House of Commons Amendments

House of Commons

Session 2008 - 09
Internet Publications
Other Bills before Parliament

9
63
Page 54, line 6, after “applied” insert “to a bank liquidator”
64
Page 54, line 7, at end insert—

“Section 172(1), (2) and (5) are applied to a

provisional bank liquidator.”

65
Page 56, line 28, in column 3 insert—

“Anything done by the bank in

connection with the exercise of a

stabilisation power under Part 1

of this Act is not a gratuitous

alienation for the purpose of

section 242 or any other rule of

law.”

66
Page 56, line 30, in column 3 insert—

“Action taken by the bank in

connection with the exercise of a

stabilisation power under Part 1

of this Act does not amount to

an unfair preference for the

purpose of section 243 or any

other rule of law.”

Clause 135
67
Page 69, line 18, after “supplemental” insert “or reverse”
Clause 142
68
Page 77, line 49, at end insert—

“(h) Section 172(1), (2) and (5) apply to a

provisional bank administrator.”

69
Page 78, line 31, at end insert—

10

“Section 179
Disclaimer of

leaseholds

Section 180
Land subject to

rentcharge

Section 181
Disclaimer: powers of

court

Section 182
Leaseholds”

Clause 149
70
Page 82, line 36, after “bank” insert “(or a bank’s holding company)”
71
Page 82, line 38, after “bank” insert “(or from another bank which is or was in the

same group as the bank)”
Clause 188
72
Page 97, line 37, at end insert—

“(3)
Before giving a direction the Bank must notify the Treasury.

(4)
The Treasury may by order confer immunity from liability in damages in

respect of action or inaction in accordance with a direction.

(5)
An immunity does not extend to action or inaction—

(a)
in bad faith, or

(b)
in contravention of section 6(1) of the Human Rights Act 1998.

(6)
An order—

(a)
shall be made by statutory instrument, and

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

House of Parliament.”
Clause 195
73
Page 100, line 10, at end insert—

“(3)
The Bank must prepare a statement of the principles which it will apply in

determining—

(a)
whether to impose a penalty, and

(b)
the amount of a penalty.

(4)
The Bank must—

(a)
publish the statement on its internet website,

(b)
send a copy to the Treasury,

(c)
review the statement from time to time and revise it if necessary

(and paragraphs (a) and (b) apply to a revision), and

(d)
in applying the statement to a compliance failure, apply the version

in force when the failure occurred.”
Clause 219
74
Page 109, line 16, at end insert—

11

“(3)
Banknote regulations must establish a method for determining the

maximum amount of a penalty.”
Clause 225
75
Page 110, leave out line 32
76
Page 110, line 33, at beginning insert “by the Treasury”
77
Page 110, line 34, at beginning insert “by the Treasury, or by the Secretary of State

with the consent of the Treasury,”
78
Page 110 , line 37, at beginning insert “by the Treasury”
79
Page 110, line 37, at end insert—

“(1A)
For the purpose of subsection (1)(b) expenditure is incurred in respect of

financial assistance in respect of banks or other financial institutions if it is

incurred in respect of an activity, transaction or arrangement, or class of

activity, transaction or arrangement, which is expected to facilitate any part

of the business of one or more banks or other financial institutions; and for

that purpose it does not matter—

(a)
whether or not that is the sole or principal expected effect of the

activity, transaction or arrangement, or

(b)
whether the sole or principal motive for the activity, transaction or

arrangement is (i) its effect on banks or other financial institutions,

(ii) its effect on the economy as a whole, (iii) its effect on a particular

industry or sector of the economy, or (iv) its effect on actual or

potential customers of banks or other financial institutions.”
80
Page 110, line 38, at end insert “(and an order under that section may restrict or

expand the effect of subsection (1A)).”
81
Page 111, line 3, at end insert—

“(4)
Expenditure which could be paid out of money provided by Parliament

under subsection (1) shall be charged on and paid out of the Consolidated

Fund if the Treasury are satisfied that the need for the expenditure is too

urgent to permit arrangements to be made for the provision of money by

Parliament.

(5)
Where money is paid in reliance on subsection (4) the Treasury shall as

soon as is reasonably practicable lay a report before Parliament specifying

the amount paid (but not the identity of the institution to or in respect of

which it is paid).

