Session 2010 - 12
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Financial Services Bill


Financial Services Bill
Part 2 — Amendments of Financial Services and Markets Act 2000

128

 

Miscellaneous amendments of FSMA 2000

42      

The consumer financial education body

Schedule 15 contains amendments of FSMA 2000 relating to the consumer

financial education body.

43      

Members of the professions

5

Schedule 16 contains miscellaneous amendments of FSMA 2000 relating to

financial services provided by members of the professions.

44      

International obligations

In section 410 of FSMA 2000 (international obligations), in subsection (4), for

paragraphs (a) and (b) substitute—

10

“(a)   

the FCA;

(aa)   

the PRA;

(ab)   

the Bank of England when exercising functions conferred on it

by Part 18;”.

45      

Interpretation of FSMA 2000

15

(1)   

In section 417 of FSMA 2000 (definitions), in subsection (1)—

(a)   

omit the definition of “the Authority”,

(b)   

in the definition of “control of information rules” for “section 147(1)”

substitute “section 137N”,

(c)   

after the definition of “exempt person” insert—

20

““the FCA” means the Financial Conduct Authority;”,

(d)   

in the definition of “financial promotion rules” for “section 145”

substitute “section 137P”,

(e)   

for the definition of “general rules” substitute—

““general rules”—

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(a)   

in relation to the FCA, has the meaning given in

section 137A(2), and

(b)   

in relation to the PRA, has the meaning given in

section 137E(2);”,

(f)   

omit the definition of “money laundering rules”;

30

(g)   

for the definition of “Part IV permission” substitute—

““Part 4A permission” has the meaning given in section

55A(5);”,

(h)   

after the definition of “partnership” insert—

““the PRA” means the Prudential Regulation Authority;

35

“PRA-authorised person” has the meaning given in section

2B(5);

“PRA-regulated activity” has the meaning given in section

22A;”,

(i)   

in the definition of “price stabilising rules” for “section 144” substitute

40

“section 137O”,

 
 

Financial Services Bill
Part 2 — Amendments of Financial Services and Markets Act 2000

129

 

(j)   

after that definition insert—

““principal” in relation to an appointed representative, is

to be read in accordance with section 39;”,

(k)   

in the definition of “regulating provisions” for “section “159(1)”

substitute “section 140A”,

5

(l)   

after that definition insert—

““regulator” has the meaning given in section 3A(2);”,

(m)   

omit the definitions of “regulatory objectives” and “regulatory

provisions”,

(n)   

for the definition of “rule” substitute—

10

““rule” means a rule made by the FCA or the PRA under

this Act;”,

(o)   

in the definition of “rule-making instrument” for “section 153”

substitute “section 138G”,

(p)   

for the definition of “threshold conditions” substitute—

15

““threshold conditions”, in relation to a regulated activity,

has the meaning given in section 55B(1);”,

(q)   

in the definition of “UK authorised person” for “section 178(4)”

substitute “section 191G(1)”, and

(r)   

in the definition of “the UK financial system” for “section 3” substitute

20

“section 1I”.

(2)   

After section 421 of FSMA 2000 insert—

“421ZA  

Immediate group

In this Act “immediate group”, in relation to a person (“A”), means—

(a)   

A;

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(b)   

a parent undertaking of A;

(c)   

a subsidiary undertaking of A;

(d)   

a subsidiary undertaking of a parent undertaking of A;

(e)   

a parent undertaking of a subsidiary undertaking of A.”

(3)   

After section 425B of FSMA 2000 insert—

30

“425C   

 “Qualifying EU provision”

(1)   

In this Act “qualifying EU provision” means a provision of—

(a)   

a directly applicable EU regulation, or

(b)   

an EU decision for whose enforcement the United Kingdom is

required by an EU obligation to make provision.

35

(2)   

In subsection (1)(b) “EU decision” means a decision under an EU

directive or EU regulation.”

