Financial Services Bill (HL Bill 25)

Financial Services BillPage 240

(b) persons who have assumed responsibility for
liabilities arising from acts or omissions of relevant
persons (“successors”) are unable, or likely to be
unable, to satisfy claims against the successors that
5are based on those acts or omissions.

(4) After subsection (1) insert—

(1A) The Treasury must by order specify—

(a) the cases in which the FCA may, or may not, make rules
under subsection (1), and

(b) 10the cases in which the PRA may, or may not, make rules
under that subsection.

(5) In subsection (2), after “rules” insert “(taken together)”.

(6) In subsection (9)(a), after “against him” insert “, or against a successor falling
within subsection (1)(b),”.

4 15In section 214 (general provisions of the scheme), in subsection (1), after
paragraph (a) insert—

(aa) as to the circumstances in which a successor falling within
section 213(1)(b) is to be taken (for the purposes of the
scheme) to be unable, or likely to be unable, to satisfy claims
20against the successor that are based on the acts or omissions
of a relevant person;.

5 In section 215 (rights of the scheme in insolvency), for “Authority”, in each
place, substitute “regulators”.

6 In section 217 (insurers in financial difficulties), in subsection (5), for
25“Authority” substitute “either regulator or both regulators”.

7 After section 217 insert—

Relationship with the regulators

217A Co-operation

(1) Each regulator and the scheme manager must take such steps as they
30consider appropriate to co-operate with each other in the exercise of
their functions under this Part and Part 15A.

(2) Each regulator and the scheme manager must prepare and maintain
a memorandum describing how that regulator and the scheme
manager intend to comply with subsection (1).

(3) 35The scheme manager must ensure that the memoranda as currently
in force are published in the way appearing to it to be best calculated
to bring them to the attention of the public.

8 For the italic heading before section 218 substitute “Annual plan and report”.

9 Before section 218 insert—

217B 40 Annual plan

(1) The scheme manager must in respect of each of its financial years
prepare an annual plan.

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(2) The plan must be prepared before the start of the financial year.

(3) An annual plan in respect of a financial year must make provision
about the use of the resources of the scheme manager.

(4) The plan may include material relating to periods longer than the
5financial year in question.

(5) Before preparing an annual plan, the scheme manager must consult
such persons (if any) as the scheme manager considers appropriate.

(6) The scheme manager must publish each annual plan in the way it
considers appropriate.

10 (1) 10Section 218 (annual report) is amended as follows.

(2) In subsections (1) and (2)(b), for “Authority” substitute “regulators”.

(3) At the end insert—

(4) The Treasury may—

(a) require the scheme manager to comply with any provisions
15of the Companies Act 2006 about accounts and their audit
which would not otherwise apply to it, or

(b) direct that any such provision of that Act is to apply to the
scheme manager with such modifications as are specified in
the direction.

(5) 20Compliance with any requirement under subsection (4)(a) or (b) is
enforceable by injunction or, in Scotland, an order for specific
performance under section 45 of the Court of Session Act 1988.

(6) Proceedings under subsection (5) may be brought only by the
Treasury.

11 25After section 218 insert—

218ZA Audit of accounts

(1) The scheme manager must send a copy of its annual accounts to the
Comptroller and Auditor General and the Treasury as soon as is
reasonably practicable.

(2) 30The Comptroller and Auditor General must—

(a) examine, certify and report on accounts received under this
section, and

(b) send a copy of the certified accounts and the report to the
Treasury.

(3) 35The Treasury must lay the copy of the certified accounts and the
report before Parliament.

(4) The scheme manager must send a copy of the certified accounts and
the report to the regulators.

(5) Except as provided by section 218(4), the scheme manager is exempt
40from the requirements of Part 16 of the Companies Act 2006 (audit),
and its balance sheet must contain a statement to that effect.

Financial Services BillPage 242

(6) In this section “annual accounts” has the meaning given by section
471 of the Companies Act 2006.

12 (1) Section 218A (power to require information) is amended as follows.

(2) In subsection (1)—

(a) 5for “The Authority”, in the first place, substitute “Each regulator”,
and

(b) for “the Authority”, in the second and third place, substitute “that
regulator”.

(3) In subsections (2) and (4), for “Authority” substitute “regulator”.

(4) 10In subsection (5), for “Authority’s” substitute “regulator’s”.

(5) In the heading, for “Authority’s” substitute “Regulators’”.

13 In section 224 (scheme manager’s power to inspect documents), in
subsection (1), after “relevant person,” insert “or a successor falling within
section 213(1)(b),”.

