Banking Bill

House of Commons

Session 2007 - 08
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Other Bills before Parliament

Banking Bill

Banking Bill
Part 3 — Bank Administration
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150
Application of other law
(1)
The Secretary of State and the Treasury may by order made jointly—
(a)
provide for an enactment about insolvency or administration to apply
to bank administration (with or without specified modifications);
(b)
amend, or modify the application of, an enactment about insolvency or
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administration in consequence of this Part.
(2)
An order under subsection (1)—
(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.
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151
Other processes
(1)
Before exercising an insolvency power in respect of a residual bank the FSA
must give notice to the Bank of England, which may participate in any
proceedings arising out of the exercise of the power.
(2)
In subsection (1)—
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(a)
“residual bank” means a bank all or part of whose business has been
transferred to a commercial purchaser in accordance with section 11 or
to a bridge bank in accordance with section 12, and
(b)
“insolvency power” means—
(i)
section 359 of the Financial Services and Markets Act 2000
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(application for administration order), and
(ii)
section 367 of that Act (winding-up petition).
152
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
25
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;
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(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 building societies.
(3)
An order—
(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
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.

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Part 3 — Bank Administration
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153
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.
(2)
An order may—
5
(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;
(c)
replicate, with or without modifications, a provision of this Part;
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(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
(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.
(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.
154
Rules
(1)
Section 411 of the Insolvency Act 1986 (company insolvency rules) is amended
20
as follows.
(2)
After subsection (1A) (inserted by section 119 above) insert—
“(1B)
Rules may also be made for the purpose of giving effect to Part 3 of the
Banking Act 2008 (bank administration); and rules for that purpose
shall be made—
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(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
Chief Justice, or
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(b)
in relation to Scotland, by the Treasury.”
(3)
In subsection (2), after “(1A)” (inserted by section 119 above) insert “or (1B)”.
(4)
After subsection (2C) (inserted by section 119 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
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includes a reference to doing anything under or for the purposes of Part
3 of the Banking Act 2008.”
(5)
In subsection (3)—
(a)
after “bank liquidator” (inserted by section 119 above) insert “or
administrator”, and
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(b)
after “Part 2” (inserted by section 119 above) insert “or 3”.

Banking Bill
Part 3 — Bank Administration
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Fees
After section 414(8A) of the Insolvency Act 1986 (fees orders - inserted by
section 120 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.”
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156
Evidence
In section 433(1) of the Insolvency Act 1986 (admissibility of statements of
affairs) after paragraph (aa) (inserted by section 122 above) insert (before the
“and”)—
“(ab)
a statement made in pursuance of a requirement imposed by or
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under Part 3 of that Act (bank administration),”.
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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.
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(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.
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158
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
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(b)
shall be subject to annulment in pursuance of a resolution of either
House of Parliament.
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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).
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(2)
At the end of that section (after the subsection added by section 123) add—
“(14)
Section 159 of the Banking Act 2008 provides for provisions of that Act
about bank administration to be “insolvency law” for the purposes of
this section.”
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Interpretation: general
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(1)
In this Part “the court” means—
(a)
in England and Wales, the High Court,
(b)
in Scotland, the Court of Session, and
(c)
in Northern Ireland, the High Court.

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Part 3 — Bank Administration
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(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
(b)
section 123 of the Insolvency Act 1986 (inability to pay debts) also
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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.
(4)
Expressions used in this Part and in the Insolvency Act 1986 have the same
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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.
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Northern Ireland
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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
(incorporating any necessary modification) is made to the equivalent
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enactment having effect in relation to Northern Ireland,
(c)
the reference in section 153 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
(d)
in section 157—
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(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
Chief Justice in Northern Ireland.
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162
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) passed before the commencement of this Part.
(3)
An order—
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(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.

Banking Bill
Part 4 — Financial Services Compensation Scheme
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Part 4
Financial Services Compensation Scheme
163
Overview
This Part makes a number of amendments in connection with the Financial
Services Compensation Scheme provided for by Part 15 of the Financial
5
Services and Markets Act 2000.
164
Contingency funding
(1)
After section 214 of the Financial Services and Markets Act 2000 (compensation
scheme: general) insert—
“214A
    Contingency funding
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(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
expenses may be paid.
(2)
Contingency fund regulations may make provision about the
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establishment and management of contingency funds; in particular, the
regulations may make provision about—
(a)
the number and size of funds;
(b)
the circumstances and timing of their establishment;
(c)
the classes of person from whom contributions to the funds may
20
be levied;
(d)
the amount and timing of payments into and out of funds
(which may include provision for different levies for different
classes of person);
(e)
refunds;
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(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);
(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
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compensation, (ii) for the purposes of co-operating with a bank
liquidator in accordance with section 93 of the Banking Act
2008, or (iii) for contributions under section 214B;
(h)
procedures to be followed in connection with funds, including
the keeping of records and the provision of information.
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(3)
The compensation scheme may include provision about contingency
funds provided that it is not inconsistent with contingency fund
regulations.”
(2)
At the end of section 213(7) (compensation scheme: further provision) add
“(except where limitations are expressly stated)”.
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(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.”