality, to a consumer (as defined in section 425A),
or to a person imitating a consumer, or to persons who
include consumers;”.”

Insert the following new Clause—

“Allowing FCA to publish instructions given to firms and their performance
against these instructions

After section 349 of the FSMA 2000 insert—

“(4)   If, in the interests of promoting the consumer protection objective
or the competition objective, the FCA uses any of its powers under
this Act in relation to any firm or requires or agrees with any firm
that any steps shall be taken, or cease to be taken, by or in relation
to that firm or its business, the FCA shall, unless publication would
be appropriate, after the period for making representations in
relation to a direction given under this section has ended, give the
firm a direction to publish details of the matter in a manner and
form specified by the FCA.

(5)   If the FCA gives a direction under this section to an authorised
person—

(a)   it must give written notice to the authorised person, and

(b)   if the direction relates to the approval by the authorised
person of another person’s communication, it must also
give written notice to that other person.

(6)   The notice must—

(a)   give details of the direction,

(b)   inform the person to whom the notice is given that the
direction takes effect immediately,

(c)   state the FCA’s reasons for giving the direction, and

(d)   inform the person to whom the notice is given that the
person may make representations to the FCA within such
period as may be specified in the notice (which may be
extended by the FCA).

(7)   The FCA may amend the direction if, having considered any
representations made by a person to whom notice is given under
subsection (2), it considers it appropriate to do so.

(8)   If, having considered any such representations, the FCA decides
not to revoke the direction—

(a)   the FCA must give separate written notice to the persons
mentioned in subsection (2)(a) or (b), and

(b)   any such person may refer the matter to the Tribunal.

(9)   A notice under subsection (5)(a) must—

(a)   give details of the direction and of any amendment of it,

(b)   state the FCA’s reasons for deciding not to revoke the
direction and, if relevant, for amending it,

(c)   inform the person to whom the notice is given of the
person’s right to refer the matter to the Tribunal, and

(d)   give an indication of the procedure on such a reference.

(10)   If, having considered any representations made by a person to
whom notice is given under subsection (5), the FCA decides to
revoke the direction, it must give separate written notice to those
persons.

(11)   Nothing in this section requires a notice to be given to a person
mentioned in subsection (2)(b) if the FCA considers it impracticable
to do so.””

Insert the following new Clause—

“Regulatory accounts

(1)   The PRA and the FCA may make rules requiring banks to prepare and
submit to the appropriate regulator accounts prepared according to
principles specified by the rules.

(2)   The principles shall be such as, in the opinion of the PRA or the FCA, are
appropriate to sucure that the accounts facilitate the performance by the
PRA or the FCA of their functions in relation to banks.

(3)   The rules may require that the accounts be independently audited.

(4)   In auditing the accounts a person owes a duty, enforceable by action
brought by the appropriate regulator, to secure that they properly audited.

(5)   The rules may require that, where the public interest so requires, the
accounts, or (if the rules so specify) an abbreviated version of them, be
published alongside the accounts required to be prepared by the bank
under the Companies Act 2006, or any similar enactment having effect in
any country or territory other than the United Kingdom, together with a
statement explaining the accounts by reference to those accounts.

(6)   In this section—

“the appropriate regulator” means—

(a)   if the bank is a PRA-authorised person (within the meaning
of FSMA 2000), the PRA, and

(b)   otherwise, the FCA.”

Insert the following new Clause—

“Definition of “bank”

(1)   In sections (Meetings between regulators and bank auditors, Leverage ratio,
Proprietary trading, Remuneration code, Powers of regulator where Bank
receiving State support, Special measures, and Regulatory accounts) “bank”
means a UK institution which—

(a)   has permission under Part 4A of FSMA 2000 (permission to carry on
regulated activities) to carry on the regulated activity of accepting
deposits; or

(b)   is an investment firm within the meaning of that Act (see section
424A of that Act).

(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)(a) 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 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
with any modifications that may be necessary as a result of
paragraphs (a) and (b).

(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—

“State aid

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 “Reverse” substitute “Bridge bank: reverse”.

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 “, or

(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 “and 81” substitute “, 80A(2)(b) and 81”.

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”

“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 place
insert—

“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—

“Bail-in compensation order

49”

“Resolution instrument

12A”

“Special bail- in provision

48B”.

