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
63

(d)
the reporting of the investigation.
(8)
A direction may, in particular—
(a)
confine the investigation to particular matters;
(b)
extend the investigation to additional matters;
(c)
require the investigator to discontinue the investigation or to take only
5
those steps that are specified in the direction;
(d)
require the investigator to make such interim reports as are so
specified.
(9)
If there is a change in the scope or conduct of the investigation and, in the
opinion of the Payment Systems Regulator, the person who is the subject of the
10
investigation is likely to be significantly prejudiced by not being made aware
of it, that person must be given written notice of the change.
75
Powers of persons appointed under section 73
(1)
An investigator may require any person within subsection (2)—
(a)
to attend before the investigator at a specified time and place and
15
answer questions, or
(b)
otherwise to provide any information which the investigator requires.
(2)
The persons referred to in subsection (1) are—
(a)
the person who is the subject of the investigation (“the person under
investigation”);
20
(b)
any person connected with the person under investigation;
(c)
in the case of an investigation into whether there has been a compliance
failure, any person who in the investigator’s opinion is or may be able
to give information which is or may be relevant to the investigation.
(3)
An investigator may also require any person to produce at a specified time and
25
place any specified documents or documents of a specified description.
(4)
A requirement under subsection (1) or (3) may be imposed only so far as the
investigator concerned reasonably considers the question, provision of
information or production of the document to be relevant to the purposes of
the investigation.
30
(5)
In the case of an investigation into whether there has been a compliance failure,
the investigator may also require any person falling within subsection (2)(c) to
give the investigator all assistance in connection with the investigation which
the person is reasonably able to give.
(6)
For the purposes of this section, a person is connected with the person under
35
investigation (“A”) if the person is or has at any relevant time been—
(a)
a member of A’s group,
(b)
a controller of A, or
(c)
a partnership of which A is a member.
(7)
In this section—
40
“controller” has the same meaning as in FSMA 2000 (see section 422 of that
Act);
“group” has the same meaning as in FSMA 2000 (see section 421 of that
Act);

Financial Services (Banking Reform) Bill
Part 5 — Regulation of payment systems
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“investigator” means a person conducting an investigation under section
73;
“specified” means specified in a notice in writing.
76
Information and documents: supplemental provisions
(1)
In this section “relevant document” means a document produced in response
5
to a requirement imposed under section 71 or 75.
(2)
In a case where—
(a)
the Payment Systems Regulator has power under section 71, or an
investigator has power under section 75, to require a person to produce
a document, but
10
(b)
it appears that the document is in the possession of another person,

the power may be exercised in relation to that other person.
(3)
Any person to whom a relevant document is produced may—
(a)
take copies or extracts from the document, or
(b)
require the person producing the document, or any relevant person
15
(see subsection (4)), to provide an explanation of the document.
(4)
“Relevant person”, in relation to a person who is required to produce a
document, means a person who—
(a)
has been or is or is proposed to be a director or controller of that person,
(b)
has been or is an auditor of that person,
20
(c)
has been or is an actuary, accountant or lawyer appointed or instructed
by that person, or
(d)
has been or is an employee of that person.
(5)
A relevant document may be retained for so long as the person to whom it is
produced considers that it is necessary to retain it (rather than copies of it) for
25
the purposes for which the document was requested.
(6)
If the person to whom a relevant document is produced has reasonable
grounds for believing—
(a)
that the document may have to be produced for the purposes of any
legal proceedings, and
30
(b)
that it might otherwise be unavailable for those purposes,

it may be retained until the proceedings are concluded.
(7)
If a person who is required under section 71 or 75 to produce a document fails
to do so, the Payment Systems Regulator or an investigator may require the
person to state, to the best of the person’s knowledge and belief, where the
35
document is.
(8)
A lawyer may be required under section 71 or 75 or this section to provide the
name and address of a client.
(9)
A person may not be required under section 71 or 75 or this section to disclose
information or produce a document in respect of which the person owes an
40
obligation of confidence as a result of carrying on the business of banking
unless—
(a)
the person is the person under investigation or a member of that
person’s group,

