Pension Schemes Bill (HL Bill 63)

the terms of the direction need not be the same as that recommended
by the FCA).

(3) The Treasury must—

(a) give notice in writing of a direction under subsection (1), and

(b) 5send a copy of the notice to the FCA.

(4) The notice must inform the designated guidance provider that
representations about why the direction should not be published
may be made to the Treasury within a specified time.

(5) Once the time specified under subsection (4) has elapsed, the
10Treasury must publish the direction unless—

(a) the Treasury consider that to do so would be against the
public interest;

(b) having considered representations made by the designated
guidance provider within the specified time, the Treasury
15consider that it would be inappropriate to do so for some
other reason.

(6) If the condition in subsection (5)(a) or (b) is satisfied in relation to a
direction but would not be satisfied if the Treasury published part
only of the direction, the Treasury may publish that part.

(7) 20A direction under subsection (1) is enforceable, on an application
made by the Treasury, by injunction or, in Scotland, by an order for
specific performance under section 45 of the Court of Session Act
1988.

333N Directions to designated guidance providers under section 333M:
25relationship with power to revoke a designation

(1) The power conferred by section 333M(1) is exercisable in addition to,
or instead of, the power conferred by section 333E(3) to revoke a
designation.

(2) If the power in section 333E(3) is exercised before the power in
30section 333M(1) the reference in section 333M(1) to a designated
guidance provider is to be read as a reference to a person who, at the
time of the failure to comply, was a designated guidance provider.

(3) Subsection (1) does not limit the grounds on which the power in
section 333E(3) may be exercised.

35FCA’s duties and power to give guidance

333O FCA’s duties

(1) The FCA must discharge its general pensions guidance functions
with a view to securing an appropriate degree of protection for
recipients of pensions guidance from designated guidance
40providers.

(2) In discharging its general pensions guidance functions the FCA must
have regard to—

(a) its strategic and operational objectives in section 1B(2) and
(3), and

(b) 45the regulatory principles in section 3B.

(3) In this section the FCA’s “general pensions guidance functions”
means its functions of—

(a) setting standards under section 333H,

(b) issuing statements under section 333K,

(c) 5giving general guidance under section 333P (see section
333P(9)),

(d) making rules under section 333Q, and

(e) determining the general policy and principles by reference to
which it performs particular functions under this Part.

333P 10Power of the FCA to give guidance

(1) The FCA may give guidance consisting of such information and
advice relating to its functions under sections 333H, 333I, 333J, 333K
and 333Q as it considers appropriate.

(2) Subsection (3) applies where the FCA proposes to give guidance to
15designated guidance providers generally, or to a class of designated
guidance providers, in relation to standards set under section 333H
or rules made under section 333Q.

(3) Where this subsection applies, subsections (1)(b), (2)(e) and (3) of
section 138I apply to the proposed guidance as they apply to
20proposed rules, unless the FCA considers that the delay in
complying with those provisions would be prejudicial to the
interests of recipients of pensions guidance from designated
guidance providers.

(4) The FCA may—

(a) 25publish its guidance,

(b) offer copies of its published guidance for sale at a reasonable
price, and

(c) if it gives guidance in response to a request made by any
person, make a reasonable charge for that guidance.

(5) 30On giving any general guidance, the FCA must give written notice to
the Treasury without delay.

(6) If the FCA alters any of its general guidance, it must give written
notice to the Treasury without delay.

(7) The notice under subsection (6) must include details of the alteration.

(8) 35If the FCA revokes any of its general guidance, it must give written
notice to the Treasury without delay.

(9) In this section “general guidance” means guidance given by the FCA
under this section which is—

(a) given to persons generally, to designated guidance providers
40generally or to a class of designated guidance provider,

(b) intended to have continuing effect, and

(c) given in writing or other legible form.

