Bank of England and Financial Services Bill (HL Bill 75)

Bank of England and Financial Services BillPage 20

(4) Regulations under subsection (3) may (amongst other things) make
provision—

(a) for the incorporation and registration in the United Kingdom of
bodies corporate;

(b) 5for a body incorporated by virtue of the regulations to take such
form and name as may be determined in accordance with the
regulations;

(c) as to the purposes for which such a body may exist and the
investments which it may issue;

(d) 10as to the constitution, ownership, management and operation of
such a body;

(e) for such a body to comprise different parts;

(f) for such parts to have legal personality distinct from that of the
body;

(g) 15as to the holding and management of the assets and liabilities of
such a body, including provision for the segregation of assets
and liabilities relating to different risks;

(h) as to the powers, duties, rights and liabilities of such a body and
of other persons, including—

(i) 20its directors and other officers;

(ii) its shareholders, and persons who hold the beneficial
title to shares in it without holding the legal title;

(iii) its auditor;

(iv) any persons holding assets for it;

(v) 25any persons who act or purport to act on its behalf;

(i) as to the merger of one or more such bodies and the division of
such a body;

(j) for the appointment and removal of an auditor for such a body;

(k) as to the winding up and dissolution of such a body;

(l) 30enabling the FCA or the PRA to apply to a court for an order
removing or replacing any director of, or person holding assets
for, such a body;

(m) for the carrying out of investigations by persons appointed by
the FCA or the PRA.

(5) 35If regulations under subsection (3) make the provision mentioned in
subsection (4)(e) references in subsection (4) to a body include its
constituent parts.

(6) Regulations under subsection (3) may—

(a) impose criminal liability;

(b) 40confer functions on the FCA or the PRA (including the functions
of making rules and giving directions);

(c) authorise the FCA or the PRA to require the Council of Lloyd’s
to exercise functions on its behalf (including functions
conferred otherwise than by the regulations);

(d) 45confer jurisdiction on any court or on the Tribunal;

(e) provide for fees to be charged by the FCA or the PRA in
connection with the carrying out of any of their functions under
the regulations (including fees payable on a periodical basis);

Bank of England and Financial Services BillPage 21

(f) modify, exclude or apply (with or without modifications) any
primary or subordinate legislation (including any provision of,
or made under, this Act);

(g) make consequential amendments, repeals and revocations of
5any such legislation;

(h) modify or exclude any rule of law.

(7) The provision that may be made by virtue of subsection (6)(f) includes
provision extending or adapting any power to make subordinate
legislation.

(8) 10Regulations under subsection (3) may provide that a reference in the
regulations to, or to any provision of, legislation (including an EU
instrument and legislation of a country or territory outside the United
Kingdom), is to be construed as a reference to that legislation or that
provision as amended from time to time.

(9) 15In this section—

  • “investment” includes any asset, right or interest;

  • “primary legislation” means an Act, an Act of the Scottish
    Parliament, a Measure or Act of the National Assembly for
    Wales, or Northern Ireland legislation;

  • 20“subordinate legislation” means an instrument made under
    primary legislation.

(10) If a statutory instrument containing regulations under this section
would, apart from this subsection, be treated as a hybrid instrument for
the purposes of the Standing Orders of either House of Parliament, it is
25to proceed in that House as if it were not a hybrid instrument.”

(3) In section 429(2) (regulations subject to the affirmative procedure), after “262,”
insert “284A,”.

Pensions guidance

27 Pensions guidance

(1) 30Section 333A of the Financial Services and Markets Act 2000 (meaning of
“pensions guidance” in Part 20A of that Act) is amended as follows.

(2) In subsection (2)—

(a) the words from “guidance”, in the second place it occurs, to the end
become paragraph (a);

(b) 35after that paragraph insert “, and

(b) guidance given for the purpose of helping an individual who
has a relevant interest in relation to a relevant annuity to make
decisions in connection with transferring or otherwise dealing
with the right to payments under that annuity.”

(3) 40After subsection (2) insert—

(2A) The Treasury may by regulations specify—

(a) the annuities that are relevant annuities for the purposes of
subsection (2)(b), and

Bank of England and Financial Services BillPage 22

(b) the interests (which may include contingent interests) that are
relevant interests for the purposes of that subsection.”

Information about resolution planning

28 Duty of Bank to provide information to Treasury

(1) 5The Financial Services Act 2012 is amended as follows.

(2) Before section 58 insert—

57A Duty of Bank to provide information required by Treasury

(1) The Treasury may by notice in writing require the Bank of England to
provide it with information specified, or of a description specified, in
10the notice.

(2) The information must be information which the Treasury consider is
material to the Bank’s assessment of the implications for public funds
of a bank, building society, credit union or investment firm failing.

