House of Commons Amendments

House of Commons

Session 2007 - 08
Internet Publications
Other Bills before Parliament

3697

House of Commons

Wednesday 26th November 2008

Consideration of Bill

Banking Bill, As Amended

new clauses

Special resolution regime: compensation: Sources of compensation

Mr Chancellor of the Exchequer

NC11

To move the following Clause:—

‘(1)
This section applies to—

(a)
compensation scheme orders,

(b)
resolution fund orders,

(c)
third party compensation orders, and

(d)
regulations under section 60.

(2)
An order or regulations may provide for compensation or other payments to be

made by—

(a)
the Treasury,

(b)
the Financial Services Compensation Scheme, subject to section 214B of

the Financial Services and Markets Act 2000 (contribution to costs of

special resolution regime - inserted by section 165 below), or

(c)
any other specified person.’.

Special resolution regime: Continuity obligations: onward property transfers

Mr Chancellor of the Exchequer

NC12

To move the following Clause:—

‘(1)
In this section—

(a)
“onward transfer” means a transfer of property, rights or liabilities

(whether or not under a power in this Part) from—

(i)
a person who is a transferee under a property transfer instrument

under section 12(2) (an “original transferee”), or

Consideration of Bill: 26th November 2008
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Banking Bill, continued

(ii)
a bank, securities issued by which were earlier transferred by a

share transfer order under section 13(2), and

(b)
the person to whom the onward transfer is made is referred to as an

“onward transferee”.

(2)
The continuity authority may—

(a)
provide for an obligation under section 62 to apply in respect of an

onward transferee;

(b)
extend section 63 so as to permit action to be taken under section 63(2)

for the purpose of enabling an onward transferee to operate transferred

business, or part of it, effectively.

(3)
“The continuity authority” means—

(a)
the Bank of England, where subsection (1)(a)(i) applies, and

(b)
the Treasury, where subsection (1)(a)(ii) applies.

(4)
Subsection (2) may be relied on to impose obligations on—

(a)
an original transferee (where the original transfer was a property

transfer),

(b)
a residual bank within the meaning of section 62 (where the original

transfer was a property transfer),

(c)
the bank (where the original transfer was a share transfer),

(d)
anything which is or was a group undertaking (within the meaning of

section 1161(5) of the Companies Act 2006) of anything within

paragraphs (a) to (c), or

(e)
any combination.

(5)
Subsection (2) may be used to impose obligations—

(a)
in addition to obligations under or by virtue of section 62 or 63, or

(b)
replacing obligations under or by virtue of either of those sections to a

specified extent.

(6)
A power under subsection (2) is exerciseable by giving a notice to each person—

(a)
on whom a continuity obligation is to be imposed under the power, or

(b)
who is expected to benefit from a continuity obligation under the power.

(7)
Sections 62(3) to (7) and 63(3) and (4) apply to an obligation as applied under

subsection (2)—

(a)
construing “transferred business” as the business transferred by means of

the onward transfer, and

(b)
with any other necessary modification.

(8)
The Bank of England may act under or by virtue of subsection (2) only with the

consent of the Treasury.’.

Special resolution regime: Continuity obligations: onward share transfers

Mr Chancellor of the Exchequer

NC13

To move the following Clause:—

‘(1)
In this section “onward transfer” means a transfer (whether or not under a power

in this Part) of securities issued by a bank where—

Consideration of Bill: 26th November 2008
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Banking Bill, continued

(a)
securities issued by the bank were earlier transferred by share transfer

order under section 13(2), or

(b)
the bank was the transferee under a property transfer instrument under

section 12(2).

(2)
The continuity authority may—

(a)
provide for an obligation under section 64 to apply in respect of the bank

after the onward transfer;

(b)
extend section 65 so as to permit action to be taken under section 65(2)

to enable the bank to operate effectively after the onward transfer.

(3)
In this section “continuity authority” has the same meaning as in sections 64 and

65.

(4)
Subsection (2) may be relied on to impose obligations on—

(a)
the bank,

(b)
anything which is or was a group undertaking (within the meaning of

section 1161(5) of the Companies Act 2006) of the bank,

(c)
anything which is or was a group undertaking of the residual bank (in a

case to which subsection (1)(b) applies), or

(d)
any combination.

(5)
Subsection (2) may be used to impose obligations—

(a)
in addition to obligations under or by virtue of section 64 or 65, or

(b)
replacing obligations under or by virtue of either of those sections to a

specified extent.

(6)
A power under subsection (2) is exerciseable by giving a notice to each person—

(a)
on whom a continuity obligation is to be imposed under the power, or

(b)
who is expected to benefit from a continuity obligation under the power.

(7)
Sections 64(3) to (7) and 65(3) and (4) apply to an obligation as applied under

subsection (2) with any necessary modification.

(8)
The Bank of England may act under or by virtue of subsection (2) only with the

consent of the Treasury.’.

Remuneration of senior staff of rescued banks

Harry Cohen

NC1

To move the following Clause:—

‘(1)
This section applies in respect of any institution (a “rescued bank”) taking part in

the bank recapitalistion fund (“the fund”) announced by the Chancellor of the

Exchequer on 8th October 2008.

(2)
The Treasury must make regulations about the remuneration of senior staff of

rescued banks.

(3)
Regulations under subsection (2) must provide that—

(a)
remuneration arrangements are such that senior staff are given no

financial incentive to take unnecessary and excessive risks that threaten

the value of the rescued bank;

(b)
a rescued bank may recover from a senior member of staff any bonus or

similar payment which is based on statements which are later shown to

be materially inaccurate;

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Banking Bill, continued

(c)
a rescued bank may make no golden parachute payment to its senior staff.

