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Other Bills before Parliament

Financial Services Bill


Financial Services Bill

1

 

A

Bill

[AS AMENDED IN COMMITTEE]

To

Make provision amending the Financial Services and Markets Act 2000,

including provision about financial education, and other provision about

financial services and markets; and to make provision for the administration

of court funds by the Director of Savings. 

Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and

consent of the Lords Spiritual and Temporal, and Commons, in this present

Parliament assembled, and by the authority of the same, as follows:—

Council for Financial Stability

1       

Council for Financial Stability

(1)   

There is to be a Council for Financial Stability consisting of—

(a)   

the Chancellor of the Exchequer,

(b)   

the chair of the FSA, and

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(c)   

the Governor of the Bank of England.

(2)   

The Chancellor of the Exchequer is to be the chair of the Council.

(3)   

The Council must—

(a)   

keep under review matters affecting the stability of the UK financial

system, and

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(b)   

co-ordinate any action taken, or to be taken, by the relevant authorities

for the purpose of protecting or enhancing the stability of that system.

(4)   

Within 6 months of this section coming into force, the Council must prepare the

report referred to in section 2 and the Treasury must lay it before Parliament.

(5)   

Among other things, the duty under subsection (3) requires the Council to—

15

(a)   

keep under review the impact (if any) on the stability of the UK

financial system of events or circumstances outside the United

Kingdom (as well as in the United Kingdom), and

 

HL Bill 51                                                                                              

54/5

 
 

Financial Services Bill

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(b)   

co-ordinate any action taken by the relevant authorities to promote

international financial regulation and supervision where the action is

taken for the purpose of protecting or enhancing the stability of the UK

financial system.

(6)   

The Treasury must prepare a statement containing further provision with

5

respect to the exercise by the Council of its functions.

(7)   

The statement may—

(a)   

specify particular objectives to be met by the Council in exercising its

functions,

(b)   

specify matters to which the Council must have regard in exercising its

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functions,

(c)   

make provision about the procedure of the Council,

(d)   

specify the responsibilities of each relevant authority in protecting or

enhancing the stability of the UK financial system,

(e)   

specify the powers each relevant authority is able to exercise in

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protecting or enhancing the stability of the system, and

(f)   

include any other provision that the Treasury consider would facilitate

the effective exercise by the Council of its functions.

(8)   

The Treasury must keep the statement under review.

(9)   

Before preparing (or revising) the statement, the Treasury must consult—

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(a)   

the FSA, and

(b)   

the Bank of England.

(10)   

As soon as reasonably practicable after preparing (or revising) the statement,

the Treasury must lay a copy before Parliament.

2       

Report on structure of UK financial system

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The report referred to in section 1 shall—

(a)   

analyse the current structure of the UK financial system with particular

reference to the risks that the system carries for the United Kingdom,

(b)   

identify whether any changes would be desirable and, if so, what the

practical implications of those changes would be,

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(c)   

identify whether there are any issues arising from the financial systems

operating in different countries and territories, including any proposals

for changes to those systems.

3       

Proceedings of the Council

(1)   

The Council must meet in each quarter of each calendar year to consider

35

strategic issues relating to its functions under section 1(3).

(2)   

Where the FSA or the Bank of England publishes a report setting out its

opinion of the risks to the stability of the UK financial system, the Council must

consider the report at the Council’s next quarterly meeting.

(3)   

Where the Treasury prepares a draft report under section 4, the Council must

40

consider the draft at the Council’s next quarterly meeting.

(4)   

The Council must publish minutes of each of its quarterly meetings.

(5)   

Subsection (4) does not apply to—

 
 

Financial Services Bill

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(a)   

minutes of any proceedings relating to matters which are commercially

confidential or market sensitive,

(b)   

minutes of any proceedings relating to any action to be taken by any of

the relevant authorities the purpose of which may be impeded or

frustrated by publication, or

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(c)   

anything which, if published, might pose a threat to the stability of the

UK financial system.

(6)   

In addition to its quarterly meetings, the Council may meet at other times.

(7)   

If a member of the Council is unable to take part in any of its proceedings, the

member may appoint someone else to represent the interests of the member in

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the proceedings.

(8)   

In the case of an appointment by the Chancellor of the Exchequer, the person

appointed is also to act as the chair of the Council.

4       

Annual report

(1)   

At least once a year, the Treasury must prepare a report on—

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(a)   

the activities which the Council has carried on during the period

covered by the report, and

(b)   

any matters which, in the opinion of the Treasury, had special

significance for the stability of the UK financial system in that period.

(2)   

The Treasury must lay a copy of the report, or a copy of the report with the

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omissions mentioned in subsection (3), before Parliament.

(3)   

The copy of the annual report laid before Parliament may omit—

(a)   

anything in the report relating to matters which are commercially

confidential or market sensitive,

(b)   

anything in the report relating to any action to be taken by any of the

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relevant authorities the purpose of which may be impeded or

frustrated by being included in the report laid before Parliament, or

(c)   

anything which, if included in the report laid before Parliament, might

pose a threat to the stability of the UK financial system.

5       

Definitions

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In sections 1 to 4 and this section—

“the Council” means the Council for Financial Stability,

“the FSA” means the Financial Services Authority,

“international financial regulation and supervision” means—

(a)   

the regulation and supervision by an international body or

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organisation of the financial systems operating in different

countries or territories, and

(b)   

the regulation and supervision by an authority in a particular

country or territory of the financial system operating in that

country or territory,

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“the relevant authorities” means—

(a)   

the Treasury,

(b)   

the FSA, and

(c)   

the Bank of England, and

 
 

Financial Services Bill

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“the UK financial system” means the financial system operating in the

United Kingdom.

Disclosure of financial assistance to the Bank of England

6       

Disclosure of financial assistance to the Bank of England

(1)   

Where the Treasury provides financial assistance to the Bank of England in

5

order to facilitate actions by the Bank of England in pursuit of its financial

stability objective under section 2A of the Bank of England Act 1998, the

Treasury shall lay a report setting out details of the financial assistance before

Parliament.

(2)   

A report under subsection (1) shall be laid as soon as possible after the

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provision of the financial assistance but may be delayed for as long as the

Treasury considers that there would be a threat to the stability of the UK

financial system if such a report were laid.

(3)   

Where the laying of the report is delayed, the Chancellor of the Exchequer shall

ensure that information is given on a confidential basis to those Members of

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Parliament whom he considers should be informed.

(4)   

“Financial assistance” includes giving guarantees or indemnities and any other

kind of financial assistance (actual or contingent).

Objectives of FSA etc

7       

 Financial stability objective

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(1)   

The Financial Services and Markets Act 2000 is amended as follows.

(2)   

In section 2(2) (the FSA’s regulatory objectives), after paragraph (a) insert—

“(ab)   

financial stability;”.

(3)   

After section 3 insert—

“3A     

Financial stability

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(1)   

The financial stability objective is: contributing to the protection and

enhancement of the stability of the UK financial system.

(2)   

In considering that objective the Authority must have regard to—

(a)   

the economic and fiscal consequences for the United Kingdom

of instability of the UK financial system;

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(b)   

the effects (if any) on the growth of the economy of the United

Kingdom of anything done for the purpose of meeting that

objective; and

(c)   

the impact (if any) on the stability of the UK financial system of

events or circumstances outside the United Kingdom (as well as

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in the United Kingdom).

(3)   

The Authority must, consulting the Treasury, determine and review its

strategy in relation to the financial stability objective.”

 
 

 
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