Financial Services (Banking Reform) Bill
Part 5 — Regulation of payment systems
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(b)
the person to whom the obligation of confidence is owed is the person
under investigation or a member of that person’s group,
(c)
the person to whom the obligation of confidence is owed consents to
the disclosure or production, or
(d)
the imposing on the person of a requirement with respect to such
5
information or document has been specifically authorised by the
Payment Systems Regulator.
(10)
If a person claims a lien on a document, its production under section 71 or 75
does not affect the lien.
(11)
In this section—
10
“controller” has the same meaning as in FSMA 2000 (see section 422 of that
Act);
“group” has the same meaning as in FSMA 2000 (see section 421 of that
Act);
“investigator” means a person appointed under section 73.
15
77
Admissibility of statements made to investigators
(1)
A statement made to an investigator by a person in compliance with an
information requirement is admissible in evidence in any proceedings, so long
as it also complies with any requirements governing the admissibility of
evidence in the circumstances in question.
20
(2)
But in criminal proceedings in which that person is charged with an offence to
which this subsection applies—
(a)
no evidence relating to the statement may be adduced by or on behalf
of the prosecution, and
(b)
no question relating to the statement may be asked by or on behalf of
25
the prosecution,

unless evidence relating to the statement is adduced, or a question relating to
it is asked, in the proceedings by or on behalf of that person.
(3)
Subsection (2) applies to any offence other than—
(a)
an offence under section 80(6);
30
(b)
an offence under section 5 of the Perjury Act 1911 (false statements
made otherwise than on oath);
(c)
an offence under section 44(2) of the Criminal Law (Consolidation)
(Scotland) Act 1995 (false statements made otherwise than on oath);
(d)
an offence under Article 10 of the Perjury (Northern Ireland) Order
35
1979.
(4)
In this section—
“information requirement” means a requirement imposed by an
investigator under section 75 or 76;
“investigator” means a person appointed under section 73.
40
78
Entry of premises under warrant
(1)
A justice of the peace may issue a warrant under this section if satisfied on
information on oath given by or on behalf of the Payment Systems Regulator
or an investigator that there are reasonable grounds for believing that the first
or second set of conditions is satisfied.
45

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(2)
The first set of conditions is—
(a)
that a person on whom an information requirement has been imposed
has failed (wholly or in part) to comply with it, and
(b)
that on the premises specified in the warrant—
(i)
there are documents which have been required, or
5
(ii)
there is information which has been required.
(3)
In this section “information requirement” means—
(a)
a requirement imposed by the Payment Systems Regulator under
section 71 or 76, or
(b)
a requirement imposed by an investigator under section 75 or 76.
10
(4)
The second set of conditions is—
(a)
that the premises specified in the warrant are premises of a participant
in a regulated payment system,
(b)
that there are on the premises documents or information in relation to
which an information requirement could be imposed, and
15
(c)
that if such a requirement were to be imposed—
(i)
it would not be complied with, or
(ii)
the documents or information to which it related would be
removed, tampered with or destroyed.
(5)
A warrant under this section authorises a constable—
20
(a)
to enter the premises specified in the warrant,
(b)
to search the premises and take possession of any documents or
information appearing to be documents or information of a kind in
respect of which a warrant under this section was issued (“the relevant
kind”) or to take, in relation to any such documents or information, any
25
other steps which may appear to be necessary for preserving them or
preventing interference with them,
(c)
to take copies of, or extracts from, any documents or information
appearing to be of the relevant kind,
(d)
to require any person on the premises to provide an explanation of any
30
document or information appearing to be of the relevant kind or to
state where it may be found, and
(e)
to use such force as may be reasonably necessary.
(6)
A warrant under this section may be executed by any constable.
(7)
The warrant may authorise persons to accompany any constable who is
35
executing it.
(8)
The powers in subsection (5) may be exercised by a person who—
(a)
is authorised by the warrant to accompany a constable, and
(b)
exercises those powers in the company of, and under the supervision
of, a constable.
40
(9)
In England and Wales, sections 15(5) to (8) and 16(3) to (12) of the Police and
Criminal Evidence Act 1984 (execution of search warrants and safeguards)
apply to warrants issued under this section.
(10)
In Northern Ireland, Articles 17(5) to (8) and 18(3) to (12) of the Police and
Criminal Evidence (Northern Ireland) Order 1989 apply to warrants issued
45
under this section.

