Financial Services (Banking Reform) Bill

House of Lords

Session 2013 - 14
Internet Publications
Other Bills before Parliament

Financial Services (Banking Reform) Bill

Financial Services (Banking Reform) Bill
Part 5 — Regulation of payment systems
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63
Penalties
(1)
The Payment Systems Regulator may require a participant in a regulated
payment system to pay a penalty in respect of a compliance failure.
(2)
A penalty—
(a)
must be paid to the Payment Systems Regulator, and
5
(b)
may be enforced by the Payment Systems Regulator as a debt.
(3)
The Payment Systems Regulator must prepare a statement of the principles
which it will apply in determining—
(a)
whether to impose a penalty, and
(b)
the amount of a penalty.
10
(4)
The Payment Systems Regulator must—
(a)
publish the statement on its website,
(b)
send a copy to the Treasury,
(c)
review the statement from time to time and revise it if necessary (and
paragraphs (a) and (b) apply to a revision), and
15
(d)
in applying the statement to a compliance failure, apply the version in
force when the compliance failure occurred.
64
Warning notices
(1)
Before imposing a sanction on any person the Payment Systems Regulator
must—
20
(a)
give the person a notice in writing (a “warning notice”),
(b)
give the person at least 21 days to make representations,
(c)
consider any representations made, and
(d)
as soon as is reasonably practicable, give the person a notice in writing
stating whether or not it intends to impose the sanction.
25
(2)
In subsection (1) any reference to imposing a sanction is a reference to—
(a)
publishing details under section 62(1), or
(b)
requiring the payment of a penalty under section 63.
65
Injunctions
(1)
If, on the application of the Payment Systems Regulator, the court is satisfied—
30
(a)
that there is a reasonable likelihood that there will be a compliance
failure, or
(b)
that there has been a compliance failure and there is a reasonable
likelihood that it will continue or be repeated,

the court may make an order restraining the conduct constituting the failure.
35
(2)
If, on the application of the Payment Systems Regulator, the court is satisfied—
(a)
that there has been a compliance failure by a participant in a regulated
payment system, and
(b)
that there are steps which could be taken for remedying the failure,

the court may make an order requiring the participant, and anyone else who
40
appears to have been knowingly concerned in the failure, to take such steps as
the court may direct to remedy it.
(3)
If, on the application of the Payment Systems Regulator, the court is satisfied—

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(a)
that there may have been a compliance failure by a participant in a
regulated payment system, or
(b)
that a person may have been knowingly concerned in a compliance
failure,

the court may make an order restraining the participant or the person (as the
5
case may be) from dealing with any assets which it is satisfied the participant
or person is reasonably likely to deal with.
(4)
The jurisdiction conferred by this section is exercisable—
(a)
in England and Wales and Northern Ireland, by the High Court, and
(b)
in Scotland, by the Court of Session.
10
(5)
In this section—
(a)
references to an order restraining anything are, in Scotland, to be read
as references to an interdict prohibiting that thing,
(b)
references to remedying a failure include mitigating its effect, and
(c)
references to dealing with assets include disposing of them.
15
66
Appeals: general
(1)
A person who is affected by any of the following decisions of the Payment
Systems Regulator may appeal against the decision—
(a)
a decision to give a direction under section 44 (other than a general
direction),
20
(b)
a decision to impose a requirement under section 45 (other than a
requirement imposed on all operators of regulated payment systems),
(c)
a decision to exercise its power under section 46, 47 or 48,
(d)
a decision to impose a sanction.
(2)
In subsection (1) the reference to imposing a sanction is a reference to—
25
(a)
publishing details under section 62(1), or
(b)
requiring the payment of a penalty under section 63.
(3)
If the decision is a CAT-appealable decision, the appeal must be made to the
Competition Appeal Tribunal in accordance with section 67.
(4)
A “CAT-appealable decision” means—
30
(a)
a decision to give a direction under section 44,
(b)
a decision to impose a requirement under section 45, or
(c)
a decision to publish details under section 62(1).
(5)
If the decision is a decision to impose a penalty on the person under section 63,
the appeal must be made to the Competition Appeal Tribunal in accordance
35
with section 68.
(6)
If the decision is a CMA-appealable decision, the appeal must be made to the
Competition and Markets Authority (“the CMA”) in accordance with section
69.
(7)
A “CMA-appealable decision” means—
40
(a)
a decision to impose a requirement under section 46,
(b)
a decision to vary an agreement under section 47, or
(c)
a decision to impose a requirement under section 48.