46      

Parliamentary control of statutory instruments

(1)   

Section 429 of FSMA 2000 (Parliamentary control of statutory instruments) is

amended as follows.

40

(2)   

In subsection (1) (orders subject to the affirmative resolution procedure)—

(a)   

in paragraph (a)—

(i)   

after “section” insert “1J, 3B(4), 55C,”,

(ii)   

after “or (e),” insert “138K(6)(c), 192B(6), 204A(7), 213(1A),”, and

 
 

Financial Services Bill
Part 3 — Mutual societies

130

 

(iii)   

after “236(5),” insert “285(4), 380(11), 382(15), 384(13),”, and

(b)   

omit paragraph (b).

(3)   

In subsection (8)—

(a)   

after “under section” insert “3G(1), 137C(1)(b),”,

(b)   

after “165A(2)(d)” insert “, 192A(4)”, and

5

(c)   

after “which” insert “section 22B or”.

Part 3

Mutual societies

Transfer of functions

47      

Mutual societies: power to transfer functions

10

(1)   

The Treasury may by order amend the legislation relating to mutual societies

for any of the relevant purposes.

(2)   

“The legislation relating to mutual societies” means—

(a)   

the Industrial and Provident Societies Act 1965;

(b)   

the Industrial and Provident Societies 1967;

15

(c)   

the Friendly and Industrial and Provident Societies Act 1968;

(d)   

the Industrial and Provident Societies Act (Northern Ireland) 1969;

(e)   

the Friendly Societies Act 1974;

(f)   

the Credit Unions Act 1979;

(g)   

the Credit Unions (Northern Ireland) Order 1985;

20

(h)   

the Building Societies Act 1986;

(i)   

the Friendly Societies Act 1992.

(3)   

The relevant purposes are—

(a)   

providing for any function of the FSA to be exercisable by that body

corporate as the FCA;

25

(b)   

providing for any function of the FSA to be transferred to the PRA;

(c)   

providing for any function of the FSA to be exercisable by that body

corporate as the FCA and also to be exercisable concurrently by the

PRA;

(d)   

providing for any function which is exercisable by the FCA or the PRA

30

(whether by virtue of a previous order under this section or otherwise)

to be transferred to, or to be exercisable concurrently by, the other

regulator;

(e)   

providing for any function which is exercisable by the FCA and the

PRA (whether by virtue of a previous order under this section or

35

otherwise) to be exercisable only by one of them;

(f)   

making provision that appears to the Treasury to be necessary or

expedient in consequence of the provisions of this Act.

(4)   

In relation to the Industrial and Provident Societies Act (Northern Ireland)

1969 and the Credit Unions (Northern Ireland) Order 1985, the relevant

40

purposes also include—

(a)   

providing for any function of a Northern Ireland department or the

Registrar of Credit Unions for Northern Ireland to be transferred to the

 
 

Financial Services Bill
Part 3 — Mutual societies

131

 

FCA or the PRA, or to both the FCA and PRA to be exercised

concurrently;

(b)   

providing for any function of a Northern Ireland department or the

Registrar of Credit Unions for Northern Ireland which relates to the

determination of disputes to be exercisable instead by a court.

5

48      

Further provision that may be included in orders under section 47

(1)   

In this section a “transfer order” means an order under section 47 making

provision for any of the purposes mentioned in subsection (3)(a) to (e) or (4) of

that section.

(2)   

The additional powers conferred by section 95(2) on a person making an order

10

under this Act include power for the Treasury, when making a transfer order,

to include—

(a)   

such consequential provision as the Treasury consider appropriate;

(b)   

provision for the transfer of any property, rights or liabilities held,

enjoyed or incurred by any person in connection with transferred

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functions;

(c)   

provision for the application of the Transfer of Undertakings

(Protection of Employment) Regulations 2006 in connection with any

transfer of staff;

(d)   

provision for the carrying on and completion by or under the authority

20

of the person to whom the functions are transferred of any proceedings,

investigations or other matters commenced, before the order takes

effect, by or under the authority of the person from whom the functions

are transferred;

(e)   

provision amending any enactment relating to transferred functions in

25

connection with their exercise by, or under the authority of, the person

to whom they are transferred;

(f)   

provision requiring either regulator to consult the other, notify the

other or obtain the consent of the other in connection with the exercise

of transferred functions;

30

(g)   

provision for the substitution of the person to whom functions are

transferred for the person from whom they are transferred, in any

instrument, contract or legal proceedings made or begun before the

order takes effect.