(6)
If the Treasury think it necessary on public interest grounds, they may

delay or dispense with a report under subsection (5).”
Clause 226
82
Page 111, line 17, at end insert—

“(6)
Where money is paid in reliance on subsection (1) the Treasury shall as

soon as is reasonably practicable lay a report before Parliament specifying

the amount paid (but not the identity of the institution to or in respect of

which it is paid).

(7)
If the Treasury think it necessary on public interest grounds, they may

delay or dispense with a report under subsection (6).”

12

After Clause 226
83
Insert the following new Clause—

“Transparency: financial assistance

(1)
The Treasury shall prepare and lay before each House of Parliament a

quarterly report in respect of—

(a)
financial assistance paid out under section 225(1);

(b)
loans made under section 226;

(c)
guarantees, indemnities or similar arrangements which may result

in amounts being paid out under section 225(1).

(2)
The Treasury shall ensure that the report contains sufficient detail to enable

Parliament to understand the actual and potential commitment of public

money to financial assistance and the Treasury may summarise the

individual items which fall to be disclosed in a report in whatever way they

consider appropriate in order to assist Parliament in that regard.

(3)
If the Treasury consider that certain information should not be disclosed in

a report on public interest grounds, a report may omit that information

until such a time as the Treasury consider that the public interest is no

longer affected.”
After Clause 227
84
Insert the following new Clause—

“Investment banks: Definition

(1)
In this group of sections “investment bank” means an institution which

satisfies the following conditions.

(2)
Condition 1 is that the institution has permission under Part 4 of the

Financial Services and Markets Act 2000 to carry on the regulated activity

of—

(a)
safeguarding and administering investments,

(b)
dealing in investments as principal, or

(c)
dealing in investments as agent.

(3)
Condition 2 is that the institution holds client assets.

(4)
In this group of sections “client assets” means assets which an institution

has undertaken to hold for a client (whether or not on trust and whether or

not the undertaking has been complied with).

(5)
Condition 3 is that the institution is incorporated in, or formed under the

law of any part of, the United Kingdom.

(6)
The Treasury may by order—

(a)
provide that a specified class of institution, which has a permission

under Part 4 of the Financial Services and Markets Act 2000 to carry

on a regulated activity, is to be treated as an investment bank for the

purpose of this group of sections;

(b)
provide that a specified class of institution is not to be treated as an

investment bank for the purpose of this group of sections;

13

(c)
provide that assets of a specified kind, or held in specified

circumstances, are to be or not to be treated as client assets for the

purpose of this group of sections;

(d)
amend a provision of this section in consequence of provision

under paragraph (a), (b) or (c).”
85
Insert the following new Clause—

“Investment banks: Insolvency regulations

(1)
The Treasury may by regulations (“Investment bank insolvency

regulations”)—

(a)
modify the law of insolvency in its application to investment banks;

(b)
establish a new procedure for investment banks where—

(i)
they are unable, or are likely to become unable, to pay their

debts (within the meaning of section 90(4)), or

(ii)
their winding up would be fair (within the meaning of

section 90(8)).

(2)
Investment bank insolvency regulations may, in particular—

(a)
apply or replicate (with or without modifications) or make

provision similar to provision made by or under the Insolvency Act

1986 or Part 2 or 3 of this Act;

(b)
establish a new procedure either (i) to operate for investment banks

in place of liquidation or administration (under the Insolvency Act

1986), or (ii) to operate alongside liquidation or administration in

respect of a particular part of the business or affairs of investment

banks.

(3)
In making investment bank insolvency regulations the Treasury shall have

regard to the desirability of—

(a)
identifying, protecting, and facilitating the return of, client assets,

(b)
protecting creditors’ rights,

(c)
ensuring certainty for investment banks, creditors, clients,

liquidators and administrators,

(d)
minimising the disruption of business and markets, and

(e)
maximising the efficiency and effectiveness of the financial services

industry in the United Kingdom.

