Banking Bill

House of Commons

Session 2007 - 08
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Banking Bill

Banking Bill
Part 5 — Inter-Bank Payment Systems
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178
Role of FSA
In exercising powers under this Part the Bank of England shall have regard to
any action that the FSA has taken or could take.
Enforcement
179
Inspection
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(1)
The Bank of England may appoint one or more persons to inspect the operation
of a recognised inter-bank payment system.
(2)
The operator of a recognised inter-bank payment system must—
(a)
grant an inspector access, on request and at any reasonable time, to
premises on or from which any part of the system is operated, and
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(b)
otherwise co-operate with an inspector.
180
Inspection: warrant
(1)
A justice of the peace may on the application of an inspector issue a warrant
entitling an inspector or a constable to enter premises if—
(a)
any part of the management or operation of a recognised inter-bank
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payment system is conducted on the premises (whether by an operator
of the system or by someone providing services used by an operator),
and
(b)
any of the following conditions is satisfied.
(2)
Condition 1 is that—
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(a)
a requirement under section 190 in connection with the payment
system has not been complied with, and
(b)
there is reason to believe that information relevant to the requirement
is on the premises.
(3)
Condition 2 is that there is reason to suspect that if a requirement under section
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190 were imposed in connection with the payment system in respect of
information on the premises—
(a)
the requirement would not be complied with, and
(b)
the information would be destroyed or otherwise tampered with.
(4)
Condition 3 is that an inspector—
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(a)
gave reasonable notice of a wish to enter the premises, and
(b)
was refused entry.
(5)
Condition 4 is that a person occupying or managing the premises has failed to
co-operate with an inspector.
(6)
A warrant—
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(a)
permits an inspector or a constable to enter the premises,
(b)
permits an inspector or a constable to search the premises and copy or
take possession of information or documents, and
(c)
permits a constable to use reasonable force.
(7)
Sections 15(5) to (8) and 16 of the Police and Criminal Evidence Act 1984
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(warrants: procedure) apply to warrants under this section.

Banking Bill
Part 5 — Inter-Bank Payment Systems
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181
Independent report
(1)
The Bank of England may require the operator of a recognised inter-bank
payment system to appoint an expert to report on the operation of the system.
(2)
The Bank may impose a requirement only if it thinks—
(a)
the operator is not taking sufficient account of principles published by
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the Bank under section 174,
(b)
the operator is failing to comply with a code of practice under section
175, or
(c)
the report is likely for any other reason to assist the Bank in the
performance of its functions under this Part.
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(3)
The Bank may impose requirements about—
(a)
the nature of the expert to be appointed;
(b)
the content of the report;
(c)
treatment of the report (including disclosure and publication);
(d)
timing.
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182
Compliance failure
In this Part “compliance failure” means a failure by the operator of a recognised
inter-bank payment system to—
(a)
comply with a code of practice under section 175,
(b)
comply with a requirement under section 176,
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(c)
comply with a direction under section 177, or
(d)
ensure compliance with a requirement under section 181.
183
Publication
The Bank of England may publish details of a compliance failure by the
operator of a recognised inter-bank payment system.
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184
Penalty
(1)
The Bank of England may require the operator of a recognised inter-bank
payment system to pay a penalty in respect of a compliance failure.
(2)
A penalty—
(a)
must be paid to the Bank of England, and
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(b)
may be enforced by the Bank as a debt.
185
Closure
(1)
This section applies if the Bank of England think that a compliance failure
threatens the stability of the UK financial system.
(2)
The Bank may give the operator of the inter-bank payment system concerned
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an order to stop operating the system (a “closure order”)—
(a)
for a specified period,
(b)
until further notice, or
(c)
permanently.
(3)
A closure order may apply to—
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Banking Bill
Part 5 — Inter-Bank Payment Systems
92