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.

(6B)   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

THE PAYMENT SYSTEMS REGULATOR

Introductory

1 In this Schedule—

(a)   “the Regulator” means the Payment Systems Regulator;

(b)   references to the functions of the Regulator are to functions
conferred on it by or under this Part.

Constitution

2    (1)   The constitution of the Regulator must provide for it to have a board
whose members are the directors of the Regulator.

(2)   The board is to consist of the following members—

(a)   a member to chair it, appointed by the FCA with the approval of
the Treasury;

(b)   a member to be the Managing Director, appointed by the FCA
with the approval of the Treasury;

(c)   one or more other members appointed by the FCA.

(3)   The persons who may be appointed under sub-paragraph (2) include
persons who are members of the FCA’s governing body.

(4)   A person may be appointed under sub-paragraph (2) only if the person
has knowledge or experience which is likely to be relevant to the exercise
by the Regulator of its functions.

(5)   A person appointed under sub-paragraph (2)(a) or (b) is liable to
removal from office by the FCA (acting with the approval of the
Treasury).

(6)   A person appointed under sub-paragraph (2)(c) is liable to removal from
office by the FCA.

Status

3    (1)   The Regulator is not to be regarded as exercising functions on behalf of
the Crown.

(2)   The officers and staff of the Regulator are not to be regarded as Crown
servants.

Budget

4    (1)   The Regulator must adopt an annual budget which has been approved
by the FCA.

(2)   The budget must be adopted—

(a)   in the case of the Regulator’s first financial year, as soon as
reasonably practicable after it is established, and

(b)   in the case of each subsequent financial year, before the start of
the financial year.

(3)   The Regulator may, with the approval of the FCA, vary the budget for a
financial year at any time after its adoption.

(4)   Before adopting or varying a budget, the Regulator must consult—

(a)   the Treasury, and

(b)   such other persons (if any) as the Regulator considers
appropriate.

(5)   The Regulator must publish each budget, and each variation of a budget,
in the way it considers appropriate.

Arrangements for discharging functions

5    (1)   The Regulator may make arrangements for any of its functions to be
discharged by—

(a)   a committee, sub-committee, officer or member of staff of the
Regulator;

(b)   an officer or member of staff of the FCA.

This is subject to sub-paragraphs (2) to (4).

(2)   In exercising any functions within sub-paragraph (3), the Regulator
must act through its board.

(3)   The functions referred to in sub-paragraph (2) are—

(a)   giving general directions under section (Directions);

(b)   imposing requirements under section (System rules) that apply to
all operators of regulated payment systems.

(4)   The function of issuing general guidance may not be discharged by an
officer or member of staff of the Regulator or of the FCA.

Annual plan

6    (1)   The Regulator must in respect of each of its financial years prepare an
annual plan which has been approved by the FCA.

(2)   The plan must be prepared—

(a)   in the case of the Regulator’s first financial year, as soon as
reasonably practicable after it is established, and

(b)   in the case of each subsequent financial year, before the start of
the financial year.

(3)   The Regulator may, with the approval of the FCA, vary the plan in
respect of a financial year at any time after its preparation.

(4)   An annual plan in respect of a financial year must set out—

(a)   the aims of the Regulator for the year,

(b)   how the extent to which each of those aims is met is to be
determined,

(c)   the relative priorities of each of those aims, and

(d)   how its resources are to be allocated among the activities to be
carried on in connection with the discharge of its functions.

(5)   In sub-paragraph (4) references to aims for a financial year include aims
for a longer period that includes that year.

(6)   Before preparing or varying an annual plan, the Regulator must
consult—

(a)   the Treasury, and

(b)   such other persons (if any) as the Regulator considers
appropriate.

(7)   The Regulator must publish each annual plan, and each variation of an
annual plan, in the way it considers appropriate.

Annual report

7    (1)   At least once a year, the Regulator must make a report to the FCA in
relation to the discharge of its functions.

(2)   The report must—

(a)   set out the extent to which the Regulator has met its aims and
priorities for the period covered by the report,

(b)   set out the extent to which the Regulator has advanced its
payment systems objectives,

(c)   include a copy of its latest accounts, and

(d)   comply with any requirement specified in rules made by the
FCA.