Funding of pensions guidance

333Q Funding of FCA’s pensions guidance costs

(1) For the purpose of meeting the FCA’s pensions guidance costs the
FCA must make rules requiring designated guidance providers, or
5any specified class of designated guidance provider, to pay to the
FCA specified amounts or amounts calculated in a specified way.

(2) Before the FCA publishes a draft of the rules it must consult the
Treasury.

(3) The amounts to be paid under the rules may include a component—

(a) 10to cover the expenses of the FCA in collecting the payments;

(b) to enable the FCA to maintain an adequate reserve.

(4) In this section the “FCA’s pensions guidance costs” means the
expenses incurred, or expected to be incurred, by the FCA in
connection with the carrying out of the functions conferred on it by
15this Part other than by section 333R.

333R Funding of Treasury’s pensions guidance costs

(1) The Treasury must, from time to time, notify the FCA of the amount
of the Treasury’s pensions guidance costs.

(2) Having been so notified, the FCA must make rules requiring
20authorised persons, or any specified class of authorised person, to
pay to the FCA specified amounts or amounts calculated in a
specified way with a view to recovering the amount notified under
subsection (1).

(3) The amounts to be paid under the rules may include a component to
25cover the expenses of the FCA in collecting the payments (“collection
costs”).

(4) Before the FCA publishes a draft of the rules it must consult the
Treasury.

(5) The rules may be made only with the consent of the Treasury.

(6) 30The Treasury may notify the FCA of matters that they will take into
account when deciding whether or not to give consent for the
purposes of subsection (5).

(7) The FCA must have regard to any matters notified under subsection
(6) before publishing a draft of rules to be made under this section.

(8) 35The FCA must pay to the Treasury the amounts that it receives under
rules made under this section apart from amounts in respect of its
collection costs (which it may keep).

(9) The Treasury must pay into the Consolidated Fund the amounts
received by them under subsection (8).

(10) 40In this section the “Treasury’s pensions guidance costs” means the
expenses incurred, or expected to be incurred, by the Treasury—

(a) in giving pensions guidance or arranging for it to be given by
designated guidance providers,

(b) in meeting the expenses of designated guidance providers
incurred in connection with the giving of the guidance,
whether by means of the power conferred by section 333D or
otherwise,

(c) 5in providing services to designated guidance providers to
support them in giving the guidance,

(d) in increasing awareness of the availability of the guidance,

(e) in undertaking or commissioning research relating to the
giving of the guidance, and

(f) 10otherwise in connection with the carrying out of its functions
under section 333B.

(11) For the purposes of subsection (10)(b) “expenses of designated
guidance providers”—

(a) includes expenses incurred by virtue of sections 333H(2),
15333J, 333M and 333Q, and

(b) where a recommendation or direction has been made by
virtue of section 333J(4) or 333N(2), includes expenses of a
former designated guidance provider.

(12) The Treasury may by regulations amend the definition of the
20“Treasury’s pensions guidance costs” in subsection (10).”

3 In section 1B (the FCA’s general duties), after subsection (7) insert—

“(7A) The FCA’s general functions do not include its general pensions
guidance functions (see section 333O(3)).”

4 In section 1M (FCA’s general duty to consult), after “section 1B” insert “and
25its duties under section 333O”.

5 In section 1S (reviews by independent person into discharge of FCA
functions), in subsection (3) (excluded functions), after “(4)” insert “or its
duties under section 333O(1) and (2)(a)”.

6 After section 137FA insert—

“137FB 30 FCA general rules: disclosure of information about the availability of
pensions guidance

(1) The FCA must make general rules requiring information about the
availability of pensions guidance to be given by the trustees or
managers of a relevant pension scheme to members of the scheme
35with a right or entitlement to flexible benefits.

(2) Before the FCA publishes a draft of any rules to be made by virtue of
this section, it must consult—

(a) the Secretary of State, and

(b) the Treasury.

