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Banking Bill


Banking Bill
Part 3 — Bank Administration

78

 

(3)   

An order—

(a)   

shall be made by statutory instrument, and

(b)   

may not be made unless a draft has been laid before and approved by

resolution of each House of Parliament.

(4)   

Provision made under or by virtue of this Part may make special provision in

5

relation to the application of this Part to building societies.

146     

Credit unions

(1)   

The Treasury may by order provide for this Part to apply to credit unions

(within the meaning of section 31 of the Credit Unions Act 1979) as it applies

to banks, subject to modifications set out in the order.

10

(2)   

An order may—

(a)   

amend the Credit Union Act 1979, the Industrial and Providential

Societies Act 1965 or any other enactment which relates, or in so far as

it relates, to credit unions;

(b)   

amend an enactment amended by this Part;

15

(c)   

replicate, with or without modifications, a provision of this Part;

(d)   

apply a provision made under or by virtue of this Part, with or without

modifications, to this Part as it applies to credit unions.

(3)   

An order—

(a)   

shall be made by statutory instrument, and

20

(b)   

may not be made unless a draft has been laid before and approved by

resolution of each House of Parliament.

(4)   

Provision made under or by virtue of this Part may make special provision in

relation to the application of this Part to credit unions.

147     

Rules

25

(1)   

Section 411 of the Insolvency Act 1986 (company insolvency rules) is amended

as follows.

(2)   

In subsection (1) after “Part 2 of the Banking Act 2008 (bank insolvency orders)”

(inserted by section 112 above) insert “, Part 3 of that Act (bank

administration)”.

30

(3)   

After subsection (2C) (inserted by section 112 above) insert—

“(2D)   

For the purposes of subsection (2), a reference in Schedule 8 to this Act

to doing anything under or for the purposes of a provision of this Act

includes a reference to doing anything under or for the purposes of Part

3 of the Banking Act 2008.”

35

(4)   

In subsection (3)—

(a)   

after “bank liquidator” (inserted by section 112 above) insert “or

administrator”, and

(b)   

after “Part 2” (inserted by section 112 above) insert “or 3”.

148     

Fees

40

After section 414(8A) of the Insolvency Act 1986 (fees orders - inserted by

 
 

Banking Bill
Part 3 — Bank Administration

79

 

section 113 above) insert—

“(8B)   

This section applies in relation to Part 3 of the Banking Act 2008 (bank

administration) as in relation to Parts I to VII of this Act.”

149     

Partnerships

(1)   

The Lord Chancellor may, by order made with the concurrence of the Secretary

5

of State and the Lord Chief Justice, modify provisions of this Part in their

application to partnerships.

(2)   

For procedural purposes an order under subsection (1) shall be treated in the

same way as an order under section 420 of the Insolvency Act 1986

(partnerships).

10

(3)   

This section does not apply in relation to partnerships constituted under the

law of Scotland.

150     

Scottish partnerships

(1)   

The Secretary of State may by order modify provisions of this Part in their

application to partnerships constituted under the law of Scotland.

15

(2)   

An order—

(a)   

shall be made by statutory instrument, and

(b)   

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

House of Parliament.

151     

Co-operation between courts

20

(1)   

Provisions of or by virtue of this Part are “insolvency law” for the purposes of

section 426 of the Insolvency Act 1986 (co-operation between courts).

(2)   

At the end of that section (after the subsection added by section 116) add—

“(14)   

Section 151 of the Banking Act 2008 provides for provisions of that Act

about bank administration to be “insolvency law” for the purposes of

25

this section.”

152     

Interpretation: general

(1)   

In this Part “the court” means—

(a)   

in England and Wales, the High Court,

(b)   

in Scotland, the Court of Session, and

30

(c)   

in Northern Ireland, the High Court.

(2)   

In this Part “the FSA” means the Financial Services Authority.

(3)   

For the purposes of a reference in this Part to inability to pay debts—

(a)   

a bank that is in default on an obligation to pay a sum due and payable

under an agreement, is to be treated as unable to pay its debts, and

35

(b)   

section 123 of the Insolvency Act 1986 (inability to pay debts) also

applies; and

   

for the purposes of paragraph (a) “agreement” means an agreement the

making or performance of which constitutes or is part of a regulated activity

carried on by the bank.