(3)   The Regulator must publish each report in the way it considers
appropriate.

(4)   Nothing in this paragraph requires the Regulator to make a report at any
time in the period of 12 months beginning with its establishment.

(5)   The Treasury may—

(a)   require the Regulator to comply with any provision of the
Companies Act 2006 about accounts and their audit which would
not otherwise apply to it, or

(b)   direct that any provision of that Act about accounts and their
audit is to apply to the Regulator with such modifications as are
specified in the direction, whether or not the provision would
otherwise apply to it.

(6)   Compliance with any requirement under sub-paragraph (5)(a) or (b) is
enforceable by injunction or, in Scotland, an order for specific
performance under section 45 of the Court of Session Act 1988.

(7)   Proceedings under sub-paragraph (6) may be brought only by the
Treasury.

(8)   The FCA’s power to make rules under sub-paragraph (2)(d) is to be
treated as if it were a power of the FCA to make rules under FSMA 2000
(and rules made under sub-paragraph (2)(d) are to be treated
accordingly).

Audit of accounts

8    (1)   The Regulator must send a copy of its annual accounts to the
Comptroller and Auditor General and the Treasury as soon as is
reasonably practicable.

(2)   The Comptroller and Auditor General must—

(a)   examine, certify and report on accounts received under this
paragraph, and

(b)   send a copy of the certified accounts and the report to the
Treasury.

(3)   The Treasury must lay the copy of the certified accounts and the report
before Parliament.

(4)   The Regulator must send a copy of the certified accounts and the report
to the FCA.

(5)   Except as provided for by paragraph 7(5), the Regulator is exempt from
the requirements of Part 16 of the Companies Act 2006 (audit) and its
balance sheet must contain a statement to that effect.

(6)   In this paragraph “annual accounts” has the meaning given by section
471 of the Companies Act 2006.

Funding

9    (1)   In this paragraph “the relevant costs” means—

(a)   the expenses incurred, or expected to be incurred, by the
Regulator in connection with the discharge of its functions,

(b)   the expenses incurred by the FCA in establishing the Regulator,

(c)   any other expenses incurred by the FCA in connection with the
discharge of its functions under this Part, and

(d)   any expenses incurred, or expected to be incurred, by the FCA in
connection with the discharge of the Regulator’s functions by an
officer or member of staff of the FCA under arrangements made
under paragraph 5.

For the purposes of paragraph (b) it does not matter when the expenses were incurred.

(2)   For the purpose of meeting the relevant costs the FCA may make rules
requiring participants in regulated payment systems to pay to the FCA
specified amounts or amounts calculated in a specified way.

(3)   Before making any rules under sub-paragraph (2) the FCA must consult
the Treasury.

(4)   The amounts to be paid under the rules may include a component to
cover the expenses of the FCA in collecting the payments (“collection
costs”).

(5)   The FCA must pay to the Regulator the amounts that it receives under
the rules, apart from the following amounts (which it may keep)—

(a)   amounts in respect of expenses falling within sub-paragraph
(1)(b) to (d);

(b)   amounts in respect of its collection costs.

(6)   In this paragraph “specified” means specified in the rules.

(7)   The FCA’s power to make rules under this paragraph is to be treated as
if it were a power of the FCA to make rules under FSMA 2000 (and rules
made under this paragraph are to be treated accordingly).

Penalty receipts

10    (1)   The Regulator must in respect of each of its financial years pay to the
Treasury any amounts received by it during the year by way of penalties
imposed under section (Penalties).

(2)   The Treasury may give directions to the Regulator as to how it is to
comply with its duty under sub-paragraph (1).

(3)   The directions may in particular—

(a)   specify the time when any payment is required to be made to the
Treasury, and

(b)   require the Regulator to provide the Treasury at specified times
with information relating to penalties that the Regulator has
imposed under section (Penalties).

(4)   The Treasury must pay into the Consolidated Fund any sums received
by them under this paragraph.

