Financial Services Bill

House of Commons

Session 2009 - 10
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Other Bills before Parliament

Financial Services Bill

Financial Services Bill
41

(3)
A notice may be given only with the consent of the manager of the
relevant scheme.
(4)
In subsection (2) “specified” means specified, or of a description
specified, in the notice.
(5)
Claims or descriptions of claims may be specified by reference to the
5
persons or description of persons whose claims they are.
224D
Cases where FSCS manager may decline to act
(1)
This section applies where a notice under section 224C(2) (a “section
224C notice”) has been given in respect of a relevant scheme.
(2)
The FSCS manager is not under a duty to comply with the section 224C
10
notice if, as soon as reasonably practicable after receiving it, the FSCS
manager gives a notice to the Treasury stating that a ground set out in
section 224E applies.
(3)
Where a notice under subsection (2) is given, the FSCS manager may
recover from the manager of the relevant scheme an amount equal to
15
the total expenses incurred by the FSCS manager in connection with the
relevant scheme in the period—
(a)
beginning with the giving of the section 224C notice; and
(b)
ending with the giving of the notice under subsection (2).
(4)
The duty to comply with the section 224C notice ceases if, after starting
20
to comply with it, the FSCS manager gives a notice to the Treasury and
the manager of the relevant scheme stating that a ground set out in
section 224E applies.
(5)
Where a notice under subsection (4) is given, the FSCS manager must
give the Treasury such information connected with the FSCS
25
manager’s exercise of functions in relation to the relevant scheme as the
Treasury may reasonably require.
(6)
Any notice under this section—
(a)
may be given only if, before giving it, the FSCS manager has
taken reasonable steps to deal with anything that is causing the
30
ground or grounds in question to apply; and
(b)
must contain details of those steps.
224E
Grounds for declining to act
(1)
This section sets out the grounds referred to in section 224D(2) and (4).
(2)
The first ground is that the FSCS manager is not satisfied that it will be
35
able to obtain any information required in order to comply with the
section 224C notice.
(3)
The second ground is that the FSCS manager is not satisfied that it will
be able to obtain any advice or other assistance from the manager of the
relevant scheme that is required in order to comply with the section
40
224C notice.
(4)
The third ground is—
(a)
that the FSCS manager has not received an amount at least
equal to the total expenses it expects to incur in connection with
its relevant scheme functions; and
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(b)
either—
(i)
that there are no arrangements for the provision of
funds to the FSCS manager to enable it to exercise those
functions and meet those expenses; or
(ii)
that the FSCS manager considers that any such
5
arrangements are unsatisfactory.
(5)
The fourth ground is that the FSCS manager considers that complying
with the section 224C notice would detrimentally affect the exercise of
its functions under the FSCS.
(6)
The fifth ground is—
10
(a)
that there is no undertaking from the manager of the relevant
scheme not to bring proceedings against the FSCS manager; or
(b)
that the FSCS manager considers that the terms of any such
undertaking are unsatisfactory.
(7)
The sixth ground is—
15
(a)
that there are no arrangements for the reimbursement of any
expenses incurred by the FSCS manager in connection with any
proceedings brought against it in respect of its relevant scheme
functions (including expenses incurred in meeting any award of
damages made against it); or
20
(b)
that the FSCS manager considers that any such arrangements
are unsatisfactory.
(8)
In subsection (6) references to an undertaking of the kind mentioned
there are to an undertaking not to bring proceedings in respect of the
FSCS manager’s relevant scheme functions except proceedings in
25
respect of an act or omission of the FSCS manager that is alleged to have
been in bad faith.
(9)
In this section “proceedings” includes proceedings outside the United
Kingdom.
Rules
30
224F
Rules about relevant schemes
(1)
The Authority may by rules make provision in connection with the
exercise by the FSCS manager of functions in respect of relevant
schemes.
(2)
The provision that may be made by the rules includes any provision
35
corresponding to provision that could be contained in the FSCS; but
this is subject to subsections (3) and (4).
(3)
The rules may confer on the FSCS manager a power to impose levies on
authorised persons (or any class of authorised persons) for the purpose of
meeting its management expenses incurred in connection with its functions in
40
respect of relevant schemes.
(4)
But if the rules confer such a power they must provide that the power
may be exercised in relation to expenses incurred in connection with a
relevant scheme only if the FSCS manager has tried its best to obtain
reimbursement of the expenses from the manager of the relevant
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scheme.

