Financial Services (Banking Reform) Bill

Page 4, line 37, leave out from “activity” to end of line 38

Page 7, line 22, leave out from beginning to end of line 42 on page 10 and insert—

“Group restructuring powers

142K          Group restructuring of ring-fenced bodies

(1)   A ring-fenced body may not be part of a group which—

(a)   carries on an excluded activity or purports to do so, or

(b)   contravenes any provision of an order under section 142E.

(2)   The appropriate regulator must exercise the group restructuring
powers if it is satisfied that a ring-fenced body is operating in
contravention of subsection (1).”

Page 17, line 15, at end insert—

“Full separation

142VA        General requirement of separation

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

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

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

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

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

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

(b)   sections 142K to 142V,

cease to have effect.

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

Page 17, line 15, at end insert—

“142VA        Review of operation of legislation relating to ring-fencing

(1)   The Treasury must, before the end of the initial period, appoint a
panel of at least 5 persons (the review panel) to carry out a review
of the operation of the legislation relating to ring-fencing.

(2)   The legislation relating to ring-fencing means—

(a)   Part 9B of FSMA 2000 (as inserted by section 4);

(b)   orders and regulations made by the Treasury under that
Part;

(c)   ring-fencing rules, as defined by section 142H(3) of FSMA
2000, made by the FCA or the PRA;

(d)   section 192JA of FSMA 2000 (as inserted by section 116);

(e)   rules made by the FCA or the PRA under that section.

(3)   The initial period is the period of 4 years beginning with the first
day on which section 142G of FSMA 2000 is fully in force.

(4)   The members of the review panel must be persons—

(a)   who appear to the Treasury to be independent of the PRA,
the FCA, the Bank of England and the Treasury, and

(b)   who do not appear to the Treasury to have any financial or
other interests that could reasonably be regarded as
affecting their suitability to serve as members of the review
panel.

(5)   In appointing the members of the review panel, the Treasury—

(a)   must have regard to the need to ensure that the review
panel (considered as a whole) has the necessary experience
to undertake the review,

(b)   must ensure that at least one of the members is a person
appearing to the Treasury to have substantial experience in
central banking or banking regulation at a senior level, and

(c)   must obtain the consent of the chairman of the Economic
Affairs Committee of the House of Lords and the chairman
of the Treasury Committee of the House of Commons.

(6)   The Treasury must appoint one of the members of the review panel
to be chair of the panel.

(7)   The review panel must, within a reasonable time after the end of the
initial period, make a written report to the Treasury—

(a)   setting out the results of the review,

(b)   making such recommendations (if any) as the panel
considers appropriate.

(8)   The report must in particular include—

(a)   an assessment of the extent to which the operation of the
legislation relating to ring-fencing is facilitating the
advancement by the PRA of the objective in section 2B(3)(c)
and by the FCA of the continuity objective, and

(b)   any recommendations which the panel considers
appropriate for the making of further changes in the law
with a view to better facilitating the advancement of those
objectives; provided that such recommendations are
consistent with the continued protection of core activities as
defined in section 142B of FSMA 2000.

(9)   The Treasury must—

(a)   lay a copy of the report before Parliament, and

(b)   publish the report in such manner as they think fit.

(10)   Any expenses reasonably incurred in the conduct of the review are
to be paid by the Treasury out of money provided by Parliament.”

Page 17, line 15, at end insert—

“142VA        Review of operation of legislation relating to ring-fencing

(1)   The Treasury must, before the end of the initial period, appoint a
panel of at least 5 persons (the review panel) to carry out a review
of the operation of the legislation relating to ring-fencing.

(2)   “The legislation relating to ring-fencing” means—

(a)   Part 9B of FSMA 2000 (as inserted by section 4);

(b)   orders and regulations made by the Treasury under that
Part;

(c)   ring-fencing rules, as defined by section 142H(3) of FSMA
2000, made by the FCA or the PRA;

(d)   section 192JA of FSMA 2000 (as inserted by section 116);

(e)   rules made by the FCA or the PRA under that section.

(3)   The initial period is the period of 4 years beginning with the first
day on which section 142G of FSMA 2000 is fully in force.

(4)   The members of the review panel must be persons—

(a)   who appear to the Treasury to be independent of the PRA,
the FCA, the Bank of England and the Treasury, and

(b)   who do not appear to the Treasury to have any financial or
other interests that could reasonably be regarded as
affecting their suitability to serve as members of the review
panel.

(5)   In appointing the members of the review panel, the Treasury—

(a)   must have regard to the need to ensure that the review
panel (considered as a whole) has the necessary experience
to undertake the review,

(b)   must ensure that at least one of the members is a person
appearing to the Treasury to have substantial experience in
central banking or banking regulation at a senior level, and

(c)   must obtain the consent of the chairman of the Economic
Affairs Committee of the House of Lords and the chairman
of the Treasury Committee of the House of Commons.

(6)   The Treasury must appoint one of the members of the review panel
to be the chair of the panel.

(7)   The review panel must, within a reasonable time after the end of the
initial period, make a written report to the Treasury—

(a)   setting out the results of the review,

(b)   making such recommendations (if any) as the panel
considers appropriate.

(8)   The report must in particular include an assessment of the extent to
which the operation of the legislation relating to ring-fencing is
facilitating the advancement by the PRA of the objective in section
2B(3)(c) and by the FCA of the continuity objective.

(9)   If the report is made before section 4 of the Financial Services
(Banking Reform) Act 2013, so far as it inserts section 142VB
(General requirement for full corporate separation of core activities)
into FSMA 2000, has come into force is must also include a
recommendation as to whether or not section 4 of that Act should
be brought into force to that extent.

(10)   The Treasury must—

(a)   lay a copy of the report before Parliament, and

(b)   publish the report in such manner as they think fit.

(11)   Any expenses reasonably incurred in the conduct of the review are
to be paid by the Treasury out of money provided by Parliament.”

Page 17, line 15, at end insert—

“Full corporate separation of core activities

142VB         General requirement for full corporate separation of core
activities

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

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

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

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

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

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

(b)   sections 142K to 142V,

cease to have effect.

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

Page 17, line 38, after “scheme” insert “all or”

Page 17, line 40, after “with” insert “all or”

Page 22, line 6, at end insert—

“(4)   Any reference to a qualifying parent undertaking is to be read in
accordance with section 142L(4).””

Leave out Clause 5

Insert the following new Clause—

“Independent review of operation of legislation relating to ring-fencing

(1)   The Treasury must, before the end of the initial period, appoint a panel of
at least 5 persons (“the review panel”) to carry out a review of the operation
of the legislation relating to ring-fencing.

(2)   “The legislation relating to ring-fencing” means—

(a)   Part 9B of FSMA 2000 (as inserted by section 4);

(b)   orders and regulations made by the Treasury under that Part;

(c)   ring-fencing rules, as defined by section 142H(3) of FSMA 2000,
made by the FCA or the PRA;

(d)   section 192JA of FSMA 2000 (as inserted by section 116);

(e)   rules made by the FCA or the PRA under that section.

(3)   The initial period is the period of 4 years beginning with the first day on
which section 142G of FSMA 2000 is fully in force.

(4)   The members of the review panel must be persons—

(a)   who appear to the Treasury to be independent of the PRA, the FCA,
the Bank of England and the Treasury, and

(b)   who do not appear to the Treasury to have any financial or other
interests that could reasonably be regarded as affecting their
suitability to serve as members of the review panel.