Records

11 The Regulator must maintain satisfactory arrangements for—

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

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

Exemption from liability in damages

12    (1)   None of the following is to be liable in damages for anything done or
omitted in the discharge, or purported discharge, of the Regulator’s
functions—

(a)   the Regulator;

(b)   any person (“P”) who is, or is acting as, an officer or member of
staff of the Regulator;

(c)   any person who could be held vicariously liable for things done
or omitted by P, but only in so far as the liability relates to P’s
conduct.

(2)   If the Regulator has made arrangements under paragraph 5 for any of its
functions to be discharged by an officer or member of staff of the FCA,
references in sub-paragraph (1) to a person who is an officer or member
of staff of the Regulator include references to the officer or member of
staff of the FCA.

(3)   Anything done or omitted by a person mentioned in sub-paragraph
(1)(b) or (c) while acting, or purporting to act, as a result of an
appointment under section (Reports by skilled persons) or (Appointment of
persons to conduct investigations) is to be taken for the purposes of sub-
paragraph (1) to have been done or omitted in the discharge or (as the
case may be) purported discharge of the Regulator’s functions.

(4)   Sub-paragraph (1) does not apply—

(a)   if the act or omission is shown to have been in bad faith, or

(b)   so as to prevent an award of damages made in respect of an act
or omission on the ground that the act or omission was unlawful
as a result of section 6(1) of the Human Rights Act 1998.”

Insert the following new Schedule—

“SCHEDULE

PROCEDURE FOR APPEALS TO THE CMA

Functions of CMA to be discharged by group

1 Except where specified otherwise in this Schedule, the functions of the
CMA with respect to an appeal are to be carried out on behalf of the
CMA by a group constituted for the purpose by the chair of the CMA
under Schedule 4 to the Enterprise and Regulatory Reform Act 2013.

2    (1)   Schedule 4 to the Enterprise and Regulatory Reform Act 2013 is
amended as follows.

(2)   In paragraph 35(1) (membership of CMA panel), after paragraph (c)
insert—

“(ca)   at least one person (a “payment systems panel
member”) appointed to the CMA panel under
paragraph 1(1)(b) for the purpose of being available for
selection as a member of a group constituted to carry
out functions on behalf of the CMA with respect to an
appeal made in accordance with section (Appeals to
Competition and Markets Authority) of the Financial
Services (Banking Reform) Act 2013 (a “specialist
payment systems group”);”.

(3)   In paragraph 38 (membership of CMA groups), after sub-paragraph (5)
insert—

“(5A)   In the case of a specialist payment systems group, the group
must include at least one payment systems member.”

(4)   In paragraph 48 (performance of functions of chair with respect to
constitution etc of CMA group), in sub-paragraph (4)(c), at the end
insert—

“(v)   Schedule (Procedure for appeals to the CMA) to
the Financial Services (Banking Reform) Act
2013.”

Application for permission to bring appeal

3    (1)   An application for permission to bring an appeal may be made only by
sending a notice to the CMA requesting the permission.

(2)   An application for permission to appeal must be accompanied by all
such information as may be required by appeal rules.

(3)   Appeal rules may require information contained in an application for
permission to appeal to be verified by a statement of truth.

(4)   A person who applies for permission to bring an appeal in accordance
with this paragraph is referred to in this Schedule as the appellant.

(5)   The appellant must send the Payment Systems Regulator—

(a)   a copy of the application for permission to appeal at the same
time as it is sent to the CMA, and

(b)   such other information as may be required by appeal rules.

(6)   The CMA’s decision whether to grant permission to appeal is to be taken
by an authorised member of the CMA.

(7)   Before the authorised member decides whether to grant permission
under this paragraph, the Payment Systems Regulator must be given an
opportunity of making representations or observations, in accordance
with paragraph 5(2).

(8)   The CMA’s decision on an application for permission must be made—

(a)   where the Payment Systems Regulator makes representations or
observations in accordance with paragraph 5(2), before the end
of 10 working days beginning with the first working day after the
day on which those representations or observations are received;

(b)   in any other case, before the end of 14 working days beginning
with the first working day after the day on which the application
for permission was received.

(9)   The grant of permission may be made subject to conditions, which may
include—

(a)   conditions which limit the matters that are to be considered on
the appeal in question;

(b)   conditions for the purpose of expediting the determination of the
appeal;

(c)   conditions requiring the appeal to be considered together with
other appeals (including appeals relating to different matters or
decisions and appeals brought by different persons).

