Financial Services (Banking Reform) Bill (HL Bill 54)

for paragraph (b) substitute—

“(b) P, when performing the function, is not acting in accordance
with an approval given under section 59.”

5 (1) Section 66 of FSMA 2000 (disciplinary powers) is amended as follows.

(2) 5In subsection (3), for paragraph (ab) (and the “or” following it) substitute—

“(ab) impose, for such period as it considers appropriate, any
conditions in relation to any such approval which it considers
appropriate;

(ac) limit the period for which any such approval is to have
10effect;”.

(3) In subsection (3A), for “restriction” substitute “condition”.

(4) In subsection (3B), for “or restriction” substitute “, condition or limitation”.

(5) In subsection (3C), for “restriction” substitute “condition”.

(6) In subsection (3D)—

(a) 15in paragraph (a), for “or restriction” substitute “, condition or
limitation”,

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

(c) in paragraph (b), for “restriction” substitute “condition”, and

(d) after that paragraph insert—

“(c) 20vary a limitation so as to increase the period for which
the approval is to have effect.”

(7) In subsection (9), for “restriction” substitute “condition”.

6 (1) Section 67 of FSMA 2000 (disciplinary measures: procedure and right to
refer to Tribunal) is amended as follows.

(2) 25In subsection (1), for “or (ab)” substitute “, (ab) or (ac)”.

(3) In subsection (2A), for “restriction” (in both places) substitute “condition”.

(4) After subsection (2A) insert—

“(2B) A warning notice about a proposal to limit the period for which an
approval is to have effect must state the length of that period.”

(5) 30In subsection (4), for “or (ab)” substitute “, (ab) or (ac)”.

(6) In subsection (5A), for “restriction” (in both places) substitute “condition”.

(7) After subsection (5A) insert—

“(5B) A decision notice about limiting the period for which an approval is
to have effect must state the length of that period.”

(8) 35In subsection (7), for “or (ab)” substitute “, (ab) or (ac)”.

7 In section 69 of FSMA 2000 (statement of policy), in subsection (1)—

(a) in paragraph (a), for “or restrictions” substitute “, conditions or
limitations”;

(b) omit the “and” at the end of paragraph (b);

(c) 40in paragraph (c), for “restrictions” substitute “conditions”;

(d) at the end of paragraph (c) insert “; and

(d) the period for which approvals under section 59 are to
have effect as a result of a limitation under section
66.”

8 5In section 138A of FSMA 2000 (modification or waiver of rules), in
subsection (2), before paragraph (a) insert—

“(za) rules made by either regulator under section 64A (rules of
conduct);”.

9 In section 138D of FSMA 2000 (actions for damages), in subsection (5), before
10paragraph (a) insert—

“(za) rules under section 64A (rules of conduct);”.

10 In section 140A of FSMA 2000 (interpretation), in the definition of
“regulating provisions”—

(a) in paragraph (a)—

(i) 15omit sub-paragraph (iii), and

(ii) in sub-paragraph (iv), omit “64 or”;

(b) in paragraph (b), omit sub-paragraphs (ii) and (iii).

11 In section 347 of FSMA 2000 (the record of authorised persons etc.), for
subsection (9) substitute—

“(9) 20Relevant authorised person”, in relation to an approved person,
means the person on whose application approval was given.”

12 In section 387 of FSMA 2000 (warning notices), in subsection (1A), for “or
55I(8)” substitute “, 55I(8) or 61(2D)”.

13 In section 388 of FSMA 2000 (decision notices), in subsection (1A), for “or
2555I(8)” substitute “, 55I(8) or 61(2D)”.

14 In section 395 of FSMA 2000 (supervisory notices), in subsection (13), after
paragraph (a) insert—

“(aa) 63ZC(4), (8) or (9)(b);”.

15 (1) Section 415B of FSMA 2000 (consultation in relation to taking certain
30enforcement action) is amended as follows.

(2) In subsection (4)—

(a) in paragraph (b), for “significant-influence” substitute “relevant
senior management”, and

(b) omit the definitions appearing after that paragraph.