(5)   In appointing the members of the review panel, the Treasury—

(a)   must have regard to the need to ensure that the review panel
(considered as a whole) has the necessary experience to undertake
the review, and

(b)   must ensure that at least one of the members is a person appearing
to the Treasury to have substantial experience in central banking or
27banking regulation at a senior level.

(6)   Before appointing the members of the review panel, the Treasury must
consult the chairman of the Treasury Committee of the House of
Commons.

(7)   The reference in subsection (6) to the Treasury Committee of the House of
Commons—

(a)   if the name of that Committee is changed, is 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
40the Speaker of the House of Commons.

(8)   The Treasury must appoint one of the members of the review panel to be
the chair of the panel.

(9)   The review panel must, within a reasonable time after the end of the initial
period, make a written report to the Treasury—

(a)   setting out the results of the review, and

(b)   making such recommendations (if any) as the panel considers
appropriate.

(10)   The Treasury must—

(a)   lay a copy of the report before Parliament, and

(b)   publish the report in such manner as they think fit.

(11)   Any expenses reasonably incurred in the conduct of the review are to be
paid by the Treasury out of money provided by Parliament.”

Line 13, leave out “4” and insert “2”

Line 27, at end insert—

“(c)   must obtain the consent of the chairman of the Economic Affairs
Committee of the House of Lords and the chairman of the Treasury
Committee of the House of Commons.”

Line 40, at end insert—

“(7A)    The report must in particular include—

(a)   an assessment of the extent to which the operation of the legislation
relating to ring-fencing is facilitating the advancement by the PRA
of the objective in section 2B(3)(c) and by the FCA of the continuity
objective, and

(b)   any recommendations which the panel considers appropriate for
the making of further changes in the law with a view to better
facilitating the advancement of those objectives; provided that such
recommendations are consistent with the continued protection of
core activities as defined in section 142B of FSMA 2000.”

Line 40, at end insert—

“(7A)    The report must in particular include an assessment of the extent to which
the operation of the legislation relating to ring-fencing is facilitating the
advancement by the PRA of the objective in section 2B(3)(c) and by the FCA
of the continuity objective.

(7B)   If the report is made before section 4 of the Financial Services (Banking
Reform) Act 2013, so far as it inserts section 142VA (general requirement
for full corporate separation of core activities) into FSMA 2000, has come
into force it must also include a recommendation as to whether or not
section 4 of that Act should be brought into force to that extent.”

Insert the following new Clause—

“Right to obtain documents and information

(1)   A review panel appointed under section (Independent review of operation of
legislation relating to ring-fencing)—

(a)   has a right of access at any reasonable time to all such documents as
the panel may reasonably require for the purposes of the review,
and

(b)   may require any person holding or accountable for any such
document to provide such information and explanation are
reasonably necessary for that purpose.

(2)   An obligation imposed on a person as a result of the exercise of the powers
conferred by subsection (1) is enforceable by injunction or, in Scotland, by
an order for specific performance under section 45 of the Court of Session
Act 1988.”

Page 102, line 31, at end insert—

“(1A)    “Special bail-in provision”, in relation to a bank, also includes
any associated provision (see subsection (1B)) that the Bank of
England may think it appropriate to make in consequence of any
provision under subsection (1) that—

(a)   is made in the same resolution instrument, or

(b)   has been made in another resolution instrument in
respect of the bank.

(1B)   “Associated provision” means provision cancelling or modifying
a contract under which a banking group company has a liability.”

Page 105, line 9, leave out “was a result of” and insert “resulted from”

Page 107, line 14, leave out “bail-in administrator” and insert “person required to
draw up the business reorganisation plan”

Page 124, line 26, at end insert—

“(6)   A direction under this section may specify circumstances in
which the person given the direction is immune from liability in
damages.

(7)   Immunity by virtue of subsection (6) does not extend to action—

(a)   in bad faith, or

(b)   in contravention of section 6(1) of the Human Rights Act
1998.

(8)   Where a direction under this section is given to a director of the
institution, the director 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 institution) by virtue of any action in
compliance with the direction.””

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.””

Page 27, line 20, leave out “bank” and insert “relevant authorised person”

Page 27, line 22, leave out “bank” and insert “relevant authorised person”

Page 27, line 28, leave out “bank” and insert “relevant authorised person”

Page 27, line 29, at end insert—

“(6D)    For the meaning of “relevant authorised person”, see section 71A.””

Page 28, leave out lines 4 to 7 and insert—

“(b)   those aspects involve, or might involve, a risk of—

(i)   serious consequences for the authorised person,

(ii)   serious consequences for business or other interests
in the United Kingdom, or

(iii)   conduct or omissions by or on behalf of an
authorised person otherwise than in accordance
with the requirements of a relevant financial scheme
giving rise to criminal liability.”

Page 28, line 11, at end insert “but excludes the provision of legal advice in taking
decisions or participating in the taking of decisions”

Page 28, line 11, at end insert—

“(4)   In subsection (2)(b)(iii), the reference to “a relevant financial scheme
giving rise to criminal liability” includes—

(a)   any legislative or regulatory provision or provisions by
which criminal liability can be imposed for the purpose of
advancing or enforcing the strategic objective (see section
1B(2)) or one or more of the operational objectives (see
sections 1C, 1D and 1E); and

(b)   includes but is not limited to the provisions of—

(i)   the Financial Services and Markets Act 2000;

(ii)   the Terrorism Act 2000, as amended by the Anti-
Terrorism, Crime and Security Act 2001 and the
Terrorism Act 2006;

(iii)   the Proceeds of Crime Act 2002, as amended by the
Serious Organised Crime and Police Act 2005;

(iv)   the Fraud Act 2006;

(v)   the Money Laundering Regulations 2007;

(vi)   the Transfer of Funds (Information on the Payer)
Regulations 2007;

(vii)   the Bribery Act 2010; and

(viii)   statutes, regulations, rules and guidance in respect
of conduct or omissions as will be specified in rules
made by the FCA or the PRA.

(5)   Subsection (2)(b)(iii) applies in respect of such minimum sums as
the FCA or the PRA will specify in rules.”

Page 28, line 18, leave out “bank” and insert “relevant authorised person (see
section 71A)”

Page 28, line 22, at end insert—

“(2B)    If the application provided under subsection (2A) is for the
approval of a person to perform a designated senior management
function under section 59ZA(2)(b)(iii), “a person” under subsection
(2A)(a) must include all persons responsible for compliance with a
relevant financial scheme giving rise to criminal liability referred to
in section 59ZA(4) and all persons responsible for management of
persons responsible for compliance with a relevant financial
scheme giving rise to criminal liability as referred to in section
59ZA(4).”

Page 28, line 29, leave out “bank” and insert “relevant authorised person”

Page 28, line 42, leave out “bank” and insert “relevant authorised person”

Page 28, line 42, leave out ““bank-related” and insert ““relevant”

Page 29, line 7, leave out “bank-related” and insert “relevant”

Page 29, line 24, leave out “bank-related” and insert “relevant”

Page 29, line 33, leave out “bank” and insert “relevant authorised person”

Page 29, line 34, leave out “bank” and insert “relevant authorised person”

Page 29, line 35, at end insert—

“(7)   For the meaning of “relevant authorised person”, see section 71A.””

Page 30, line 29, leave out “bank” and insert “relevant authorised person”

Page 31, line 24, leave out “bank” and insert “relevant authorised person”

Page 31, line 29, leave out “bank” and insert “relevant authorised person”

Page 31, line 32, leave out “bank” and insert “relevant authorised person”

Page 31, line 45, at end insert—

“(6)   For the meaning of “relevant authorised person”, see section 71A.”

