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[AS AMENDED IN PUBLIC BILL COMMITTEE] |
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Make provision for, and in connection with, using money from dormant bank |
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and building society accounts for social or environmental purposes. |
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Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and |
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consent of the Lords Spiritual and Temporal, and Commons, in this present |
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Parliament assembled, and by the authority of the same, as follows:— |
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Transfer of balances in dormant accounts |
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1 | Transfer of balances to reclaim fund |
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(1) | This section applies where— |
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(a) | a bank or building society transfers to an authorised reclaim fund the |
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balance of a dormant account that a person (“the customer”) holds with |
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(b) | the reclaim fund consents to the transfer. |
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(a) | the customer no longer has any right against the bank or building |
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society to payment of the balance, but |
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(b) | the customer has against the reclaim fund whatever right to payment |
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of the balance the customer would have against the bank or building |
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society if the transfer had not happened. |
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(3) | The reference in subsection (1) to an account that a person holds is to be read |
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as including an account held by a deceased individual immediately before his |
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| In such a case, a reference in subsection (2) to the customer is to be read as a |
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reference to the person to whom the right to payment of the balance has |
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Alternative scheme for smaller institutions |
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2 | Transfer of balances to charities, with proportion to reclaim fund |
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(1) | This section applies where— |
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(a) | a smaller bank or building society transfers to an authorised reclaim |
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fund an agreed proportion of the balance of a dormant account that a |
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person (“the customer”) holds with it, |
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(b) | the bank or building society transfers the remainder of that balance to |
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(c) | the charity, or each of the charities, either— |
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(i) | is a charity that the bank or building society considers to have a |
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special connection with it, or |
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(ii) | undertakes to apply the money in question for the benefit of |
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members of communities that are local to the branches of the |
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bank or building society, |
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(d) | the reclaim fund consents to the transfer to it, and |
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(e) | the charity, or each of the charities, consents to the transfer to it. |
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(a) | the customer no longer has any right against the bank or building |
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society to payment of the balance, but |
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(b) | the customer has against the reclaim fund whatever right to payment |
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of the balance the customer would have against the bank or building |
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society if the transfers had not happened. |
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(3) | The reference in subsection (1) to an account that a person holds is to be read |
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as including an account held by a deceased individual immediately before his |
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| In such a case, a reference in subsection (2) to the customer is to be read as a |
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reference to the person to whom the right to payment of the balance has |
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(4) | In subsection (1) “agreed proportion” means a proportion agreed between the |
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bank or building society and the reclaim fund. |
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| In agreeing that proportion, the reclaim fund must take account of the need for |
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the fund to have access at any given time to enough money to enable it to meet |
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whatever repayment claims it is prudent to anticipate. |
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(5) | For the purposes of this section— |
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(a) | “repayment claim” means a claim made by virtue of subsection (2)(b); |
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(b) | a “smaller” bank or building society is one that meets the assets-limit |
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condition (see section 3); |
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(c) | a charity has a “special connection” with a bank if (and only if) the |
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purpose, or any of the main purposes, of the charity is to benefit |
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members of communities that are local to the branches of the bank; |
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(d) | a charity has a “special connection” with a building society if (and only |
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if) the purpose, or any of the main purposes, of the charity— |
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(i) | is to benefit members of communities that are local to the |
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branches of the building society, or |
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(ii) | is especially consonant with any particular purposes that the |
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(6) | The reference in subsection (5)(d)(ii) to particular purposes does not include |
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the purpose mentioned in section 5(1)(a) of the Building Societies Act 1986 |
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(c. 53) (making loans that are secured on residential property and substantially |
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3 | The assets-limit condition |
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(1) | A bank or building society meets the assets-limit condition if the aggregate of |
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the amounts shown in its balance sheet as assets on the last day of the latest |
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financial year for which it has prepared accounts is less than £7,000 million. |
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(2) | In relation to a bank or building society that was a member of a group on the |
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day referred to in subsection (1), that subsection has effect as if the aggregate |
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of the amounts shown in its balance sheet as assets on that day also included |
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the aggregate of the amounts shown in each group member’s balance sheet as |
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(b) | (in the case of a group member whose financial year did not end on that |
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day) on the last day of its latest financial year to end before that day. |
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(3) | Where a balance sheet for a particular day shows amounts in a currency other |
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than sterling, for the purposes of this section the amounts are to be converted |
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into sterling at the London closing exchange rate for that currency and that |
