Parliamentary control of statutory instruments under FSMA 2000

126 Amendments of section 429 of FSMA 2000

(1) Section 429 of FSMA 2000 (Parliamentary control of statutory instruments) is
amended as follows.

(2) 5In subsection (1)(a) (orders subject to affirmative procedure), for “144(4), 192(b)
or (e), 138K(6)(c)” substitute “138K(6)(c), 144(4), 192(b) or (e)”.

(3) In subsection (2) (regulations subject to affirmative procedure), after “90B,”
insert “142W,”.

(4) After subsection (2) insert—

“(2A) 10Regulations to which subsection (2B) applies are not to be made unless
a draft of the regulations has been laid before Parliament and approved
by a resolution of each House.

(2B) This subsection applies to regulations which contain provision made
under section 410A, other than provision made only by virtue of
15subsection (2) of that section.”

(5) In subsection (8), for “or 23A” substitute “, 23A or 142Z”.

Bank of England

127 Accounts of Bank of England and its wholly-owned subsidiaries

(1) The Bank of England Act 1998 is amended as follows.

(2) 20In section 7 (accounts), in subsection (4), for the words from “appropriate” to
the end substitute “necessary to do so having regard to the Financial Stability
Objective”.

(3) After section 7 insert—

“7A Accounts of companies wholly owned by the Bank

(1) 25If the Bank considers it necessary to do so having regard to the
Financial Stability Objective, the Bank may by direction to a qualifying
company exclude the application to the qualifying company of any of
the relevant Companies Act requirements.

(2) The relevant Companies Act requirements are the requirements to
30which the directors of the qualifying company would otherwise be
subject under the Companies Act 2006 (except sections 412 and 413
(directors’ benefits)) in relation to the preparation of accounts under
section 394 of that Act.

(3) A direction under subsection (1) may relate to one or more specified
35accounting periods of the qualifying company, or to a specified
accounting period and all subsequent accounting periods of the
qualifying company.

(4) The Bank must consult the Treasury before giving a direction under
subsection (1).

(5) The Treasury may by notice in writing to the Bank require it to publish
in such manner as it thinks fit such information relating to the accounts
of a qualifying company as the Treasury may specify in the notice.

(6) The information specified in a notice under subsection (5) may include
5information which as a result of a direction under subsection (1) was
excluded from accounts prepared in accordance with the Companies
Act 2006.

(7) The Treasury must consult the Bank before giving a notice under
subsection (5).

(8) 10A direction under subsection (1) or a notice under subsection (5) may
be revoked by a subsequent direction or notice (as the case may be).

(9) “Qualifying company” means any company which is wholly owned by
the Bank other than—

(a) the Prudential Regulation Authority, or

(b) 15a company which is a bridge bank for the purposes of section
12(3) of the Banking Act 2009.

(10) For the purposes of subsection (9), a company is wholly owned by the
Bank if—

(a) it is a company of which no person other than the Bank or a
20nominee of the Bank is a member, or

(b) it is a wholly-owned subsidiary of a company within paragraph
(a).”

Building societies

128 Building societies

25Schedule 9 (which contains provision about building societies) has effect.

Claims management services

129 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) 30In 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-
35paragraph (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) 40Regulations 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
5“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) 10This 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
15determine 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
20Regulator 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) 25The 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) 30In 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) 35after 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) 40any 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
45the Regulator);

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

Minor amendments

130 Minor amendments

5Schedule 10 (which contains amendments of, or connected with, the Financial
Services Act 2012 and amendments of provisions amended by that Act) has
effect.

Part 8 Final provisions

131 10Orders 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 36 (payment systems:
designation orders).

(3) 15An 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.

132 20Orders and regulations: Parliamentary control

(1) A statutory instrument containing an order or regulations under this Act is
subject to annulment in pursuance of a resolution of either House of
Parliament, unless—

(a) the instrument contains only provision made under section 137
25(commencement), or

(b) the instrument is required by subsection (3) or any other enactment to
be laid in draft before, and approved by a resolution of, each House.

(2) Subsection (3) applies to a statutory instrument that contains (with or without
other provisions)—

(a) 30regulations under section 7 (building societies: power to make
provision about ring-fencing);

(b) an order under section 34(4) (meaning of “payment system”);

(c) an order under section 134 (power to make further consequential
amendments) that amends or repeals primary legislation;

(d) 35an order under paragraph 6 of Schedule 6 (conduct of FMI
administration).

(3) A statutory instrument to which this subsection applies may not be made
unless a draft of the instrument has been laid before, and approved by a
resolution of, each House of Parliament.

(4) 40In subsection (2)(c) “primary legislation” means—

(a) an Act of Parliament,

(b) an Act of the Scottish Parliament,

(c) a Measure or Act of the National Assembly for Wales, or

(d) Northern Ireland legislation.

