House of Commons Public Bill Committee Proceedings

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Session 2009 - 10
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Other Bills before Parliament

101

SUPPLEMENT TO THE VOTES AND PROCEEDINGS

Monday 25 January 2010

Report Stage Proceedings

Financial Services Bill, As Amended

New Clauses

No credit agreement to be enforceable if its total cost exceeds the statutory limit

Rob Marris

Withdrawn  NC1

To move the following Clause:—

‘(1)
No agreement regulated by the Consumer Credit Act 1974 shall be enforceable if

the total cost of credit charged under that agreement or the cost of transactions

linked to that agreement exceed the relevant limits set by the OFT pursuant to

sections [Quanta of statutory limits] and [Limits on costs of transactions linked to

credit agreements].

(2)
Where a consumer credit agreement is found to be unlawful by virtue of

subsection (1) that agreement and any linked agreement shall be unenforceable

and the lender and any agent acting on its behalf shall be liable to:

(a)
a fine determined by the OFT in accordance with section [Level of fines];

and

(b)
the revocation of the lender’s Consumer Credit Licence.’.

OFT’s power to set statutory limit

Rob Marris

Not called  NC2

To move the following Clause:—

‘(1)
Where the OFT is satisfied that insufficient price competition in a defined credit

market is causing or may cause a detriment to consumers the OFT shall set a

reasonable limit on the total cost chargeable for credit by lenders in that market.

(2)
In setting the limit referred to in subsection (1) the OFT shall consider evidence

of:

(a)
the degree of price competition in the credit market; and

(b)
the level of consumer detriment caused by any identified lack of price

competition.

Report Stage Proceedings: 25 January 2010
102

Financial Services Bill, continued

(3)
The OFT shall within three months of the date on which this Act or any Part

thereof comes into force and thereafter on each anniversary thereof decide

whether or not to set a limit on the total cost of credit for any consumer credit

market and shall publish that decision and the reasons for it.’.

Quanta of statutory limits

Rob Marris

Not called  NC3

To move the following Clause:—

‘(1)
The OFT shall set statutory limits which reasonably reflect the cost of providing

credit in a properly functioning competitive credit market.

(2)
To reflect variations in the amount of reasonable costs incurred by lenders

different statutory limits may be set for loans of different amounts and of different

durations.

(3)
The OFT may on not less than 14 days’ published notice vary any statutory limits

to reflect wider macroeconomic conditions including but not limited to changes

in the Bank of England’s base lending rate.’.

Limits on cost of transactions linked to credit agreements

Rob Marris

Not called  NC4

To move the following Clause:—

‘(1)
Where the OFT sets a statutory limit for a credit market it may also set limits on

cost of transactions linked to such credit agreements which costs are not included

in the total charge for credit.

(2)
Limits on the cost of transactions linked to credit agreements include:

(a)
the cash price of goods which are being offered for sale on credit terms;

and

(b)
the costs of any related insurance or collection services.

(3)
The OFT may set reasonable limits on the cost of transactions linked to credit

agreements if it finds evidence that:

(a)
the statutory limit is likely to be avoided; or

(b)
there is likely to be a consumer detriment which is more than de

minimis.’.

Report Stage Proceedings: 25 January 2010
103

Financial Services Bill, continued

Publication of limits

Rob Marris

Not called  NC5

To move the following Clause:—

‘When it sets a statutory limit or sets a limit on the cost of transactions linked to

credit agreements the OFT shall take reasonable steps to ensure that such limits

are timeously:

(a)
published in the London Gazette;

(b)
publicised throughout the credit industry;

(c)
notified to relevant consumer groups; and

(d)
notified to relevant advice agencies.’.

Level of fines

Rob Marris

Not called  NC6

To move the following Clause:—

‘(1)
The OFT may impose a fine on any lender who exceeds a statutory limit or a limit

on the cost of transactions linked to credit agreements.