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(4) | The Treasury may by order amend the figure in subsection (1). |
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(5) | An order under this section is subject to annulment in pursuance of a |
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resolution of either House of Parliament. |
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Shareholding members of building societies |
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4 | Effect of balance transfer on membership rights |
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(1) | This section applies where a person (“the member”) holds a share in a building |
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society represented by an account with the society, and either— |
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(a) | a transfer is made to a reclaim fund with the result that section 1 applies |
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in relation to the account, or |
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(b) | transfers are made to a reclaim fund and one or more charities with the |
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result that section 2 applies in relation to the account. |
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(2) | After the transfer or transfers the member is to be treated as having whatever |
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share in the building society the member would have if the transfer or transfers |
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had not happened (and accordingly as having whatever rights, including |
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distribution rights, a holder of that share would have as such). |
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(3) | In subsection (2) “distribution rights” means rights to any distribution arising |
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as mentioned in section 96 (amalgamation or transfer of engagements) or 100 |
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(transfer of business) of the Building Societies Act 1986. |
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(4) | Subsection (2) ceases to apply where the balance of the account is paid out |
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following a claim made by virtue of section 1(2)(b) or 2(2)(b). |
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(5) | But where the balance of the account is paid out following such a claim and, as |
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soon as reasonably practical, the money is— |
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(a) | paid back into the account, or |
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(b) | paid into another share account with the building society in the |
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| subsection (2) continues to apply until the account is credited with the money. |
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(6) | Where, after the transfer or transfers referred to in subsection (1), the building |
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society is succeeded by another building society as a result of an amalgamation |
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or transfer of engagements, a reference in subsection (2) or (5) to the building |
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society is to be read, in relation to any time after the amalgamation or transfer |
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of engagements, as a reference to the successor building society (or to the |
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successor building society of the successor, in relation to any time after a |
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subsequent amalgamation or transfer; and so on). |
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5 | Functions etc of a reclaim fund |
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(1) | A “reclaim fund” is a company the objects of which are restricted by its articles |
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of association to the following— |
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(a) | the meeting of repayment claims; |
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(b) | the management of dormant account funds in such a way as to enable |
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the company to meet whatever repayment claims it is prudent to |
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(c) | the transfer of money to the body or bodies for the time being specified |
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in section 15(1), subject to the need for the company— |
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(i) | to have access at any given time to enough money to meet |
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whatever repayment claims it is prudent to anticipate, |
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(ii) | to comply with any requirement with regard to its financial |
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resources that is imposed on it by or under any enactment, and |
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(iii) | to defray its expenses; |
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(d) | objects that are incidental or conducive to, or otherwise connected with, |
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any of the above (including in particular the prudent investment of |
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(2) | Schedule 1 makes further provision about provision that must be made in the |
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articles of association of a reclaim fund. |
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(3) | An alteration by a reclaim fund of its articles of association is ineffective if it |
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(a) | the company ceasing to have objects restricted to those mentioned in |
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(b) | the company’s articles of association not containing any provision that |
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they are required to make under Schedule 1. |
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(4) | The Treasury may give a direction to a reclaim fund requiring it— |
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(a) | to give effect to any specified object that it has, or |
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(b) | to comply with any specified obligation or prohibition imposed on it by |
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a provision that its articles of association are required to make under |
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| “Specified” means specified in the direction. |
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“company” has the meaning given by section 1(1) of the Companies Act |
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“dormant account funds” means money paid to a reclaim fund by banks |
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and by building societies in respect of dormant accounts; |
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“repayment claims” means claims made by virtue of section 1(2)(b) or |
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6 | Interpretation of Part 1 |
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“account” has the meaning given by section 9; |
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“authorised”, in relation to a reclaim fund, means authorised for the |
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purposes of the Financial Services and Markets Act 2000 (c. 8); |
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“balance” has the meaning given by section 8; |
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“bank” has the meaning given by section 7; |
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“building society” means a building society incorporated (or deemed to |
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be incorporated) under the Building Societies Act 1986 (c. 53); |
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“charity” means a body, or the trustees of a trust, established for charitable |
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“dormant” has the meaning given by section 10; |
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(a) | in relation to a company (other than a building society) within |
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the meaning of the Companies Act 2006, has the meaning given |
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in section 390(1) to (3) of that Act; |
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(b) | in relation to an undertaking that is not a company within the |
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meaning of that Act (and is not a building society), has the |
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meaning given in section 390(4) of that Act; |
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(c) | in relation to a building society, has the meaning given in |