40

 
 

Banking Bill
Part 4 — Financial Services Compensation Scheme

80

 

(4)   

Expressions used in this Part and in the Insolvency Act 1986 have the same

meaning as in that Act.

(5)   

Expressions used in this Part and in the Companies Act 2006 have the same

meaning as in that Act.

(6)   

A reference in this Part to action includes a reference to inaction.

5

153     

Northern Ireland

In the application of this Part to Northern Ireland—

(a)   

a reference to an enactment is to be treated as a reference to the

equivalent enactment having effect in relation to Northern Ireland,

(b)   

where this Part amends an enactment an equivalent amendment

10

(incorporating any necessary modification) is made to the equivalent

enactment having effect in relation to Northern Ireland,

(c)   

the reference in section 146 to section 31 of the Credit Unions Act 1979

is to be treated as a reference to Article 2 of the Credit Unions (Northern

Ireland) Order 1985, and

15

(d)   

in section 149

(i)   

the reference to the Secretary of State is to be treated as a

reference to the Department for Enterprise, Trade and

Investment, and

(ii)   

the reference to the Lord Chief Justice is a reference to the Lord

20

Chief Justice in Northern Ireland.

154     

Consequential provision

(1)   

The Treasury may by order make provision in consequence of this Part.

(2)   

An order may, in particular, amend or modify the effect of an enactment

(including a fiscal enactment and an Act of the Scottish Parliament) passed

25

before the commencement of this Part.

(3)   

An order—

(a)   

shall be made by statutory instrument, and

(b)   

may not be made unless a draft has been laid before and approved by

resolution of each House of Parliament.

30

Part 4

Financial Services Compensation Scheme

155     

Overview

This Part makes a number of amendments in connection with the Financial

Services Compensation Scheme provided for by Part 15 of the Financial

35

Services and Markets Act 2000.

156     

Contingency funding

(1)   

After section 214 of the Financial Services and Markets Act 2000 (compensation

 
 

Banking Bill
Part 4 — Financial Services Compensation Scheme

81

 

scheme: general) insert—

“214A   

    Contingency funding

(1)   

The Treasury may make regulations (“contingency fund regulations”)

permitting the scheme manager to impose levies under section 213 for

the purpose of maintaining contingency funds from which possible

5

expenses may be paid.

(2)   

Contingency fund regulations may make provision about the

establishment and management of contingency funds; in particular, the

regulations may make provision about—

(a)   

the number and size of funds;

10

(b)   

the circumstances and timing of their establishment;

(c)   

the classes of person from whom contributions to the funds may

be levied;

(d)   

the amount and timing of payments into and out of funds

(which may include provision for different levies for different

15

classes of person);

(e)   

refunds;

(f)   

the ways in which funds’ contents may be invested (including

(i) the extent of reliance on section 223A, and (ii) the application

of investment income);

20

(g)   

the purposes for which funds may be applied, but only so as to

determine whether a fund is to be used (i) for the payment of

compensation, (ii) for the purposes of co-operating with a bank

liquidator in accordance with section 86 of the Banking Act

2008, or (iii) for contributions under section 214B;

25

(h)   

procedures to be followed in connection with funds, including

the keeping of records and the provision of information.

(3)   

The compensation scheme may include provision about contingency

funds provided that it is not inconsistent with contingency fund

regulations.”

30

(2)   

At the end of section 213(7) (compensation scheme: further provision) add

“(except where limitations are expressly stated)”.

(3)   

In section 218 (compensation scheme: annual report)—

(a)   

in subsection (1) after “to the Authority” insert “and the Treasury”, and

(b)   

at the end of subsection (2)(b) add “or in contingency fund regulations.”

35

157     

Special resolution regime

After section 214A of the Financial Services and Markets Act 2000 (contingency

funding - inserted by section 156 above) insert—

“214B   

     Contribution to costs of special resolution regime

(1)   

This section applies where—

40

(a)   

a stabilisation power under Part 1 of the Banking Act 2008 has

been exercised in respect of a bank (within the meaning of that

Part), and

(b)   

the Treasury think that the bank was, or but for the exercise of

the stabilisation power would have become, unable to satisfy

45

claims against it.