Page 35, line 10, leave out “banks” and insert “relevant authorised persons (see
section 71A)”

Page 35, line 10, at end insert—

“(2)   The FCA must make rules about the conduct of all persons
responsible for compliance with a relevant financial scheme giving
rise to criminal liability referred to in section 59ZA(4) and all
persons responsible for management of persons responsible for
compliance with a relevant financial scheme giving rise to criminal
liability as referred to in section 59ZA(4) in respect of such
minimum sums as will be specified in rules made by the FCA on
behalf of an authorised person.”

Page 35, line 20, leave out “PRA-authorised banks” and insert “relevant PRA-
authorised persons”

Page 35, line 20, at end insert—

“( )   The PRA must make rules about the conduct of all persons
responsible for compliance with a relevant financial scheme giving
rise to criminal liability referred to in section 59ZA(4) and all
persons responsible for management of persons responsible for
compliance with a relevant financial scheme giving rise to criminal
liability as referred to in section 59ZA(4) in respect of such
minimum sums as will be specified in rules made by the PRA on
behalf of an authorised person.”

Page 35, line 22, leave out from beginning to “and” in line 23 and insert ““relevant
PRA-authorised person” means a PRA-authorised person that is a relevant
authorised person (see section 71A),”

Page 35, line 43, at end insert—

“(7)   The rules of conduct made by the FCA or the PRA under section
64A may not require any person who is a professional legal
adviser—

(a)   to answer any privileged question,

(b)   to provide any privileged information, or

(c)   to produce any privileged document.

(8)   A “privileged question” is a question which the person would be
entitled to refuse to answer on grounds of legal professional
privilege in proceedings in the High Court.

(9)   “Privileged information” is information which the person would be
entitled to refuse to provide on grounds of legal professional
privilege in such proceedings.

(10)   A “privileged document” is a document which the person would be
entitled to refuse to produce on grounds of legal professional
privilege in such proceedings.

(11)   A person may not be required under section 64A to produce any
excluded material (as defined by section 11 of the Police and
Criminal Evidence Act 1984).

(12)   In the application of this section to Scotland—

(a)   subsections (7) to (11) do not have effect, but

(b)   a person who is a professional legal adviser may not be
required, under the rules of conduct made by the FCA or
PRA under section 64A, to answer any question, provide
any information or produce any document which he would
be entitled, on grounds of legal privilege, to refuse to
answer or (as the case may be) provide or produce.

(13)   In this section, “legal professional privilege” means protection in
legal proceedings from disclosure, by virtue of any rule of law
relating to the confidentiality of communications; and “items
subject to legal professional privilege” are—

(a)   communications between a person and his professional
legal adviser, or

(b)   communications made in connection with or in
contemplation of legal proceedings and for the purposes of
those proceedings.

(14)   In this section, “professional legal adviser” means a barrister,
advocate or solicitor.”

Page 35, line 43, at end insert—

“(7)   This section applies only in relation to employees whose actions or
behaviour could seriously harm their employer, its reputation or its
customers.”

Page 35, line 43, at end insert—

“64B          Standards for employees of relevant authorised persons

(1)   A relevant authorised person has a duty to ensure that all relevant
employees comply with rules of conduct made by the FCA under
section 64A in accordance with this section.

(2)   The duty imposed by subsection (1) is to be known as the Licensing
Regime for the Banking Industry.

(3)   Compliance with the rules of conduct must be a condition of
employment for relevant employees.

(4)   In this section “relevant employees” means employees whose
actions or behaviour could seriously harm the relevant authorised
person, its reputation or its customers; and subsection (6) of section
64A applies for the purposes of this section as for those of that
section.

(5)   The relevant authorised person must ensure that relevant
employees receive regular training in the effect and application of
the rules of conduct.

(6)   The relevant authorised person must ensure that relevant
employees make a record of matters relating to the operation of the
rules of conduct in relation to their roles and ensure that, when they
cease to carry out their roles, the record is made available to their
successors.

(7)   The relevant authorised person must have an effective system for
enforcing breaches of the rules of conduct (which may include
removing an entitlement to remuneration, sums in respect of loss of
office or change of control, or pension benefits, not yet paid or in
payment).

(8)   The relevant authorised person must keep records of breaches of
the rules of conduct.

(9)   The relevant authorised person must notify the FCA of breaches of
the rules of conduct.

(10)   The relevant authorised person must designate a senior manager as
personally responsible for monitoring compliance with the rules of
conduct.

(11)   The FCA may exchange information relating to relevant employees
of relevant authorised persons with bodies exercising functions
similar to those of the FCA in a country or territory outside the
United Kingdom.”

Page 36, line 19, leave out “bank” and insert “relevant authorised person”

Page 36, line 27, leave out from “of” to end of line 28 and insert “a relevant
authorised person, an employee of the authorised person.”

Page 36, leave out line 36 and insert “a relevant authorised person,”

Page 36, line 38, leave out “bank” and insert “authorised person”

Page 36, line 40, leave out “bank’s” and insert “authorised person’s”

Page 37, line 2, leave out “an authorised person that is a bank” and insert “a
relevant authorised person”

Page 37, line 5, leave out “bank” and insert “authorised person”

Page 37, line 17, at end insert—

“(9)   For the meaning of “relevant authorised person”, see section 71A.”

Page 37, line 17, at end insert—

“(9)   This section applies only in relation to employees whose actions or
behaviour could seriously harm their employer, its reputation or its
customers.”

Page 37, line 27, leave out “PRA-authorised bank” and insert “relevant PRA-
authorised person”

Page 37, line 37, leave out from “of” to end of line 38 and insert “a relevant
authorised person, an employee of the authorised person.”

Page 37, line 46, leave out “PRA-authorised bank” and insert “relevant PRA-
authorised person”

Page 38, line 2, leave out “bank” and insert “authorised person”

Page 38, line 4, leave out “bank’s” and insert “authorised person’s”

Page 38, line 11, leave out “an authorised person that is a bank” and insert “a
relevant authorised person”

Page 38, line 14, leave out “bank” and insert “authorised person”

Page 38, leave out lines 33 and 34 and insert—

““relevant PRA-authorised person” means a PRA-authorised
person that is a relevant authorised person;”

Page 38, line 38, at end insert—

“(9)   For the meaning of “relevant authorised person”, see section 71A.””

Insert the following new Clause—

“Independent review

After section 66B of FSMA 2000 (inserted by section 23 above) insert—

“66C          Independent review

(1)   The Treasury shall commission an independent report in relation to
the effectiveness of—

(a)   any rules implemented under section 64A; and

(b)   any action taken by the FCA or PRA by virtue of section 66.

(2)   The Treasury shall ensure that the report prepared under
subsection (1) shall—

(a)   include such recommendations as considered appropriate
for legislative and other action;

(b)   be laid before Parliament by the end of 2018; and

(c)   be published in such manner as it sees fit.””

Page 38, line 42, leave out “Bank” and insert “Relevant authorised person”

Page 38, line 43, leave out “bank” and insert “relevant authorised person”

Page 38, line 44, leave out from “Part” to end of line 46 and insert ““relevant
authorised person” means a UK institution which—

(a)   meets condition A or B, and

(b)   is not an insurer.

(2)   Condition A is that the institution has permission under Part 4A to carry on
the regulated activity of accepting deposits.