(3) The information must be provided before the end of such reasonable
15period as may be specified in the notice.

(4) The Bank’s duty to provide information under this section does not
apply to information which the Bank does not have in its possession.

(5) For the purposes of this section, the cases in which a bank, building
society, credit union or investment firm (“the institution”) is to be
20regarded as failing include those where—

(a) the institution enters insolvency,

(b) any of the stabilisation options in Part 1 of the Banking Act 2009
is achieved in relation to the institution, or

(c) the institution falls to be taken for the purposes of the Financial
25Services Compensation Scheme (within the meaning given by
section 213 of FSMA 2000) to be unable, or likely to be unable,
to satisfy claims against the institution.

(6) In subsection (5)(a) “insolvency” includes—

(a) bankruptcy;

(b) 30liquidation;

(c) bank insolvency;

(d) building society insolvency;

(e) investment bank insolvency;

(f) administration;

(g) 35bank administration;

(h) building society special administration;

(i) receivership;

(j) a composition between the institution and the institution’s
creditors;

(k) 40a scheme of arrangement of the institution’s affairs.

(7) For the purposes of this section—

  • “bank” has the meaning given by section 2 of the Banking Act
    2009,

  • Bank of England and Financial Services BillPage 23

  • “bank administration” has the same meaning as in that Act (see
    section 136 of that Act),

  • “bank insolvency” has the same meaning as in that Act (see section
    90 of that Act),

  • 5“building society”, “building society insolvency” and “building
    society special administration” have the same meaning as in the
    Building Societies Act 1986 (see section 119 of that Act),

  • “credit union” means a credit union as defined by section 31 of the
    Credit Unions Act 1979 or a credit union as defined by Article
    102(2) of the Credit Unions (Northern Ireland) Order 1985,

  • “investment bank insolvency” means any procedure established
    by regulations under section 233 of the Banking Act 2009,

  • “investment firm” has the same meaning as in that Act (see section
    258A of that Act),

  • 15“public funds” means the Consolidated Fund and any other
    account or source of money which cannot be drawn or spent
    other than by, or with the authority of, the Treasury,

and an event has implications for public funds if it would or might
involve or lead to a need for the application of public funds.

57B 20Duty of Bank to inform Treasury about resolution plans

(1) This section applies in relation to—

(a) a resolution plan which includes one or more options for the
exercise of a stabilisation power by the Bank of England in
relation to an institution (“the institution”), and

(b) 25a group resolution plan which includes one or more options for
the exercise of a stabilisation power by the Bank of England in
relation to a group entity (“the entity”).

(2) Unless otherwise directed under subsection (5), before adopting the
plan the Bank must provide the Treasury with—

(a) 30a copy of the plan,

(b) the Bank’s assessment of the systemic risk of the institution or
the entity failing,

(c) the Bank’s assessment of the implications for public funds—

(i) of the exercise by the Bank of a stabilisation power in
35relation to the institution or the entity in accordance
with the option (or each of the options) for the exercise
of such a power included in the plan, and

(ii) if the plan includes one or more options for the use of an
insolvency or administration procedure in relation to
40the institution or the entity, of the use of such a
procedure in accordance with that option (or each of
those options), and

(d) any analysis considered by the Bank (whether or not prepared
by the Bank) to be material in making the assessments
45mentioned in paragraph (c).

(3) Unless otherwise directed under subsection (5), the Bank must provide
the Treasury with details of—

(a) any material changes to the plan, before those changes are
adopted,

Bank of England and Financial Services BillPage 24

(b) any material changes to the Bank’s assessments of the matters
mentioned in subsection (2)(b) or (c), and

(c) any further analysis considered by the Bank (whether or not
prepared by the Bank) to be material to revising the assessments
5mentioned in subsection (2)(c).

(4) Where reasonably practicable the Bank must comply with subsections
(2) and (3) before the Bank exercises any of its powers under section 3A
of the Banking Act 2009 in relation to the institution or the entity.

(5) The Treasury may by notice in writing—

(a) 10direct the Bank not to provide it under this section with
information in relation to institutions specified, or of a
description specified, in the notice (“specified institutions”);

(b) revoke a direction given under paragraph (a).

(6) Where a direction given under subsection (5)(a) is revoked—

(a) 15the Bank must provide the Treasury with the matters listed in
subsection (2)(a) to (d) in relation to the specified institutions as
soon as reasonably practicable after the date of the revocation,
and

(b) subsection (3) applies in relation to the specified institutions,

20but this is subject to any further direction under subsection (5)(a).