(2)
A fine imposed by virtue of subsection (1) shall not exceed 5 per cent. of that

lender’s annual turnover.

(3)
When setting a fine the OFT shall have regard to:

(a)
the length of time that the lender has been operating in the market;

(b)
the lender’s previous record regarding statutory limits;

(c)
the lender’s previous record regarding the cost of transactions linked to

credit agreements; and

(d)
the annual turnover of the lender in its most recent annual accounts.

(4)
A lender upon whom a fine is imposed by the OFT pursuant to this section has

the right to appeal to the Secretary of State for Business, Innovation and Skills

within 28 days after being notified by the OFT of that fine.’.

Definitions

Rob Marris

Not called  NC7

To move the following Clause:—

‘(1)
In the sections [No credit limit to be enforceable if its total cost exceeds the

statutory limit], [OFT’s power to set statutory limit], [Quanta of statutory limits],

[Limits on cost of transactions linked to credit agreements], [Publication of

limits] and [Level of fines] “OFT” means the Office for Fair Trading.

Report Stage Proceedings: 25 January 2010
104

Financial Services Bill, continued

(2)
In sections [Quanta of statutory limits] and [Publication of limits] the “statutory

limit” means the limit referred to in subsection (1) of section [OFT’s power to set

statutory limit].

(3)
In sections [Publication of limits] and [Level of fines] “limits on the cost of

transactions linked to credit agreements” means the limits referred to in

subsection (1) of section [Limits on cost of transactions linked to credit

agreements].’.

Short selling

Mr Frank Field

Ms Katy Clark

Mr Andrew Dismore

Kate Hoey

Mr Chris Mullin

Mr Peter Kilfoyle

Withdrawn  NC8

To move the following Clause:—

‘(1)
The Financial Services Authority (“the Authority”) must make rules prohibiting

persons from engaging in short selling of shares except in one of the following

circumstances—

(a)
the share price at the time of the transaction was higher than it was at the

close of the previous trading day of the market on which the share was

listed; or

(b)
the short selling was by a person who borrowed the shares, and the

beneficial owners of the shares had given prior permission at an annual

general meeting for the shares to be lent.

(2)
Any person who engages in short selling under the provisions of paragraph 1(a)

or (b) must make a declaration of the sale to the Authority on the day of the

transaction.

(3)
The Authority may set requirements as to the form and content of declarations

made under section (2), but the Authority must require that such declarations

state—

(a)
the number of shares sold;

(b)
the price for which they were sold;

(c)
any features of the transaction which would confer a financial advantage

on the seller in the event of a decrease in the price of the shares; and

(d)
the person to whom they were sold.

(4)
The Authority must publish on its website all declarations under subsection (2) as

soon as possible after they are received, and in any case not more than 24 hours

after receipt.

(5)
If the Authority is satisfied that a person has contravened the provisions of

subsections (1) or (2), it may impose a penalty of such amount as it considers

appropriate on—

(a)
the person who contravened the provision or requirement, in which case

the penalty must not be less than the profit made by the person in

question; or

(b)
any person who was knowingly concerned in the contravention.

Report Stage Proceedings: 25 January 2010
105

Financial Services Bill, continued

(6)
Rules under this section may apply to short selling wholly outside the United

Kingdom by persons outside the United Kingdom, but only in so far as the rules

relate to shares admitted to trading on a market within the United Kingdom.

(7)
For the purposes of this section the cases where a person engages in short selling

in relation to shares include any case where—

(a)
the person enters into a transaction which relates to shares; and

(b)
the effect (or one of the effects) of the transaction is to confer a financial

advantage on the person in the event of a decrease in the price or value of

the shares.’.

Bank and building society accounts of retail customers

Mr Frank Field

Withdrawn  NC9

To move the following Clause:—

‘(1)
It shall be a requirement on banks and building societies that accept deposits from

retail customers that they must offer retail customers—

(a)
at least one current account in respect of which no charge is made for

holding the account when it is in credit; and

(b)
at least one savings account in respect of which no charge is made for

holding the account when it is in credit, and on which interest is paid to

the account holder.

