Banking Bill

House of Commons

Session 2008 - 09
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Other Bills before Parliament

Banking Bill

Banking Bill
Part 5 — Inter-Bank Payment Systems
98

189
Role of FSA
(1)
In exercising powers under this Part the Bank of England shall have regard to
any action that the FSA has taken or could take.
(2)
Before taking action under this Part in respect of a recognised inter-bank
payment system the operator of which satisfies section 183(2), the Bank of
5
England must consult the FSA.
(3)
If the FSA gives the Bank of England notice that the FSA is considering taking
action in respect of the operator of a recognised inter-bank payment system
who satisfies section 183(2), the Bank may not take action under this Part in
respect of the operator unless—
10
(a)
the FSA consents, or
(b)
the notice is withdrawn.
Enforcement
190
Inspection
(1)
The Bank of England may appoint one or more persons to inspect the operation
15
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
premises on or from which any part of the system is operated, and
(b)
otherwise co-operate with an inspector.
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191
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—
(a)
any part of the management or operation of a recognised inter-bank
payment system is conducted on the premises (whether by an operator
25
of the system or by someone providing services used by an operator),
and
(b)
any of the following conditions is satisfied.
(2)
Condition 1 is that—
(a)
a requirement under section 201 in connection with the payment
30
system has not been complied with, and
(b)
there is reason to believe that information relevant to the requirement
is on the premises.
(3)
Condition 2 is that there is reason to suspect that if a requirement under section
201 were imposed in connection with the payment system in respect of
35
information on the premises—
(a)
the requirement would not be complied with, and
(b)
the information would be destroyed or otherwise tampered with.
(4)
Condition 3 is that an inspector—
(a)
gave reasonable notice of a wish to enter the premises, and
40
(b)
was refused entry.

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Part 5 — Inter-Bank Payment Systems
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(5)
Condition 4 is that a person occupying or managing the premises has failed to
co-operate with an inspector.
(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
5
take possession of information or documents, and
(c)
permits a constable to use reasonable force.
(7)
Sections 15(5) to (8) and 16 of the Police and Criminal Evidence Act 1984
(warrants: procedure) apply to warrants under this section.
(8)
In the application of this section to Scotland—
10
(a)
the reference to a justice of the peace includes a reference to a sheriff,
and
(b)
ignore subsection (7).
(9)
In the application of this section to Northern Ireland—
(a)
the reference to a justice of the peace is a reference to a lay magistrate,
15
and
(b)
the reference to sections 15(5) to (8) and 16 of the Police and Criminal
Evidence Act 1984 is a reference to the equivalent provisions of the
Police and Criminal Evidence (Northern Ireland) Order 1989.
192
Independent report
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(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.
(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 185,
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(b)
the operator is failing to comply with a code of practice under section
186, or
(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—
30
(a)
the nature of the expert to be appointed;
(b)
the content of the report;
(c)
treatment of the report (including disclosure and publication);
(d)
timing.
193
Compliance failure
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In this Part “compliance failure” means a failure by the operator of a recognised
inter-bank payment system to—
(a)
comply with a code of practice under section 186,
(b)
comply with a requirement under section 187,
(c)
comply with a direction under section 188, or
40
(d)
ensure compliance with a requirement under section 192.

Banking Bill
Part 5 — Inter-Bank Payment Systems
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194
Publication
(1)
The Bank of England may publish details of a compliance failure by the
operator of a recognised inter-bank payment system.
(2)
The Bank may publish details of a sanction imposed under sections 195 to 197.
195
Penalty
5
(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
(b)
may be enforced by the Bank as a debt.
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196
Closure
(1)
This section applies if the Bank of England thinks that a compliance failure—
(a)
threatens the stability of, or confidence in, the UK financial system, or
(b)
has serious consequences for business or other interests throughout the
United Kingdom.
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(2)
The Bank may give the operator of the inter-bank payment system concerned
an order to stop operating the system (a “closure order”)—
(a)
for a specified period,
(b)
until further notice, or
(c)
permanently.
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(3)
A closure order may apply to—
(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—
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(a)
on summary conviction, to a fine not exceeding the statutory
maximum, or
(b)
on conviction on indictment, to a fine.
197
Management disqualification
(1)
The Bank of England may by order prohibit a specified person from being an
30
operator of a recognised inter-bank payment system—
(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
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position involving responsibility for taking decisions about the management of
a recognised inter-bank payment system—
(a)
for a specified period,
(b)
until further notice, or
(c)
permanently.
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(3)
A person who breaches a prohibition under subsection (1) or (2) commits an
offence.
(4)
A person guilty of an offence is liable—
(a)
on summary conviction, to a fine not exceeding the statutory
maximum, or
5
(b)
on conviction on indictment, to a fine.
198
Warning
(1)
Before imposing a sanction on the operator of an inter-bank payment system
or on another person the Bank of England must—
(a)
give the operator or other person a notice (a “warning notice”),
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(b)
give the operator or other person at least 21 days to make
representations,
(c)
consider any representations made, and
(d)
as soon as is reasonably practicable, give the operator or other person a
notice stating whether or not the Bank intends to impose the sanction.
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(2)
In subsection (1) “imposing a sanction” means—
(a)
publishing details under section 194(1),
(b)
requiring the payment of a penalty under section 195,
(c)
giving a closure order under section 196, or
(d)
making an order under section 197.
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(3)
Despite subsection (1), if satisfied that it is necessary the Bank may without
notice—
(a)
give a closure order under section 196, or
(b)
make an order under section 197.
199
Appeal
25
(1)
Where the Bank of England notifies a person under section 198(1)(d) that the
Bank intends to impose a sanction, the person may appeal to the Financial
Services and Markets Tribunal.
(2)
Where the Bank of England imposes a sanction on a person without notice in
reliance on section 198(3), the person may appeal to the Financial Services and
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Markets Tribunal.
(3)
Part 9 of the Financial Services and Markets Act 2000 applies to appeals under
this section; and for that purpose—
(a)
a reference to the FSA is to be taken as a reference to the Bank of
England,
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(b)
for section 133(9) of that Act substitute the proposition that a sanction
may not be imposed while an appeal could be brought or is pending.
(c)
Part 9 is to be read with any other necessary modifications.