(3) 40In determining what provision to include in the rules, the FCA must
have regard to any regulations that are for the time being in force
under section 113 of the Pension Schemes Act 1993 concerning the
giving of information about the availability of pensions guidance to
members of pension schemes with a right or entitlement to flexible
45benefits.

(4) In this section—

Pension Schemes BillPage 74

• “flexible benefit” has the meaning given by section 72 of the
  Pension Schemes Act 2014;

• “pensions guidance” means pensions guidance given by virtue
  of Part 20A;

• 5“relevant pension scheme” means a pension scheme set up by a
  person with permission under this Act to establish—

  (a)

  a personal pension scheme within the meaning of an
  order under section 22, or

  (b)

  a stakeholder pension scheme within the meaning of
  10such an order.”

7 (1) Section 138F (notification of rules) is amended as follows.

(2) The existing text becomes subsection (1).

(3) After that subsection insert—

“(2) Subsection (1)(b) does not apply to rules made under or by virtue of
15section 137FB, 333Q or 333R.”

8 In section 138I (rules: consultation by the FCA)—

(a) in subsection (6) (exemption from requirement to carry out a cost
benefit analysis), after paragraph (a) insert—

“(aa) section 137FB;”;

(b) 20in that subsection, after paragraph (c) insert—

“(ca) section 333Q;

(cb) section 333R”;

(c) in subsection (10) (rules to which requirement to consult the PRA
does not apply), after “apply to” insert “—

(a) 25rules made by the FCA under section 137FB, 333Q or
333R, or

(b)”.

9 In section 139A (power of the FCA to give guidance), after subsection (1)
insert—

“(1A) 30The FCA may not give guidance under this section relating to its
functions under sections 333H, 333I, 333J, 333K and 333Q (see section
333P for provision about the giving of guidance relating to these
functions).”

10 In section 140A (competition scrutiny: interpretation), in subsection (1), in
35paragraph (a) of the definition of “regulating provisions”—

(a) in sub-paragraph (ii), after “section 139B(5)” insert “or 333P(9)”;

(b) after sub-paragraph (iv) insert—

“(v) standards set under section 333H;

(vi) statement issued by the FCA under 333K;”.

11 40In section 168 (appointment of persons to carry out investigations in
particular cases), in subsection (2)(a), after “section 24(1)” insert “or 333G”.

12 In section 429 (Parliamentary control of statutory instruments), in subsection
(2) (regulations subject to the affirmative resolution procedure), for “or 262”
substitute “, 262, 333C or 333R”.

13 In Schedule 1ZA (the FCA), in paragraph 8 (arrangements for discharging
functions)—

(a) in sub-paragraph (3) (legislative functions that must be exercised by
the FCA acting through its governing body), in paragraph (c)(i), for
5“or 312J” substitute “, 312J or 333K”;

(b) in sub-paragraph (3), after paragraph (d) insert—

“(e) setting standards under section 333H.”

(c) in sub-paragraph (4), after “section 139B(5)” insert “or 333P(9)”.

14 In that Schedule, in paragraph 11 (annual report), in sub-paragraph (1)
10(matters to be covered in the report), after paragraph (ha) insert—

“(hb) how, in its opinion, it has complied with its duties in
section 333O,”.

15 In that Schedule, in paragraph 21 (FCA financial penalty scheme), in sub-
paragraph (2) (list of “regulated persons” who may benefit from the
15scheme)—

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

(b) at the end of paragraph (d) insert “, and

(e) designated guidance providers.”

16 In that Schedule, in paragraph 23 (fees)—

(a) 20in sub-paragraph (1), in the opening words, after “of this Act” insert
“other than sections 333Q and 333R”;

(b) in sub-paragraph (1)(a), after “functions” insert “, other than its
excepted functions,”;

(c) in sub-paragraph (2)(a), after “(ca)” insert “but not its excepted
25functions”;

(d) after sub-paragraph (2) insert—

“(2ZA) The “excepted functions” of the FCA are—

(a) its functions under sections 333E to 333Q, and

(b) its functions under section 333R so far as relating to
30the collection of payments.”