Section 36

15SCHEDULE 11 The financial ombudsman service

1 In section 226 (compulsory jurisdiction), in subsection (3)(a), for “Authority”
substitute “FCA”.

2 In section 226A (consumer credit jurisdiction), in subsection (7), for
20“Authority” substitute “FCA”.

3 In section 227 (voluntary jurisdiction), in subsection (6), for “Authority’s”
substitute “FCA’s”.

4 (1) Section 228 (determination under the compulsory and consumer credit
jurisdiction) is amended as follows.

(2) 25In subsection (4), in paragraph (c), omit “in writing”.

(3) After subsection (6) insert—

(6A) But the complainant is not to be treated as having rejected the
determination by virtue of subsection (6) if—

(a) the complainant notifies the ombudsman after the specified
30date of the complainant’s acceptance of the determination,

(b) the complainant has not previously notified the ombudsman
of the complainant’s rejection of the determination, and

(c) the ombudsman is satisfied that such conditions as may be
prescribed by rules made by the scheme operator for the
35purposes of this section are satisfied.

(4) After subsection (7) insert—

(7A) Where a determination is rejected by virtue of subsection (6), the
notification under subsection (7) must contain a general description
of the effect of subsection (6A).

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5 In section 229 (awards), in subsection (4), for “Authority” substitute “FCA”.

6 In section 230 (costs), in subsection (2), for “Authority” substitute “FCA”.

7 After section 230 insert—

230A Reports of determinations

(1) 5The scheme operator must publish a report of any determination
made under this Part.

(2) But if the ombudsman who makes the determination informs the
scheme operator that, in the ombudsman’s opinion, it is
inappropriate to publish a report of that determination (or any part
10of it) the scheme operator must not publish a report of that
determination (or that part).

(3) Unless the complainant agrees, a report of a determination published
by the scheme operator may not include the name of the
complainant, or particulars which, in the opinion of the scheme
15operator, are likely to identify the complainant.

(4) The scheme operator may charge a reasonable fee for providing a
person with a copy of a report.

8 After section 232 insert—

232A Scheme operator’s duty to provide information to FCA

20If the scheme operator considers that it has information that, in its
opinion, would or might be of assistance to the FCA in advancing
one or more of the FCA’s operational objectives, it must disclose that
information to the FCA.

9 In section 234 (industry funding), in subsection (1), for “Authority”
25substitute “FCA”.

10 In section 234A (funding by consumer credit licensees), in subsection (1), for
“Authority” substitute “FCA”.

11 After section 234A insert—

Successors to businesses

234B 30Transfers of liability

(1) This section applies where a person (the “successor”) has assumed a
liability (including a contingent one) of a person (the “predecessor”)
who was, or (apart from this section) would have been, the
respondent in respect of a complaint falling to be dealt with under
35the ombudsman scheme.

(2) The complaint may (but need not) be dealt with under this Part as if
the successor were the respondent.

12 Schedule 17 (the ombudsman scheme) is amended as follows.

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13 For paragraph 2 (and the italic heading before it) substitute—

Duty of FCA

2 The FCA must take such steps as are necessary to ensure that the
5body corporate established by the Financial Services Authority
under this Schedule as originally enacted is, at all times, capable of
exercising the functions conferred on the scheme operator by or
under this Act.

14 In paragraph 3 (constitution)—

(a) 10for “Authority”, in each place, substitute “FCA”, and

(b) in sub-paragraph (4), after “9” insert “, 9A”.

15 After paragraph 3 insert—

Relationship with FCA

3A (1) 15The scheme operator and the FCA must each take such steps as it
considers appropriate to co-operate with the other in the exercise
of their functions under this Part.

(2) The scheme operator and the FCA must prepare and maintain a
memorandum describing how they intend to comply with sub-
20paragraph (1).

(3) The scheme operator must ensure that the memorandum as
currently in force is published in the way appearing to the scheme
operator to be best calculated to bring it to the attention of the
public.

16 25In paragraph 7 (annual reports)—

(a) for “Authority”, in each place, substitute “FCA”, and

(b) at the end insert—

(5) The Treasury may—

(a) require the scheme operator to comply with any
30provisions of the Companies Act 2006 about accounts and
their audit which would not otherwise apply to it, or

(b) direct that any provision of that Act about accounts and
their audit is to apply to the scheme operator with such
modifications as are specified in the direction, whether or
35not the provision would otherwise apply to the scheme
manager.

(6) Compliance with any requirement under sub-paragraph (5)(a) or
(b) is enforceable by injunction or, in Scotland, an order for specific
performance under section 45 of the Court of Session Act 1988.

(7) 40Proceedings under sub-paragraph (6) may be brought only by the
Treasury.

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17 After paragraph 7 insert—

Audit of accounts

7A (1) The scheme operator must send a copy of its annual accounts to
the Comptroller and Auditor General as soon as is reasonably
5practicable.

