Banking Bill

House of Commons

Session 2007 - 08
Internet Publications
Other Bills before Parliament

Banking Bill

Banking Bill
Part 7 — Miscellaneous
103

Bank of England
216
UK financial stability
(1)
After section 2 of the Bank of England Act 1998 (functions of court of directors)
insert—
“2A
Financial Stability Objective
5
(1)
An objective of the Bank shall be to contribute to protecting and
enhancing the stability of the financial systems of the United Kingdom
(the “Financial Stability Objective”).
(2)
The court of directors shall, consulting the Treasury, determine and
review the Bank’s strategy in relation to the Financial Stability
10
Objective.
2B
Financial Stability Committee
(1)
There shall be a sub-committee of the court of directors of the Bank (the
“Financial Stability Committee”) consisting of—
(a)
the Governor of the Bank, who shall chair the Committee (when
15
present),
(b)
the Deputy Governors of the Bank, and
(c)
4 directors of the Bank, appointed by the chair of the court of
directors (designated under paragraph 13 of Schedule 1).
(2)
The Committee shall have the following functions—
20
(a)
to make recommendations to the court of directors, which they
shall consider, about the nature and implementation of the
Bank’s strategy in relation to the Financial Stability Objective,
(b)
to give advice about whether and how the Bank should act in
respect of an institution, where the issue appears to the
25
Committee to be relevant to the Financial Stability Objective,
(c)
in particular, to give advice about whether and how the Bank
should use stabilisation powers under Part 1 of the Banking Act
2008 in particular cases,
(d)
to monitor the Bank’s use of the stabilisation powers,
30
(e)
to monitor the Bank’s exercise of its functions under Part 5 of
the Banking Act 2008 (inter-bank payment systems), and
(f)
any other functions delegated to the Committee by the court of
directors for the purpose of pursuing the Financial Stability
Objective.
35
(3)
The Treasury may appoint a person to represent the Treasury at
meetings of the Committee; and the Treasury’s representative—
(a)
may not vote in proceedings of the Committee,
(b)
shall in all other respects be a member of the Committee, and
(c)
may be replaced by the Treasury.
40
(4)
The Committee may co-opt other non-voting members.
(5)
The chair of the court of directors may replace members of the
Committee appointed under subsection (1)(c).

Banking Bill
Part 7 — Miscellaneous
104

2C
Financial Stability Committee: supplemental
(1)
The Committee shall determine its own procedure (including quorum).
(2)
If a member of the Committee has any direct or indirect interest in any
dealing or business with the Bank which falls to be considered by the
Committee—
5
(a)
he shall disclose his interest to the Committee when it considers
the dealing or business, and
(b)
he shall have no vote in proceedings of the Committee in
relation to any question arising from its consideration of the
dealing or business, unless the Committee has resolved that the
10
interest does not give rise to a conflict of interest.
(3)
In any proceedings of the Committee, a member shall have no vote in
relation to any question arising which touches or concerns him but
shall withdraw and be absent during the debate of any matter in which
he is concerned.
15
(4)
The Committee may delegate a function under section 2B(2)(b) to (e) to
two or more of its members, excluding—
(a)
the Treasury representative, and
(b)
co-opted non-voting members.”
(2)
At the end of section 2 of the Bank of England Act 1998 add—
20
“(5)
Sections 2A and 11 set objectives for the Bank in relation to financial
stability and monetary policy; and subsections (2) to (4) above are
subject to those sections.”
217
Number of directors
(1)
Section 1 of the Bank of England Act 1998 (court of directors) is amended as
25
follows.
(2)
In subsection (2) omit “16”.
(3)
After subsection (2) insert—
“(2A)
The number of directors must not exceed 9.”
(4)
The directors immediately before the day on which this section comes into
30
force shall vacate office on that day (without prejudice to re-appointment).
218
Meetings
(1)
Paragraph 12 of Schedule 1 to the Bank of England 1998 (court of directors:
meetings) is amended as follows.
(2)
In sub-paragraph (1) for “once a month” substitute “7 times in each calendar
35
year”.
(3)
For sub-paragraph (2) substitute—
    “(2)
Either of the following may summon a meeting at any time on giving
such notice as the circumstances appear to require—
(a)
the Governor of the Bank (or in his absence a Deputy
40
Governor), and

