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Banking Bill


Banking Bill
Part 1 — Special Resolution Regime

21

 

Compensation

44      

Orders

(1)   

This Part provides three methods of protecting the financial interests of

transferors and others in connection with share transfer instruments and

orders and property transfer instruments.

5

(2)   

A “compensation scheme order” is an order establishing a scheme for—

(a)   

determining whether transferors should be paid compensation, and

(b)   

paying any compensation.

(3)   

A “resolution fund order” is an order establishing a scheme under which

transferors become entitled to the proceeds of the disposal of things

10

transferred—

(a)   

in specified circumstances, and

(b)   

to a specified extent.

(4)   

A “third party compensation order” is provision made in accordance with

section 54 for compensation to be paid to persons other than transferors.

15

45      

Sale to private sector purchaser

(1)   

This section applies if the Bank of England makes a share transfer instrument

or a property transfer instrument in accordance with section 10(2).

(2)   

The Treasury shall make a compensation scheme order.

(3)   

An order made by virtue of subsection (2) may include a third party

20

compensation order.

(4)   

In the case of a partial property transfer, an order made by virtue of subsection

(2) must include a third party compensation order.

46      

Transfer to bridge bank

(1)   

This section applies if the Bank of England makes a property transfer

25

instrument in accordance with section 11(2).

(2)   

The Treasury shall make a resolution fund order.

(3)   

An order made by virtue of subsection (2) may include—

(a)   

a compensation scheme order;

(b)   

a third party compensation order (which may, in particular, make

30

provision, in respect of specified classes of creditor, for rights in

addition to any rights they may have by virtue of the resolution fund

order).

(4)   

In the case of a partial property transfer, the resolution fund order must

include a third party compensation order.

35

47      

Transfer to temporary public ownership

(1)   

This section applies if the Treasury make a share transfer order in accordance

with section 12(2).

(2)   

The Treasury shall make either—

 
 

Banking Bill
Part 1 — Special Resolution Regime

22

 

(a)   

a compensation scheme order, or

(b)   

a resolution fund order.

(3)   

A resolution fund order made by virtue of subsection (2)(b) may include—

(a)   

a compensation scheme order;

(b)   

a third party compensation order (which may, in particular, make

5

provision, in respect of specified classes of creditor, for rights in

addition to any rights they may have by virtue of the resolution fund

order).

(4)   

A compensation scheme order made by virtue of subsection (2) may include a

third party compensation order.

10

48      

Onward transfers

(1)   

This section applies where—

(a)   

the Treasury make an onward share transfer order under section 27,

(b)   

the Bank of England makes a bridge bank share transfer instrument

under section 28,

15

(c)   

the Bank of England makes an onward property transfer instrument

under section 40, or

(d)   

the Treasury makes a property transfer order under section 41.

(2)   

The Treasury may make—

(a)   

a compensation scheme order;

20

(b)   

a third party compensation order.

49      

Independent valuer

(1)   

A compensation scheme order must provide for the amount of any

compensation payable to be determined by a person appointed in accordance

with the order (the “independent valuer”).

25

(2)   

An order must provide for the independent valuer to be appointed by a person

appointed by the Treasury (“the appointing person”).

(3)   

An order may either—

(a)   

require the Treasury to make arrangements to identify a number of

possible independent valuers, one of whom is to be selected by the

30

appointing person, or

(b)   

require the appointing person to make arrangements to select the

independent valuer, having regard to any criteria specified in the order.

(4)   

The independent valuer may be removed only—

(a)   

on the grounds of incapacity or serious misconduct, and

35

(b)   

by a person specified by the Treasury in accordance with the

compensation scheme order.

(5)   

An order must include provision for resignation and replacement of the

independent valuer (and subsections (2) and (3) apply to replacement as to the

first appointment).

40

 
 

Banking Bill
Part 1 — Special Resolution Regime

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50      

Independent valuer: supplemental

(1)   

An independent valuer may do anything necessary or desirable for the

purposes of or in connection with the performance of the functions of the

office.

(2)   

The Treasury may by order confer specific functions on independent valuers;

5

in particular, the order may—

(a)   

enable an independent valuer to apply to a court or tribunal for an

order requiring the provision of information or the giving of oral or

written evidence;

(b)   

enable or require independent valuers to publish, disclose or withhold

10

information.

(3)   

Provision under subsection (2) may—

(a)   

confer a discretion on independent valuers;

(b)   

confer jurisdiction on a court or tribunal;

(c)   

make provision about oaths, expenses and other procedural matters

15

relating to the giving of evidence or the provision of information;

(d)   

create a criminal offence;

(e)   

make other provision about enforcement.

(4)   

An independent valuer may appoint staff.

(5)   

The Treasury may by order make provision about the procedure to be followed

20

by independent valuers.

(6)   

The Treasury shall by order make provision for—

(a)   

reconsideration of a decision of an independent valuer, and

(b)   

appeal to a court or tribunal against a decision of an independent

valuer.

25

(7)   

Independent valuers (and their staff) are neither servants nor agents of the

Crown (and, in particular, are not civil servants).

