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55 | Third party compensation: mandatory provision |
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(1) | The Treasury may make regulations about third party compensation |
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arrangements in the case of partial property transfers. |
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(2) | In making regulations the Treasury shall, in particular, have regard to the |
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desirability of ensuring that if a residual bank is wound up after transfer, pre- |
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transfer creditors do not receive less favourable treatment than they would |
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have received had it been wound up immediately before transfer. |
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(a) | “residual bank” means a bank that is a transferor under a property |
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(b) | “pre-transfer creditor” means a person who— |
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(i) | is a creditor of a residual bank immediately before a property |
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transfer instrument takes effect, and |
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(ii) | satisfies conditions specified by the regulations, and |
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(c) | the reference to winding-up includes a reference to winding-up |
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through insolvency or bank insolvency. |
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(a) | require a compensation scheme order or a resolution fund order to |
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include a third party compensation order; |
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(b) | require a third party compensation order to include provision of a |
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specified kind or to specified effect; |
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(c) | make provision which is to be treated as forming part of a third party |
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compensation order (whether (i) generally, (ii) only if applied, (iii) |
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unless disapplied, or (iv) subject to express modification). |
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(5) | Regulations may provide for whether compensation is to be paid, and if so |
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what amount is to be paid, to be determined by reference to any factors or |
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combination of factors; in particular, the regulations may provide for |
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(a) | to depend in part upon the amounts which are or may be payable under |
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(b) | to be contingent upon the occurrence or non-occurrence of specified |
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(c) | to be determined wholly or partly by an independent valuer (within the |
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meaning of sections 49 to 51) appointed in accordance with a |
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compensation scheme order or resolution fund order. |
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(6) | Regulations may make provision about payment including, in particular, |
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(a) | on account subject to terms and conditions; |
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(d) | by the Financial Services Compensation Scheme. |
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(a) | shall be made by statutory instrument, and |
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(b) | may not be made unless a draft has been laid before and approved by |
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resolution of each House of Parliament. |
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(1) | This section applies to— |
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(a) | compensation scheme orders, |
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(b) | resolution fund orders, and |
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(c) | third party compensation orders. |
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(2) | An order may not be made unless a draft has been laid before and approved by |
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resolution of each House of Parliament. |
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57 | General continuity obligation: property transfers |
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(1) | In this section and section 58— |
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(a) | “residual bank” means a bank all or part of whose business has been |
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transferred in accordance with section 10(2)(b) or 11(2), |
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(b) | “group company” means a company which is a group undertaking in |
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relation to a residual bank, |
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(c) | “group undertaking” has the meaning given by section 1161(5) of the |
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Companies Act 2006 (interpretation), |
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(d) | “the transferred business” means the part of the bank’s business that |
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has been transferred, and |
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(e) | “transferee” means a commercial purchaser or bridge bank to whom |
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the transferred business has been transferred. |
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(2) | The residual bank and each group company must provide such services and |
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facilities as are required to enable a transferee to operate the transferred |
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(3) | The duty under subsection (2) (the “continuity obligation”) may be enforced as |
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if created by contract between the residual bank or group company and the |
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(4) | The residual bank or a group company may— |
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(a) | require consideration at market rate for anything done in fulfilment of |
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the continuity obligation, and |
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(b) | impose any other terms or conditions that would be expected in |
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arrangements concluded between parties dealing at arm’s length on |
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(5) | The continuity obligation is not limited to the provision of services or facilities |
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directly to a transferee. |
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(6) | The Bank of England may, with the consent of the Treasury, by notice to the |
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residual bank or a group company state that in the Bank’s opinion— |
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(a) | specified activities are required to be undertaken in accordance with |
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the continuity obligation; |
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(b) | activities are required be undertaken in accordance with the continuity |
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obligation on specified terms. |
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(7) | A notice under subsection (6) shall be determinative of the nature and extent of |
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the continuity obligation as from the time when the notice is given. |
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58 | Special continuity obligations: property transfers |
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(1) | Expressions in this section have the same meaning as in section 57. |
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(2) | The Bank of England may— |
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(a) | cancel a contract or other arrangement between the residual bank and |