“(2A)    Condition B is that—

(a)   the institution is an investment firm,

(b)   it has permission under Part 4A to carry on the regulated activity of
dealing in investments as principal, and

(c)   when carried on by it, that activity is a PRA-regulated activity.”

Page 39, line 7, leave out “(1)” and insert “(2), (2A)”

Page 39, line 7, leave out “section 22, taken with Schedule 2 and” and insert
“Schedule 2, taken with”

Page 39, line 14, leave out “relevant authorised person is a bank” and insert
“authorised person concerned is a relevant authorised person”

Page 39, line 19, leave out “an authorised person that is a bank” and insert “a
relevant authorised person”

Page 39, line 28, leave out “an authorised person that is a bank” and insert “a
relevant authorised person”

Page 39, line 31, leave out “bank” and insert “authorised person”

Page 39, line 32, leave out “bank” and insert “relevant authorised person”

Page 39, line 35, at end insert—

“( )   For subsection (9) substitute—

“(9)   “The authorised person concerned”, in relation to an approved
person, means the person on whose application approval was
given.””

Page 131, line 18, leave out from “etc.),” to end of line 21 and insert “in subsection
(2)(g), in sub-paragraphs (ii) and (iii), for “relevant authorised person” substitute
“authorised person concerned”.”

Page 39, line 42, leave out “bank (“B”)” and insert “financial institution (“F”)”

Page 40, line 1, leave out sub-paragraph (i) and insert—

“(i)   takes or agrees to the taking of any decision or the carrying
on of any activity by or on behalf of B as to the business of a
group bank, or”

Page 40, line 1, after “decision” insert “or decisions”

Page 40, line 1, leave out “B” and insert “F”

Page 40, line 2, leave out “bank” and insert “institution”

Page 40, line 4, leave out “such a decision being taken” and insert “the taking of
such a decision or the carrying on of such an activity”

Page 40, line 4, at end insert “or decisions”

Page 40, line 6, after “decision” insert “or decisions”

Page 40, line 6, after second “of” insert “such a decision or such an activity,”

Page 40, line 7, after “decision” insert “or decisions”

Page 40, line 7, after “decision” insert “or the activity”

Page 40, line 7, after “cause” insert “or contribute directly and significantly to”

Page 40, line 7, after “cause” insert “or contribute significantly to”

Page 40, line 7, leave out “bank” and insert “institution”

Page 40, line 8, leave out from “of” to “and” in line 10 and insert “such a decision
or such an activity is unreasonable”

Page 40, line 9, after “decision” insert “or decisions”

Page 40, line 11, leave out “the decision” and insert “such a decision or such an
activity”

Page 40, line 11, leave out “decision causes” and insert “decision or decisions cause
or contribute directly and significantly to”

Page 40, line 11, after “decision” insert “or decisions”

Page 40, line 11, after “causes” insert “or contributes significantly to”

Page 40, line 11, leave out “bank” and insert “institution”

Page 40, line 12, leave out from beginning to “group” in line 13 and insert “A
“group institution”, in relation to a financial institution (“F”), means F or any other
financial institution that is a member of F’s”

Page 40, line 14, at end insert—

“(2A)    In subsection (1)—

(a)   “decision” refers to any decision or decisions; and

(b)   “activity” refers to any activity or activities.”

Page 40, line 32, leave out subsections (2) and (3) and insert—

“(2)   “Financial institution” means a UK institution which—

(a)   meets condition A or B, and

(b)   is not an insurer or a credit union.

(2A)   Condition A is that it has permission under Part 4A of FSMA 2000 to carry
on the regulated activity of accepting deposits.

(2B)   Condition B is that—

(a)   it is for the purposes of FSMA 2000 an investment firm (see section
424A of that Act),

(b)   it has permission under Part 4A of that Act to carry on the regulated
activity of dealing in investments as principal, and

(c)   when carried on by it, that activity is a PRA-regulated activity.”

Page 40, line 37, leave out “subsections (2) and (3)” and insert “subsection (2)”

Page 41, line 1, leave out subsection (5) and insert—

“(5)   Subsections (2A), (2B) and (4)(b) are to be read in accordance with sections
22 and 22A of FSMA 2000, taken with Schedule 2 to that Act and any order
under section 22.”

Page 41, line 3, leave out “bank” and insert “financial institution”

Page 41, line 4, leave out from “into” to “in” and insert “by the institution, or by a
contractor of the institution,”

Page 41, line 5, leave out “bank” and insert “institution”

Page 41, line 5, leave out from “performs” to end of line 6 and insert “a senior
management function.

(6A)   A “senior management function” is a function designated as such—”

Page 41, line 10, leave out “bank (“B”)” and insert “financial institution (“F”)”

Page 41, line 11, leave out “B” and insert “F”

Page 41, line 13, leave out “B” and insert “F”

Page 41, line 14, leave out “B” and insert “F”

Page 41, line 15, leave out “B” and insert “F”

Page 41, line 15, at end insert—

“(d)   B has failed seriously or systematically to comply with the
requirements of a relevant financial scheme giving rise to criminal
liability as referred to in section 59ZA(4)”

Page 41, line 23, leave out “B and B’s” and insert “F and F’s”

Page 41, line 24, leave out “B’s” and insert “F’s”

Insert the following new Clause—

“PART 4A

REGULATION OF HIGH COST CREDIT

Regulation of high-cost credit agreements

(1)   The FCA shall, within 6 months of the passing of this Act, include among
the regulations governing high-cost, short-term credit agreements
provisions to—

(a)   restrict such loans to one outstanding loan per customer at any
given time;

(b)   provide for a 24-hour cooling off period between loans in which no
new loan may be entered into less than 24 hours after the settlement
in full of a previous loan;

(c)   establish at the lender’s cost a real time database of loans
outstanding to be used in the enforcement of paragraphs (a) and (b);

(d)   restrict the amount of any loan to a maximum face value of £300,
exclusive of permissible fees;

(e)   restrict any transaction fees and charges of any kind to a maximum
of 10% of the face value of the loan plus a £3 verification fee;

(f)   restrict the term of any loan to between 7 and 31 days;

(g)   allow the borrower to extend the loan term for an additional 60
days beyond the due date without any additional charges of any
kind;

(h)   require borrowers who avail themselves of the extension in
paragraph (g) to undergo credit counselling with a designated
professional counsellor or organisation and to abide by the plan
established to retire the debt.

(2)   For the purposes of this section—

“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—

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

(b)   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;

“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;

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

Page 42, line 9, leave out “38” and insert “(Publication)”

Page 42, line 18, after “to” insert “(Disclosure of information by Bank to Regulator)
contain information and investigation powers and provision about the disclosure
of information.

( )   Sections 81 and”

Page 134, line 1, after “imposing” insert “generally-imposed”

Page 134, line 1, leave out from “45” to end of line 2

Page 135, line 32, at beginning insert—

“(A1)   For the purposes mentioned in sub-paragraph (A2) 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.

(A2)   The purposes are—

(a)   meeting the relevant costs (see sub-paragraph (1)), and

(b)   enabling the Regulator to maintain adequate reserves.”

Page 136, line 1, leave out sub-paragraph (2)

Page 136, line 4, leave out “(2)” and insert “(A1)”

Page 136, line 16, at end insert—

“( )   But the requirements to carry out a cost benefit analysis under section
138I of FSMA 2000 do not apply in relation to rules made under this
paragraph.”