(3) 35After subsection (4) insert—

“(5) In subsection (4)—

• “arrangement” has the same meaning as in section 59;

• “relevant senior management function” means a function which
  the FCA is satisfied is a senior management function as
  40defined in section 59ZA (whether or not it has been
  designated as such under section 59(6B) or (6C)).”

16 In Schedule 1ZA to FSMA 2000 (the Financial Conduct Authority), in
paragraph 8(3)—

(a) in paragraph (b), omit “64 or”;

(b) in paragraph (c)(i)—

(i) after “section” insert “63ZD,”, and

(ii) omit “64,”.

17 In Schedule 1ZB to FSMA 2000 (the Prudential Regulation Authority), in
5paragraph 16(3)—

(a) omit paragraph (b);

(b) in paragraph (c)(i)—

(i) after “section” insert “63ZD,”, and

(ii) omit “64,”.

10Financial Services Act 2012

18 In section 14 of the Financial Services Act 2012, omit subsection (4).

19 (1) Section 85 of the Financial Services Act 2012 (relevant functions in relation
to complaints scheme) is amended as follows.

(2) In subsection (4)—

(a) 15in paragraph (b), omit “64 or”;

(b) in paragraph (c)(i)—

(i) after “section” insert “63ZD,”, and

(ii) omit “64,”.

(3) In subsection (5)—

(a) 20omit paragraph (b);

(b) in paragraph (c)(i)—

(i) after “section” insert “63ZD,”, and

(ii) omit “64,”.

Section 31

SCHEDULE 4 25The Payment Systems Regulator

Introductory

1 In this Schedule—

(a) “the Regulator” means the Payment Systems Regulator;

(b) references to the functions of the Regulator are to functions conferred
30on it by or under this Part.

Constitution

2 (1) The constitution of the Regulator must provide for it to have a board whose
members are the directors of the Regulator.

(2) The board is to consist of the following members—

(a) 35a member to chair it, appointed by the FCA with the approval of the
Treasury;

(b) a member to be the Managing Director, appointed by the FCA with
the approval of the Treasury;

(c) one or more other members appointed by the FCA.

(3) The persons who may be appointed under sub-paragraph (2) include
persons who are members of the FCA’s governing body.

(4) A person may be appointed under sub-paragraph (2) only if the person has
knowledge or experience which is likely to be relevant to the exercise by the
5Regulator of its functions.

(5) A person appointed under sub-paragraph (2)(a) or (b) is liable to removal
from office by the FCA (acting with the approval of the Treasury).

(6) A person appointed under sub-paragraph (2)(c) is liable to removal from
office by the FCA.

10Status

3 (1) The Regulator is not to be regarded as exercising functions on behalf of the
Crown.

(2) The officers and staff of the Regulator are not to be regarded as Crown
servants.

15Budget

4 (1) The Regulator must adopt an annual budget which has been approved by
the FCA.

(2) The budget must be adopted—

(a) in the case of the Regulator’s first financial year, as soon as
20reasonably practicable after it is established, and

(b) in the case of each subsequent financial year, before the start of the
financial year.

(3) The Regulator may, with the approval of the FCA, vary the budget for a
financial year at any time after its adoption.

(4) 25Before adopting or varying a budget, the Regulator must consult—

(a) the Treasury, and

(b) such other persons (if any) as the Regulator considers appropriate.

(5) The Regulator must publish each budget, and each variation of a budget, in
the way it considers appropriate.

30Arrangements for discharging functions

5 (1) The Regulator may make arrangements for any of its functions to be
discharged by—

(a) a committee, sub-committee, officer or member of staff of the
Regulator;

(b) 35an officer or member of staff of the FCA.

This is subject to sub-paragraphs (2) to (4).

(2) In exercising any functions within sub-paragraph (3), the Regulator must act
through its board.

(3) The functions referred to in sub-paragraph (2) are—

(a) 40giving general directions under section 44;

(b) imposing requirements under section 45 that apply to all operators
of regulated payment systems.

(4) The function of issuing general guidance may not be discharged by an
officer or member of staff of the Regulator or of the FCA.