(7) For the purposes of this section—

  • “failing” has the same meaning as in section 57A,

  • “insolvency or administration procedure” means—

    (a)

    bank insolvency,

    (b)

    25building society insolvency,

    (c)

    investment bank insolvency,

    (d)

    bank administration, or

    (e)

    building society special administration,

    (and those terms have the same meaning as in section 57A);

  • 30“public funds” has the same meaning as in section 57A,

  • “systemic risk” means risk to the stability of the financial system
    in the United Kingdom or in other EEA states,

and action has implications for public funds if it would or might
involve or lead to a need for the application of public funds.”

(3) 35In section 65 (memorandum of understanding)—

(a) in subsection (1), after “in relation to” insert—

(a) the sharing of information by the Bank about any
proposals to include in a resolution plan or a group
resolution plan an option for the exercise of a
40stabilisation power by the Bank in relation to an
institution or group entity;

(b) ”;

(b) in subsection (2), at the beginning insert “For the purposes of
subsection (1)(b),”;

(c) 45in the heading, after “understanding:” insert “resolution planning and”.

Bank of England and Financial Services BillPage 25

(4) In section 67 (interpretation), after subsection (5) insert—

(6) “Group entity” has the same meaning as in the Bank Recovery and
Resolution (No. 2) Order 2014 (S.I. 2014/3348S.I. 2014/3348).

(7) “Group resolution plan” means a group resolution plan drawn up by
5the Bank under Part 5 of that Order.

(8) “Resolution plan” means a resolution plan drawn up by the Bank under
Part 5 of that Order.

(9) “Stabilisation power” has the same meaning as in section 1(4) of the
Banking Act 2009.”

10Part 3 Miscellaneous and general

Banknotes in Scotland and Northern Ireland

29 Banks authorised to issue banknotes in Scotland and Northern Ireland

(1) The Banking Act 2009 is amended as follows.

(2) 15In section 207(b) (overview of Part 6) for the words from “banks” to the end
substitute “authorised banks (see section 210).”

(3) In section 210 (authorised bank)—

(a) the words from “a bank” to the end become paragraph (a);

(b) at the end of that paragraph insert “(unless by virtue of regulations
20under section 214A it is no longer an authorised bank for the purposes
of this Part), or”;

(c) after that paragraph insert—

(b) a bank which is designated as an authorised bank for the
purposes of this Part by regulations under section
25214A(1)(a).”

(4) In section 213 (saving for existing issuers)—

(a) the existing text becomes subsection (1);

(b) in that subsection, after “bank” insert “within section 210(a)”;

(c) after that subsection insert—

(2) 30An authorised bank within section 210(b) may issue banknotes,
but only—

(a) in accordance with the provisions of this Part, and

(b) in the part of the United Kingdom which is specified in
relation to the bank in regulations under section
35214A(1)(b).”;

(d) for the heading substitute “Authorisation to issue banknotes”.

(5) After section 214 insert—

214A Power to designate banks as “authorised banks”

(1) The Treasury may by regulations—

Bank of England and Financial Services BillPage 26

(a) specify a bank which on and after the designation date is
designated as an authorised bank for the purposes of this Part,

(b) specify a part of the United Kingdom in which the bank may
issue banknotes, and

(c) 5make provision about how the bank is to be identified on those
banknotes.

(2) Regulations under subsection (1)

(a) may only specify under paragraph (a) a bank (the newly
authorised bank) which is in the same group as an authorised
10bank (the previously authorised bank) which has the right to
rely on section 213;

(b) may only specify under paragraph (b) the part of the United
Kingdom in which the previously authorised bank is
authorised to issue banknotes;

(c) 15must procure that on and after the designation date the
previously authorised bank is no longer an authorised bank for
the purposes of this Part by—

(i) in the case of a previously authorised bank within
section 210(a), providing that it is no longer an
20authorised bank for the purposes of this Part;

(ii) in the case of a previously authorised bank within
section 210(b), revoking its designation;

(d) must provide for the newly authorised bank to be treated as
having issued any banknotes in circulation which were issued
25by the previously authorised bank;

(e) must provide for the transfer of any rights or liabilities in
relation to those banknotes to the newly authorised bank from
the previously authorised bank;

(f) may provide for anything done by or in relation to the
30previously authorised bank in connection with those banknotes
to be treated as having been done by or in relation to the newly
authorised bank for the purposes specified in the regulations;

(g) may make further provision about banknotes issued by the
previously authorised bank;

(h) 35may make provision about banknotes held by or on behalf of
the previously authorised bank which are not in circulation.

(3) The reference in subsection (2)(d) and (g) to banknotes issued by the
previously authorised bank includes a reference to banknotes which
are to be treated as having been issued by that bank as a result of
40regulations made under subsection (1) (or any other enactment).

(4) Regulations under subsection (1) must—

(a) specify a date as the designation date, or

(b) if no such date is specified, make provision for the designation
date to be determined and published by the Treasury.

(5) 45Before specifying a bank under subsection (1)(a) the Treasury must
obtain the consent of the Bank of England.

