Banking Bill

House of Commons

Session 2008 - 09
Internet Publications
Other Bills before Parliament

Banking Bill

Banking Bill
Part 4 — Financial Services Compensation Scheme
94

from National Loans Fund - inserted by section 170 above) insert—
“223C
     Payments in error
(1)
Payments made by the scheme manager in error may be provided for
in setting a levy by virtue of section 213, 214A, 214B or 223B.
(2)
This section does not apply to payments made in bad faith.”
5
175
Regulations
In section 429(2) of the Financial Services and Markets Act 2000 (parliamentary
control of subordinate legislation: affirmative resolution) after “90B” insert “,
214A, 214B”.
176
Delegation of functions
10
(1)
Before section 222 of the Financial Services and Markets Act 2000 (scheme
manager: statutory immunity) insert—
“221A
     Delegation of functions
(1)
The scheme manager may arrange for any of its functions to be
discharged on its behalf by another person (a “scheme agent”).
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(2)
Before entering into arrangements the scheme manager must be
satisfied that the scheme agent—
(a)
is competent to discharge the function, and
(b)
has been given sufficient directions to enable the agent to take
any decisions required in the course of exercising the function
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in accordance with policy determined by the scheme manager.
(3)
Arrangements may include provision for payments to be made by the
scheme manager to the scheme agent (which payments are
management expenses of the scheme manager).”
(2)
In section 222(1) of that Act after “officer” insert “, scheme agent”.
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177
Functions under this Act
At the end of Part 15 of the Financial Services and Markets Act 2000 add—
“224A
    Functions under the Banking Act 2008
A reference in this Part to functions of the scheme manager (including
a reference to functions conferred by or under this Part) includes a
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reference to functions conferred by or under the Banking Act 2008.”

Banking Bill
Part 5 — Inter-Bank Payment Systems
95

Part 5
Inter-Bank Payment Systems
Introduction
178
Overview
This Part enables the Bank of England to oversee certain systems for payments
5
between financial institutions.
179
Interpretation: “inter-bank payment system”
(1)
In this Part “inter-bank payment system” means arrangements designed to
facilitate or control the transfer of money between financial institutions who
participate in the arrangements.
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(2)
The fact that persons other than financial institutions can participate does not
prevent arrangements from being an inter-bank payment system.
(3)
In subsection (1) “financial institutions” means—
(a)
banks, and
(b)
building societies.
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(4)
In subsection (1) “money” includes credit.
(5)
A system is an inter-bank payment system for the purposes of this Part
whether or not it operates wholly or partly in relation to persons or places
outside the United Kingdom.
180
Interpretation: other expressions
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In this Part—
(a)
a reference to the “operator” of an inter-bank payment system is a
reference to any person with responsibility under the system for
managing or operating it,
(b)
a reference to the operation of a system includes a reference to its
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management,
(c)
“the UK financial system” has the meaning given to “the financial
system” by section 3(2) of the Financial Services and Markets Act 2000
(market confidence),
(d)
a reference to the Bank of England’s role as a monetary authority is to
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be construed in accordance with section 234(2)(c), and
(e)
“the FSA” means the Financial Services Authority.
Recognised systems
181
Recognition order
(1)
The Treasury may by order (“recognition order”) specify an inter-bank
35
payment system as a recognised system for the purposes of this Part.
(2)
A recognition order must specify in as much detail as is reasonably practicable
the arrangements which constitute the inter-bank payment system.

Banking Bill
Part 5 — Inter-Bank Payment Systems
96

(3)
The Treasury may not specify an inter-bank system operated solely by the
Bank of England.
182
Recognition criteria
(1)
The Treasury may make a recognition order in respect of an inter-bank
payment system only if satisfied that any deficiencies in the design of the
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system, or any disruption of its operation, would be likely—
(a)
to threaten the stability of, or confidence in, the UK financial system, or
(b)
to have serious consequences for business or other interests throughout
the United Kingdom.
(2)
In considering whether to specify a system the Treasury must have regard to—
10
(a)
the number and value of the transactions that the system presently
processes or is likely to process in the future,
(b)
the nature of the transactions that the system processes,
(c)
whether those transactions or their equivalent could be handled by
other systems,
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(d)
the relationship between the system and other systems, and
(e)
whether the system is used by the Bank of England in the course of its
role as a monetary authority.
183
Procedure
(1)
Before making a recognition order in respect of a payment system the Treasury
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must—
(a)
consult the Bank of England,
(b)
notify the operator of the system, and
(c)
consider any representations made.
(2)
The Treasury must also consult the FSA before making a recognition order in
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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,
(b)
is, or has applied to become, a recognised clearing house within the
30
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
system the Treasury may rely on information provided by the Bank of England
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or the FSA.
184
De-recognition
(1)
The Treasury may revoke a recognition order.
(2)
The Treasury must revoke a recognition order if not satisfied that the criteria
in section 182 are met in respect of the recognised inter-bank payment system.
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(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

Banking Bill
Part 5 — Inter-Bank Payment Systems
97

(c)
consider any representations made.
(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
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2000,
(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).
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(5)
The Treasury must consider any request by the operator of a recognised inter-
bank payment system for the revocation of its recognition order.
Regulation
185
Principles
(1)
The Bank of England may publish principles to which operators of recognised
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inter-bank payment systems are to have regard in operating the systems.
(2)
Before publishing principles the Bank must obtain the approval of the
Treasury.
186
Codes of practice
The Bank of England may publish codes of practice about the operation of
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recognised inter-bank payment systems.
187
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;
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(b)
to change the rules in a specified way or so as to achieve a specified
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.
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188
Directions
(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
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system;
(b)
set standards to be met in the operation of the system.