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(8)
The permission of the CMA is required for an appeal to be made in accordance
with section 69.
(9)
The CMA may refuse permission for an appeal only if—
(a)
the appeal is made for reasons that are trivial or vexatious, or
(b)
the appeal has no reasonable prospect of success.
5
67
Appeals to Competition Appeal Tribunal
(1)
This section applies where a person is appealing to the Competition Appeal
Tribunal (“the Tribunal”) against a CAT-appealable decision.
(2)
The means of making an appeal is by sending the Tribunal a notice of appeal
in accordance with Tribunal rules.
10
(3)
The notice of appeal must be sent within the period specified, in relation to the
decision appealed against, in those rules.
(4)
In determining an appeal made in accordance with this section, the Tribunal
must apply the same principles as would be applied by a court on an
application for judicial review.
15
(5)
The Tribunal must either—
(a)
dismiss the appeal, or
(b)
quash the whole or part of the decision to which the appeal relates.
(6)
If the Tribunal quashes the whole or part of a decision, it may refer the matter
back to the Payment Systems Regulator with a direction to reconsider and
20
make a new decision in accordance with its ruling.
(7)
The Tribunal may not direct the Payment Systems Regulator to take any action
which it would not otherwise have the power to take in relation to the decision.
(8)
The effect of a decision to publish details under section 62(1) is suspended by
the making of an appeal against the decision (and the details may not be
25
published until the appeal has been determined).
(9)
The effect of any other CAT-appealable decision is not suspended by the
making of an appeal against the decision.
(10)
In this section and section 68 “Tribunal rules” means rules under section 15 of
the Enterprise Act 2002.
30
68
Appeals in relation to penalties
(1)
This section applies where a person is appealing to the Competition Appeal
Tribunal (“the Tribunal”) against a decision to impose a penalty under section
63.
(2)
The person may appeal against—
35
(a)
the imposition of the penalty,
(b)
the amount of the penalty, or
(c)
any date by which the penalty, or any part of it, is required to be paid.
(3)
The means of making an appeal is by sending the Tribunal a notice of appeal
in accordance with Tribunal rules.
40

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(4)
The notice of appeal must be sent within the period specified, in relation to the
decision appealed against, in those rules.
(5)
The Tribunal may do any of the following—
(a)
uphold the penalty;
(b)
set aside the penalty;
5
(c)
substitute for the penalty a penalty of an amount decided by the
Tribunal;
(d)
vary any date by which the penalty, or any part of it, is required to be
paid.
(6)
If an appeal is made in accordance with this section, the penalty is not required
10
to be paid until the appeal has been determined.
(7)
Subsections (2), (5) and (6) do not restrict the power to make Tribunal rules;
and those subsections are subject to Tribunal rules.
(8)
Except as provided by this section, the validity of the penalty may not be
questioned by any legal proceedings whatever.
15
(9)
In the case of an appeal made in accordance with this section, a decision of the
Tribunal has the same effect as, and may be enforced in the same manner as, a
decision of the Payment Systems Regulator.
69
Appeals to Competition and Markets Authority
(1)
This section applies where a person is appealing to the Competition and
20
Markets Authority (“the CMA”) against a CMA-appealable decision.
(2)
In determining the appeal the CMA must have regard, to the same extent as is
required of the Payment Systems Regulator, to the matters to which the
Payment Systems Regulator must have regard in discharging its functions
under this Part.
25
(3)
In determining the appeal the CMA—
(a)
may have regard to any matter to which the Payment Systems
Regulator was not able to have regard in relation to the decision, but
(b)
must not, in the exercise of that power, have regard to any matter to
which the Payment Systems Regulator would not have been entitled to
30
have regard in reaching its decision had it had the opportunity of doing
so.
(4)
The CMA must either—
(a)
dismiss the appeal, or
(b)
quash the whole or part of the decision to which the appeal relates.
35
(5)
The CMA may act as mentioned in subsection (4)(b) only to the extent that it is
satisfied that the decision was wrong on one or more of the following
grounds—
(a)
that the Payment Systems Regulator failed properly to have regard to
any matter mentioned in subsection (2);
40
(b)
that the Payment Systems Regulator failed to give the appropriate
weight to any matter mentioned in subsection (2);
(c)
that the decision was based, wholly or partly, on an error of fact;
(d)
that the decision was wrong in law.

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(6)
If the CMA quashes the whole or part of a decision, it may either—
(a)
refer the matter back to the Payment Systems Regulator with a
direction to reconsider and make a new decision in accordance with its
ruling, or
(b)
substitute its own decision for that of the Payment Systems Regulator.
5
(7)
The CMA may not direct the Payment Systems Regulator to take any action
which it would not otherwise have the power to take in relation to the decision.
(8)
Schedule 5 contains further provision about the making of appeals in
accordance with this section.
70
Enforcement of requirement to dispose of interest in payment system
10
(1)
A requirement imposed under section 48 is enforceable by civil proceedings
brought by the Payment Systems Regulator for an injunction or for interdict or
for any other appropriate relief or remedy.
(2)
Civil proceedings may not be brought to enforce a requirement imposed under
that section unless—
15
(a)
the time for bringing an appeal against the decision to impose the
requirement has expired and no appeal has been brought within that
time, or
(b)
the person on whom the requirement was imposed has within that time
brought such an appeal and the appeal has been dismissed or
20
withdrawn.
Information and investigation powers
71
Power to obtain information or documents
(1)
The Payment Systems Regulator may by notice in writing require a person to
provide information or documents—
25
(a)
which the Payment Systems Regulator thinks will help the Treasury in
determining whether to make a designation order, or
(b)
which the Payment Systems Regulator otherwise requires in
connection with its functions under this Part.
(2)
In particular, a notice under subsection (1) may require a participant in a
30
regulated payment system to notify the Payment Systems Regulator if events
of a specified kind occur.
(3)
A notice under subsection (1) may require information or documents to be
provided—
(a)
in a specified form or manner;
35
(b)
at a specified time;
(c)
in respect of a specified period.
(4)
The Payment Systems Regulator may disclose information obtained by virtue
of this section to—
(a)
the Treasury;
40
(b)
the Bank of England;
(c)
the FCA;
(d)
the PRA;