5Annual plan

6 (1) The Regulator must in respect of each of its financial years prepare an annual
plan which has been approved by the FCA.

(2) The plan must be prepared—

(a) in the case of the Regulator’s first financial year, as soon as
10reasonably practicable after it is established, and

(b) in the case of each subsequent financial year, before the start of the
financial year.

(3) The Regulator may, with the approval of the FCA, vary the plan in respect
of a financial year at any time after its preparation.

(4) 15An annual plan in respect of a financial year must set out—

(a) the aims of the Regulator for the year,

(b) how the extent to which each of those aims is met is to be determined,

(c) the relative priorities of each of those aims, and

(d) how its resources are to be allocated among the activities to be
20carried on in connection with the discharge of its functions.

(5) In sub-paragraph (4) references to aims for a financial year include aims for
a longer period that includes that year.

(6) Before preparing or varying an annual plan, the Regulator must consult—

(a) the Treasury, and

(b) 25such other persons (if any) as the Regulator considers appropriate.

(7) The Regulator must publish each annual plan, and each variation of an
annual plan, in the way it considers appropriate.

Annual report

7 (1) At least once a year, the Regulator must make a report to the FCA in relation
30to the discharge of its functions.

(2) The report must—

(a) set out the extent to which the Regulator has met its aims and
priorities for the period covered by the report,

(b) set out the extent to which the Regulator has advanced its payment
35systems objectives,

(c) include a copy of its latest accounts, and

(d) comply with any requirement specified in rules made by the FCA.

(3) The Regulator must publish each report in the way it considers appropriate.

(4) Nothing in this paragraph requires the Regulator to make a report at any
40time in the period of 12 months beginning with its establishment.

(5) The Treasury may—

(a) require the Regulator to comply with any provision of the
Companies Act 2006 about accounts and their audit which would not
otherwise apply to it, or

(b) direct that any provision of that Act about accounts and their audit
5is to apply to the Regulator with such modifications as are specified
in the direction, whether or not the provision would otherwise apply
to it.

(6) Compliance with any requirement under sub-paragraph (5)(a) or (b) is
enforceable by injunction or, in Scotland, an order for specific performance
10under section 45 of the Court of Session Act 1988.

(7) Proceedings under sub-paragraph (6) may be brought only by the Treasury.

(8) The FCA’s power to make rules under sub-paragraph (2)(d) is to be treated
as if it were a power of the FCA to make rules under FSMA 2000 (and rules
made under sub-paragraph (2)(d) are to be treated accordingly).

15Audit of accounts

8 (1) The Regulator must send a copy of its annual accounts to the Comptroller
and Auditor General and the Treasury as soon as is reasonably practicable.

(2) The Comptroller and Auditor General must—

(a) examine, certify and report on accounts received under this
20paragraph, and

(b) send a copy of the certified accounts and the report to the Treasury.

(3) The Treasury must lay the copy of the certified accounts and the report
before Parliament.

(4) The Regulator must send a copy of the certified accounts and the report to
25the FCA.

(5) Except as provided for by paragraph 7(5), the Regulator is exempt from the
requirements of Part 16 of the Companies Act 2006 (audit) and its balance
sheet must contain a statement to that effect.

(6) In this paragraph “annual accounts” has the meaning given by section 471 of
30the Companies Act 2006.

Funding

9 (1) In this paragraph “the relevant costs” means—

(a) the expenses incurred, or expected to be incurred, by the Regulator
in connection with the discharge of its functions,

(b) 35the expenses incurred by the FCA in establishing the Regulator,

(c) any other expenses incurred by the FCA in connection with the
discharge of its functions under this Part, and

(d) any expenses incurred, or expected to be incurred, by the FCA in
connection with the discharge of the Regulator’s functions by an
40officer or member of staff of the FCA under arrangements made
under paragraph 5.

For the purposes of paragraph (b) it does not matter when the expenses were
incurred.

(2) For the purpose of meeting the relevant costs 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.

(3) Before making any rules under sub-paragraph (2) the FCA must consult the
5Treasury.