(a)
all activities of the payment system, or
(b)
specified activities.
(4)
An operator who fails to comply with a closure order commits an offence.
(5)
A person guilty of an offence is liable—
(a)
on summary conviction, to a fine not exceeding the statutory
5
maximum, or
(b)
on conviction on indictment, to a fine.
186
Management disqualification
(1)
The Bank of England may by order prohibit a specified person from being an
operator of a recognised inter-bank payment system—
10
(a)
for a specified period,
(b)
until further notice, or
(c)
permanently.
(2)
The Bank may by order prohibit a specified person from holding an office or
position involving responsibility for taking decisions about the management of
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a recognised inter-bank payment system—
(a)
for a specified period,
(b)
until further notice, or
(c)
permanently.
(3)
A person who breaches a prohibition under subsection (1) or (2) commits an
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offence.
(4)
A person guilty of an offence is liable—
(a)
on summary conviction, to a fine not exceeding the statutory
maximum, or
(b)
on conviction on indictment, to a fine.
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187
Warning
(1)
Before imposing a sanction on the operator of an inter-bank payment system
the Bank of England must—
(a)
give the operator a notice (a “warning notice”),
(b)
give the operator at least 21 days to make representations, and
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(c)
consider any representations made.
(2)
In subsection (1) “imposing a sanction” means—
(a)
publishing details under section 183,
(b)
requiring the payment of a penalty under section 184,
(c)
giving a closure order under section 185, or
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(d)
making an order under section 186.
(3)
Despite subsection (1), if satisfied that it is necessary the Bank may without
notice—
(a)
give a closure order under section 185, or
(b)
make an order under section 186.
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Part 5 — Inter-Bank Payment Systems
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188
Appeal
(1)
An appeal lies to the Financial Services and Markets Tribunal against the
imposition of a sanction on the operator of an inter-bank payment system.
(2)
In subsection (1) the imposition of a sanction means—
(a)
giving a warning notice of publication under section 183,
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(b)
giving a warning notice of a requirement to pay a penalty under section
184,
(c)
giving a closure order under section 185, and
(d)
making an order under section 186.
(3)
Part 9 of the Financial Services and Markets Act 2000 applies to appeals under
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this section; and for that purpose—
(a)
a reference to the FSA is to be taken as a reference to the Bank of
England,
(b)
a reference to a decision notice is to be taken as a reference to the notice
or order mentioned in subsection (2), and
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(c)
Part 9 is to be read with any other necessary modifications.
Miscellaneous
189
Fees
(1)
The Bank of England may require operators of recognised inter-bank payment
systems to pay fees.
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(2)
A requirement under subsection (1) must relate to a scale of fees approved by
the Treasury by regulations.
(3)
Regulations under subsection (2)—
(a)
shall be made by statutory instrument, and
(b)
shall be subject to annulment in pursuance of a resolution of either
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House of Parliament.
(4)
A requirement under subsection (1) may be enforced by the Bank as a debt.
190
Information
(1)
The Bank of England may by notice in writing require a person to provide
information—
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(a)
which the Bank thinks will help the Treasury in determining whether
to make a recognition order, or
(b)
which the Bank otherwise requires in connection with its functions
under this Part.
(2)
In particular, a notice may require the operator of a recognised inter-bank
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payment system to notify the Bank if events of a specified kind occur.
(3)
A notice may require information to be provided—
(a)
in a specified form or manner;
(b)
at a specified time;
(c)
in respect of a specified period.
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(4)
The Bank may disclose information obtained by virtue of this section to—

Banking Bill
Part 5 — Inter-Bank Payment Systems
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(a)
the Treasury;
(b)
the FSA;
(c)
an authority in a country or territory outside the United Kingdom
which exercises functions similar to those of the Treasury, the Bank of
England or the FSA in relation to inter-bank payment systems;
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(d)
the European Central Bank;
(e)
the Bank for International Settlements.
(5)
The Treasury may by regulations permit the disclosure of information
obtained by virtue of this section to a specified person.
(6)
The Bank may publish information obtained by virtue of this section.
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(7)
The Treasury may make regulations about the manner and extent of
publication under subsection (6).
(8)
Regulations under this section—
(a)
shall be made by statutory instrument, and
(b)
shall be subject to annulment in pursuance of a resolution of either
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House of Parliament.
(9)
It is an offence—
(a)
to fail without reasonable excuse to comply with a requirement under
this section;
(b)
knowingly or recklessly to give false information in pursuance of this
20
section.
(10)
A person guilty of an offence is liable—
(a)
on summary conviction, to a fine not exceeding the statutory
maximum, or
(b)
on conviction on indictment, to a fine.
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191
Pretending to be recognised
(1)
It is an offence for the operator of a non-recognised inter-bank payment
system—
(a)
to assert that the system is recognised, or
(b)
to do anything which suggests that the system is recognised.
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(2)
A person guilty of an offence is liable—
(a)
on summary conviction, to a fine not exceeding the statutory
maximum, or
(b)
on conviction on indictment, to a fine.
192
Saving for informal oversight
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(1)
Nothing in this Part prevents the Bank of England from having dealings with
the operators of payment systems to which this Part does not apply.
(2)
Nothing in this Part prevents the Bank from having dealings, other than
through the provisions of this Part, with the operators of payment systems to
which this Part does apply.
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Banking Bill
Part 6 — Banknotes: Scotland and Northern Ireland
95

Part 6
Banknotes: Scotland and Northern Ireland
Introduction
193
Overview
This Part—
5
(a)
repeals existing provisions about permission to issue banknotes in
Scotland and Northern Ireland, and
(b)
replaces the provisions, but only for banks which already have
permission to issue banknotes.
Key terms
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194
“Banknote”
In this Part “banknote” means a promissory note, bill of exchange or other
document which—
(a)
records an engagement to pay money,
(b)
is payable to the bearer on demand, and
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(c)
is designed to circulate as money.
195
“Issue”
(1)
For the purposes of this Part a banknote is issued when it passes—
(a)
from a person who holds it not as bearer but as a person carrying on the
business of banking (“the issuing bank”), and
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(b)
to a person taking as bearer (“the bearer”).
(2)
In subsection (1)(a) the reference to a banknote passing from the issuing bank
includes a reference to it passing—
(a)
from the issuing bank’s agent, or
(b)
from a person printing or preparing the banknote for, or taking it to, the
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issuing bank or its agent.
(3)
For the purposes of subsection (1)(b) it does not matter whether the bearer also
holds the banknote for use in the business of banking.
196
“Authorised bank”
In this Part “authorised bank” means a bank which immediately before
30
commencement was authorised to issue banknotes in Scotland or Northern
Ireland.
197
“Commencement”
In this Part “commencement” means the date set for the coming into force of
section 198 (under the commencement power in section 238).
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