(4)
A reference to returning client assets includes a reference to—

(a)
transferring assets to another institution, and

(b)
returning or transferring assets equivalent to those which an

institution undertook to hold for clients.”
86
Insert the following new Clause—

“Investment banks: Regulations: details

(1)
Investment bank insolvency regulations may provide for a procedure to be

instituted—

(a)
by a court, or

(b)
by the action of one or more specified classes of person.

(2)
Investment bank insolvency regulations may—

14

(a)
confer functions on persons appointed in accordance with the

regulations (which may, in particular, (i) be similar to the functions

of a liquidator or administrator under the Insolvency Act 1986, or

(ii) involve acting as a trustee of client assets), and

(b)
specify objectives to be pursued by a person appointed in

accordance with the regulations.

(3)
Investment bank insolvency regulations may make the application of a

provision depend—

(a)
on whether an investment bank is, or is likely to become, unable to

pay its debts,

(b)
on whether the winding up of an investment bank would be fair, or

(c)
partly on those and partly on other considerations.

(4)
Investment bank insolvency regulations may make provision about the

relationship between a procedure established by the regulations and—

(a)
liquidation or administration under the Insolvency Act 1986,

(b)
bank insolvency or bank administration under Part 2 or 3 of this

Act, and

(c)
provision made by or under any other enactment in connection

with insolvency.

(5)
Regulations by virtue of subsection (4) may, in particular—

(a)
include provision for temporary or permanent moratoria;

(b)
amend an enactment.

(6)
Investment bank insolvency regulations may include provision—

(a)
establishing a mechanism for determining which assets are client

assets (subject to section (Investment banks: Definition));

(b)
establishing a mechanism for determining that assets are to be, or

not to be, treated as client assets (subject to section (Investment

banks: Definition));

(c)
about the treatment of client assets;

(d)
about the treatment of unsettled transactions (and related

collateral);

(e)
for the transfer to another financial institution of assets or

transactions;

(f)
for the creation or enforcement of rights (including rights that take

preference over creditors’ rights) in respect of client assets or other

assets;

(g)
indemnifying a person who is exercising or purporting to exercise

functions under or by virtue of the regulations;

(h)
for recovery of assets transferred in error.

(7)
Provision may be included under subsection (6)(f) only to the extent that

the Treasury think it necessary having regard to the desirability of

protecting both—

(a)
client assets, and

(b)
creditors’ rights.

(8)
Investment bank insolvency regulations may confer functions on—

(a)
a court or tribunal,

(b)
the Financial Services Authority,

15

(c)
the Financial Services Compensation Scheme (established under

Part 15 of the Financial Services and Markets Act 2000),

(d)
the scheme manager of that Scheme, and

(e)
any other specified person.

(9)
Investment bank insolvency regulations may include provision about

institutions that are or were group undertakings (within the meaning of

section 1161(5) of the Companies Act 2006) of an investment bank.

(10)
Investment bank insolvency regulations may replicate or apply, with or

without modifications, a power to make procedural rules.

(11)
Investment bank insolvency regulations may include provision for

assigning or apportioning responsibility for the cost of the application of a

procedure established or modified by the regulations.”
87
Insert the following new Clause—

“Investment banks: Regulations: procedure

(1)
Investment bank insolvency regulations shall be made by statutory

instrument.

(2)
Investment bank insolvency regulations may not be made unless a draft

has been laid before and approved by resolution of each House of

Parliament.

(3)
The Treasury must consult before laying draft investment bank insolvency

regulations before Parliament.

(4)
If the power to make investment bank insolvency regulations has not been

exercised before the end of the period of 2 years beginning with the date on

which this Act is passed, it lapses.

(5)
An order under section (Investment banks: Definition)(6)—

(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.”
88
Insert the following new Clause—

“Review

(1)
The Treasury shall arrange for a review of the effect of any investment bank

insolvency regulations.

(2)
The review must be completed during the period of 2 years beginning with

the date on which the regulations come into force.

(3)
The Treasury shall appoint one or more persons to conduct the review; and

a person appointed must have expertise in connection with the law of

insolvency or financial services.

(4)
The review must consider, in particular—

(a)
how far the regulations are achieving the objectives specified in

section (Investment banks: Insolvency regulations)(3), and

(b)
whether the regulations should continue to have effect.

(5)
The review must result in a report to the Treasury.