(4) The amounts to be paid under the rules may include a component to cover
the expenses of the FCA in collecting the payments (“collection costs”).

(5) The FCA must pay to the Regulator the amounts that it receives under the
rules, apart from the following amounts (which it may keep)—

(a) 10amounts in respect of expenses falling within sub-paragraph (1)(b) to
(d);

(b) amounts in respect of its collection costs.

(6) In this paragraph “specified” means specified in the rules.

(7) The FCA’s power to make rules under this paragraph is to be treated as if it
15were a power of the FCA to make rules under FSMA 2000 (and rules made
under this paragraph are to be treated accordingly).

Penalty receipts

10 (1) The Regulator must in respect of each of its financial years pay to the
Treasury any amounts received by it during the year by way of penalties
20imposed under section 63.

(2) The Treasury may give directions to the Regulator as to how it is to comply
with its duty under sub-paragraph (1).

(3) The directions may in particular—

(a) specify the time when any payment is required to be made to the
25Treasury, and

(b) require the Regulator to provide the Treasury at specified times with
information relating to penalties that the Regulator has imposed
under section 63.

(4) The Treasury must pay into the Consolidated Fund any sums received by
30them under this paragraph.

Records

11 The Regulator must maintain satisfactory arrangements for—

(a) recording decisions made in the exercise of its functions, and

(b) the safe-keeping of those records which it considers ought to be
35preserved.

Exemption from liability in damages

12 (1) None of the following is to be liable in damages for anything done or
omitted in the discharge, or purported discharge, of the Regulator’s
functions—

(a) 40the Regulator;

(b) any person (“P”) who is, or is acting as, an officer or member of staff
of the Regulator;

(c) any person who could be held vicariously liable for things done or
omitted by P, but only in so far as the liability relates to P’s conduct.

(2) If the Regulator has made arrangements under paragraph 5 for any of its
functions to be discharged by an officer or member of staff of the FCA,
5references in sub-paragraph (1) to a person who is an officer or member of
staff of the Regulator include references to the officer or member of staff of
the FCA.

(3) Anything done or omitted by a person mentioned in sub-paragraph (1)(b) or
(c) while acting, or purporting to act, as a result of an appointment under
10section 72 or 73 is to be taken for the purposes of sub-paragraph (1) to have
been done or omitted in the discharge or (as the case may be) purported
discharge of the Regulator’s functions.

(4) Sub-paragraph (1) does not apply—

(a) if the act or omission is shown to have been in bad faith, or

(b) 15so as to prevent an award of damages made in respect of an act or
omission on the ground that the act or omission was unlawful as a
result of section 6(1) of the Human Rights Act 1998.

Section 69

SCHEDULE 5 Procedure for appeals to the CMA

20Functions of CMA to be discharged by group

1 Except where specified otherwise in this Schedule, the functions of the CMA
with respect to an appeal are to be carried out on behalf of the CMA by a
group constituted for the purpose by the chair of the CMA under Schedule
4 to the Enterprise and Regulatory Reform Act 2013.

2 (1) 25Schedule 4 to the Enterprise and Regulatory Reform Act 2013 is amended as
follows.

(2) In paragraph 35(1) (membership of CMA panel), after paragraph (c) insert—

“(ca) at least one person (a “payment systems panel member”)
appointed to the CMA panel under paragraph 1(1)(b) for
30the purpose of being available for selection as a member of
a group constituted to carry out functions on behalf of the
CMA with respect to an appeal made in accordance with
section 69 of the Financial Services (Banking Reform) Act
2013 (a “specialist payment systems group”);”.

(3) 35In paragraph 38 (membership of CMA groups), after sub-paragraph (5)
insert—

“(5A) In the case of a specialist payment systems group, the group must
include at least one payment systems member.”

(4) In paragraph 48 (performance of functions of chair with respect to
40constitution etc of CMA group), in sub-paragraph (4)(c), at the end insert—

“(v) Schedule 5 to the Financial Services (Banking
Reform) Act 2013.”