(2)
A penalty may be imposed by the Financial Services Authority on a bank or

builidng society which fails to offer accounts in accordance with subsection (1).

(3)
The penalty which may be imposed for a first offence under subsection (2) is a

penalty not exceeding £100,000.

(4)
The penalty which may be imposed for a second or subsequent offence under

subsection (2) is an unlimited fine.’.

Financial Services Authority regulation of Northern Ireland credit unions

Mark Durkan

Mr Eddie McGrady

Lady Hermon

Sammy Wilson

Mr Nigel Dodds

David Simpson

Withdrawn  NC10

To move the following Clause:—

‘(1)
The Financial Services and Markets Act 2000 (Exemption) (Amendment) Order

2001 is amended as follows.

Report Stage Proceedings: 25 January 2010
106

Financial Services Bill, continued

(2)
Omit Articles 3 and 4.’.

Bank of England to have regard to CFS in delivering financial stability

Mr Mark Hoban

Negatived  NC11

To move the following Clause:—

‘(1)
The Bank of England Act 1998 is amended as follows.

(2)
In section 2A(2), after “Treasury”, insert “the Council for Financial Stability”.’.

Power of the Bank of England to require information

Mr Mark Hoban

Not called  NC12

To move the following Clause:—

‘(1)
The Banking Act 2009 is amended as follows.

(2)
In section 238, at end insert—

“(238A)
(1) The Bank of England may by notice in writing require a person to

provide information—

(a)
which the Bank thinks will help it pursue its financial stability

objective set out in section 238 above, or

(b)
which the Bank requires in relation to recovery and resolution

plans, as set out in section 139 of Financial Services and Markets

Act 2000.

(2)
In particular, a notice may require a person to notify the Bank if events

of a specified kind occur.

(3)
A notice may require information to be provided—

(a)
in a specified form or manner;

(b)
at a specified time;

(c)
in respect of a specified period.

(4)
The Bank may disclose information obtained by virtue of this section

to—

(a)
The Treasury;

(b)
The FSA;

(c)
An authority in a country or territory outside the United

Kingdom which exercises functions similar to those of the

Treasury, the Bank of England or the FSA in relation to financial

stability.

(5)
Subsection (4)—

Report Stage Proceedings: 25 January 2010
107

Financial Services Bill, continued

(a)
overrides a contractual or other requirement to keep information

in confidence, and

(b)
is without prejudice to any other power to disclose information.

(6)
The Treasury may by regulations permit the disclosure of information

obtained by virtue of this section to a specified person.

(7)
The Bank may publish information obtained by virtue of this section.

(8)
The Treasury may make regulations about the manner and extent of

publication under subsection (7).

(9)
Regulations under this section—

(a)
shall be made by statutory instrument, and

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

either House of Parliament.

(10)
It is an offence—

(a)
to fail without reasonable excuse to comply with a requirement

under this section;

(b)
knowingly or recklessly to give false information in pursuance of

this section.

(11)
A person guilty of an offence is liable—

(a)
on summary conviction, to a fine not exceeding the statutory

maximum, or

(b)
on conviction on indictment, to a fine.”.’.

Consumer protection objective

Mr Mark Hoban

Not called  NC13

To move the following Clause:—

‘(1)
The Financial Services and Markets Act 2000 as amended as follows.

(2)
In section 349(1), after paragraph (b) insert—

“(c)
where disclosure would support the Authority’s consumer

protection objective.”.

(3)
In section 391(1) at end insert “except where disclosure by the Authority would

support its consumer protection objective”.’.

Store cards and consumer credit agreements

Mr Mark Hoban

Negatived on division  NC14

To move the following Clause:—

‘(1)
The Consumer Credit Act 1974 shall be amended as follows.



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