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Session 2008 - 09
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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

20

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”.

25

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

30

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.

10

(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.

15

(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

20

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

25

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

30

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

5

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,

15

(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

20

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

25

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

35

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.

40

(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

5

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).

10

(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

15

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

20

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;

25

(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.

30

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

35

system;

(b)   

set standards to be met in the operation of the system.

 
 

 
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