(8)   

Records of an independent valuer are public records for the purposes of the

Public Records Act 1958.

(9)   

An order under this section—

30

(a)   

shall be made by statutory instrument, and

(b)   

shall be subject to annulment in pursuance of a resolution of either

House of Parliament.

51      

Independent valuer: money

(1)   

The Treasury may by order provide for the payment by the Treasury of remuneration

35

and allowances to

(a)   

independent valuers,

(b)   

staff of independent valuers, and

(c)   

appointing persons.

(2)   

An order—

40

(a)   

must provide for the appointment by the Treasury of a person to

monitor the operation of the arrangements for remuneration and

allowances for independent valuers;

 
 

Banking Bill
Part 1 — Special Resolution Regime

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(b)   

may require, or enable a compensation scheme order or third party

compensation order to require, the monitor’s approval before specified

things may be done in the course of those arrangements;

(c)   

may include provision about records and accounts;

(d)   

may make provision about numbers of staff and the terms and

5

conditions of their appointment (which may include provision

requiring the approval of the Treasury or the monitor).

(3)   

In subsection (1) a reference to the payment of allowances to a person includes

a reference to the payment to or in respect of the person of sums by way of or

in respect of pension.

10

(4)   

Independent valuers (and their staff) are not liable for damages in respect of

anything done in good faith for the purposes of or in connection with the

functions of the office (subject to section 8 of the Human Rights Act 1998).

(5)   

An order under this section—

(a)   

shall be made by statutory instrument, and

15

(b)   

shall be subject to annulment in pursuance of a resolution of either

House of Parliament.

52      

Valuation principles

(1)   

A compensation scheme order may specify principles (“valuation principles”)

to be applied in determining the amount of compensation.

20

(2)   

Valuation principles may, in particular, require an independent valuer—

(a)   

to apply, or not to apply, specified methods of valuation;

(b)   

to assess values or average values at specified dates or over specified

periods;

(c)   

to take specified matters into account in a specified manner;

25

(d)   

not to take specified matters into account.

(3)   

In determining an amount of compensation (whether or not in accordance with

valuation principles) an independent valuer must disregard actual or potential

financial assistance provided by the Bank of England or the Treasury

(disregarding ordinary market assistance offered by the Bank on its usual

30

terms).

(4)   

Valuation principles may require or permit an independent valuer to make

assumptions; such as, for example, that the bank—

(a)   

has had a permission under Part 4 of the Financial Services and Markets

Act 2000 (regulated activities) varied or cancelled,

35

(b)   

is unable to continue as a going concern,

(c)   

is in administration, or

(d)   

is being wound up.

(5)   

There is nothing to prevent the application of the valuation principles in an

order from resulting in no compensation being payable to a transferor.

40

53      

Resolution fund

(1)   

A resolution fund order must include provision for determining—

(a)   

who will be entitled to a share of the proceeds on disposal of things

transferred,

 
 

Banking Bill
Part 1 — Special Resolution Regime

25

 

(b)   

the way in which the proceeds will be calculated, and

(c)   

the way in which shares will be calculated.

(2)   

Provision under subsection (1)(b) may, in particular, provide for proceeds to be

calculated net of—

(a)   

amounts required for the repayment of loans from public funds or for

5

other payments in respect of public financial assistance;

(b)   

some or all of the administrative or other expenses incurred in

connection with the provisions of this Part.

(3)   

A resolution fund order may confer a discretionary function on—

(a)   

a Minister of the Crown,

10

(b)   

the Treasury,

(c)   

the Bank of England, or

(d)   

any other specified person.

(4)   

A resolution fund order may include provision for the determination of

disputes about the application of its provisions (whether by conferring

15

jurisdiction on a court or tribunal or otherwise).

(5)   

A resolution fund order may require the Bank of England in managing a bridge

bank to aim to maximise the proceeds available for distribution in accordance

with the order; and an order which includes a requirement must—

(a)   

subserviate it to pursuit of the special resolution objectives and

20

compliance with the code of practice under section 5,

(b)   

specify its extent, and

(c)   

include provision about how the Bank is to comply with it.

(6)   

A resolution fund order may require the Treasury to ensure that a bank in

temporary public ownership in accordance with section 12(2) is managed with

25

the aim of maximising the proceeds available for distribution in accordance

with the order; and an order which includes a requirement must—

(a)   

subserviate it to pursuit of the special resolution objectives and

compliance with the code of practice under section 5,

(b)   

specify its extent, and

30

(c)   

include provision about how the Treasury is to comply with it.

54      

Third party compensation: discretionary provision

(1)   

A power or duty in this Part to make a third party compensation order is a

power or duty to make provision establishing a scheme for paying

compensation to persons other than a transferor.

35

(2)   

A third party compensation order may—

(a)   

form part of a compensation scheme order or resolution fund order, or

(b)   

be a separate order.

(3)   

A third party compensation order may include provision for—

(a)   

an independent valuer (in which case sections 49 and 50 shall apply);

40

(b)   

valuation principles (in which case section 52(2) to (5) shall apply).

 
 

 
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