 
 

Banking Bill
Part 4 — Financial Services Compensation Scheme

82

 

(2)   

Where this section applies—

(a)   

the Treasury may require the scheme manager to contribute

towards expenses connected with the exercise of the

stabilisation power, and

(b)   

contributions shall be treated as expenditure under the scheme

5

for all purposes (including levies, contingency funds and

borrowing).

(3)   

The Treasury shall make regulations—

(a)   

specifying what expenses the scheme manager may be required

to contribute towards under subsection (2),

10

(b)   

providing for independent verification of the nature and

amount of expenses incurred (which may include provision

about appointment and payment of an auditor), and

(c)   

providing for the method by which amounts to be contributed

are to be determined.

15

(4)   

The regulations must ensure that contributions required do not exceed

the amount of compensation that would have been payable under the

scheme if the stabilisation power had not been exercised and the bank

had been unable to satisfy claims against it; and for that purpose the

amount of compensation that would have been payable does not

20

include—

(a)   

amounts that would have been likely, at the time when the

stabilisation power was exercised, to be recovered by the

scheme from the bank, or

(b)   

any compensation actually paid to an eligible depositor of the

25

bank.

(5)   

The regulations must provide for the appointment of an independent

valuer (who may be the person appointed as valuer under section 49 of

the Banking Act 2008 in respect of the exercise of the stabilisation

power) to calculate the amounts referred to in subsection (4)(a); and the

30

regulations—

(a)   

must provide for the valuer to be appointed by the Treasury or

by a person designated by the Treasury,

(b)   

must include provision enabling the valuer to reconsider a

decision,

35

(c)   

must provide a right of appeal to a court or tribunal,

(d)   

must provide for payment of the valuer,

(e)   

may replicate or apply a provision of section 49 or 50, and

(f)   

may apply or include any provision that is or could be made

under that section.

40

(6)   

The regulations may include provision—

(a)   

about timing;

(b)   

about procedures to be followed;

(c)   

for discretionary functions to be exercised by a specified body

or by persons of a specified class;

45

(d)   

about the resolution of disputes (which may include provision

conferring jurisdiction on a court or tribunal).

 
 

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Part 4 — Financial Services Compensation Scheme

83

 

(7)   

The compensation scheme may include provision about contributions

under and levies in connection with this section, provided that it is not

inconsistent with this section or regulations under it.”

158     

Investing in National Loans Fund

After section 223 of the Financial Services and Markets Act 2000 (management

5

expenses) insert—

“223A   

    Investing in National Loans Fund

(1)   

Sums levied for the purpose of maintaining a contingency fund may be paid to

the Treasury.

(2)   

The Treasury may receive sums under subsection (1) and may set terms and

10

conditions of receipts.

(3)   

Sums received shall be treated as if raised under section 12 of the National

Loans Act 1968 (and shall therefore be invested as part of the National Loans

Fund).

(4)   

Interest accruing on the invested sums may be credited to the contingency

15

fund (subject to any terms and conditions set under subsection (2)).

(5)   

The Treasury shall comply with any request of the scheme manager to arrange

for the return of sums for the purpose of making payments out of a contingency

fund (subject to any terms and conditions set under subsection (2)).”

159     

Borrowing from National Loans Fund

20

After section 223A of the Financial Services and Markets Act 2000 (investing in

National Loans Fund - inserted by section 158 above) insert—

“223B   

    Borrowing from National Loans Fund

(1)   

The scheme manager may request a loan from the National Loans Fund for the

purpose of funding expenses incurred or expected to be incurred under the

25

scheme.

(2)   

The Treasury may arrange for money to be paid out of the National Loans

Fund in pursuance of a request under subsection (1).

(3)   

The Treasury shall determine—

(a)   

the rate of interest on a loan, and

30

(b)   

other terms and conditions.

(4)   

The Treasury may make regulations—

(a)   

about the amounts that may be borrowed under this section;

(b)   

permitting the scheme manager to impose levies under section 213 for

the purpose of meeting expenses in connection with loans under this

35

section;

(c)   

about the classes of person on whom those levies may be imposed;

(d)   

about the amounts and timing of those levies.

(5)   

The compensation scheme may include provision about borrowing under this

section provided that it is not inconsistent with regulations under this

40

section.”

 
 

 
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