17 In section 85 of the Financial Services Act 2012 (relevant functions in relation
to scheme for investigating complaints against FCA and other regulators), in
subsection (4) (legislative functions of the FCA that are excluded)—

(a) in paragraph (c)(i), for “or 312J” substitute “, 312J or 333K”;

(b) 35in paragraph (e), after “139B(5)” insert “or 333P(9)”;

(c) after paragraph (e) insert—

“(f) setting standards under section 333H of FSMA 2000.”

18 (1) For the purpose of the exercise of a function conferred by a provision listed
in the first column of the table, a consultation requirement listed in the
40corresponding entry in the second column may be satisfied by things done
before the day on which this Act is passed.

(2) Where before the day on which this Act is passed the Financial Conduct
20Authority publishes a draft of proposed standards for the giving of pensions
guidance by designated guidance providers—

(a) the consultation requirement in section 138I of FSMA may be treated
as satisfied by virtue of sub-paragraph (1) even if the draft is not
accompanied by—

(i) 25a cost benefit analysis, or

(ii) an explanation of the Financial Conduct Authority’s reasons
for believing that setting the proposed standards would
secure an appropriate degree of protection for recipients of
pensions guidance from designated guidance providers, and

(b) 30if it is, any resulting standards published under section 138G(4) of
FSMA must be accompanied by—

(i) a cost benefit analysis within the meaning of section 138I of
that Act even if the conditions in subsection (5) of section 138I
are not satisfied, and

(ii) 35an explanation of the Financial Conduct Authority’s reasons
for believing that setting the standards will secure an
appropriate degree of protection for recipients of pensions
guidance from designated guidance providers.

(3) References in sub-paragraph (2) to provisions of sections 138G and 138I of
40FSMA are to those provisions as applied with modifications by section
333H(6) of that Act.

(4) Where before the day on which this Act is passed the Financial Conduct
Authority publishes a draft of proposed rules requiring information about
the availability of pensions guidance to be given by the trustees or managers

of a relevant pension scheme to members of the scheme with a right or
entitlement to flexible benefits, the consultation requirement in section
137FB(2) of FSMA may be treated as satisfied by virtue of sub-paragraph (1)
even if the only consultation before publication was with the Treasury.

(5) 5In this paragraph—

• “consultation requirement” includes—

  (a)

  a requirement to publish a draft;

  (b)

  a requirement under section 333E(2)(b) or (c) of FSMA;

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

19 10Expenses incurred by the Financial Conduct Authority before the day on
which this Act is passed in anticipation of the conferral of functions on it by
virtue of the amendments made by this Schedule are to be treated as if they
had been incurred on or after that day.

Section 65

SCHEDULE 4 15Rights to transfer benefits

Part 1 Great Britain amendments

Pension Schemes Act 1993 (c. 48)Pension Schemes Act 1993 (c. 48)

1 The Pension Schemes Act 1993 is amended as follows.

2 (1) 20Chapters 4 and 5 of Part 4 of the Act become Chapters 1 and 2 of a new
Part 4ZA.

(2) Accordingly—

(a) before section 93 (and before the Chapter heading above it) insert—

“Part 4ZA

Transfers and contribution refunds”;

(b) for the Chapter heading above section 93 substitute—

“Chapter 1

Transfer rights: general”;

(c) 25for the Chapter heading above section 101AA substitute—

“Chapter 2

Early leavers: cash transfer sums and contribution refunds”.

3 Until the coming into force of its repeal by Schedule 13 to the Pensions Act
2014, section 56 of the Pension Schemes Act 1993 (payment of state scheme
premiums on termination of certified status: supplementary) has effect as if,
in subsection (4)(b), for “Chapter 5 of Part 4” there were substituted
30“Chapter 2 of Part 4ZA”.

4 In section 73 (form of short service benefit and its alternatives), in subsection
(3), for “Chapter IV of this Part” substitute “Chapter 1 of Part 4ZA”.