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(5)
The rules may apply any provision of the FSCS, with or without
modifications.
(6)
An amount payable to the FSCS manager as a result of any provision of
the rules made by virtue of subsection (3) may be recovered as a debt
due to the FSCS manager.
5
(7)
References to the FSCS manager’s “management expenses” are to its
expenses incurred otherwise than in paying compensation.”
Powers to require information
30
Information relating to financial stability
(1)
The Financial Services and Markets Act 2000 is amended as follows.
10
(2)
After section 165 insert—
“165A
Authority’s power to require information: financial stability
(1)
The Authority may, by notice in writing given to a person to whom this
section applies, require the person—
(a)
to provide specified information or information of a specified
15
description; or
(b)
to produce specified documents or documents of a specified
description.
(2)
This section applies to—
(a)
a person who has a legal or beneficial interest in any of the
20
assets of a relevant investment fund;
(b)
a person who is responsible for the management of a relevant
investment fund;
(c)
a person (a “service provider”) who provides any service to an
authorised person;
25
(d)
a person prescribed by an order made by the Treasury or any
person of a description prescribed by such an order (and see
also section 165C);
(e)
a person who is connected with a person to whom this section
applies as a result of any of the above paragraphs.
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(3)
This section applies only to information and documents that the
Authority considers are, or might be, relevant to the stability of one or
more aspects of the UK financial system.
(4)
A notice may be given to a service provider, or to a person who is
connected with a service provider, only if the Authority considers
35
that—
(a)
the service or the way in which it (or any part of it) is provided,
or
(b)
any failure to provide the service (or any part of it),

poses, or would be likely to pose, a serious threat to the stability of the
40
UK financial system.
(5)
Information or documents required under this section must be
provided or produced—

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(a)
before the end of such reasonable period as may be specified;
and
(b)
at such place as may be specified.
(6)
The Authority may require any information provided under this
section to be provided in such form as it may reasonably require.
5
(7)
The Authority may require—
(a)
any information provided, whether in a document or otherwise,
to be verified in such manner as it may reasonably require; or
(b)
any document produced to be authenticated in such manner as
it may reasonably require.
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(8)
In this section—
“management” includes any of the activities listed in Annex II to
the UCITS directive;
“relevant investment fund” means an investment fund whose
assets consist of or include financial instruments which—
15
(a)
are traded in the United Kingdom; or
(b)
were issued by a body incorporated in the United
Kingdom;
“service” includes facility;
“specified” means specified in the notice.
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(9)
For the purposes of the definition of “relevant investment fund”—
(a)
arrangements may constitute an investment fund even if there
is only one person participating in the arrangements; and
(b)
the reference to financial instruments has the meaning given by
Article 4.1(17) of the markets in financial instruments directive.
25
(10)
For the purposes of this section a person is connected with another
person (“A”) if the person is or has at any relevant time been—
(a)
a member of A’s group;
(b)
a controller of A;
(c)
any other member of a partnership of which A is a member; or
30
(d)
in relation to A, a person mentioned in Part 1 of Schedule 15
(reading references in that Part to the authorised person as
references to A).
165B
Safeguards etc in relation to exercise of power under section 165A
(1)
If the Authority proposes to impose a requirement on a person under
35
section 165A, it must give the person a notice in writing warning the
person that the Authority is proposing to impose the requirement.
(2)
The notice under subsection (1) must—
(a)
give the Authority’s reasons for proposing to impose the
requirement; and
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(b)
specify a reasonable period within which the person may make
representations to the Authority.
(3)
The Authority must then decide, within a reasonable period, whether
to impose the requirement.

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(4)
Subsections (1) to (3) do not apply in any case where the Authority is
satisfied that it is necessary for the information or documents to be
provided or produced without delay.
(5)
If the Authority imposes a requirement on a person under section 165A,
the notice under that section must give the Authority’s reasons for
5
imposing the requirement.
(6)
The Authority must prepare a statement of its policy with respect to the
exercise of the power conferred by section 165A.
(7)
The statement requires the approval of the Treasury.
(8)
If the Treasury approve the statement, the Authority must publish it.
10
(9)
The power conferred by section 165A may not be exercised before the
statement has been published.
165C
Orders under section 165A(2)(d)
(1)
The Treasury may make an order under section 165A(2)(d) only if they
consider that—
15
(a)
the activities carried on by the prescribed person or persons of
the prescribed description, or the way in which those activities
(or any part of them) are carried on, or
(b)
any failure to carry on those activities (or any part of them),