(10)   Where a decision is made to grant or to refuse an application for
permission, an authorised member of the CMA must notify the decision,
giving reasons, to the following persons—

(a)   the appellant, and

(b)   the Payment Systems Regulator.

(11)   A decision of the CMA under this paragraph must be published, in such
manner as an authorised member of the CMA considers appropriate, as
soon as reasonably practicable after it is made.

(12)   The CMA may exclude from publication under sub-paragraph (11) any
information which it is satisfied is—

(a)   commercial information, the disclosure of which would, or
might in the CMA’s opinion, significantly harm the legitimate
business interests of an undertaking to which it relates, or

(b)   information relating to the private affairs of an individual, the
disclosure of which would, or might in the CMA’s opinion,
significantly harm the individual’s interests.

Suspension of decision

4    (1)   The CMA may direct that, pending the determination of an appeal
against a decision of the Payment Systems Regulator—

(a)   the decision is not to have effect, or

(b)   the decision is not to have effect to such extent as may be
specified in the direction.

(2)   The power to give a direction under this paragraph is exercisable only
where—

(a)   an application for its exercise has been made by the appellant at
the same time as the appellant made an application in accordance
with paragraph 3 for permission to bring an appeal against a
decision of the Payment Systems Regulator,

(b)   the Payment Systems Regulator has been given an opportunity of
making representations or observations, in accordance with
paragraph 5(2), and

(c)   the balance of convenience does not otherwise require effect to be
given to the decision pending that determination.

(3)   The CMA’s decision on an application for a direction under this
paragraph must be made—

(a)   where the Payment Systems Regulator makes representations or
observations in accordance with paragraph 5(2), before the end
of 10 working days beginning with the first working day after the
day on which those representations or observations are received;

(b)   in any other case, before the end of 14 working days beginning
with the first working day following the day on which the
application under sub-paragraph (2)(a) is received.

(4)   The appellant must send the Payment Systems Regulator a copy of the
application for a direction under this paragraph at the same time as it is
sent to the CMA.

(5)   The CMA’s decision whether to give a direction is to be taken by an
authorised member of the CMA.

(6)   A direction under this paragraph must be—

(a)   given by an authorised member of the CMA, and

(b)   published, in such manner as an authorised member of the CMA
considers appropriate, as soon as reasonably practicable after it
is given.

(7)   Sub-paragraph (12) of paragraph 3 applies to the publication of a
direction under sub-paragraph (6) of this paragraph as it applies to the
publication of a decision under sub-paragraph (11) of that paragraph.

Time limit for representations and observations by the Regulator

5    (1)   Sub-paragraph (2) applies where the Payment Systems Regulator wishes
to make representations or observations to the CMA in relation to—

(a)   an application for permission to bring an appeal under
paragraph 3;

(b)   an application for a direction under paragraph 4.

(2)   The Payment Systems Regulator must make the representations or
observations in writing before the end of 10 working days beginning
with the first working day after the day on which it received a copy of
the application under paragraph 3(5) or 4(4) (as the case may be).

(3)   Sub-paragraph (4) applies where an application for permission to bring
an appeal has been granted and the Payment Systems Regulator wishes
to make representations or observations to the CMA in relation to—

(a)   the Payment Systems Regulator’s reasons for the decision in
relation to which the appeal is being brought;

(b)   any grounds on which that appeal is being brought against that
decision.

(4)   The Payment Systems Regulator must make the representations or
observations in writing before the end of 15 working days beginning
with the first working day after the day on which permission to bring the
appeal was granted.

(5)   The Payment Systems Regulator must send a copy of the representations
and observations it makes under this paragraph to the appellant.

Consideration and determination of appeal by group

6    (1)   A group constituted by the chair of the CMA under Schedule 4 to the
Enterprise and Regulatory Reform Act 2013 for the purpose of carrying
out functions of the CMA with respect to an appeal must consist of three
members of the CMA panel.

(2)   A decision of the group is effective if, and only if—

(a)   all the members of the group are present when it is made, and

(b)   at least two members of the group are in favour of the decision.

Time limits for determining appeal

7    (1)   The CMA must determine an appeal within the period of 6 months
beginning with the permission date.