(4)
In this section “senior staff” and “golden parachute” have such meaning as shall

be prescribed in regulations under subsection (2).

(5)
Regulations under subsection (2) shall cease to apply to a rescued bank if, and

only if, it ceases to take part in the fund.

(6)
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 House

of Parliament.’.

Reversion of rescued former building societies to mutual status

David Taylor

Mr Adrian Bailey

Mr David Drew

NC2

To move the following Clause:—

‘(1)
This section applies in respect of any company to which subsections (2) and (3)

apply (and which is referred to in this section as a “rescued former building

society”).

(2)
This subsection applies if—

(a)
the assets and liabilities of a building society (within the meaning of

section 119 of the Building Societies Act 1986 (“the 1986 Act”)) have

been transferred to the company, and

(b)
the company continues to trade under the name of that society (or under

a similar name).

(3)
This subsection applies if—

(a)
an order under section 3 (transfer of securities issued by an authorised

UK deposit-taker) or 6 (transfer of property, rights and liabilities of an

authorised UK deposit-taker) of the Banking (Special Provisions) Act

2008 has been made in relation to the company, or

(b)
the company has taken part in the bank recapitalisation fund announced

by the Chancellor of the Exchequer on 8th October 2008, or

(c)
the company is subject to any of the stabilisation options provided for in

sections 10 to 12 of this Act.

(4)
The Treasury must by regulations make provision enabling rescued former

building societies to reconstitute themselves as building societies within the

meaning of the 1986 Act.

(5)
Regulations under subsection (4) may—

(a)
disapply or modify the effect of a provision of an enactment, or

(b)
disapply or modify the effect of a rule of law not set out in legislation.

(6)
Regulations under subsection (4)—

(a)
shall be made by statutory instrument, and

Consideration of Bill: 26th November 2008
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Banking Bill, continued

(b)
shall be subject to annulment in pursuance of a resolution of either House

of Parliament.’.

Safeguards for partial property transfers

Mr David Gauke

NC3

To move the following Clause:—

‘(1)
The Treasury must prepare and publish an annual assessment of the efficacy of

the safeguards relating to partial property transfers under Part 1 of this Act.

(2)
In preparing each assessment the Treasury must consult the Banking Liaison

Panel constituted under section 10.

(3)
If an assessment indicates that the safeguards are inadequate the Treasury must

make proposals for strengthening them.

(4)
Each assessment published under this section must be laid before Parliament.

(5)
A Minister of the Crown must make a motion in the House of Commons related

to the assessment not more than three months after the assessment was laid before

Parliament.’.

Exemption of bank directors from liability

Mr David Gauke

NC4

To move the following Clause:—

‘(1)
The Treasury may by order exempt directors of a bank for which the stabilisation

powers have been exercised, or of any group undertaking of any such bank, from

liability in connection with acts and omissions in relation to the bank or

undertaking.

(2)
Any such 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.’.

Consideration of Bill: 26th November 2008
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Banking Bill, continued

Protection of bank customers

Mr David Gauke

NC5

To move the following Clause:—

‘(1)
The Treasury may by order amend Part 16 of the Financial Services and Markets

Act 2000 for the purposes of protecting the position of customers of a bank for

which the stabilisation powers have been exercised.

(2)
Any such 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.’.

Contingency funding: power to make regulations

Mr Mark Hoban

NC6

To move the following Clause:—

‘After section 214A of the Financial Services and Markets Act 2000

(Contingency funding - inserted by section 164 above) insert—

“214AA
Contingency funding: power to make regulations

The Treasury may make regulations under section 214A only after it has

laid before Parliament a report on the impact of a pre-funded scheme on

the classes of person from whom contributions can be levied and whether

contingency funding is the best way to achieve the special resolution

regime objective set out in section 4 of the Banking Act 2008.”’.

Debt responsibility mechanism

Mr Mark Hoban

NC7

To move the following Clause:—

‘After section 2C of the Bank of England Act 1998 (Financial Stability

Committee: supplemental - inserted by section 225 above) insert—

“2D
Debt responsiblity mechanism

(1)
The Financial Stability Committee must write to the FSA twice a year,

setting out its assessment of financial stability and the FSA must have

regard to that assessment in the exercise of its duties in respect of

paragraph 4 of Schedule 6 to the Financial Services and Markets Act

2000 (threshold conditions: adequate resources).

Consideration of Bill: 26th November 2008
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Banking Bill, continued

(2)
The Financial Stability Committee must publish its letter and the FSA

must publish its response.”’.

Order of consideration of stabilisation options

Mr Mark Hoban

NC8

To move the following Clause:—

‘The stabilisation options in sections 11, 12, and 13 must be considered in the

order set out above.’.

Financial Services Compensation Scheme

Mr Mark Hoban

NC9

To move the following Clause:—

‘(1)
The scheme manager must decide, once a stabilisation power has been exercised,

how to achieve Objective 3 of the special resolution regime through—

(a)
the transfer of a relevant account to another financial institution, or

(b)
making a payment to relevant depositors.

(2)
Subsection (1)(a) takes precedence over subsection (1)(b).

(3)
Prior to making its decision the scheme manager must consult—

(a)
the Treasury,

(b)
the Bank of England, and

(c)
the FSA.’.

Report on exercise of stabilisation powers

Mr Mark Hoban

NC10

To move the following Clause:—

‘(1)
On the exercise of stabilisation powers, the Treasury must lay before Parliament

a report setting out—

(a)
the reason for the exercise by the FSA of its powers under section 7, and

(b)
how the Treasury of the Bank of England then exercised their

stabilisation powers to achieve the special resolution regime objectives.