Financial Services (Banking Reform) Bill
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(11)
This section has effect in relation to Scotland as if—
(a)
for any reference to a justice of the peace there were substituted a
reference to a justice of the peace or a sheriff, and
(b)
for any reference to information on oath there were substituted a
reference to evidence on oath.
5
(12)
In this section “investigator” means a person appointed under section 73.
79
Retention of documents taken under section 78
(1)
Any document of which possession is taken under section 78 (“a seized
document”) may be retained so long as it is necessary to retain it (rather than
copies of it) in the circumstances.
10
(2)
A person claiming to be the owner of a seized document may apply to a
magistrates’ court or (in Scotland) the sheriff for an order for the delivery of the
document to the person appearing to the court or sheriff to be the owner.
(3)
If on an application under subsection (2) the court or (in Scotland) the sheriff
cannot ascertain who is the owner of the seized document the court or sheriff
15
(as the case may be) may make such order as the court or sheriff thinks fit.
(4)
An order under subsection (2) or (3) does not affect the right of any person to
take legal proceedings against any person in possession of a seized document
for the recovery of the document.
(5)
Any right to bring proceedings (as described in subsection (4)) may only be
20
exercised within 6 months of the date of the order made under subsection (2)
or (3).
80
Enforcement of information and investigation powers
(1)
If a person other than an investigator (“the defaulter”) fails to comply with a
requirement imposed under any of sections 71 to 78, the person imposing the
25
requirement may certify that fact in writing to the court.
(2)
If the court is satisfied that the defaulter failed without reasonable excuse to
comply with the requirement, 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.
30
(3)
In subsection (2) “officer”, in relation to a limited liability partnership, means a
member of the limited liability partnership.
(4)
A person who knows or suspects that an investigation is being or is likely to be
conducted under section 73 is guilty of an offence if the person—
(a)
falsifies, conceals, destroys or otherwise disposes of a document which
35
the person knows or suspects is or would be relevant to such an
investigation, or
(b)
causes or permits the falsification, concealment, destruction or disposal
of such a document.
(5)
It is a defence for a person charged with an offence under subsection (4) to
40
show that the person had no intention of concealing facts disclosed by the
documents from the investigator.

Financial Services (Banking Reform) Bill
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(6)
A person is guilty of an offence if the person, in purported compliance with a
requirement imposed under any of sections 71 to 78—
(a)
provides information which the person knows to be false or misleading
in a material particular, or
(b)
recklessly provides information which is false or misleading in a
5
material particular.
(7)
A person guilty of an offence under subsection (4) or (6) 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
10
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
15
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.
(8)
Any person who intentionally obstructs the exercise of any rights conferred by
20
a warrant under section 78 is guilty of an offence and liable on summary
conviction—
(a)
in England and Wales, to imprisonment for a term not exceeding 51
weeks (or 3 months, if the offence was committed before the
commencement of section 280(2) of the Criminal Justice Act 2003) or a
25
fine, or both;
(b)
in Scotland, to imprisonment for a term not exceeding 3 months or a
fine not exceeding level 5 on the standard scale, or both;
(c)
in Northern Ireland, to imprisonment for a term not exceeding 3
months or a fine not exceeding level 5 on the standard scale, or both.
30
(9)
In this section—
“court” means the High Court or, in Scotland, the Court of Session;
“investigator” means a person appointed under section 73.
Guidance
81
Guidance
35
(1)
The Payment Systems Regulator may give guidance consisting of such
information and advice as it considers appropriate—
(a)
with respect to the operation of specified provisions of this Part;
(b)
with respect to any other matter relating to its functions under this Part;
(c)
with respect to any other matters about which it appears to the
40
Payment Systems Regulator to be desirable to give information or
advice.
(2)
Guidance given by the Payment Systems Regulator under this section must
include guidance about how it intends to advance its payment systems
objectives in discharging its functions under this Part in relation to different
45
categories of payment system or participants in payment systems.

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(3)
In this Part “general guidance” means guidance given by the Payment Systems
Regulator under this section which—
(a)
is given—
(i)
to persons generally,
(ii)
to participants in payment systems, or regulated payment
5
systems, generally, or
(iii)
to a class of participant in a payment system or regulated
payment system,
(b)
is intended to have continuing effect, and
(c)
is given in writing or other legible form.
10
(4)
The Payment Systems Regulator may give financial or other assistance to
persons giving information or advice of a kind which the Payment Systems
Regulator could give under this section.
(5)
The Payment Systems Regulator may—
(a)
publish its guidance,
15
(b)
offer copies of its published guidance for sale at a reasonable price, and
(c)
if it gives guidance in response to a request made by any person, make
a reasonable charge for that guidance.
Reports
82
Reports
20

If it considers that it is desirable to do so in order to advance any of its payment
systems objectives, the Payment Systems Regulator may prepare and publish
a report into any matter which it considers relevant to the exercise of its
functions under this Part.
Relationship with other regulators
25
83
Duty of regulators to ensure co-ordinated exercise of functions
(1)
The following are regulators for the purposes of this section—
(a)
the Payment Systems Regulator;
(b)
the Bank of England;
(c)
the FCA;
30
(d)
the PRA.
(2)
The regulators must co-ordinate the exercise of their relevant functions (see
subsection (5)) with a view to ensuring—
(a)
that each regulator consults every other regulator (where not otherwise
required to do so) in connection with any proposed exercise of a
35
relevant function in a way that may have a material adverse effect on
the advancement by that other regulator of any of its objectives;
(b)
that where appropriate each regulator obtains information and advice
from every other regulator in connection with the exercise of its
relevant functions in relation to matters of common regulatory interest
40
in cases where the other regulator may be expected to have relevant
information or relevant expertise.