Banking Bill

House of Commons

Session 2007 - 08
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Other Bills before Parliament

Banking Bill

Banking Bill
Part 5 — Inter-Bank Payment Systems
94

(2)
The Treasury must also consult the FSA before making a recognition order in
respect of a payment system the operator of which—
(a)
is, or has applied to become, a recognised investment exchange within
the meaning of section 285 of the Financial Services and Markets Act
2000,
5
(b)
is, or has applied to become, a recognised clearing house within the
meaning of that section, or
(c)
has, or has applied for, permission under Part 4 of that Act (regulated
activities).
(3)
In considering whether to make a recognition order in respect of a payment
10
system the Treasury may rely on information provided by the Bank of England
or the FSA.
181
De-recognition
(1)
The Treasury may revoke a recognition order.
(2)
The Treasury must revoke a recognition order if not satisfied that the criteria
15
in section 179 are met in respect of the recognised inter-bank payment system.
(3)
Before revoking a recognition order the Treasury must—
(a)
consult the Bank of England,
(b)
notify the operator of the recognised inter-bank payment system, and
(c)
consider any representations made.
20
(4)
The Treasury must also consult the FSA before revoking a recognition order in
respect of a payment system the operator of which—
(a)
is, or has applied to become, a recognised investment exchange within
the meaning of section 285 of the Financial Services and Markets Act
2000,
25
(b)
is, or has applied to become, a recognised clearing house within the
meaning of that section, or
(c)
has, or has applied for, permission under Part 4 of that Act (regulated
activities).
(5)
The Treasury must consider any request by the operator of a recognised inter-
30
bank payment system for the revocation of its recognition order.
Regulation
182
Principles
(1)
The Bank of England may publish principles to which operators of recognised
inter-bank payment systems are to have regard in operating the systems.
35
(2)
Before publishing principles the Bank must obtain the approval of the
Treasury.
183
Codes of practice
The Bank of England may publish codes of practice about the operation of
recognised inter-bank payment systems.
40

Banking Bill
Part 5 — Inter-Bank Payment Systems
95

184
System rules
(1)
The Bank of England may require the operator of a recognised inter-bank
payment system—
(a)
to establish rules for the operation of the system;
(b)
to change the rules in a specified way or so as to achieve a specified
5
purpose;
(c)
to notify the Bank of any proposed change to the rules;
(d)
not to change the rules without the approval of the Bank.
(2)
A requirement under subsection (1)(c) or (d) may be general or specific.
185
Directions
10
(1)
The Bank of England may give directions to the operator of a recognised inter-
bank payment system.
(2)
A direction may—
(a)
require or prohibit the taking of specified action in the operation of the
system;
15
(b)
set standards to be met in the operation of the system.
186
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
20
187
Inspection
(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
25
premises on or from which any part of the system is operated, and
(b)
otherwise co-operate with an inspector.
188
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—
30
(a)
any part of the management or operation of a recognised inter-bank
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.
35
(2)
Condition 1 is that—
(a)
a requirement under section 198 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.
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Banking Bill
Part 5 — Inter-Bank Payment Systems
96

(3)
Condition 2 is that there is reason to suspect that if a requirement under section
198 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.
5
(4)
Condition 3 is that an inspector—
(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.
10
(6)
A warrant—
(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.
15
(7)
Sections 15(5) to (8) and 16 of the Police and Criminal Evidence Act 1984
(warrants: procedure) apply to warrants under this section.
189
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.
20
(2)
The Bank may impose a requirement only if it thinks—
(a)
the operator is not taking sufficient account of principles published by
the Bank under section 182,
(b)
the operator is failing to comply with a code of practice under section
183, or
25
(c)
the report is likely for any other reason to assist the Bank in the
performance of its functions under this Part.
(3)
The Bank may impose requirements about—
(a)
the nature of the expert to be appointed;
(b)
the content of the report;
30
(c)
treatment of the report (including disclosure and publication);
(d)
timing.
190
Compliance failure
In this Part “compliance failure” means a failure by the operator of a recognised
inter-bank payment system to—
35
(a)
comply with a code of practice under section 183,
(b)
comply with a requirement under section 184,
(c)
comply with a direction under section 185, or
(d)
ensure compliance with a requirement under section 189.
191
Publication
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The Bank of England may publish details of a compliance failure by the
operator of a recognised inter-bank payment system.

Banking Bill
Part 5 — Inter-Bank Payment Systems
97

192
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
5
(b)
may be enforced by the Bank as a debt.
193
Closure
(1)
This section applies if the Bank of England thinks 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
10
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—
15
(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
20
maximum, or
(b)
on conviction on indictment, to a fine.
194
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—
25
(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
30
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
35
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.
40