pose, or would be likely to pose, a serious threat to the stability of the
20
UK financial system.
(2)
Subject as follows, an order under section 165A(2)(d) may not be made
unless a draft of the order has been laid before, and approved by a
resolution of, each House of Parliament.
(3)
Subsection (2) does not apply in any case where the Treasury are
25
satisfied that it is necessary to make an order under section 165A(2)(d)
without laying a draft for approval.
(4)
In that case, the order—
(a)
must be laid before Parliament after being made; and
(b)
ceases to have effect at the end of the relevant period unless
30
before the end of that period it is approved by a resolution of
each House of Parliament.
(5)
If an order ceases to have effect as a result of subsection (4)(b) that does
not affect—
(a)
anything done under it; or
35
(b)
the power to make a new one.
(6)
“Relevant period” means a period of 28 days beginning with the day on
which the order is made.
(7)
In calculating the relevant period no account is to be taken of any time
during which Parliament is dissolved or prorogued or during which
40
both Houses are adjourned for more than four days.
(8)
If a statutory instrument containing an order under section 165A(2)(d)
would, apart from this subsection, be treated as a hybrid instrument for
the purposes of the Standing Orders of either House of Parliament, it is
to proceed in that House as if it were not a hybrid instrument.”
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(3)
After section 169 insert—
“169A
  Support of overseas regulator with respect to financial stability
(1)
At the request of an overseas regulator, the Authority may exercise a
corresponding section 165A power.
(2)
An “overseas regulator” means an authority in a country or territory
5
outside the United Kingdom which exercises functions with respect to
the stability of the financial system operating in that country or
territory.
(3)
A “corresponding section 165A power” means a power corresponding
to the one conferred by section 165A, but reading references in that
10
section to the stability of the UK financial system as references to the
stability of the financial system operating in the country or territory of
the overseas regulator.
(4)
The following provisions apply in relation to the exercise of the
corresponding section 165A power—
15
(a)
section 165B(1) to (5); and
(b)
section 169(3), (4)(a) and (d), (5) and (6).
(5)
Any reference in this section to the “financial system” operating in a
country or territory outside the United Kingdom has the same meaning
as in section 6B(5).”
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Asset protection scheme etc
(1)
The Treasury may, by notice in writing, require a person who participates (or
is proposing to participate) in the asset protection scheme or a qualifying
scheme—
(a)
to provide such information, or
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(b)
to produce such documents,

as they may reasonably require for the purposes of, or in connection with, the
scheme or a relevant scheme agreement.
(2)
“The asset protection scheme” means the scheme known as the Asset
Protection Scheme that was the subject of a statement made by the Chancellor
30
of the Exchequer on 26 February 2009.
(3)
“Qualifying scheme” means a scheme specified in an order made by the
Treasury.
(4)
“Relevant scheme agreement” means an agreement entered into (or proposed
to be entered into) under the asset protection scheme or a qualifying scheme.
35
(5)
The information or documents must be provided or produced at such times,
and at such place, as the Treasury may specify in the notice.
(6)
The Treasury may require the information to be provided in such form as they
may reasonably require.
(7)
A requirement imposed on a person as a result of this section is enforceable by
40
an injunction or, in Scotland, by an order for specific performance under
section 45 of the Court of Session Act 1988.

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(8)
The Treasury may specify a scheme in an order under subsection (3) only if it
appears to them that the purpose of the scheme corresponds to, or is connected
with, the purpose of the asset protection scheme.
(9)
An order under subsection (3) is subject to negative resolution procedure.
Banking Act 2009
5
32
Services forming part of recognised inter-bank payment systems
In Part 5 of the Banking Act 2009 (inter-bank payment systems), after section
206 insert—
“206A
  Services forming part of recognised inter-bank payment systems
(1)
The Treasury may by order make provision applying any provision of this Part
10
to persons who are service providers in relation to a recognised inter-bank
payment system.
(2)
A person is a service provider in relation to a recognised inter-bank
payment system if—
(a)
the person provides services that form part of the arrangements
15
constituting the system, and
(b)
the person is specified as a person within paragraph (a) by the
Treasury in the recognition order made in respect of the system.
(3)
Telecommunication or information technology services are examples
of the kind of services that may fall within subsection (2)(a).
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(4)
Before specifying persons under subsection (2)(b), the Treasury must—
(a)
consult the Bank of England and the FSA,
(b)
notify the operator of the system and the persons whom the
Treasury proposes to specify, and
(c)
consider any representations made.
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(5)
The Treasury may not specify the Bank of England under subsection
(2)(b).
(6)
Before making an order under subsection (1), the Treasury must
consult—
(a)
the Bank of England,
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(b)
the FSA, and
(c)
such other persons as the Treasury consider appropriate.
(7)
An order under subsection (1)—
(a)
may modify any provision of this Part in its application to
persons who are service providers in relation to a recognised
35
inter-bank payment system;
(b)
may (but need not) take the form of textual amendment.
(8)
An order under subsection (1)—
(a)
is to be made by statutory instrument, and
(b)
may not be made unless a draft has been laid before and
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approved by resolution of each House of Parliament.”