(3)   

A transfer order may provide for—

35

(a)   

any provision of FSMA 2000 that would not otherwise apply in relation

to transferred functions to apply in relation to those functions with

such modifications as may be specified, or

(b)   

any provision of FSMA 2000 that would otherwise apply in relation to

transferred functions not to apply in relation to them or to apply with

40

such modifications as may be specified.

(4)   

For the purposes of subsections (2) and (3), a transfer order is to be taken to

transfer functions to any person by whom any function becomes exercisable by

virtue of the order.

(5)   

On or after the making of a transfer order (“the original order”) the Treasury

45

may by order make any incidental, supplemental, consequential or transitional

provision or provision by virtue of subsection (2) or (3) which they had power

to include in the original order.

 
 

Financial Services Bill
Part 3 — Mutual societies

132

 

(6)   

The provisions of this section do not limit—

(a)   

the powers conferred by section 98 or 99(3), or

(b)   

the powers exercisable under Schedule 21 in connection with a transfer

order that transfers functions to the PRA or to the FCA and the PRA.

49      

Evidence

5

(1)   

A certificate issued by the Treasury that property vested in a person

immediately before a transfer order takes effect has been transferred as a result

of the order is conclusive evidence of the transfer.

(2)   

“Transfer order” means—

(a)   

an order under section 47,

10

(b)   

an order under section 48(5), or

(c)   

an order under Part 21 of FSMA 2000 (mutual societies).

50      

Repeals in Part 21 of FSMA 2000

(1)   

The following provisions of Part 21 of FSMA 2000 are repealed—

(a)   

in section 334 (the Friendly Societies Commission), subsections (1) and

15

(2);

(b)   

section 335 (the Registry of Friendly Societies);

(c)   

section 336 (the Building Societies Commission);

(d)   

section 337 (the Building Societies Investor Protection Board);

(e)   

section 338 (industrial and provident societies and credit unions);

20

(f)   

section 339 (supplemental provisions).

(2)   

The repeals in subsection (1) do not have the effect of revoking any order made

under any provision of Part 21 of FSMA 2000 before the commencement of this

section.

Building societies: miscellaneous

25

51      

Building societies: creation of floating charges

(1)   

Section 9B of the Building Societies Act 1986 (restriction on creation of floating

charges) is amended as follows.

(2)   

In subsection (1), at the end insert “unless it complies with the requirements in

subsection (1A)”.

30

(3)   

After that subsection insert—

“(1A)   

The requirements are that the floating charge—

(a)   

is created in favour of a participant in a system, and

(b)   

is created for the purpose of securing any rights and obligations

that may arise in connection with participation in that system.”

35

(4)   

After subsection (2) insert—

“(3)   

In this section “participant” and “system” have the meaning given by

Article 2 of Directive 98/26/EC of the European Parliament and of the

Council of 19th May 1998 on settlement finality in payment and

 
 

Financial Services Bill
Part 4 — Collaboration between Treasury and Bank of England, FCA or PRA

133

 

securities settlement systems (as amended by Directives 2009/44/EC

and 2010/78/EU).”

52      

Power to direct transfer of building society’s business

(1)   

Section 42B of the Building Societies Act 1986 (power to direct transfers of

engagements or business) is amended as follows.