(2)   If—

(a)   the CMA has received representations on the timing of the
determination from a party to the appeal, and

(b)   it is satisfied that there are special reasons why the determination
cannot be made within the period specified in sub-paragraph (1),

(3)   In a case where sub-paragraph (2) applies, the CMA must also—

(a)   inform the parties to the appeal of the time limit for determining
the appeal, and

(b)   publish that time limit in such manner as it considers appropriate
for the purpose of bringing it to the attention of any other persons
likely to be affected by the determination.

(4)   In this paragraph the “permission date” is the date on which the CMA
gave permission to bring the appeal in accordance with section (Appeals:
general)(8).

Matters to be considered on appeal

8    (1)   The CMA, if it thinks it necessary to do so for the purpose of securing the
determination of an appeal within the period provided for by paragraph
7, may disregard—

(a)   any or all matters raised by an appellant that were not raised by
that appellant at the time of the relevant application, and

(b)   any or all matters raised by the Payment Systems Regulator that
were not contained in representations or observations made for
the purposes of the appeal in accordance with paragraph 5.

(2)   In this paragraph “relevant application” means an application under
paragraph 3 or 4.

Production of documents etc

9    (1)   For the purposes of this Schedule, the CMA may by notice—

(a)   require a person to produce to the CMA the documents specified
or otherwise identified in the notice;

(b)   require any person who carries on a business to supply to the
CMA such estimates, forecasts, returns or other information as
may be specified or described in the notice in relation to that
business.

(2)   The power to require the production of a document, or the supply of any
estimate, forecast, return or other information, is a power to require its
production or, as the case may be, supply—

(a)   at the time and place specified in the notice, and

(b)   in a legible form.

(3)   No person is to be compelled under this paragraph to produce a
document or supply an estimate, forecast, return or other information
which the person could not be compelled to produce in civil proceedings
in the High Court or Court of Session.

(4)   An authorised member of the CMA may, for the purpose of the exercise
of the functions of the CMA, make arrangements for copies to be taken
of a document produced or an estimate, forecast, return or other
information supplied to it under this paragraph.

(5)   A notice for the purposes of this paragraph—

(a)   may be issued on the CMA’s behalf by an authorised member of
the CMA;

(b)   must include information about the possible consequences of not
complying with the notice (as set out in paragraph 13).

Oral hearings

10    (1)   For the purposes of this Schedule an oral hearing may be held, and
evidence may be taken on oath—

(a)   by a person considering an application for permission to bring an
appeal under paragraph 3,

(b)   by a person considering an application for a direction under
paragraph 4, or

(c)   by a group with the function of determining an appeal;

and, for that purpose, such a person or group may administer oaths.

(2)   The CMA may by notice require a person—

(a)   to attend at a time and place specified in the notice, and

(b)   at that time and place, to give evidence to a person or group
mentioned in sub-paragraph (1).

(3)   At any oral hearing the person or group conducting the hearing may—

(a)   require the appellant or the Payment Systems Regulator, if
present at the hearing, to give evidence or to make
representations or observations, or

(b)   require a person attending the hearing as a representative of the
appellant or of the Payment Systems Regulator to make
representations or observations.

(4)   A person who gives oral evidence at the hearing may be cross-examined
by or on behalf of any party to the appeal.

(5)   If the appellant, the Payment Systems Regulator, or the appellant’s or
Payment Systems Regulator’s representative is not present at a
hearing—

(a)   there is no requirement to give notice to that person under sub-
paragraph (2), and

(b)   the person or group conducting the hearing may determine the
application or appeal without hearing that person’s evidence,
representations or observations.

(6)   No person is to be compelled under this paragraph to give evidence
which the person could not be compelled to give in civil proceedings in
the High Court or Court of Session.

(7)   Where a person is required under this paragraph to attend at a place
more than 10 miles from the person’s place of residence, an authorised
member of the CMA must arrange for the person to be paid the
necessary expenses of attendance.

(8)   A notice for the purposes of this paragraph may be issued on the CMA’s
behalf by an authorised member of the CMA.

Written statements

11    (1)   The CMA may by notice require a person to produce a written statement
with respect to a matter specified in the notice to—

(a)   a person who is considering, or is to consider, an application for
a direction under paragraph 4, or

(b)   a group with the function of determining an appeal.

