Banking Bill

House of Commons

Session 2007 - 08
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Banking Bill

Banking Bill
Part 2 — Bank Insolvency
62

Miscellaneous
117
Role of FSCS
(1)
For the purpose of co-operating in the pursuit of Objective 1 in section 93 the
FSCS—
(a)
may make or arrange for payments to or in respect of eligible
5
depositors of the bank, and
(b)
may make money available to facilitate the transfer of accounts of
eligible depositors of the bank.
(2)
The FSCS may include provision about expenditure under this section; and, in
particular—
10
(a)
money may be raised through the imposition of a levy under Part 15 of
the Financial Services and Markets Act in respect of expenditure or
possible expenditure under this section, and
(b)
sums raised in connection with the scheme (whether or not under
paragraph (a)) may be expended under this section.
15
(3)
In section 220(3)(a) of the Financial Services and Markets Act 2000
(Compensation Scheme: information) after “liquidator” insert “, bank
liquidator”.
(4)
The FSCS is entitled to participate in proceedings for or in respect of a bank
insolvency order.
20
(5)
A bank liquidator must—
(a)
comply with a request of the FSCS for the provision of information, and
(b)
provide the FSCS with any other information which the bank liquidator
thinks might be useful for the purpose of co-operating in the pursuit of
Objective 1.
25
(6)
A bank liquidator may enter into an agreement under section 221A of the
Financial Services and Markets Act 2000 (Compensation Scheme: delegation of
functions) for the bank liquidator to exercise functions of the scheme manager
for the purpose of facilitating the pursuit of Objective 1.
(7)
Where a bank insolvency order is made in respect of a bank, the fact that it later
30
ceases to be an authorised person does not prevent the operation of the
compensation scheme in respect of it; and for that purpose the bank is a
relevant person within the meaning of section 213(9) of the Financial Services
and Markets Act 2000 despite the lapse of authorisation.
118
Transfer of accounts
35
(1)
This section applies where a bank liquidator arranges, in pursuit of Objective
1 in section 93, for the transfer of eligible depositors’ accounts from the bank to
another financial institution.
(2)
The arrangements may disapply, or provide that they shall have effect despite,
any restriction arising by virtue of contract or legislation or in any other way.
40
(3)
In subsection (2) “restriction” includes—
(a)
any restriction, inability or incapacity affecting what can and cannot be
assigned or transferred (whether generally or by a particular person),
and

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(b)
a requirement for consent (by any name).
(4)
In making the arrangements mentioned in subsection (1) the bank liquidator
must ensure that eligible depositors will be able to remove money from
transferred accounts as soon as is reasonably practicable after transfer.
119
Rules
5
(1)
Section 411 of the Insolvency Act 1986 (company insolvency rules) is amended
as follows.
(2)
After subsection (1) insert—
“(1A)
Rules may also be made for the purpose of giving effect to Part 2 of the
Banking Act 2008 (bank insolvency orders); and rules for that purpose
10
shall be made—
(a)
in relation to England and Wales, by the Lord Chancellor with
the concurrence of—
(i)
the Treasury, and
(ii)
in the case of rules that affect court procedure, the Lord
15
Chief Justice, or
(b)
in relation to Scotland, by the Treasury.”
(3)
In subsection (2)—
(a)
after “subsection (1),” insert “(1A)”;
(b)
in paragraph (b), after “Secretary of State” insert “or the Treasury”.
20
(4)
After subsection (2B) insert—
“(2C)
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
2 of the Banking Act 2008.”
25
(5)
In subsection (3)—
(a)
after “provisional liquidator” insert “or bank liquidator”, and
(b)
after “Parts I to VII of this Act” insert “or Part 2 of the Banking Act
2008”.
(6)
In subsection (5), after “the Secretary of State” insert “or the Treasury”.
30
(7)
In paragraph 27 of Schedule 8 to the Insolvency Act 1986 (provisions capable
of inclusion in company insolvency rules), after “Secretary of State” insert “or
the Treasury”.
120
Fees
After section 414(8) of the Insolvency Act 1986 (fees orders) insert—
35
“(8A)
This section applies in relation to Part 2 of the Banking Act 2008 (bank
insolvency) as in relation to Parts I to VII of this Act.”
121
Insolvency Services Account
A bank liquidator who obtains money by realising assets in the course of the
bank insolvency must pay it into the Insolvency Services Account (kept by the
40
Secretary of State).

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122
Evidence
In section 433(1) of the Insolvency Act 1986 (admissibility of statements of
affairs) after paragraph (a) insert (before the “and”)—
“(aa)
a statement made in pursuance of a requirement imposed by or
under Part 2 of the Banking Act 2008 (bank insolvency),”.
5
123
Co-operation between courts
(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 add—
“(13)
Section 123 of the Banking Act 2008 provides for provisions of that Act
10
about bank insolvency to be “insolvency law” for the purposes of this
section.”
124
Building societies
(1)
The Treasury may by order provide for this Part to apply to building societies
(within the meaning of section 119 of the Building Societies Act 1986) as it
15
applies to banks, subject to modifications set out in the order.
(2)
An order may—
(a)
amend the Building Societies Act 1986 or any other enactment which
relates, or in so far as it relates, to building societies;
(b)
amend an enactment amended by this Part;
20
(c)
replicate, with or without modifications, any 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 building societies.
(3)
An order—
(a)
shall be made by statutory instrument, and
25
(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 building societies.
125
Credit unions
30
(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.
(2)
An order may—
(a)
amend the Credit Unions Act 1979, the Industrial and Providential
35
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;
(c)
replicate, with or without modifications, any provision of this Part;
(d)
apply a provision made under or by virtue of this Part, with or without
40
modifications, to this Part as it applies to credit unions.

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(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 credit unions.
126
Partnerships
(1)
The Lord Chancellor may, by order made with the concurrence of the Secretary
of State and the Lord Chief Justice, modify provisions of this Part in their
application to partnerships.
10
(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).
(3)
This section does not apply in relation to partnerships constituted under the
law of Scotland.
15
127
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.
(2)
An order—
(a)
shall be made by statutory instrument, and
20
(b)
shall be subject to annulment in pursuance of a resolution of either
House of Parliament.
128
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
25
equivalent enactment having effect in relation to Northern Ireland,
(b)
where this Part amends an enactment an equivalent amendment
(incorporating any necessary modification) is made to the equivalent
enactment having effect in relation to Northern Ireland,
(c)
references to the Secretary of State, except in section 116, are to be
30
treated as references to the Department of Enterprise, Trade and
Investment,
(d)
a reference to the Insolvency Services Account is to be treated as a
reference to the Insolvency Account,
(e)
a reference to section 31 of the Credit Unions Act 1979 is to be treated
35
as a reference to Article 2 of the Credit Unions (Northern Ireland) Order
1985,
(f)
the Judgments Enforcement (Northern Ireland) Order 1981 has effect in
place of sections 183 and 184 of the Insolvency Act 1986 (applied by
section 97 above), and
40
(g)
the reference in section 126 to the Lord Chief Justice is a reference to the
Lord Chief Justice in Northern Ireland.