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Financial Services (Banking Reform) Bill


Financial Services (Banking Reform) Bill
Schedule 2 — Bail-in stabilisation option
Part 1 — Amendments of Banking Act 2009

127

 

(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

5

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).

10

(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.”

15

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.”

20

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

25

insert—

 

“48F(1)

Power to amend

Draft

 
 

and (2)

definition of

affirmative

 
  

“excluded liabilities”

resolution

 
 

48G

Insolvency treatment

Draft

 

30

  

principles

affirmative

 
   

resolution

 
 

48P

Safeguarding of

Draft

 
  

certain financial

affirmative

 
  

arrangements

resolution

 

35

 

52A

Bail-in compensation

Draft

 
  

orders

affirmative

 
   

resolution”

 
 

“60A

Third party

Draft

 
  

compensation:

affirmative

 

40

  

instruments

resolution”;

 
  

containing special

  
  

bail-in provision

  
 
 

Financial Services (Banking Reform) Bill
Schedule 2 — Bail-in stabilisation option
Part 2 — Modification of Investment Bank Special Administration Regulations 2011

128

 

(c)   

in the Table in subsection (3), in Part 3, at the appropriate place

insert—

 

“152A

Property transfer

Draft

 
  

from transferred

affirmative

 
  

institution

resolution”;

 

5

(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

10

from transferred institution),”.

33         

In section 261 (index of defined terms), in the Table, at the appropriate places

insert—

 

“Bail-in

49”

 
 

compensation

  

15

 

order

  
 

“Resolution

12A”

 
 

instrument

  
 

“Special bail-

48B”.

 
 

in provision

  

20

Part 2

Modification of Investment Bank Special Administration Regulations 2011

34    (1)  

This paragraph 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

25

Banking Act 2009 with respect to the investment bank in the relevant 3-

month period.

      (2)  

In sub-paragraph (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.

30

      (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

35

of England” and after “notice” insert “and the appropriate

regulator”;

 
 

Financial Services (Banking Reform) Bill
Schedule 3 — Consequential amendments relating to Part 4

129

 

(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

5

also inform the Bank of England of the contents of the notice.

(6B)   

Where the Bank of England receives notice under paragraph

(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

10

which the notice relates going ahead.”

Schedule 3

Section 26

 

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

15

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

20

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

25

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.

30

      (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

35

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),

 
 

Financial Services (Banking Reform) Bill
Schedule 3 — Consequential amendments relating to Part 4

130

 

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—

5

“(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;”.

10

      (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

15

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

20

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)”.

25

      (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)”.

30

      (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)”.

35

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”;

40

 
 

Financial Services (Banking Reform) Bill
Schedule 3 — Consequential amendments relating to Part 4

131

 

(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

5

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—

10

“(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

15

(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,

20

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)”.

25

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.

30

      (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—

35

“(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

40

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”;

 
 

Financial Services (Banking Reform) Bill
Schedule 4 — The Payment Systems Regulator

132

 

(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)—

5

(a)   

omit paragraph (b);

(b)   

in paragraph (c)(i)—

(i)   

after “section” insert “63ZD,”, and

(ii)   

omit “64,”.

Financial Services Act 2012

10

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”;

15

(b)   

in paragraph (c)(i)—

(i)   

after “section” insert “63ZD,”, and

(ii)   

omit “64,”.

      (3)  

In subsection (5)—

(a)   

omit paragraph (b);

20

(b)   

in paragraph (c)(i)—

(i)   

after “section” insert “63ZD,”, and

(ii)   

omit “64,”.

Schedule 4

Section 31

 

The Payment Systems Regulator

25

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.

30

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

35

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.

 
 

Financial Services (Banking Reform) Bill
Schedule 4 — The Payment Systems Regulator

133

 

      (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

      (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

10

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

15

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

20

(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—

25

(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

30

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.

35

           

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 44;

40

 
 

 
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