Banking Bill
Part 7 — Miscellaneous
105

(b)
the chair of the court.”
219
Chair of court
(1)
For paragraph 13(3) of Schedule 1 to the Bank of England Act 1998 (court of
directors: chairing meetings) substitute—
    “(3)
The Chancellor of the Exchequer may designate—
5
(a)
a member of the court to chair its meetings (“the chair of the
court”), and
(b)
one or more members of the court as deputies to chair its
meetings in the absence of the chair of the court.”
(2)
For section 3(4) of that Act (sub-committee: chair) substitute—
10
“(4)
The chair of the court (designated under paragraph 13 of Schedule 1)
shall chair meetings of the sub-committee (when present).”
220
Quorum
(1)
The Bank of England Act 1998 is amended as follows.
(2)
In section 3 (functions delegated to sub-committee)—
15
(a)
omit subsection (3),
(b)
in subsection (7) for “(3)” substitute “(4)”, and
(c)
at the end of subsection (7) add “(including quorum)”.
(3)
In paragraph 13 of Schedule 1 (court of directors: proceedings)—
(a)
omit sub-paragraph (2),
20
(b)
in sub-paragraph (6) for “(2)” substitute “(3)”, and
(c)
at the end of sub-paragraph (6) add “(including quorum)”.
221
Tenure
(1)
At the end of paragraph 1 of Schedule 1 to the Bank of England Act 1998
(Governor and Deputies: appointment) add—
25
    “(3)
A person may not be appointed as Governor more than twice.
      (4)
A person may not be appointed as Deputy Governor more than
twice.”
(2)
At the end of paragraph 6 of that Schedule (re-appointment) insert “(subject to
paragraph 1(3) and (4))”.
30
(3)
After paragraphs 1 and 2 of Schedule 3 to that Act (Monetary Policy
Committee: appointment) insert—
“2A
A person may not be appointed as a member of the Committee under
section 13(2)(c) more than twice.”
(4)
At the end of paragraph 6 of that Schedule (re-appointment) insert “(subject to
35
paragraph 2A)”.
222
Immunity
(1)
The Bank of England has immunity in its capacity as a monetary authority.

Banking Bill
Part 7 — Miscellaneous
106

(2)
In this section—
(a)
a reference to the Bank of England is a reference to the Bank and anyone
who acts or purports to act as a director, officer, servant or agent of the
Bank,
(b)
“immunity” means immunity from liability in damages in respect of
5
action or inaction, and
(c)
a reference to the Bank’s capacity as a monetary authority includes a
reference to functions exercised by the Bank for the purpose of or in
connection with—
(i)
acting as the central bank of the United Kingdom, or
10
(ii)
protecting or enhancing the stability of the financial systems of
the United Kingdom.
(3)
The immunity does not extend to action or inaction—
(a)
in bad faith, or
(b)
in contravention of section 6(1) of the Human Rights Act 1998.
15
223
Weekly return
Section 6 of the Bank Charter Act 1844 (Bank to produce weekly account) shall
cease to have effect.
224
Information
(1)
The Bank of England may disclose information that it thinks relevant to the
20
financial stability of—
(a)
individual financial institutions, or
(b)
one or more aspects of the financial systems of the UK.
(2)
Information about the business or other affairs of a specified or identifiable
person may be disclosed under subsection (1) only to—
25
(a)
the Treasury;
(b)
the Financial Services Authority.
(3)
This section—
(a)
overrides a contractual or other requirement to keep information in
confidence, and
30
(b)
is without prejudice to any other power to disclose information.
225
Bank of England Act 1946
Nothing in this Act affects the generality of section 4 of the Bank of England
Act 1946 (directions and relations with other banks).
Financial Services Authority
35
226
Variation of permission
At the end of section 45(1)(c) of the Financial Services and Markets Act 2000
(variation of permission to carry on regulated activities) add “(whether of the
services of the authorised person or of the services of other authorised
persons)”.
40