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section 117 of the Building Societies Act 1986; |
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“group” means a parent undertaking and its subsidiary undertakings; |
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“parent undertaking” and “subsidiary undertaking” have the same |
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meaning as in the Companies Act 2006 (see section 1162 of that Act); |
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“reclaim fund” has the meaning given by section 5(1). |
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(1) | Subject to subsection (4), “bank” means an authorised deposit-taker that has its |
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head office, or one or more branches, in the United Kingdom. |
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(2) | In subsection (1) “authorised deposit-taker” means— |
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(a) | a person who under Part 4 of FSMA 2000 has permission to accept |
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(b) | an EEA firm of the kind mentioned in paragraph 5(b) of Schedule 3 to |
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FSMA 2000 that has permission under paragraph 15 of that Schedule |
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(as a result of qualifying for authorisation under paragraph 12(1) of that |
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Schedule) to accept deposits. |
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(3) | A reference in subsection (2) to a person or firm with permission to accept |
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deposits does not include a person or firm with permission to do so only for the |
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purposes of, or in the course of, an activity other than accepting deposits. |
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(4) | “Bank” does not include— |
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(b) | a person who is specified, or is within a class of persons specified, by an |
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order under section 38 of FSMA 2000 (exemption orders); |
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“credit union” has the same meaning as in the Credit Unions Act 1979 |
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(c. 34) (see section 1(1) of that Act); |
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“friendly society” has the same meaning as in the Friendly Societies Act |
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1992 (c. 40) (see section 116 of that Act); |
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“FSMA 2000” means the Financial Services and Markets Act 2000 (c. 8). |
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(1) | The balance of a person’s account at any particular time is the amount owing |
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to the person in respect of the account at that time, after the appropriate |
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adjustments have been made for such things as interest due and fees and |
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(2) | In relation to a time after a transfer has been made as mentioned in section 1(1) |
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or transfers have been made as mentioned in section 2(1), the adjustments |
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referred to in subsection (1) above include those that would fall to be made but |
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for the transfer or transfers. |
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(1) | “Account” means an account that has at all times consisted only of money. |
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(2) | A reference in this Part to an account held with a bank or building society is to |
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an account provided by the bank or building society as part of its activity of |
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(3) | In relation to a building society, “account” includes an account representing |
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shares in the society, other than— |
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(a) | preferential shares, or |
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(b) | deferred shares within the meaning given in section 119(1) of the |
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Building Societies Act 1986 (c. 53). |
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(1) | An account is “dormant” at a particular time if— |
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(a) | the account has been open throughout the period of 15 years ending at |
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(b) | during that period no transactions have been carried out in relation to |
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the account by or on the instructions of the holder of the account. |
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(2) | But an account is to be treated as not dormant if at any time during that |
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(a) | the bank or building society in question was under instructions from |
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the holder of the account not to communicate with that person about |
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(b) | under the terms of the account— |
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(i) | withdrawals were prevented, or |
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(ii) | there was a penalty or other disincentive for making |
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withdrawals in all circumstances. |
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(3) | For the purposes of subsection (1) an account is to be treated as remaining open |
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where it is closed otherwise than on the instructions of the holder of the |
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(4) | For the purposes of subsection (2)(b)(i) withdrawals are prevented if they are |
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prevented except as permitted by provision made under subsection (4)(d) of |
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section 3 of the Child Trust Funds Act 2004 (c. 6) (requirements to be satisfied |
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(5) | The Treasury may by order amend the figure in subsection (1)(a). |
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(6) | An order under this section is subject to annulment in pursuance of a |
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resolution of either House of Parliament. |
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11 | Customer’s rights preserved on insolvency etc of bank or building society |
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(1) | Where after a person has acquired a right to payment under section 1(2)(b) or |
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(a) | the bank or building society in question is dissolved or wound up, or |
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(b) | for any other reason the liability that the bank or building society |
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would have to the person (but for the transfer referred to in section 1(1) |
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or the transfers referred to in section 2(1)) is extinguished or reduced, |
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| the dissolution, winding-up, extinguishment or reduction is to be disregarded |
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for the purposes of section 1(2)(b) or 2(2)(b). |
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(2) | Subsection (1)(b) does not apply to an extinguishment of liability by |
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prescription under the law of Scotland. |
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12 | Disclosure of information |
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No obligation as to secrecy or other restriction on disclosure (however |
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imposed) prevents a bank or building society from giving to an authorised |
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reclaim fund information needed by the fund to enable it to deal with claims |
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made by virtue of section 1(2)(b) or 2(2)(b). |
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13 | Banks making transfers under section 2: information in directors’ reports |
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(a) | the directors of a company that is a bank are required by section 415(1) |
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of the Companies Act 2006 (c. 46) to prepare a report for a particular |
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(b) | in that year the company made transfers in relation to which section 2 |
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