Financial Services (Banking Reform) Bill

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.

13

(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
the 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
47appropriate.

(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 47, at end insert—

“(9A)    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 47, at end insert—

“(9A)    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.

(9B)   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.”