Page 136, line 19, leave out from “Treasury” to end of line 20 and insert “its penalty
receipts after deducting its enforcement costs.

(1A)   The Regulator’s “penalty receipts” in respect of a financial year are any
amounts received by it during the year by way of penalties imposed
under section 63.

(1B)   The Regulator’s “enforcement costs” in respect of a financial year are the
expenses incurred by it during the year in connection with—

(a)   the exercise, or consideration of the possible exercise, of any of its
enforcement powers in particular cases, or

(b)   the recovery of penalties imposed under section 63.

(1C)   For the purposes of sub-paragraph (1B) the Regulator’s enforcement
powers are—

(a)   its powers under sections 62 to 65;

(b)   its powers under any other enactment specified by the Treasury
by order;

(c)   its powers in relation to the investigation of relevant offences;

(d)   its powers in England and Wales or Northern Ireland in relation
to the prosecution of relevant offences.

(1D)   In sub-paragraph (1C) “relevant offences” means—

(a)   offences under this Part;

(b)   any other offences specified by the Treasury by order.”

Page 136, line 24, leave out paragraphs (a) and (b) and insert—

“(a)   specify descriptions of expenditure that are, or are not, to be
regarded as incurred in connection with either of the matters
mentioned in sub-paragraph (1B),

(b)   relate to the calculation and timing of the deduction in respect of
the Regulator’s enforcement costs, and

(c)   specify the time when any payment is required to be made to the
Treasury.

( )   The directions may also require the Regulator to provide the Treasury at
specified times with specified information relating to—

(a)   penalties that the Regulator has imposed under section 63, or

(b)   the Regulator’s enforcement costs.”

Page 136, line 30, at end insert—

“10A   (1)  The Regulator must prepare and operate a scheme (“the financial
penalty scheme”) for ensuring that the amounts that, as a result of the
deduction for which paragraph 10(1) provides, are retained by the
Regulator in respect of amounts paid to it by way of penalties imposed
under section 63 are applied for the benefit of participants in regulated
payment systems.

(2)   The financial penalty scheme may, in particular, make different
provision with respect to different classes of participant.

(3)   The financial penalty scheme must ensure that those who have become
liable to pay a penalty to the Regulator in any financial year do not
receive any benefit under the scheme in the following financial year.

(4)   Up-to-date details of the financial penalty scheme must be set out in a
document (the “scheme details”).

10B   (1)  The scheme details must be published by the Regulator in the way
appearing to it to be best calculated to bring them to the attention of the
public.

(2)   Before making the financial penalty scheme, the Regulator must publish
a draft of the proposed scheme in the way appearing to the Regulator to
be best calculated to bring it to the attention of the public.

(3)   The draft must be accompanied by notice that representations about the
proposals may be made to the Regulator within a specified time.

(4)   Before making the scheme, the Regulator must have regard to any
representations made to it in accordance with sub-paragraph (3).

(5)   If the Regulator makes the proposed scheme, it must publish an account,
in general terms, of—

(a)   the representations made to it in accordance with sub-paragraph
(3), and

(b)   its response to them.

(6)   If the scheme differs from the draft published under sub-paragraph (2)
in a way which is, in the opinion of the Regulator, significant, the
Regulator must (in addition to complying with sub-paragraph (5))
publish details of the difference.

(7)   The Regulator must, without delay, give the Treasury a copy of any
scheme details published by it.

(8)   The Regulator may charge a reasonable fee for providing a person with
a copy of—

(a)   a draft published under sub-paragraph (2);

(b)   scheme details.

(9)   Sub-paragraphs (2) to (6) and (8)(a) also apply to a proposal to alter or
replace the financial penalty scheme.”

Page 137, line 17, at end insert—

“Freedom of information

13 In Part 6 of Schedule 1 to the Freedom of Information Act 2000 (public
authorities to which Act applies), at the appropriate place insert—

“The Payment Systems Regulator established under section 31 of the Financial Services (Banking Reform) Act 2013.”

Equality

14 In Part 1 of Schedule 19 to the Equality Act 2010 (public authorities:
general), under the heading “Industry, business, finance etc.”, at the
appropriate place insert—

“The Payment Systems Regulator established under section 31 of the Financial Services (Banking Reform) Act 2013.””

Insert the following new Clause—

“Publication

(1)   The Treasury must publish any designation order.

(2)   If the Treasury amends a designation order, the Treasury must publish the
amended order.

(3)   The Treasury must publish any revocation of a designation order.”

Page 48, line 15, leave out paragraph (b) and insert—

“(b)   in relation to—

(i)   all operators, or every operator of a regulated payment
system of a specified description,

(ii)   all infrastructure providers, or every person who is an
infrastructure provider in relation to a regulated payment
system of a specified description, or

(iii)   all payment service providers, or every person who is a
payment service provider in relation to a regulated payment
system of a specified description,”

Page 48, line 20, after “(3)(a)” insert “or (b)”

Page 48, line 32, at end insert—

“(3)   A requirement under this section that is imposed on—

(a)   all operators of regulated payment systems, or

(b)   every operator of a regulated payment system of a specified
description,

is referred to in this Part as a “generally-imposed requirement”.”

Page 49, line 2, at end insert—

“(3A)    Before an order is made under subsection (3), the Payment Systems
Regulator must consider any representations made by the payment service
provider about the risks to which the payment service provider may be
exposed as a result of the order.

(3B)   The Payment Systems Regulator may revoke an order made under
subsection (3) if it is satisfied that compliance with the order would expose
the payment service provider to risks which it is not reasonable for the
payment service provider to bear.”

Page 50, line 14, leave out “(“the concurrent functions”)”

Page 51, line 11, leave out “has the same meaning as in section 49” and insert
“means the functions which by virtue of section 49 are concurrent functions of the
Payment Systems Regulator and the CMA.”

Page 51, line 19, leave out “has the same meaning as in section 49” and insert
“means the functions which by virtue of section 49 are concurrent functions of the
Payment Systems Regulator and the CMA”

Page 52, line 16, leave out “requirment on all operators of regulated payment
systems)” and insert “generally-imposed requirement);”

Page 57, leave out line 22 and insert “generally-imposed requirement),”

Page 145, line 35, at end insert—

““appellant” has the meaning given by paragraph 3(4);”

Page 60, line 38, leave out subsections (4) to (9)

Page 61, line 23, leave out “(“the relevant participant”)”

Page 61, line 24, after “to” insert “the person’s participation in”

Page 61, line 27, at end insert—

“The person whose participation in the payment system is to be the subject of the report is referred to in this section as “the relevant participant”.”

Insert the following new Clause—

“Restrictions on disclosure of confidential information

(1)   Confidential information must not be disclosed by a primary recipient, or
by any person obtaining the information directly or indirectly from a
primary recipient, without the consent of—

(a)   the person from whom the primary recipient obtained the
information, and

(b)   if different, the person to whom it relates.

(2)   In this section “confidential information” means information which—

(a)   relates to the business or other affairs of any person,

(b)   was received by the primary recipient for the purposes of, or in the
discharge of, any functions of the Payment Systems Regulator
under this Part, and

(c)   is not prevented from being confidential information by subsection
(4).

(3)   It is immaterial for the purposes of subsection (2) whether or not the
information was received—

(a)   as a result of a requirement to provide it imposed by or under any
enactment;

(b)   for other purposes as well as purposes mentioned in that
subsection.

