Bank of England and Financial Services Bill (HL Bill 75)
SCHEDULE 1 continued
Bank of England and Financial Services BillPage 30
(2)
For this purpose an appointment which by virtue of paragraph
3(2) is for a period of less than 3 years is to be disregarded.
5
(1)
If it appears to the Chancellor of the Exchequer that in the
circumstances it is desirable to do so, the Chancellor may, before
5the end of the term for which a person is appointed as a member
of the Committee under section 30A(2)(g), extend the person’s
term of office on one occasion for a specified period of not more
than 6 months.
(2)
The term being extended may be the person’s first or second term
10or, in a case where paragraph 4(2) allows a third term, the person’s
third term.
(3)
If a person whose first term of office is extended is subsequently
re-appointed under section 30A(2)(g)—
(a)
the length of the second term is to be reduced by a period
15equal to the extension of the first term, but
(b)
the second term may itself be extended under sub-
paragraph (1).
(4)
In a case where a person’s second term of office is extended and
paragraph 4(2) allows a third term, sub-paragraph (3) is to be read
20as if the references to first and second terms were references to
second and third terms respectively.
6
(1)
A person appointed under section 30A(2)(f) or (g) may resign the
office by written notice to the Bank.
(2)
Where the notice relates to a person appointed under section
2530A(2)(g) the Bank must give a copy of the notice to the Treasury.
Terms and conditions of appointment
7
(1)
The terms on which a person is appointed as a member of the
Committee under section 30A(2)(g) must be such as—
(a)
to secure that the member is not subject to direction by the
30Bank or the Treasury,
(b)
to require the member not to act in accordance with the
directions of any other person, and
(c)
to prohibit the member from acquiring any financial or
other interests that have a material effect on the extent of
35the functions as member that it would be proper for the
member to discharge.
(2)
The terms and conditions on which a person holds office as a
member of the Committee appointed under section 30A(2)(g) are
to be determined by the court of directors.
40Qualification for appointment
8
(1)
The following persons are disqualified for appointment under
section 30A(2)(f) or (g)—
(a) a minister of the Crown;
Bank of England and Financial Services BillPage 31
(b)
a person serving in a government department in
employment in respect of which remuneration is paid out
of money provided by Parliament.
(2)
The following persons are disqualified for appointment under
5section 30A(2)(g)—
(a)
a member of the Financial Policy Committee of the Bank
appointed under section 9B(1)(e);
(b)
a member of the Monetary Policy Committee of the Bank
appointed under section 13(2)(c).
10Removal of appointed members
9
(1)
A person appointed under section 30A(2)(f) or (g) vacates office on
becoming a person to whom paragraph 8(1) applies.
(2)
The court of directors of the Bank may, with the consent of the
Chancellor of the Exchequer, remove a member appointed under
15section 30A(2)(f) or (g) (“M”) if it is satisfied—
(a)
that M has been absent from 3 or more meetings of the
Prudential Regulation Committee without the
Committee’s consent,
(b)
that M has become bankrupt, that a debt relief order
20(under Part 7A of the Insolvency Act 1986) has been made
in respect of M, that M’s estate has been sequestrated or
that M has made an arrangement with or granted a trust
deed for M’s creditors, or
(c)
that M is unable or unfit to discharge M’s functions as a
25member.
(3)
The court of directors may, with the consent of the Chancellor of
the Exchequer, also remove a member appointed under section
30A(2)(g) (“M”) if it is satisfied that in all the circumstances M’s
financial or other interests are such as substantially to affect the
30functions as member which it would be proper for M to discharge.
Decision making
10 (1) Decisions of the Committee must be taken either—
(a)
at a meeting of the Committee in accordance with
paragraphs 11 to 15, or
(b) 35in writing in accordance with paragraph 16.
(2)
Subject to paragraphs 11 to 16, the Committee is to determine its
own procedure.
Meetings
11
The Governor of the Bank or any Deputy Governor of the Bank
40who is a member of the Committee may summon a meeting at any
time by giving such notice as the person giving the notice thinks
the circumstances require.
12
(1)
At a meeting of the Committee, the proceedings are to be
regulated as follows.