(2)   The power to require the production of a written statement includes
power—

(a)   to specify the time and place at which it is to be produced, and

(b)   to require it to be verified by a statement of truth;

and a statement required to be so verified must be disregarded unless it is so verified.

(3)   No person is to be compelled under this paragraph to produce a written
statement with respect to any matter about which the person could not
be compelled to give evidence in civil proceedings in the High Court or
Court of Session.

(4)   A notice for the purposes of this paragraph may be issued on the CMA’s
behalf by an authorised member of the CMA.

Expert advice

12 Where permission to bring an appeal is granted under paragraph 3, the
CMA may commission expert advice with respect to any matter raised
by a party to the appeal.

Defaults in relation to evidence

13    (1)   If a person (“the defaulter”)—

(a)   fails to comply with a notice issued or other requirement
imposed under paragraph 9, 10 or 11,

(b)   in complying with a notice under paragraph 11, makes a
statement that is false in any material particular, or

(c)   in providing information verified in accordance with a statement
of truth required by appeal rules, provides information that is
false in a material particular,

an authorised member of the CMA may certify that fact to the court.

(2)   If the court is satisfied that the defaulter failed without reasonable excuse
to comply with the notice or other requirement, or made the false
statement, or provided the false information, it may deal with the
defaulter (and in the case of a body corporate, any director or other
officer of the body) as if that person were in contempt.

(3)   In sub-paragraph (2) “officer”, in relation to a limited liability
partnership, means a member of the limited liability partnership.

(4)   In this paragraph “court” means—

(a)   the High Court, or

(b)   in Scotland, the Court of Session.

14    (1)   A person who wilfully alters, suppresses or destroys a document which
the person has been required to produce under paragraph 9 is guilty of
an offence.

(2)   A person guilty of an offence under this paragraph 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 2 years or a fine, or both.

Determination of appeal by CMA

15    (1)   A determination by the CMA on an appeal—

(a)   must be contained in an order made by the CMA;

(b)   must set out the reasons for the determination;

(c)   takes effect at the time specified in the order or determined in
accordance with provision made in the order;

(d)   must be notified by the CMA to the parties to the appeal;

(e)   must be published by the CMA—

(i)   as soon as reasonably practicable after the determination
is made;

(ii)   in such manner as the CMA considers appropriate for the
purpose of bringing the determination to the attention of
any person likely to be affected by it (other than a party to
the appeal).

(2)   The CMA may exclude from publication under sub-paragraph (1)(e) any
information which it is satisfied is—

(a)   commercial information, the disclosure of which would, or
might in the CMA’s opinion, significantly harm the legitimate
business interests of an undertaking to which it relates, or

(b)   information relating to the private affairs of an individual, the
disclosure of which would, or might in the CMA’s opinion,
significantly harm the individual’s interests.

(3)   The Payment Systems Regulator must take such steps as it considers
necessary for it to comply with an order of the CMA made by virtue of
sub-paragraph (1)(a).

(4)   The steps must be taken—

(a)   if a time is specified in (or is to be determined in accordance with)
the order, within that time;

(b)   in any other case, within a reasonable time.

Appeal rules

16    (1)   The CMA Board may make rules of procedure regulating the conduct
and disposal of appeals.

(2)   Those rules may include provision supplementing the provisions of this
Schedule in relation to any application, notice, hearing, power or
requirement for which this Schedule provides; and that provision may,
in particular, impose time limits or other restrictions on—

(a)   the taking of evidence at an oral hearing, or

(b)   the making of representations or observations at such a hearing.

(3)   The CMA Board must publish rules made under this paragraph in such
manner as it considers appropriate for the purpose of bringing them to
the attention of those likely to be affected by them.

(4)   Before making rules under this paragraph, the CMA Board must consult
such persons as it considers appropriate.

(5)   Rules under this paragraph may make different provision for different
cases.

Costs

17    (1)   A group that determines an appeal must make an order requiring the
payment to the CMA of the costs incurred by the CMA in connection
with the appeal.

(2)   An order under sub-paragraph (1) must require those costs to be paid—

(a)   where the appeal is allowed in full, by the Payment Systems
Regulator;

(b)   where the appeal is dismissed in full, by the appellant;

(c)   where the appeal is partially allowed, by one or more parties in
such proportions as the CMA considers appropriate in all the
circumstances.