(4)   Information is not confidential information if—

(a)   it has been made available to the public by virtue of being disclosed
in any circumstances in which, or for any purposes for which,
disclosure is not precluded by this section, or

(b)   it is in the form of a summary or a collection of information that is
framed in such a way that it is not possible to ascertain from it
information relating to any particular person.

(5)   Each of the following is a primary recipient for the purposes of this
section—

(a)   the Payment Systems Regulator;

(b)   the FCA;

(c)   a person who is or has been employed by the Payment Systems
Regulator or the FCA;

(d)   a person who is or has been engaged to provide services to the
Payment Systems Regulator or the FCA;

(e)   any auditor or expert instructed by the Payment Systems Regulator
or the FCA;

(f)   a person appointed to make a report under section 72;

(g)   a person appointed under section 73.

(6)   Nothing in this section applies to information received by a primary
recipient for the purposes of, or in the discharge of, any functions of the
Payment Systems Regulator under the Competition Act 1998 or the
Enterprise Act 2002 by virtue of section 49 or 51.

(For provision about the disclosure of such information, see Part 9 of the
Enterprise Act 2002.)”

Insert the following new Clause—

“Exemptions from section ( Restrictions on disclosure of confidential
information )

(1)   Section (Restrictions on disclosure of confidential information) does not prevent
a disclosure of confidential information which—

(a)   is made for the purpose of facilitating the carrying out of a public
function, and

(b)   is permitted by regulations made by the Treasury under this
section.

(2)   For the purposes of this section “public functions” includes—

(a)   functions conferred by or in accordance with any provision
contained in any enactment;

(b)   functions conferred by or in accordance with any provision
contained in the EU Treaties or any EU instrument;

(c)   similar functions conferred on persons by or under provisions
having effect as part of the law of a country or territory outside the
United Kingdom;

(d)   functions exercisable in relation to specified disciplinary
proceedings.

(3)   Regulations under this section may, in particular, make provision
permitting the disclosure of confidential information or of confidential
information of a specified kind—

(a)   by specified recipients, or recipients of a specified description, to
any person for the purpose of enabling or assisting the recipient to
discharge specified public functions;

(b)   by specified recipients, or recipients of a specified description, to
specified persons, or persons of specified descriptions, for the
purpose of enabling or assisting those persons to discharge
specified public functions;

(c)   by the Payment Systems Regulator to the Treasury for any purpose;

(d)   by any recipient if the disclosure is with a view to or in connection
with specified proceedings.

(4)   Regulations under this section may also include provision—


In relation to confidential information, each of the following is a
“recipient”—

(a)   making any permission to disclose confidential information subject
to conditions (which may relate to the obtaining of consents or any
other matter);

(b)   restricting the uses to which confidential information disclosed
under the regulations may be put.

(a)   a primary recipient;

(b)   a person obtaining the information directly or indirectly from a
primary recipient.

(6)   In this section—

“confidential information” and “primary recipient” have the same
meaning as in section (Restrictions on disclosure of confidential
information);

“specified” means specified in regulations.”

Insert the following new Clause—

“Offences relating to disclosure of confidential information

(1)   A person who discloses information in contravention of section
(Restrictions on disclosure of confidential information) is guilty of an offence.

(2)   A person guilty of an offence under subsection (1) is liable—

(a)   on summary conviction—

(i)   in England and Wales, to imprisonment for a term not
exceeding 3 months 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 3 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.

(3)   A person is guilty of an offence if—

(a)   information has been disclosed to the person in accordance with
regulations made under section (Exemptions from section
(Restrictions on disclosure of confidential information)), and

(b)   the person uses the information in contravention of any provision
of those regulations.

(4)   A person guilty of an offence under subsection (3) is 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 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.

(5)   In proceedings against a person (“P”) for an offence under this section it is
a defence for P to prove—

(a)   that P did not know and had no reason to suspect that the
information was confidential information;

(b)   that P took all reasonable precautions and exercised all due
diligence to avoid committing the offence.

(6)   In this section “confidential information” has the same meaning as in
section (Restrictions on disclosure of confidential information).”

Insert the following new Clause—

“Information received from Bank of England

(1)   The following are regulators for the purposes of this section—

(a)   the Payment Systems Regulator;

(b)   the FCA.

(2)   A regulator must not disclose to any person specially protected
information.

(3)   “Specially protected information” is information in relation to which the
first and second conditions are met.

(4)   The first condition is that the regulator received the information from—

(a)   the Bank of England (“the Bank”), or

(b)   the other regulator where that regulator had received the
information from the Bank.

(5)   The second condition is that the Bank notified the regulator to which it
disclosed the information that the Bank held the information for the
purpose of its functions with respect to any of the following—

(a)   monetary policy;

(b)   financial operations intended to support financial institutions for
the purposes of maintaining stability;

(c)   the provision of private banking services and related services.

(6)   The notification referred to in subsection (5) must be—

(a)   in writing, and

(b)   given before, or at the same time as, the Bank discloses the
information.

(7)   The prohibition in subsection (2) does not apply—

(a)   to disclosure by one regulator to the other regulator where the
regulator making the disclosure informs the other regulator that the
information is specially protected information by virtue of this
section;

(b)   where the Bank has consented to disclosure of the information;

(c)   to information which has been made available to the public by
virtue of being disclosed in any circumstances in which, or for any
purposes for which, disclosure is not precluded by this section;

(d)   to information which the regulator is required to disclose in
pursuance of any EU obligation.

(8)   In this section references to disclosure by or to a regulator or by the Bank
include references to disclosure by or to any of the following—

(a)   persons who are, or are acting as, officers of, or members of the staff
of, the regulator;

(b)   persons who are, or are acting as, officers, employees or agents of
the Bank;

(c)   auditors, experts, contractors or investigators appointed by the
regulator or the Bank under powers conferred by this Part or
otherwise.

(9)   References to disclosure by a regulator do not include references to
disclosure between persons who fall within subsection (8)(a) or (b) in
relation to that regulator.

(10)   Each regulator must take such steps as are reasonable in the circumstances
to prevent the disclosure of specially protected information, in cases not
excluded by subsection (7), by those who are or have been—

(a)   its officers or members of staff (including persons acting as its
officers or members of staff);

(b)   auditors, experts, contractors or investigators appointed by the
regulator under powers conferred by this Part or otherwise;

(c)   persons to whom the regulator has delegated any of its functions.”

Insert the following new Clause—

“Disclosure of information by Bank to Regulator

(none)   In section 246 of the Banking Act 2009 (information), in subsection (2), after
paragraph (c) insert—

“(ca)   the Payment Systems Regulator (established under section 31 of the Financial Services (Banking Reform) Act 2013);”.”

Page 72, line 33, after “system,” insert—

“( )   threaten the continuity of core services provided in the United
Kingdom,”

Page 73, line 7, after “section” insert “—

“core services” has the same meaning as in FSMA 2000 (see section
142C of that Act), and”

Page 73, line 35, after “direction” insert “under section 44”

Page 73, line 36, after “a” insert “generally-imposed”

Page 73, line 36, leave out from “45” to end of line 37

Page 77, line 8, leave out “requirements imposed” and insert “generally-imposed
requirements”

Page 77, line 8, leave out from “45” to end of line 9

Page 77, line 35, at end insert—

““CAT-appealable decision” has the meaning given by section 66(4);

“CMA-appealable decision” has the meaning given by section 66(7);”

Page 78, line 4, at end insert—

““generally-imposed requirement” has the meaning given by section 45(3);”

Page 83, line 30, at end insert—

“(f)   staff.”