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(e)
the Office of Communications;
(f)
an authority in a country or territory outside the United Kingdom that
exercises functions similar to those of the Treasury, the Bank of
England, the FCA, the PRA or the Payment Systems Regulator in
relation to payment systems;
5
(g)
the European Commission;
(h)
the European Central Bank;
(i)
the Bank for International Settlements.
(5)
Subsection (4)—
(a)
overrides any requirement to keep information in confidence, and
10
(b)
is without prejudice to any other power to disclose information.
(6)
The Treasury may by regulations permit the disclosure of information
obtained by virtue of this section to a specified person.
(7)
The Payment Systems Regulator may publish information obtained by virtue
of this section.
15
(8)
The Treasury may make regulations about the manner and extent of
publication under subsection (7).
(9)
In subsection (4)(f) the reference to payment systems is to be read as if
subsection (2)(b) of section 32 were omitted.
72
Reports by skilled persons
20
(1)
The Payment Systems Regulator may—
(a)
require a person who is a participant in a regulated payment system
(“the relevant participant”) to provide the Payment Systems Regulator
with a report on any matter relating to the system (“the matter
concerned”), or
25
(b)
appoint a person to provide the Payment Systems Regulator with a
report on the matter concerned.
(2)
The power conferred by subsection (1)(a) is exercisable by giving the relevant
participant a notice in writing.
(3)
When acting under subsection (1)(a), the Payment Systems Regulator may
30
require the report to be in a form specified in the notice.
(4)
The Payment Systems Regulator must give written notice of an appointment
under subsection (1)(b) to the relevant participant.
(5)
A person appointed to make a report under this section—
(a)
must be a person appearing to the Payment Systems Regulator to have
35
the skills necessary to make a report on the matter concerned, and
(b)
where the appointment is to be made by the relevant participant, must
be a person nominated or approved by the Payment Systems
Regulator.
(6)
It is the duty of—
40
(a)
the relevant participant, and
(b)
any person who is providing (or who has at any time provided)
services to the relevant participant in relation to the matter concerned,

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to give the person appointed to prepare a report all such assistance as the
appointed person may reasonably require.
(7)
The obligation imposed by subsection (6) is enforceable, on the application of
the Payment Systems Regulator, by an injunction or, in Scotland, by an order
for specific performance under section 45 of the Court of Session Act 1988.
5
(8)
The Payment Systems Regulator may direct the relevant participant to pay any
expenses incurred by the Payment Systems Regulator in relation to an
appointment under subsection (1)(b).
73
Appointment of persons to conduct investigations
(1)
If it considers that it is desirable to do so in order to advance any of its payment
10
systems objectives, the Payment Systems Regulator may appoint one or more
competent persons to conduct an investigation on its behalf into the nature,
conduct or state of the business of any participant in a regulated payment
system.
(2)
If it appears to the Payment Systems Regulator that there are circumstances
15
suggesting that there may have been a compliance failure, the Payment
Systems Regulator may appoint one or more competent persons to conduct an
investigation on its behalf.
74
Investigations: general
(1)
This section applies if the Payment Systems Regulator appoints one or more
20
competent persons (“investigators”) under section 73 to conduct an
investigation on its behalf.
(2)
The Payment Systems Regulator must give written notice of the appointment
of an investigator to the person who is the subject of the investigation.
(3)
Subsections (2) and (9) do not apply if—
25
(a)
the Payment Systems Regulator believes that the notice required by
subsection (2) or (9) would be likely to result in the investigation being
frustrated, or
(b)
the investigator is appointed under subsection (2) of section 73.
(4)
A notice under subsection (2) must—
30
(a)
specify the provision under which the investigator was appointed, and
(b)
state the reason for the appointment.
(5)
Nothing prevents the Payment Systems Regulator from appointing as an
investigator—
(a)
a member of its staff, or
35
(b)
a member of staff of the FCA.
(6)
An investigator who conducts an investigation must make a report of the
investigation to the Payment Systems Regulator.
(7)
The Payment Systems Regulator may, by a direction to an investigator,
control—
40
(a)
the scope of the investigation,
(b)
the period during which the investigation is to be conducted,
(c)
the conduct of the investigation, and