5

(2)   

In subsection (1)—

(a)   

before the “or” at the end of paragraph (a) insert—

“(aa)   

direct the society, within a specified period, to transfer

its business under section 97 to an existing or specially

formed company that is a subsidiary of another mutual

10

society by a transfer to which provision made by order

under section 3 of the 2007 Act (transfers to subsidiaries

of other mutuals) applies;”, and

(b)   

in paragraph (b), for “to an existing company under section 97”

substitute “under section 97 to an existing company that is not a

15

subsidiary of another mutual society”.

(3)   

After subsection (1) insert—

“(1A)   

In this section—

(a)   

“the 2007 Act” means the Building Societies (Funding) and

Mutual Societies (Transfers) Act 2007;

20

(b)   

“mutual society” has the same meaning as in section 3 of that

Act.”

(4)   

In subsection (4)—

(a)   

in paragraph (a), for “(1)(b)” substitute “(1)(aa) or (b)”, and

(b)   

in paragraph (b), after “existing company” insert “, or to a specially

25

formed company that is a subsidiary of another mutual society,”.

(5)   

In Schedule 8A to that Act (directions under section 42B(4)), in paragraph 9(3),

for “section 42B(1)(b)” substitute “section 42B(1)(aa) or (b)”.

Interpretation

53      

Interpretation of Part 3

30

(1)   

In this Part “regulator” means the FCA or the PRA.

(2)   

In this Part a reference to a person’s functions under an enactment includes a

reference to the person’s functions under any other enactment as applied by

that enactment.

Part 4

35

Collaboration between Treasury and Bank of England, FCA or PRA

54      

Duty of Bank to notify Treasury of possible need for public funds

(1)   

Where it appears to the Bank of England that there is a material risk of

circumstances within any of the following cases arising, the Bank must

immediately notify the Treasury.

40

 
 

Financial Services Bill
Part 4 — Collaboration between Treasury and Bank of England, FCA or PRA

134

 

(2)   

A notification under subsection (1) or section 55(2) is referred to in this Part as

a “public funds notification”.

(3)   

The first case is where the Treasury or the Secretary of State might reasonably

be expected to regard it as appropriate to provide financial assistance to or in

respect of a financial institution.

5

(4)   

The second case is where—

(a)   

the Treasury, the Bank of England, the PRA or the Secretary of State

might reasonably be expected to regard it as appropriate to exercise any

of their respective powers under Parts 1 to 3 of the Banking Act 2009,

and

10

(b)   

the Treasury might reasonably be expected to regard it as appropriate

to incur expenditure in connection with the exercise of any of those

powers (whether by the Treasury, the Bank, the PRA or the Secretary of

State).

(5)   

The third case is where the scheme manager of the Financial Services

15

Compensation Scheme might reasonably be expected to request—

(a)   

a loan from the National Loans Fund under section 223B of FSMA 2000,

or

(b)   

financial assistance from the Treasury,

   

for the purpose of funding expenses incurred or expected to be incurred under

20

the Financial Services Compensation Scheme.

(6)   

A public funds notification must give a general indication of the matters giving

rise to the notification.

(7)   

A public funds notification must be given or confirmed in writing.

55      

Duty of Bank to notify Treasury of changes

25

(1)   

This section applies where a public funds notification has been given.

(2)   

If the Bank of England is of the opinion that the risk to which the notification

relates continues but that there is a substantial change in the matters which

gave rise to the notification, the Bank must notify the Treasury.

(3)   

If the Bank of England is of the opinion that the risk to which the notification

30

relates has ceased, it must notify the Treasury.

(4)   

Before giving a notification under subsection (3), the Bank must consult the

Treasury.

(5)   

A notification under subsection (3) must be given or confirmed in writing.

56      

Circumstances in which Treasury power of direction exercisable

35

(1)   

This section makes provision about the circumstances in which the Treasury’s

power of direction under section 57 is exercisable, subject to the provisions of

that section.

(2)   

Where a public funds notification has been given, the power of direction is

exercisable by reference to the notification unless the notification has been

40

superseded by a notification under section 55(3).

 
 

 
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Revised 27 January 2012