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a group company (whether or not rights or obligations under it have |
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been transferred to a transferee); |
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(b) | modify the terms of a contract or other arrangement between the |
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residual bank and a group company (whether or not rights or |
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obligations under it have been transferred to a transferee); |
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(c) | add or substitute a transferee as a party to a contract or other |
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arrangement between the residual bank and a group company; |
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(d) | confer and impose rights and obligations on a group company and a |
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transferee, which shall have effect as if created by contract between |
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(e) | confer and impose rights and obligations on the residual bank and a |
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transferee which shall have effect as if created by contract between |
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(3) | In modifying or setting terms under subsection (2) the Bank of England shall |
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aim, so far as is reasonably practicable, to preserve or include— |
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(a) | provision for consideration at market rate, and |
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(b) | any other provision that would be expected in arrangements concluded |
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between parties dealing at arm’s length on market terms. |
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(4) | The power under subsection (2)— |
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(a) | may be exercised only in so far as the Bank of England thinks it |
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necessary to ensure the provision of such services and facilities as are |
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required to enable the transferee to operate the transferred business |
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(b) | may be exercised only with the consent of the Treasury, and |
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(c) | must be exercised by way of provision in a property transfer |
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instrument (or supplemental instrument). |
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59 | General continuity obligation: share transfers |
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(1) | In this section and section 60— |
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(a) | “transferred bank” means a bank all or part of the ownership of which |
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has been transferred in accordance with section 10(2)(a) or 12(2), |
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(b) | “former group company” means a company which was a group |
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undertaking in relation to the transferred bank immediately before the |
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(c) | “group undertaking” has the meaning given by section 1161(5) of the |
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Companies Act 2006 (interpretation), and |
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(d) | “the continuity authority” means— |
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(i) | the Bank of England, where ownership was transferred in |
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accordance with section 10(2)(a), and |
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(ii) | the Treasury, where ownership was transferred in accordance |
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(2) | Each former group company must provide such services and facilities as are |
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required to enable the transferred bank to operate effectively. |
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(3) | The duty under subsection (2) (the “continuity obligation”) may be enforced as |
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if created by contract between the transferred bank and the former group |
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(4) | A former group company may— |
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(a) | require consideration at market rate for anything done in fulfilment of |
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the continuity obligation, and |
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(b) | impose any other terms or conditions that would be expected in |
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arrangements concluded between parties dealing at arm’s length on |
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(5) | The continuity obligation is not limited to the provision of services or facilities |
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directly to the transferred bank. |
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(6) | The continuity authority may by notice to a former group undertaking state |
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that in the authority’s opinion— |
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(a) | specified activities are required to be undertaken in accordance with |
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the continuity obligation; |
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(b) | activities are required be undertaken in accordance with the continuity |
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obligation on specified terms. |
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(7) | A notice under subsection (6) shall be determinative of the nature and extent of |
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the continuity obligation as from the time when the notice is given. |
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60 | Special continuity obligations: share transfers |
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(1) | Expressions in this section have the same meaning as in section 59. |
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(2) | The continuity authority may— |
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(a) | cancel a contract or other arrangement between the transferred bank |
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and a former group company; |
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(b) | modify the terms of a contract or other arrangement between the |
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transferred bank and a former group company; |
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(c) | confer and impose rights and obligations on a former group company |
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and the transferred bank, which shall have effect as if created by |
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(3) | In modifying or setting terms under subsection (2) the continuity authority |
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shall aim, so far as is reasonably practicable, to preserve or include— |
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(a) | provision for consideration at market rate, and |
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(b) | any other provision that would be expected in arrangements concluded |
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between parties dealing at arm’s length on market terms. |
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(4) | The power under subsection (2)— |
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(a) | may be exercised only in so far as the continuity authority thinks it |
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necessary to ensure the provision of such services and facilities as are |
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required to enable the transferee to operate the transferred business |
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(b) | may be exercised by the Bank of England only with the consent of the |
| 40 |
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(c) | must be exercised by way of provision in a share transfer instrument or |
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order (or supplemental instrument or order). |
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