Insert the following new Clause—

“Review of the effects of the exemption of certain business and financial
contracts from the Gaming Acts

(1)   The Treasury must institute a review of the effects of certain business and
financial gaming contracts having been made enforceable at law by the
repeal of certain provisions of the Gaming Acts pursuant to the Financial
Services Act 1986 (as amended).

(2)   “Effects” shall include the national social, cultural and ethical effects as well
as the commercial and economic effects.

(3)   The Treasury shall appoint one or more persons to undertake the review
after consultation with the Bank of England, the PRA and the FCA and
such others as it shall decide on such terms as it thinks fit.

(4)   The review shall culminate in a report to the Treasury within two and a half
years of the coming into force of this Act.

(5)   The Treasury must lay the report before Parliament and thereafter publish
the same.”

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.”

Page 157, leave out lines 11 to 14

Page 157, line 26, leave out “financial sector activities” and insert “the provision of
financial services”

Page 158, line 7, leave out from beginning to “and” in line 8 and insert “the
acquisition or provision in the United Kingdom of financial services,”

Page 158, line 23, leave out “financial sector activities” and insert “the provision of
financial services”

Page 160, line 24, at end insert—

“ In section 348 of FSMA 2000 (restrictions on disclosure of confidential
information by FCA, PRA etc), after subsection (6) insert—

“(7)   Nothing in this section applies to information received by a
primary recipient for the purposes of, or in the discharge of, any
functions of the FCA under the Competition Act 1998 or the
Enterprise Act 2002 by virtue of Part 16A of this Act.

(For provision about the disclosure of such information, see Part
9 of the Enterprise Act 2002.)””

Page 160, line 42, at end insert “; but this subsection is not to be regarded as limiting
the effect of the definition of “functions” in paragraph 1.””

Insert the following new Clause—

“Arrangements for consulting practitioners and consumers

After section 2L of FSMA 2000 (the PRA’s general duty to consult) insert—

“2LA PRA duty to consider representations from the FCA Consumer
Panel

(1)   The PRA must consider and respond to representations made by
the Consumer Panel established by the FCA under section 1Q of the
Financial Services Act 2012.

(2)   The PRA must from time to time publish in such manner as it thinks
fit responses to the representations.””

Page 92, line 14, at end insert—

“(2)   In section 3A of FSMA 2000 (meaning of “regulator”), in subsection (3)—

(a)   omit the “or” at the end of paragraph (a), and

(b)   after paragraph (b) insert “or

(c)   the meaning of “regulator” in sections 410A and
410B (fees to meet certain expenses of Treasury).””

Page 92, line 21, leave out from “(e)”,” to end of line 22

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 relevant authorised persons.

(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 day on which this Act is passed.

(5)   In this section, “relevant authorised person” has the meaning given in
section 71A of FSMA 2000.”

Insert the following new Clause—

“Other provisions about the FCA and the PRA

Abolition of strategic objective of the FCA

In FSMA 2000—

(a)   In section 1B, omit—

(i)   in subsection (1), paragraph (a) (and the “and” following it)

  and, in paragraph (b), “operational”,

(ii)   subsection (2),

(iii)   in subsection (3), “operational”,

(b)   omit section 1F,

(c)   in subsection (1K), omit “operational”,

(d)   omit section 3B(3),

(e)   omit section 3D(4),

(f)   in section 55B(4), for the words after “advance” substitute “any of
its objectives”,

(g)   in section 55H(4), omit “operational”,

(h)   in section 55I(5), omit “operational”,

(i)   in section 55J(1)(c), for the words after “advance” substitute “any of
its objectives”,

(j)   in section 55L(6), omit “operational”,

(k)   in section 55T, omit “operational”,

(l)   in section 88E, in subsection (1) and in the heading, omit
“operational”,

(m)   in section 89U, in subsection (1) and in the heading, omit
“operational”,

(n)   in section 137A(1), omit “operational”,

(o)   in section 138A(5), omit “operational”,

(p)   in section 192C(2), for the words after “advance” substitute “any of
its objectives”,

(q)   in section 194(1)(c), for the words after “advance” substitute “any of
its objectives”,

(r)   in section 232A, omit “operational”,

(s)   in section 314(1), omit “operational”,

(t)   in section 316(1A)(a), omit “operational”,

(u)   in section 318(3A)(a), omit “operational”,

(v)   in section 340(8), for the words after “expedient” substitute “for the
purpose of advancing any of its objectives”,

(w)   in section 395(3), for the words after “procedure and” substitute
“the regulator considers that, in the particular case, it is necessary in
order to advance any of its objectives.”,

(x)   in paragraph 11(1)(b) of Schedule 1ZA, omit “operational”,

(y)   in paragraphs 6 and 6B of Schedule 1A, omit “operational”, and

(z)   in paragraphs 3C(1) and 3D(1) of Schedule 6, omit “operational”.”

Insert the following new Clause—

“Independent Banking Regulatory Decisions Committee of the FCA

(1)   After section 1L of FSMA 2000 insert—

“1LA  Independent Banking Regulatory Decisions Committee

(1)   There is to be a Banking Regulatory Decisions Committee of the
FCA (“the Committee”).

(2)   The members of the Committee are to be appointed jointly by the
FCA and the PRA and hold office in accordance with the terms of
their appointment.

(3)   The person appointed to chair the Committee must have experience
of acting in a senior judicial capacity.

(4)   A majority of the members of the Committee must be persons
appearing to the FCA and the PRA to have (and to have had) no
professional connection with the provision of financial services.

(5)   The remaining members of the Committee must include persons
appearing to the FCA and the PRA to have extensive experience in
senior roles in banking.

(6)   The function of the Committee is to exercise the banking regulatory
decisions function of the FCA and the PRA.

(7)   “Banking regulatory decisions function” means the function of
taking decisions for enforcing compliance with relevant
requirements, within the meaning of Part 14, in cases where the
authorised person is a relevant authorised person within the
meaning of section 71A of this Act.

(8)   The banking regulatory decisions function of the FCA and the PRA
is delegated to the Committee; and references in this Act to the FCA
and the PRA in relation to that function are to be construed
accordingly.

(9)   The FCA shall meet the reasonable costs of the Committee in
discharging its function but the Committee—

(a)   is not subject to direction by the FCA or the PRA as to the
exercise of its function,

(b)   is not accountable to the FCA or the PRA for the exercise of
its function, and

(c)   may appoint its own officers and staff.

(10)   At least once a year the Committee must make a report to the
Treasury on the discharge of its function.

(11)   The Treasury must lay before Parliament a copy of each report
received by them under subsection (10).”

(2)   The FCA and the PRA must carry out a review of the operation of the
Banking Regulatory Decisions Committee of the FCA.

(3)   The review must be completed before the end of 2018.

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

(5)   The report must include an assessment of whether the function of the
Banking Regulatory Decisions Committee would be better discharged by a
body that was entirely independent of the FCA and the PRA.

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

Insert the following new Clause—

“Unfair relationships

Unfair relationships

Before a regulated consumer credit agreement, other than an excluded
agreement, is made, the creditor shall advise the borrower in writing of his
or her rights as a borrower under sections 140A and 140B of the Consumer
Credit Act 1974.”

Insert the following new Clause—

“Continuous Payment Authorities

Continuous Payment Authorities: debtor’s rights

(1)   This section applies where a debtor has granted to a creditor a continuous
payment authority for payment of any debt arising under a regulated
agreement.