Bank of England and Financial Services BillPage 32
(2)
The quorum is to be determined by the Committee, but it must be
not less than 3 and of those 3—
(a)
one must be the Governor of the Bank, the Bank’s Deputy
Governor for financial stability or the Bank’s Deputy
5Governor for markets and banking,
(b)
unless both the Governor and the Bank’s Deputy Governor
for financial stability are present, one must be the Bank’s
Deputy Governor for prudential regulation, and
(c) one must be a member appointed under section 30A(2)(g).
(3)
10The chair is to be taken by the Governor of the Bank or, if the
Governor is not present, by the Deputy Governor for financial
stability or the Deputy Governor for markets and banking.
(4)
The person chairing the meeting must seek to ensure that
decisions of the Committee are reached by consensus wherever
15possible.
(5)
Where that person forms the opinion that consensus cannot be
reached, a decision is to be taken by a vote of all those members
present at the meeting (subject to paragraphs 13 and 14).
(6)
In the event of a tie, the person chairing the meeting is to have a
20second casting vote.
13
The chief executive of the Financial Conduct Authority must not
take part in any discussion by or decision of the Committee which
relates to—
(a)
the exercise of any functions of the Prudential Regulation
25Authority in relation to a particular person, or
(b) a decision not to exercise those functions.
14
(1)
If a member of the Committee (“M”) has any direct or indirect
interest (including any reasonably likely future interest) in any
dealing or business which falls to be considered by the
30Committee—
(a)
M must disclose that interest to the Committee when it
considers the dealing or business, and
(b)
the Committee must decide whether M is to be permitted
to participate in any proceedings of the Committee relating
35to any question arising from its consideration of the
dealing or business, and if so to what extent and subject to
what conditions (if any).
(2)
The Bank must issue and maintain a code of practice describing
how members of the Committee and the Committee are to comply
40with sub-paragraph (1).
(3) The Bank may at any time revise or replace the code.
(4)
Before issuing, revising or replacing the code, the Bank must
consult the Treasury.
(5)
The Bank must publish the current version of the code in whatever
45manner it sees fit.
(6)
The Committee must comply with the code when taking decisions
under sub-paragraph (1)(b).
Bank of England and Financial Services BillPage 33
15
(1)
The Committee may determine circumstances in which a member
who is not present at, but is in communication with, a meeting is
to be treated as present at it for the purposes of paragraph 12.
(2)
The Committee may invite other persons to attend, or to attend
5and speak at, any meeting of the Committee.
Decisions otherwise than at meetings
16
(1)
The Committee may take a decision on a matter without a meeting
if—
(a)
a majority of eligible members indicate in writing their
10agreement to the decision,
(b)
the eligible members who indicate in writing their
agreement to the decision would have constituted a
quorum at a meeting of the Committee, and
(c)
any other requirements determined by the Committee are
15met.
(2)
“Eligible members” are members of the Committee who would
have been entitled to vote on the matter if the matter had been
proposed for decision at a meeting of the Committee.
Delegation of functions
17
(1)
20The Committee may delegate such of its functions as it thinks fit
to—
(a) a member of the Committee,
(b) a sub-committee of the Committee consisting of—
(i) members of the Committee, or
(ii)
25one or more members of the Committee and one or
more officers, employees or agents of the Bank,
(c) an officer, employee or agent of the Bank, or
(d)
a committee consisting of officers, employees or agents of
the Bank.
30This is subject to sub-paragraphs (2) and (9).
(2)
The Committee must delegate to the chief executive for prudential
regulation the following functions—
(a)
preparing for consideration by the Committee drafts of a
prudential regulation strategy and any proposed revisions
35to that strategy;
(b)
preparing for consideration by the Committee drafts of the
annual budget required by paragraph 18 and any
proposed variations of that budget;
(c)
the day to day management of the Bank’s functions as the
40Prudential Regulation Authority;
(d)
the day to day implementation of the prudential regulation
strategy.
This is subject to sub-paragraph (9).
(3) A delegation under sub-paragraph (2)—
(a)
45must identify any decisions (within sub-paragraph (9) or
otherwise) that are not included in the delegation;
Bank of England and Financial Services BillPage 34
(b)
may be on such terms and subject to such conditions as the
Committee thinks fit.