(3)   The group that determines an appeal may also make such order as it
thinks fit for requiring a party to the appeal to make payments to another
party in respect of costs reasonably incurred by that other party in
connection with the appeal.

(4)   A person who is required by an order under this paragraph to pay a sum
to another person must comply with the order before the end of the
period of 28 days beginning with the day after the making of the order.

(5)   Sums required to be paid by an order under this paragraph but not paid
within the period mentioned in sub-paragraph (4) are to bear interest at
such rate as may be determined in accordance with provision contained
in the order.

(6)   Any costs payable by virtue of an order under this paragraph and any
interest that has not been paid may be recovered as a civil debt by the
person in whose favour the order is made.

Interpretation

18    (1)   In this Schedule—

“appeal” means an appeal made in accordance with section (Appeals
to Competition and Markets Authority);

“appeal rules” means rules of procedure under paragraph 16;

“authorised member of the CMA”—

(a)   in relation to a power exercisable in connection with an
appeal in respect of which a group has been constituted by
the chair of the CMA under Schedule 4 to the Enterprise and
Regulatory Reform Act 2013, means a member of that group
who has been authorised by the chair of the CMA to exercise
that power;

(b)   in relation to a power exercisable in connection with an
application for permission to bring an appeal, or otherwise
in connection with an appeal in respect of which a group has
not been so constituted by the chair of the CMA, means—

(i)   any member of the CMA Board who is also a
member of the CMA panel, or

(ii)   any member of the CMA panel authorised by the
Treasury (whether generally or specifically) to
exercise the power in question;

“CMA” means the Competition and Markets Authority;

“CMA Board” and “CMA panel” have the same meaning as in
Schedule 4 to the Enterprise and Regulatory Reform Act 2013;

“group” means a group selected in accordance with paragraph 6;

“statement of truth”, in relation to the production of a statement or
provision of information by a person, means a statement that the
person believes the facts stated in the statement or information to
be true;

“working day” means any day other than—

(a)   Saturday or Sunday;

(b)   Christmas Day or Good Friday;

(c)   a day which is a bank holiday under the Banking and
Financial Dealings Act 1971 in any part of the United
Kingdom.

(2)   References in this Schedule to a party to an appeal are references to—

(a)   the appellant, or

(b)   the Payment Systems Regulator.”

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 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 FMI 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 administration) 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 administration) 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) 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 administration) 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 administration) 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 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
administration)(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 and liabilities from the old company to the new company (an “FMI 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 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 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 the Enterprise Act 2002—

  section 166 (duty to maintain register of undertakings
and orders);

  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
CMA.

(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—

  section 31D(1) to (6) (duty to publish guidance);

  section 38(1) to (6) (duty to publish guidance about
penalties);

  section 40B(1) to (4) (duty to publish statement of policy
on penalties);

  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 for 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
(g) insert—

“(h)   the Financial Conduct Authority.”

Competition Act 1998

8 In section 54 of the Competition Act 1998 (regulators), in subsection (1),
after paragraph (i) insert—

“(j)   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 (g) insert—

“(h)   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—

“(i)   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).

(8F)   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
conferred in contravention of this subsection.”

(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”.

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).

(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
subsection (1G).

(1A)   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.

(1B)   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).

(1C)   The year-end date of a building society established on or after
25th August 1894 and before the relevant day is 31st December.

(1D)   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.

(1E)   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)).

(1F)   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)).

(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.

(1H)   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.”

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,”.”

[Withdrawn]

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 (Meaning of “payment system”)(4) (meaning
of “payment system”);

(c)   an order under section (Power to make further consequential
amendments) (power to make further consequential amendments)
that amends or repeals primary legislation;

(d)   an order under paragraph 6 of Schedule (Conduct of FMI
administration) (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)(c) “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.”

Insert the following new Clause—

“Power to make further consequential amendments

(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.”

Page 29, line 33, at end insert—

“( )   Section (Building societies) and Schedule (Building 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.”

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.”

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.”

Line 4, after “insolvency;” insert “to make further provision about payment
systems and securities settlement systems;”