(2) The Comptroller and Auditor General must—

(a) examine, certify and report on accounts received under
this paragraph, and

(b) send a copy of the certified accounts and the report to the
10Treasury.

(3) The Treasury must lay the copy of the certified accounts and the
report before Parliament.

(4) The scheme operator must send a copy of the certified accounts
and the report to the FCA.

(5) 15Except as provided by paragraph 7(5), the scheme operator is
exempt from the requirements of Part 16 of the Companies Act
2006 (audit), and its balance sheet must contain a statement to that
effect.

(6) In this paragraph “annual accounts” has the meaning given by
20section 471 of the Companies Act 2006.

18 For the italic heading before paragraph 8 substitute “Information, advice and
guidance
”.

19 In paragraph 8 (guidance), for “guidance consisting of such information and
advice” substitute “such information, guidance or advice”.

20 25In paragraph 9 (budget), for “Authority”, in each place, substitute “FCA”.

21 After paragraph 9 insert—

Annual plan

9A (1) The scheme operator must in respect of each of its financial years
prepare an annual plan.

(2) 30The plan must be prepared before the start of the financial year.

(3) An annual plan in respect of a financial year must make provision
about the use of the resources of the scheme operator.

(4) The plan may include material relating to periods longer than the
financial year in question.

(5) 35Before preparing an annual plan, the scheme operator must
consult such persons (if any) as the scheme operator considers
appropriate.

(6) The scheme operator must publish each annual plan in the way it
considers appropriate.

22 40In paragraph 13 (procedural rules)—

(a) for “Authority”, in each place, substitute “FCA”,

Financial Services BillPage 246

(b) for “Authority’s”, in each place, (including the italic heading),
substitute “FCA’s”, and

(c) in sub-paragraph (4)(b), for “Part X” substitute “Part 9A”.

23 In paragraph 14 (scheme operator’s rules)—

(a) 5in sub-paragraph (2), after paragraph (f) insert—

(fa) allow the correction of any clerical mistake in the
written statement of a determination made by an
ombudsman;

(fb) provide that any irregularity arising from a failure
10to comply with any provisions of the scheme rules
does not of itself render a determination void;”,
and

(b) in sub-paragraph (7), for “Authority” substitute “FCA”.

24 In paragraph 16B (procedure for complaints etc), in sub-paragraph (1), after
15paragraph (d) insert—

(e) may provide that an ombudsman may correct any clerical
mistake in a determination made by that ombudsman;

(f) provide that any irregularity arising from a failure to
comply with any provisions of the consumer credit rules
20does not of itself render a determination void.

25 In paragraph 16E (consumer credit rules), for “Authority”, in each place,
substitute “FCA”.

26 In paragraph 18 (terms of reference), for “Authority”, in each place,
substitute “FCA”.

27 25In paragraph 19 (delegation), in sub-paragraph (3), for “Authority”
substitute “FCA”.

28 In paragraph 20 (voluntary jurisdiction rules: procedure), for “Authority”, in
each place, substitute “FCA”.

Section 38

SCHEDULE 12 30Amendments of Parts 11 and 23 of FSMA 2000

Part 1 Part 11 of FSMA 2000: information gathering and investigations

1 (1) Section 165 (power to require information) is amended as follows.

(2) In subsection (1), for “The Authority” substitute “Either regulator”.

(3) 35In subsection (3), for “Authority” substitute “regulator”.

(4) In subsection (4), for “the Authority” substitute “either regulator”.

(5) In subsections (5) and (6) for “The Authority”, in each place, substitute “The
regulator in question”.

(6) In subsection (7), for the words from “exercised” to the end substitute
40“exercised—

Financial Services BillPage 247

(a) by either regulator, to impose requirements on a person who is
connected with an authorised person;

(b) by the FCA, to impose requirements on an operator, trustee or
depositary of a scheme recognised under section 270 or 272 who is
5not an authorised person;

(c) by the FCA, to impose requirements on a recognised investment
exchange;

(d) by the FCA, to impose requirements on a person who is connected
with a recognised investment exchange.”

(7) 10In subsection (9)—

(a) for “the Authority”, in the first place, substitute “the regulator
exercising the power”,

(b) for “the Authority’s” substitute “that regulator’s”, and

(c) for “the Authority”, in the second place, substitute “that regulator”.

(8) 15In subsection (11)—

(a) in the opening words, for “an authorised person” substitute “another
person”, and

(b) in paragraph (d), at the end insert “(reading references in that Part to
the authorised person as references to A)”.

(9) 20In the heading, for “Authority’s” substitute “Regulators’”.