(4) Those terms and conditions—
(a)
may include provision about the manner of the exercise of
5the delegated functions;
(b) may be revised by the Committee from time to time.
(5)
Sub-paragraph (2) does not apply in the event of a vacancy in the
office of Deputy Governor for prudential regulation.
(6) The Bank must publish a statement setting out—
(a)
10the functions which the Committee has delegated to the
chief executive for prudential regulation,
(b)
the terms and conditions on which each delegation is
made, and
(c)
any decisions (within sub-paragraph (9) or otherwise) that
15are not included in the delegations.
(7)
If there is a material change to any of those matters, the Bank must
publish a revised statement.
(8)
The requirement to delegate the functions mentioned in sub-
paragraph (2) to the chief executive for prudential regulation does
20not prevent further delegation of those functions by the chief
executive.
(9) The Committee may not delegate the following functions—
(a) reporting to the Treasury under paragraph 19;
(b)
making rules under the Financial Services and Markets Act
252000;
(c)
determining, reviewing and revising the prudential
regulation strategy under section 2E of that Act;
(d)
giving and reviewing guidance under section 2I of that
Act;
(e)
30giving and revoking directions under section 3I, 3J, 3M,
316 or 318 of that Act;
(f)
issuing statements under section 63ZD, 63C, 69, 142V,
192H, 192N, 210 or 345D of that Act;
(g)
issuing statements under section 80 of the Financial
35Services Act 2012.
Prudential regulation budget
18
(1)
The Committee must, with the approval of the court of directors,
for each of the Bank’s financial years adopt an annual budget for
the Bank’s functions as the Prudential Regulation Authority.
(2)
40The budget must be adopted before the start of the financial year
to which it relates.
(3)
The Committee may, with the approval of the court of directors,
vary the budget for a financial year at any time after its adoption.
(4)
The Bank must publish each budget, and each variation of a
45budget, in whatever way it thinks appropriate.
Bank of England and Financial Services BillPage 35
Annual reports
19
At least once a year the Committee must make a report to the
Chancellor of the Exchequer on—
(a)
the adequacy of the resources allocated, in the period to
5which the report relates, to the Bank’s functions as the
Prudential Regulation Authority, and
(b)
the extent to which the exercise of the Bank’s functions as
the Prudential Regulation Authority is independent of the
exercise of its other functions.””
Section 16
10SCHEDULE 2 Amendments relating to Part 1
Part 1 Bank of England Act 1998
1 The Bank of England Act 1998 is amended as follows.
2 15In section 2 (functions of court of directors), for subsection (5) substitute—
“(5) Subsections (2) to (4) are subject to—
(a) section 2A (Financial Stability Objective);
(b) section 11 (objectives in relation to monetary policy);
(c)
Part 1A of the Financial Services and Markets Act 2000
20(objectives and strategy of the Prudential Regulation
Authority).””
3
In section 2A(2) (financial stability objective) for “, the Financial Conduct
Authority and the Prudential Regulation Authority)” substitute “and the
Financial Conduct Authority)”.
4 (1) 25Section 3A (oversight functions) is amended as follows.
(2) In subsection (2)(a)—
(a)
in sub-paragraph (i), after “Act” insert “, the objectives specified in
relation to the Prudential Regulation Authority in Part 1A of the
Financial Services and Markets Act 2000”;
(b) 30omit the “and” at the end of sub-paragraph (ii);
(c) for sub-paragraph (iii) substitute—
“(“iii)
the Bank’s strategy determined under section
2,
(iv)
the Bank’s financial stability strategy
35determined under section 9A, and
(v)
the strategy of the Prudential Regulation
Authority determined under section 2E of the
Financial Services and Markets Act 2000;”.”
(3) In subsection (4) omit paragraphs (c) to (h).
5 (1) 40Section 3C (reviews) is amended as follows.
Bank of England and Financial Services BillPage 36
(2) In subsection (1)—
(a) after “of its” insert “oversight”;
(b) for “Oversight Committee” substitute “court of directors”;
(c)
in paragraphs (a) and (b) for “Committee” substitute “court of
5directors”.
