(1)Where as agents of any scheduled authority or body the Crown Agents undertake any activity involving the making of payments by them on behalf of the principal, the following provisions of this section shall apply.
(2)It shall be the duty of the Crown Agents to ensure, so far as they are able to do so, that before any particular payment falls to be made by them on behalf of the principal, the principal will have either—
(a)paid or caused to be paid to them a sum sufficient to enable them to make the payment; or
(b)caused to be issued to them an irrevocable letter of credit that will enable them to recover the sum required to make the payment.
(3)Subject to subsection (5), any sum which the Crown Agents receive for disbursement or investment on behalf of the principal may, pending its disbursement or investment on his behalf, be invested by the Crown Agents in their own name and for their own benefit in accordance with regulations made under section 5(4).
(4)As consideration for their use of any sum invested by them for their own benefit under subsection (3) the Crown Agents shall be liable to pay interest thereon to the principal; and the Crown Agents shall not be liable to account to the principal for any profit accruing to them from that use.
(5)Where—
(a)the Crown Agents receive for disbursement or investment on behalf of the principal a sum which, or a part of which, will not be needed by them for that purpose until a future date ; and
(b)the period from the receipt of that sum to the date when it, or that part of it, will be, or is likely to be, so needed is long enough for it to be appropriate, as a matter of good investment management, for the Crown Agents to invest the sum, or that part of it, on behalf of the principal,
the Crown Agents shall invest the sum, or that part of it, on behalf of the principal at his risk in accordance with his general or specific instructions or, in default of such instructions, by placing it on deposit at his risk at a bank.
In this subsection " bank " means the Bank of England or—
(i)in relation to any time before such date as the Minister may, after consultation with the Treasury, determine, a bank which is both an authorised dealer and an authorised depositary as respectively defined in section 42(1) of the [1947 c. 14.] Exchange Control Act 1947 ; and
(ii)in relation to any time on or after that date, a recognised bank within the meaning of the [1979 c. 37.] Banking Act 1979, or the Post Office in the exercise of its powers to provide banking services.
(6)Where—
(a)a payment falls to be made on some future date by the Crown Agents on behalf of the principal; and
(b)to enable them to make that payment the Crown Agents need to realise investments for the time being held by them on behalf of the principal in consequence of subsection (5),
the Crown Agents may realise the necessary investments a reasonable time before the payment falls to be made.
(7)Where the Crown Agents realise any investments in pursuance of subsection (6), subsections (3) to (5) shall apply in the case of the proceeds as they apply in the case of any other sum received by them for disbursement or investment on behalf of the principal.