(2)   Prior to granting the continuous payment authority, a creditor must give
the debtor a statement of the debtor’s rights in relation to the continuous
payment authority.

(3)   A debtor may at any time cancel or vary a continuous payment authority.

(4)   A cancellation or variation of a continuous payment authority must be
signed by the debtor and bear the date of the signature.

(5)   A bank is obliged to comply with immediate effect to a cancellation or
variation of a continuous payment authority signed by the debtor.

(6)   A debtor must inform the creditor within 24 hours of signing the
cancellation or variation that the continuous payment authority has been
cancelled or varied.

(7)   In this section “continuous payment authority” means an instruction or
mandate given by a debtor to a bank to pay a fixed or variable sum to a
creditor.”

Insert the following new Clause—

“Miscellaneous

Meetings between regulators and auditors of relevant authorised persons

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

(2)   The FCA and the PRA may conduct meetings under subsection (1) jointly
or separately (but each relevant authorised person’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 relevant authorised person 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).

(5)   In this section, “relevant authorised person” has the meaning given in
section 71A of FSMA 2000.”

Insert the following new Clause—

“Proprietary trading

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

(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 relevant authorised persons engage in
proprietary trading and any action taken by the PRA or the FCA to
discourage relevant authorised persons 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 relevant authorised
persons which the PRA or the FCA consider may be engaging in
proprietary trading to publish a statement of the exposure to risk of
relevant authorised persons 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 relevant authorised persons;

(e)   an assessment, drawing on experience in countries other than the
United Kingdom, of the feasibility of prohibiting relevant
authorised persons 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 relevant authorised persons 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 relevant authorised
persons.

(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 relevant authorised person,
means trading with funds on markets on the relevant authorised
person’s own account (whether or not in connection with business
with the relevant authorised person’s customers),

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

(c)   “relevant authorised person” has the meaning given by section 71A
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 relevant authorised person 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 relevant
authorised person providing it and fair reward for the recipient 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 relevant authorised person 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 relevant authorised person providing
it, and

(f)   require that non-executive directors of a relevant authorised person
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—

(a)   “relevant authorised person” has the meaning given by section 71A
of FSMA 2000,

(b)   “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 relevant authorised person receiving State support

(1)   This section applies where—

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

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

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

(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 relevant authorised person,

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

(5)   In this section, “relevant authorised person” has the meaning given by
section 71A of FSMA 2000.”

Insert the following new Clause—

“Special measures

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

(a)   has reason to believe that a relevant authorised person’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 relevant authorised person of
the belief mentioned in subsection (1)(a).

(3)   If the FCA or the PRA gives notice under subsection (2), it must invite the
relevant authorised person 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 relevant authorised
person’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
relevant authorised person, and

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

(5)   The relevant authorised person 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 relevant authorised person to
take measures to provide sufficient safeguards and to monitor their
effectiveness.

(7)   The relevant authorised person must—

(a)   comply with the notice, and

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

(8)   Compliance by a relevant authorised person 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.

(9)   In this section, “relevant authorised person” has the meaning given by
section 71A of FSMA 2000.”

Insert the following new Clause—

“Power to impose penalties on persons providing claims management services

(1)   The Schedule to the Compensation Act 2006 (claims management
regulations) is amended as follows.

(2)   In paragraph 8 (rules about conduct of authorised persons), in sub-
paragraph (2)(b), after sub-paragraph (i) insert—

“(ia)   provision enabling the Regulator to require an
authorised person to pay a penalty;”.

(3)   In paragraph 9 (codes of practice about conduct of authorised persons), in
sub-paragraph (2)(b), after sub-paragraph (i) insert—

“(ia)   enable the Regulator to require an authorised
person to pay a penalty;”.

(4)   In paragraph 10 (complaints about conduct of authorised persons), after
sub-paragraph (2) insert—

“(3)   Regulations under sub-paragraph (1) may enable the Regulator
to require an authorised person to pay a penalty.”

(5)   In paragraph 11 (requirement to have indemnity insurance), in sub-
paragraph (2)(b), after “Regulator” insert “to require the payment of a
penalty by an authorised person or”.

(6)   In paragraph 14 (enforcement), in sub-paragraph (4), for the words from
“impose” to “authorisation” substitute “require an authorised person to
pay a penalty, or to impose conditions on, suspend or cancel a person’s
authorisation,”.

(7)   After paragraph 15 insert—

“Penalties: supplementary provision

16    (1)   This paragraph applies in any case where regulations include
provision enabling the Regulator to require an authorised person
to pay a penalty.

(2)   The regulations—

(a)   shall include provision about how the Regulator is to
determine the amount of a penalty, and

(b)   may, in particular, include provision specifying a
minimum or maximum amount.

(3)   The regulations—

(a)   shall provide for income from penalties imposed by the
Regulator to be paid into the Consolidated Fund, but

(b)   may provide that such income is to be paid into the
Consolidated Fund after the deduction of costs incurred
by the Regulator in collecting, or enforcing the payment
of, such penalties.

(4)   The regulations may also include, in particular—

(a)   provision for a penalty imposed by the Regulator to be
enforced as a debt;

(b)   provision specifying conditions that must be met before
any action to enforce a penalty may be taken.”

(8)   In section 13 of the Compensation Act 2006 (appeals and references to
Tribunal)—

(a)   in subsection (1), omit the “or” at the end of paragraph (d) and after
paragraph (e) insert “, or

(f)   imposes a penalty on the person.”;

(b)   after subsection (1) insert—

“(1A)    A person who is appealing to the Tribunal against a decision
to impose a penalty may appeal against—

(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.”;

(c)   in subsection (3), after paragraph (d) insert—

“(da)   may require a person to pay a penalty (which may
be of a different amount from that of any penalty
imposed by the Regulator);

(db)   may vary any date by which a penalty, or any part of
a penalty, is required to be paid;”.”

Insert the following new Clause—

“Orders and regulations: general

(1)   Any power of the Treasury or the Secretary of State to make an order or
regulations under this Act is exercisable by statutory instrument.

(2)   Subsection (1) does not apply to an order under section 34 (payment
systems: designation orders).

(3)   An order or regulations made by the Treasury or Secretary of State under
this Act may—

(a)   make different provision for different cases, and

(b)   contain such incidental or transitional provision as the Treasury or
Secretary of State considers appropriate.”

Page 94, line 9, leave out subsection (1)

Page 95, line 7, after “Treasury” insert “or Secretary of State”

Page 95, line 9, leave out “they consider” and insert “the Treasury or Secretary of
State considers”

Page 95, line 13, leave out paragraph (b)

Page 95, line 18, after “Treasury” insert “or Secretary of State”

Page 95, line 18, leave out “they consider” and insert “the Treasury or Secretary of
State considers”

Page 95, line 28, after “Britain)” insert “and section (Power to impose penalties on
persons providing claims management services) (power to impose penalties on persons
providing claims management services)”

Page 95, line 33, at end insert—

“( )   Section (Power to impose penalties on persons providing claims management
services) comes into force on such day as the Secretary of State may by order
appoint.”

Page 95, 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 or FSMA 2000 unless—

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

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

Page 95, 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 142VB of FSMA 2000 (general
requirement for full corporate separation of core activities) unless—

(a)   the day is later than that on which there is published the report of a
review under section (Review of operation of legislation relating to ring-
fencing) 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 6, after “subsidiaries;” insert “to make provision for penalties to be imposed
on persons providing claims management services;”