(3) In subsection (3)(a) for “Committee” substitute “court of directors”.
(4) Omit subsection (4).
(5) In subsection (5) for “Committee” substitute “court of directors”.
6
In section 3D(1) (publication of reports of performance reviews) for
10“Oversight Committee” substitute “court of directors”.
7
In section 3E(2) (recommendations resulting from review) for “Oversight
Committee” substitute “court of directors”.
8 (1) Section 3F (oversight: further provisions) is amended as follows.
(2) In subsection (1)—
(a) 15for “Oversight Committee” substitute “court of directors”;
(b) after “of its” insert “oversight”;
(c)
for “or the Monetary Policy Committee” substitute “, the Monetary
Policy Committee or the Prudential Regulation Committee”.
(3) In subsection (2)—
(a) 20for “Oversight Committee” substitute “court of directors”;
(b)
for “or the Monetary Policy Committee” substitute “, the Monetary
Policy Committee or the Prudential Regulation Committee for the
purposes of exercising its oversight functions”.
(4) After subsection (2) insert—
“(2A)
25But a member of the court of directors who has any direct or indirect
interest (including any reasonably likely future interest) in any
dealing or business which falls to be considered by the Prudential
Regulation Committee may not, under the powers conferred by this
section—
(a)
30obtain access to any documents relating to the dealing or
business, or
(b)
attend any proceedings of the Prudential Regulation
Committee relating to any question arising from its
consideration of the dealing or business.””
(5) 35In subsection (3)—
(a) in paragraph (a)—
(i)
after “Policy Committee” insert “, the Monetary Policy
Committee or the Prudential Regulation Committee”;
(ii) for “Oversight Committee” substitute “court of directors”;
(b) 40omit the “or” at the end of paragraph (b);
(c) at the end of paragraph (c) insert “, or
(d)
the powers of the Prudential Regulation Committee
under paragraph 15(2) of Schedule 6A.””
(6) In the heading, for “Committee” substitute “functions”.
Bank of England and Financial Services BillPage 37
9 (1) Section 4 (annual report by the Bank) is amended as follows.
(2) For subsection (2)(a) substitute—
“(a)
a report by the court of directors on the matters which it
reviews, monitors or otherwise considers in the performance
5of its oversight functions (as defined by section 3A(2)),”.”
(3) In subsection (2)(b)—
(a) for “statement” substitute “statements”;
(b) after “7(2)” insert “and (2A)”;
(c) for “it” substitute “them”.
(4) 10Omit subsection (3).
(5) After subsection (6) insert—
“(7)
The Chancellor may comply with subsection (6) by laying a
document containing a report under this section together with a
report by the Prudential Regulation Authority under paragraph 19 of
15Schedule 1ZB to the Financial Services and Markets Act 2000.””
10 Omit section 7A(9)(a) (definition of “qualifying company”).
11
In section 9B(4) (Financial Policy Committee) for “Oversight Committee”
substitute “court of directors of the Bank”.
12
In section 9O (FPC recommendations within the Bank), after subsection (4)
20insert—
“(5)
Recommendations by the Committee to the PRA are to be made
under section 9Q (and not under this section).””
13
(1)
Section 9Y (directions requiring information or documents) is amended as
follows.
(2)
25In subsection (2)(a) for “or the PRA (“the regulator”) requiring the regulator”
substitute “requiring it”.
(3) In subsection (3) for “regulator”, in each place it occurs, substitute “FCA”.
(4) In subsection (4) omit—
(a) the “and” at the end of paragraph (a), and
(b) 30paragraph (b).
(5) In the italic heading before section 9Y, omit “or PRA”.
14
(1)
Section 9Z (further provisions about directions under section 9Y) is
amended as follows.
(2) In subsection (2)—
(a) 35omit “or the PRA (“the regulator”)”;
(b) for “regulator”, in the second place it occurs, substitute “FCA”.
(3) In subsection (4), for “regulator to which it is given” substitute “FCA”.
15 In section 14 (publications of statements about decisions)—
(a) in subsection (1) after “As soon as” insert “reasonably”;
(b) 40in subsection (5) after “As soon as” insert “reasonably”.