(6) The Bank of England must prepare and publish a statement of the
matters which it intends to take into account in deciding whether to
give its consent.

Bank of England and Financial Services BillPage 27

(7) The power to make regulations under this section—

(a) is exercisable by statutory instrument;

(b) includes a power to make transitory or saving provision;

(c) includes a power to apply (with or without modifications) or
5disapply any provision of an Act or subordinate legislation
whenever passed or made.

(8) A statutory instrument containing regulations under this section may
not be made unless a draft of the instrument has been laid before and
approved by a resolution of each House of Parliament.

(9) 10For the purposes of this section—

  • “bank” has the same meaning as in Part 1 (see section 2),

  • “designation date” in relation to regulations under subsection (1)
    means the date specified or determined, as the case may be, in
    accordance with subsection (4),

  • 15“group” has the meaning given by section 421 of the Financial
    Services and Markets Act 2000, and

a banknote is in circulation from the time that it is issued by an
authorised bank until the time that it is returned to the bank (or a bank
which is treated as having issued it as a result of regulations made
20under subsection (1) or any other enactment).”

(6) In section 259(3) (statutory instruments), in Part 6 of the Table, before the entry
relating to section 215 insert—

“214A Issuers of
banknotes:
Scotland and
Northern
Ireland
Draft
affirmative
25resolution”

General

30 Consequential provision

(1) 30The Treasury may by regulations make the provision in subsection (2) in
consequence of any provision made by or under this Act.

(2) The provision referred to in subsection (1) is provision amending, repealing,
revoking or applying with modifications any provision of primary or
secondary legislation to which this section applies.

(3) 35This section applies to primary and secondary legislation passed or made—

(a) before the passing of this Act, or

(b) on or before the last day of the session in which this Act is passed.

(4) Regulations under this section—

(a) may make saving, transitory or transitional provision;

(b) 40may make different provision for different purposes.

(5) The power to make regulations under this section is exercisable by statutory
instrument.

Bank of England and Financial Services BillPage 28

(6) A statutory instrument containing regulations under this section—

(a) if it contains (whether alone or with other provision) provision which
amends or repeals any provision of primary legislation, may not be
made unless a draft of the instrument has been laid before, and
5approved by a resolution of, each House of Parliament, and

(b) otherwise, is subject to annulment in pursuance of a resolution of either
House of Parliament.

(7) In this section—

  • “primary legislation” means an Act, an Act of the Scottish Parliament, a
    10Measure or Act of the National Assembly for Wales, or Northern
    Ireland legislation;

  • “secondary legislation” means an instrument made under primary
    legislation.

31 Extent

(1) 15Subject to subsection (2) this Act extends to England and Wales, Scotland and
Northern Ireland.

(2) An amendment or repeal made by this Act has the same extent as the provision
amended or repealed.

32 Commencement

(1) 20The following provisions come into force on the day on which this Act is
passed—

(a) section 26;

(b) sections 30 to 33.

(2) The other provisions of this Act come into force on such day as the Treasury
25may by regulations appoint.

(3) The Treasury may by regulations make saving, transitory or transitional
provision in connection with the coming into force of any provision made by
or under this Act.

(4) Regulations under this section may make different provision for different
30purposes.

(5) The power to make regulations under this section is exercisable by statutory
instrument.

33 Short title

This Act may be cited as the Bank of England and Financial Services Act 2015.

Bank of England and Financial Services BillPage 29

SCHEDULES

Section 13

SCHEDULE 1 Prudential Regulation Committee

Section 30A

Schedule 1 5Prudential Regulation Committee

Interpretation

1 In this Schedule—

  • “chief executive for prudential regulation” means the Deputy
    Governor for prudential regulation, acting in his or her
    10capacity as a member of the Committee or by virtue of a
    delegation under paragraph 17;

  • “the Committee” means the Prudential Regulation
    Committee;

  • “prudential regulation strategy” means the strategy
    15determined by the Prudential Regulation Authority under
    section 2E of the Financial Services and Markets Act 2000.

Appointment of members by Chancellor

2 Before appointing a person as a member of the Committee under
section 30A(2)(g), the Chancellor of the Exchequer must—

(a) 20be satisfied that the person has knowledge or experience
which is likely to be relevant to the Committee’s functions,
and

(b) consider whether the person has any financial or other
interests that could substantially affect the functions as
25member that it would be proper for the person to
discharge.

Term of office of appointed members

3 (1) Appointment as a member of the Committee under section
30A(2)(f) or (g) is to be for a period of 3 years, but this is subject to
30sub-paragraph (2) and to paragraph 4.

(2) Initially some appointments may be for shorter and different
periods so as to secure that appointments expire at different times.

4 (1) A person may not be appointed as a member of the Committee
under section 30A(2)(g) more than twice.