133 5Interpretation

In this Act—

• “enactment” includes—

  (a)

  an enactment contained in subordinate legislation,

  (b)

  an enactment contained in, or in an instrument made under, an
  10Act of the Scottish Parliament,

  (c)

  an enactment contained in, or in an instrument made under, a
  Measure or Act of the National Assembly for Wales, and

  (d)

  an enactment contained in, or in an instrument made under,
  Northern Ireland legislation;

• 15“the FCA” means the Financial Conduct Authority;

• “FSMA 2000” means the Financial Services and Markets Act 2000;

• “the PRA” means the Prudential Regulation Authority.

134 Power to make further consequential amendments

(1) The Treasury or Secretary of State may by order make such provision
20amending, repealing, revoking or applying with modifications any enactment
to which this section applies as the Treasury or Secretary of State considers
necessary or expedient in consequence of any provision made by or under this
Act.

(2) This section applies to—

(a) 25any enactment passed or made before the passing of this Act, and

(b) any enactment passed or made on or before the last day of the Session
in which this Act is passed.

(3) Amendments and repeals made under this section are additional to those
made by or under any other provision of this Act.

135 30Transitional provisions and savings

(1) The Treasury or Secretary of State may by order make such provision as the
Treasury or Secretary of State considers necessary or expedient for transitory,
transitional or saving purposes in connection with the commencement of any
provision made by or under this Act.

(2) 35An order under this section may—

(a) confer functions on the FCA or the PRA;

(b) modify, exclude or apply (with or without modifications) any
enactment (including any provision of, or made under, this Act).

136 Extent

40The provisions of this Act extend to England and Wales, Scotland and
Northern Ireland, except that the amendments made by section 10 (preferential
debts: Great Britain) and section 129 (power to impose penalties on persons

providing claims management services) have the same extent as the
enactments amended.

137 Commencement and short title

(1) This Part comes into force on the day on which this Act is passed.

(2) 5Section 128 and Schedule 9, apart from paragraph 4 of that Schedule, come into
force at the end of the period of 2 months beginning with the day on which this
Act is passed.

(3) Section 129 comes into force on such day as the Secretary of State may by order
appoint.

(4) 10The remaining provisions of this Act come into force on such day as the
Treasury may by order appoint.

(5) Different days may be appointed for different purposes.

(6) This Act may be cited as the Financial Services (Banking Reform) Act 2013.

SCHEDULES

Section 6

SCHEDULE 1 Ring-fencing transfer schemes

1 Part 7 of FSMA 2000 (control of business transfer schemes) is amended as
5follows.

2 For “the authorised person concerned”, wherever occurring in Part 7
(including Schedule 12), substitute “the transferor concerned”.

3 (1) Section 103A (meaning of “the appropriate regulator”) is amended as
follows.

(2) 10In subsection (1), in paragraph (a), for “a scheme” substitute “a ring-fencing
transfer scheme or a scheme (other than a ring-fencing transfer scheme)”.

(3) At the end of subsection (2) insert—

“(d) in the case of a ring-fencing transfer scheme, means the body
to whose business the scheme relates.”

4 15In section 106 (banking business transfer schemes), at the end of subsection
(1)(c) insert “or a ring-fencing transfer scheme”.

5 After section 106A insert—

106B   Ring-fencing transfer scheme

(1) A scheme is a ring-fencing transfer scheme if it—

(a) 20is one under which the whole or part of the business carried
on—

(i) by a UK authorised person, or

(ii) by a qualifying body,

is to be transferred to another body (“the transferee”),

(b) 25is to be made for one or more of the purposes mentioned in
subsection (3), and

(c) is not an excluded scheme or an insurance business transfer
scheme.

(2) “Qualifying body” means a body which—

(a) 30is incorporated in the United Kingdom,

(b) is a member of the group of a UK authorised person, and

(c) is not itself an authorised person.

(3) The purposes are—

(a) enabling a UK authorised person to carry on core activities as
35a ring-fenced body in compliance with the ring-fencing
provisions;

(b) enabling the transferee to carry on core activities as a ring-
fenced body in compliance with the ring-fencing provisions;

(c) making provision in connection with the implementation of
proposals that would involve a body corporate whose group
5includes the body corporate to whose business the scheme
relates becoming a ring-fenced body while one or more other
members of its group are not ring-fenced bodies;

(d) making provision in connection with the implementation of
proposals that would involve a body corporate whose group
10includes the transferee becoming a ring-fenced body while
one or more other members of the transferee’s group are not
ring-fenced bodies.

(4) A scheme is an excluded scheme for the purposes of this section if—

(a) the body to whose business the scheme relates is a building
15society or credit union, or

(b) the scheme is a compromise or arrangement to which Part 27
of the Companies Act 2006 (mergers and divisions of public
companies) applies.

(5) For the purposes of subsection (1)(a) it is immaterial whether or not
20the business to be transferred is carried on in the United Kingdom.

(6) “UK authorised person” has the same meaning as in section 105.

(7) “Building society” and “credit union” have the same meanings as in
section 106.

(8) “The ring-fencing provisions” means ring-fencing rules and the duty
25imposed as a result of section 142G.”