2 In section 165A (power to require information relevant to financial
stability)—

(a) for “Authority”, in each place, substitute “PRA”, and

(b) in the heading, for “Authority’s” substitute “PRA’s”.

3 25In section 165B (safeguards relating to section 165A)—

(a) for “Authority”, in each place, substitute “PRA”, and

(b) for “Authority’s”, in each place, substitute “PRA’s”.

4 In section 165C (orders under section 165A(2)(d)) for subsection (1)
substitute—

(1) 30The Treasury may make an order under section 165A(2)(d) only if
either or both of the following conditions is met in relation to the
provision made by the order.

(1A) Condition A is that the Treasury consider that—

(a) the activities carried on by the prescribed person or persons
35of 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
UK financial system.

(1B) 40Condition B is that the provision implements all or part of a
recommendation made by the Financial Policy Committee of the
Bank of England under section 9O of the Bank of England Act 1998.

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5 For section 166 (reports by skilled persons) substitute—

166 Reports by skilled persons

(1) This section applies where either regulator has required or could
require a person to whom subsection (2) applies (“the person
5concerned”) to provide information or produce documents with
respect to any matter (“the matter concerned”).

(2) This subsection applies to—

(a) an authorised person (“A”),

(b) any other member of A’s group,

(c) 10a partnership of which A is a member, or

(d) a person who has at any relevant time been a person falling
within paragraph (a), (b) or (c),

who is, or was at the relevant time, carrying on a business.

(3) The regulator mentioned in subsection (1) may either—

(a) 15by notice in writing given to the person concerned, require
the person concerned to provide the regulator with a report
on the matter concerned, or

(b) itself appoint a person to provide the regulator with a report
on the matter concerned.

(4) 20When acting under subsection (3)(a), the regulator may require the
report to be in such form as may be specified in the notice.

(5) The regulator must give notice of an appointment under subsection
(3)(b) to the person concerned.

(6) The person appointed to make a report—

(a) 25must be a person appearing to the regulator to have the skills
necessary to make a report on the matter concerned, and

(b) where the appointment is to be made by the person
concerned, must be a person nominated or approved by the
regulator.

(7) 30It is the duty of—

(a) the person concerned, and

(b) any person who is providing (or who has at any time
provided) services to the person concerned in relation to the
matter concerned,

35to give the person appointed to prepare a report all such assistance
as the appointed person may reasonably require.

(8) The obligation imposed by subsection (7) is enforceable, on the
application of the regulator in question, by an injunction or, in
Scotland, by an order for specific performance under section 45 of the
40Court of Session Act 1988.

(9) A regulator may make rules providing for expenses incurred by it in
relation to an appointment under subsection (3)(b) to be payable as a
fee by the person concerned.

(10) The powers conferred by this section may also be exercised by the
45FCA in relation to a person to whom subsection (11) applies, (and
references to the person concerned are to be read accordingly).

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(11) This subsection applies to—

(a) a recognised investment exchange (“A”),

(b) any other member of A’s group,

(c) a partnership of which A is a member, or

(d) 5a person who has at any time been a person falling within
paragraph (a), (b) or (c),

who is, or was at the relevant time, carrying on a business.

6 After section 166 insert—

166A   Appointment of skilled person to collect and update information

(1) 10This section applies if either regulator considers that an authorised
person has contravened a requirement in rules made by that
regulator to collect, and keep up to date, information of a description
specified in the rules.

(2) The regulator may either—

(a) 15require the authorised person to appoint a skilled person to
collect or update the information, or

(b) itself appoint a skilled person to do so.

(3) References in this section to a skilled person are to a person—

(a) appearing to the regulator to have the skills necessary to
20collect or update the information in question, and

(b) where the appointment is to be made by the authorised
person, nominated or approved by the regulator.

(4) The regulator must give notice of an appointment under subsection
(2)(b) to the authorised person.

(5) 25The skilled person may require any person to provide all such
assistance as the skilled person may reasonably require to collect or
update the information in question.

(6) A requirement imposed under subsection (5) is enforceable, on the
application of the regulator in question, by an injunction or, in
30Scotland, by an order for specific performance under section 45 of the
Court of Session Act 1988.

(7) A contractual or other requirement imposed on a person (“P”) to
keep any information in confidence does not apply if—

(a) the information is or may be relevant to anything required to
35be done as a result of this section,

(b) an authorised person or a skilled person requests or requires
P to provide the information for the purpose of securing that
those things are done, and

(c) the regulator in question has approved the making of the
40request or the imposition of the requirement before it is made
or imposed.

(8) An authorised person may provide information (whether received
under subsection (7) or otherwise) that would otherwise be subject to
a contractual or other requirement to keep it in confidence if it is
45provided for the purposes of anything required to be done as a result
of this section.