5 For sections 93 to 94 substitute—

“93 Scope of Chapter 1

(1) 5This Chapter applies to a member of a pension scheme if all of the
following conditions are met.

(2) Condition 1 is that the member has accrued rights to any category of
benefits under the scheme rules.

(3) Condition 2 is that no crystallisation event has occurred in relation to
10the member’s accrued rights to benefits in that category (see
subsection (7)).

(4) Condition 3 is that—

(a) the member is no longer accruing rights to benefits in that
category (see subsection (8)), and

(b) 15in the case of benefits that are not flexible benefits, the
member stopped accruing those rights at least one year
before normal pension age.

(5) But this Chapter does not apply to—

(a) a member of a salary related occupational pension scheme
20whose pensionable service terminated before 1 January 1986
and in respect of whom prescribed requirements are
satisfied;

(b) a member of a personal pension scheme which is comprised
in an annuity contract made before 4 January 1988.

(6) 25In this Chapter a reference to a “category” of benefits is to one of the
following three categories—

(a) money purchase benefits;

(b) flexible benefits other than money purchase benefits;

(c) benefits that are not flexible benefits.

(7) 30For the purposes of Condition 2 a crystallisation event occurs in
relation to a member’s accrued rights to benefits in a category
when—

(a) payment of a pension in respect of any of the benefits has
begun,

(b) 35in the case of money purchase benefits, sums or assets held
for the purpose of providing any of the benefits are
designated as available for the payment of drawdown
pension (as defined by paragraph 4 of Schedule 28 to the
Finance Act 2004), or

(c) 40in the case of a personal pension scheme, sums or assets held
for the purpose of providing any of the benefits are applied
for purchasing an annuity or insurance policy.

(8) For the purposes of Condition 3 a member stops accruing rights to a
category of benefits when there are no longer arrangements in place
45for the accrual of rights to benefits in that category for or in respect
of the member.

(9) In this section a reference to accrued rights does not include pension
credit rights.

(10) Regulations may—

(a) provide for this Chapter not to apply in relation to a person
5of a prescribed description;

(b) modify the application of this Chapter in relation to a
member who has accrued rights to benefits of a prescribed
description.

(11) In the following provisions of this Chapter—

(a) 10a reference to a “member” of a pension scheme is a reference
to a member to whom this Chapter applies, and

(b) a reference to a member’s “transferrable rights” are to any
rights in relation to a category of benefits by virtue of which
this Chapter applies to the member.

93A 15Right to statement of entitlement: benefits other than money purchase

(1) The trustees or managers of a pension scheme must, on the
application of any member, provide the member with a statement of
entitlement in respect of the member’s transferrable rights in relation
to categories of benefits other than money purchase benefits.

(2) 20In the case of a member with transferrable rights in relation to two
categories of benefits other than money purchase benefits, the
application may relate to transferrable rights in relation to either or
both of those categories.

(3) For the purposes of this Chapter a member’s “statement of
25entitlement” is a written statement of the amount of the cash
equivalent at the guarantee date of the transferrable rights to which
the application under subsection (1) relates.

(4) In this Chapter “the guarantee date” means the date by reference to
which the value of the cash equivalent is calculated, and must be—

(a) 30within the prescribed period beginning with the date of the
application, and

(b) within the prescribed period ending with the date on which
the statement of entitlement is provided to the member.

(5) Regulations may make provision in relation to applications under
35this section and may, in particular, restrict the making of successive
applications.

(6) If the trustees or managers of a pension scheme fail to comply with
subsection (1), section 10 of the Pensions Act 1995 (civil penalties)
applies to any trustee or manager who has failed to take all
40reasonable steps to secure compliance.

94 Right to cash equivalent

(1) A member of a pension scheme who has received a statement of
entitlement under section 93A acquires a right to take the cash
equivalent shown in that statement in accordance with this Chapter.