16 (1) Section 16 (functions of Oversight Committee) is amended as follows.
Bank of England and Financial Services BillPage 38
(2)
In subsection (1) for “Oversight Committee” substitute “court of directors of
the Bank”.
(3)
In subsection (2) for “the function of the Oversight Committee” substitute
“the court’s function”.
(4) 5In the heading, for “Oversight Committee” substitute “court of directors”.
17 In section 18(6) (reports) after “as soon as” insert “reasonably”.
18 In section 40(2) (orders) after “under—” insert—
-
““section 1A(1),”.”
19 (1) Schedule 1 (court of directors) is amended as follows.
(2)
10In paragraph 8(2) for “Chief Executive of the Prudential Regulation
Authority” substitute “chief executive for prudential regulation (see
Schedule 6A)”.
(3) In paragraph 11(1), after paragraph (c) insert—
“(“d)
a committee consisting of officers, employees
15or agents of the Bank.””
20 (1) Schedule 2A (Financial Policy Committee) is amended as follows.
(2)
In paragraph 5 for “Oversight Committee” substitute “court of directors of
the Bank”.
(3) In paragraph 6 for sub-paragraph (2) substitute—
“(2)
20The following persons are disqualified for appointment under
section 9B(1)(e)—
(a)
a member of the Monetary Policy Committee of the Bank
appointed under section 13(2)(c);
(b)
a member of the Prudential Regulation Committee of the
25Bank appointed under section 30A(2)(g).””
(4) In paragraph 9—
(a)
in sub-paragraph (1) for “Oversight Committee” substitute “court of
directors of the Bank”;
(b)
in sub-paragraph (2) for “Oversight Committee” substitute “court of
30directors”.
(5) In paragraph 11—
(a) in sub-paragraph (2)(b) for “either” substitute “one”;
(b) omit sub-paragraph (8).
(6) In paragraph 14—
(a) 35the existing text becomes sub-paragraph (1);
(b) after that sub-paragraph insert—
“(2)
The Bank must issue and maintain a code of practice
describing how members of the Committee and the
Committee are to comply with sub-paragraph (1).
(3) 40The Bank may at any time revise or replace the code.
(4)
Before issuing, revising or replacing the code, the Bank
must consult the Treasury.
Bank of England and Financial Services BillPage 39
(5)
The Bank must publish the current version of the code in
whatever manner it sees fit.
(6)
The Committee must comply with the code when taking
decisions under sub-paragraph (1)(b).””
(7) 5After paragraph 14 insert—
““Decisions otherwise than at meetings
15
(1)
The Committee may take a decision on a matter without a meeting
if—
(a)
a majority of eligible members indicate in writing their
10agreement to the decision,
(b)
the eligible members who indicate in writing their
agreement to the decision would have constituted a
quorum at a meeting of the Committee, and
(c)
any other requirements determined by the Committee are
15met.
(2)
“Eligible members” are members of the Committee who would
have been entitled to vote on the matter if the matter had been
proposed for decision at a meeting of the Committee.
Power to determine own procedure
16
20Subject to paragraphs 11, 14 and 15, the Committee is to determine
its own procedure.””
21 (1) Schedule 3 (Monetary Policy Committee) is amended as follows.
(2)
In paragraph 4(2) for “Oversight Committee” substitute “court of directors
of the Bank”.
(3) 25For paragraph 5A substitute—
“5A
The following persons are disqualified for appointment under
section 13(2)(c)—
(a)
a member of the Financial Policy Committee of the Bank
appointed under section 9B(1)(e);
(b)
30a member of the Prudential Regulation Committee of the
Bank appointed under section 30A(2)(g).””
(4) In paragraph 8—
(a)
for “have executive responsibility” substitute “carry out monetary
policy analysis”;
(b) 35omit the words from “for” to the end.
(5) In paragraph 9(1)—
(a)
for “Oversight Committee” substitute “court of directors of the
Bank”;
(b)
in paragraph (a) for “the meetings of the Monetary Policy Committee
40for more than 3 months” substitute “3 or more meetings of the
Monetary Policy Committee”.