6 (1) Section 107 (application for order sanctioning transfer scheme) is amended
as follows.

(2) In subsection (1), for “or a reclaim fund business transfer scheme” substitute
“, a reclaim fund business transfer scheme or a ring-fencing transfer
30scheme”.

(3) After subsection (2) insert—

“(2A) An application relating to a ring-fencing transfer scheme may be
made only with the consent of the PRA.

(2B) In deciding whether to give consent, the PRA must have regard to
35the scheme report prepared under section 109A in relation to the
ring-fencing transfer scheme.”

7 For the heading to section 109 substitute “Scheme reports: insurance
business transfer schemes”.

8 After section 109 insert—

109A 40  Scheme reports: ring-fencing transfer schemes

(1) An application under section 106B in respect of a ring-fencing
transfer scheme must be accompanied by a report on the terms of the
scheme (a “scheme report”).

(2) A scheme report may be made only by a person—

(a) appearing to the PRA to have the skills necessary to enable
the person to make a proper report, and

(b) nominated or approved for the purpose by the PRA.

(3) A scheme report must be made in a form approved by the PRA.

(4) 5A scheme report must state—

(a) whether persons other than the transferor concerned are
likely to be adversely affected by the scheme, and

(b) if so, whether the adverse effect is likely to be greater than is
reasonably necessary in order to achieve whichever of the
10purposes mentioned in section 106B(3) is relevant.

(5) The PRA must consult the FCA before—

(a) nominating or approving a person under subsection (2)(b), or

(b) approving a form under subsection (3).”

9 (1) Section 110 (right to participate in proceedings) is amended as follows.

(2) 15In subsection (1), after “section 107” insert “relating to an insurance business
transfer scheme, a banking business transfer scheme or a reclaim fund
business transfer scheme”.

(3) After subsection (2) insert—

“(3) Subsections (4) and (5) apply where an application under section 107
20relates to a ring-fencing transfer scheme.

(4) The following are also entitled to be heard—

(a) the PRA,

(b) where the transferee is an authorised person, the FCA, and

(c) any person (“P”) (including an employee of the transferor
25concerned or of the transferee) who alleges that P would be
adversely affected by the carrying out of the scheme.

(4)
P is not entitled to be heard by virtue of subsection (4)(c) unless
before the hearing P has—

(a) filed (in Scotland, lodged) with the court a written statement
30of the representations that P wishes the court to consider, and

(b) served copies of the statement on the PRA and the transferor
concerned.”

10 (1) Section 111 (sanction of court for business transfer schemes) is amended as
follows.

(2) 35In subsection (1), for “or a reclaim fund business transfer scheme” substitute
“, a reclaim fund business transfer scheme or a ring-fencing transfer
scheme”.

(3) In subsection (2), after paragraph (aa) insert—

“(ab) in the case of a ring-fencing transfer scheme, the appropriate
40certificates have been obtained (as to which see Part 2B of that
Schedule);”

11 In section 112 (effect of order sanctioning business transfer scheme), in
subsection (10), after “transfer scheme” insert “or ring-fencing transfer
scheme”.

12 In section 112A (rights to terminate etc.), in subsection (1), for “or a banking
business transfer scheme” substitute “, a banking business transfer scheme
or a ring-fencing transfer scheme”.

13 In Schedule 12 (transfer schemes: certificates) after Part 2A insert—

5“ Part 2B Ring-fencing transfer schemes

9B Appropriate certificates

(1) For the purposes of section 111(2) the appropriate certificates, in
relation to a ring-fencing transfer scheme, are—

(a) 10a certificate given by the PRA certifying its approval of the
application,

(b) a certificate under paragraph 9C, and

(c) if sub-paragraph (2) applies, a certificate under paragraph
9D.

(2) 15This sub-paragraph applies if the transferee is an EEA firm falling
within paragraph 5(a) or (b) of Schedule 3.

9C Certificate as to financial resources

(1) A certificate under this paragraph is one given by the relevant
authority and certifying that, taking the proposed transfer into
20account, the transferee possesses, or will possess before the
scheme takes effect, adequate financial resources.

(2) “Relevant authority” means—

(a) if the transferee is a PRA-authorised person with a Part 4A
permission or with permission under Schedule 4, the PRA;

(b) 25if the transferee is an EEA firm falling within paragraph
5(a) or (b) of Schedule 3, its home state regulator;

(c) if the transferee does not fall within paragraph (a) or (b)
but is subject to regulation in a country or territory outside
the United Kingdom, the authority responsible for the
30supervision of the transferee’s business in the place in
which the transferee has its head office;

(d) in any other case, the FCA.

(3) In sub-paragraph (2), any reference to a transferee of a particular
description includes a reference to a transferee who will be of that
35description if the proposed ring-fencing transfer scheme takes
effect.

9D Certificate as to consent of home state regulator

A certificate under this paragraph is one given by the appropriate
regulator and certifying that the home state regulator of the
40transferee has been notified of the proposed scheme and that—

(a) the home state regulator has responded to the notification,
or