Application for permission to bring appeal

3 (1) An application for permission to bring an appeal may be made only by
sending a notice to the CMA requesting the permission.

(2) An application for permission to appeal must be accompanied by all such
5information as may be required by appeal rules.

(3) Appeal rules may require information contained in an application for
permission to appeal to be verified by a statement of truth.

(4) A person who applies for permission to bring an appeal in accordance with
this paragraph is referred to in this Schedule as the appellant.

(5) 10The appellant must send the Payment Systems Regulator—

(a) a copy of the application for permission to appeal at the same time as
it is sent to the CMA, and

(b) such other information as may be required by appeal rules.

(6) The CMA’s decision whether to grant permission to appeal is to be taken by
15an authorised member of the CMA.

(7) Before the authorised member decides whether to grant permission under
this paragraph, the Payment Systems Regulator must be given an
opportunity of making representations or observations, in accordance with
paragraph 5(2).

(8) 20The CMA’s decision on an application for permission must be made—

(a) where the Payment Systems Regulator makes representations or
observations in accordance with paragraph 5(2), before the end of 10
working days beginning with the first working day after the day on
which those representations or observations are received;

(b) 25in any other case, before the end of 14 working days beginning with
the first working day after the day on which the application for
permission was received.

(9) The grant of permission may be made subject to conditions, which may
include—

(a) 30conditions which limit the matters that are to be considered on the
appeal in question;

(b) conditions for the purpose of expediting the determination of the
appeal;

(c) conditions requiring the appeal to be considered together with other
35appeals (including appeals relating to different matters or decisions
and appeals brought by different persons).

(10) Where a decision is made to grant or to refuse an application for permission,
an authorised member of the CMA must notify the decision, giving reasons,
to the following persons—

(a) 40the appellant, and

(b) the Payment Systems Regulator.

(11) A decision of the CMA under this paragraph must be published, in such
manner as an authorised member of the CMA considers appropriate, as
soon as reasonably practicable after it is made.

(12) The CMA may exclude from publication under sub-paragraph (11) any
information which it is satisfied is—

(a) commercial information, the disclosure of which would, or might in
the CMA’s opinion, significantly harm the legitimate business
5interests of an undertaking to which it relates, or

(b) information relating to the private affairs of an individual, the
disclosure of which would, or might in the CMA’s opinion,
significantly harm the individual’s interests.

Suspension of decision

4 (1) 10The CMA may direct that, pending the determination of an appeal against a
decision of the Payment Systems Regulator—

(a) the decision is not to have effect, or

(b) the decision is not to have effect to such extent as may be specified in
the direction.

(2) 15The power to give a direction under this paragraph is exercisable only
where—

(a) an application for its exercise has been made by the appellant at the
same time as the appellant made an application in accordance with
paragraph 3 for permission to bring an appeal against a decision of
20the Payment Systems Regulator,

(b) the Payment Systems Regulator has been given an opportunity of
making representations or observations, in accordance with
paragraph 5(2), and

(c) the balance of convenience does not otherwise require effect to be
25given to the decision pending that determination.

(3) The CMA’s decision on an application for a direction under this paragraph
must be made—

(a) where the Payment Systems Regulator makes representations or
observations in accordance with paragraph 5(2), before the end of 10
30working days beginning with the first working day after the day on
which those representations or observations are received;

(b) in any other case, before the end of 14 working days beginning with
the first working day following the day on which the application
under sub-paragraph (2)(a) is received.

(4) 35The appellant must send the Payment Systems Regulator a copy of the
application for a direction under this paragraph at the same time as it is sent
to the CMA.

(5) The CMA’s decision whether to give a direction is to be taken by an
authorised member of the CMA.

(6) 40A direction under this paragraph must be—

(a) given by an authorised member of the CMA, and

(b) published, in such manner as an authorised member of the CMA
considers appropriate, as soon as reasonably practicable after it is
given.

(7) 45Sub-paragraph (12) of paragraph 3 applies to the publication of a direction
under sub-paragraph (6) of this paragraph as it applies to the publication of
a decision under sub-paragraph (11) of that paragraph.