xmlns:atom="http://www.w3.org/2005/Atom" xmlns:atom="http://www.w3.org/2005/Atom"

E+W+S+N.I.

Building Societies Act 1986

1986 CHAPTER 53

An Act to make fresh provision with respect to building societies and further provision with respect to conveyancing services.

[25th July 1986]

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:—

Annotations:

Modifications etc. (not altering text)

C1Act modified (temp.) by S.I. 1986/2168, art. 3(1)(2)(a)(b)

C3Act applied (with modifications) and modified by S.I. 1988/1394, arts. 2, 7, Schs. 1, 2

Act applied (N.I.) (1.10.1991) by S.I. 1989/2404, art. 12, Sch. 1 Pt. I para. 6; S.R. 1991/410, art. 1(2)

Act applied (N.I.) (1.10.1991) by S.I. 1990/1504, art. 111; S.R. 1991/438, art. 2(d)

Act applied (with modifications) (1.7.1992) by S.I. 1992/1547, arts. 5, 6, Sch. 2

C4Act: definition applied (N.I.) (1.6.1992) by Northern Ireland (Emergency Provisions) Act 1991 (c. 24, SIF 39:1), ss. 55, 69(1)(2), Sch. 4 para. 7(4); S.I. 1992/1181, art. 2 (which 1991 Act was repealed (25.8.1996) by 1996 c. 22, ss. 59, 62(1), 63(3)(7), Sch. 7 Pt. I)

C6Power to amend Act conferred (N.I.) (27.3.2006) by The Insolvency (Northern Ireland) Order 2005 (S.I. 2005/1455), arts. 1(3), 4(b); S.R. 2006/21, art. 2 (subject to S.R. 2006/22, arts. 2-7)

C7Power to modify Act conferred (21.2.2008) by Banking (Special Provisions) Act 2008 (c. 2), s. 11

C8Power to amend Act conferred (17.2.2009 for specified purposes, 21.2.2009 in so far as not already in force) by Banking Act 2009 (c. 1), ss. 158(2)(a), 251, 263(1) (with s. 247); S.I. 2009/296, arts. 2, 3, Sch. para. 3

C9Power to amend Act conferred (24.1.2013) by Financial Services Act 2012 (c. 21), ss. 50(2)(h), 122(3) (with Sch. 20); S.I. 2013/113, art. 2(1)(a), Sch. Pt. 1

[F1PART I]E+W+S+N.I. FUNCTIONS OF THE [F2Financial Conduct Authority and the Prudential Regulation Authority]

Annotations:

Amendments (Textual)

F1Pt. I (s. 1) substituted (17.8.2001 for specified purposes and otherwise 1.12.2001) for Pt. I (ss. 1-4) by S.I. 2001/2617, arts. 2, 13(1), Sch. 3 Pt. II, para. 132 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(a)

[F31 Functions of the [F4Financial Conduct Authority and the Prudential Regulation Authority] in relation to building societies.E+W+S+N.I.

(1)[F5The FCA] has the following functions under this Act in relation to building socities—

F6(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)to administer the system of regulation of building societies provided for by or under this Act; and

(c)to advise and make recommendations to the Treasury and other government departments on any matter relating to building societies.

[F7(1A)The PRA has the following functions under this Act in relation to building societies—

(a)to secure that the principal purpose of building societies remains that of making loans which are secured on residential property and are funded substantially by their members;

(b)to administer the system of regulation of building societies provided by or under this Act, but only in so far as sections 5, 6, 7 [F8and 9A ] confer functions on the PRA; and

(c)to advise and make recommendations to the Treasury and other government departments on any matter relating to building societies.]

(2)The [F9FCA and the PRA also have] , in relation to such societies, the other functions conferred on [F10them respectively] by or under this Act or any other enactment.]

2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part IIE+W+S+N.I. Constitution of Building Societies

EstablishmentE+W+S+N.I.

5 Establishment, constitution and powers.E+W+S+N.I.

[F12(1)A society may be established under this Act if (and only if) it complies with the following requirements, namely—

(a)its purpose or principal purpose is that of making loans which are secured on residential property and are funded substantially by its members; and

(b)its principal office is in the United Kingdom.]

(2)A society is established under this Act on compliance by the persons establishing it with the scheduled requirements and is incorporated under this Act as from the date of registration by the [F13FCA] .

(3)A society incorporated under this Act is referred to in this Act as a “building society”.

(4)A society incorporated under the repealed enactments whose principal office, as registered with the central office immediately before the commencement of this section, was in the United Kingdom, shall be deemed to be registered (and accordingly as incorporated) under this Act.

[F14(4A)If, after its establishment, a building society fails to comply with the requirements imposed by subsection (1)(a) or (b) above—

(a)the powers conferred on the [F15appropriate authority] by section 36 or 37 shall become exercisable in relation to the society; but

(b)the failure shall not affect the validity of any transaction or other act.]

[F16(5)Subject to the provisions of this Act, a building society shall have the powers conferred on it by its memorandum.]

(8)Schedule 2 to this Act has effect as respects the constitution, powers, and regulation of building societies and in that Schedule—

(a)Part I makes provision with respect to the constitution, memorandum, rules and certain incidents of membership;

[F17(b)Part II makes provision with respect to the capacity of a society and the powers of its directors to bind it; and]

(c)Part III makes provision with respect to meetings, postal ballots and resolutions;

[F18and in this section “scheduled”, with reference to requirements for establishment, means contained in that Schedule]

(9)Any obligation imposed by this Act or the rules of a building society to give or send notices or other documents to members is subject to paragraph 14 of that Schedule.

[F19(10)In this Act “residential property” means land at least 40 per cent of which—

(a)is normally used as, or in connection with, one or more dwellings; or

(b)has been, is being or is to be developed or adapted for such use;

and for the purposes of this subsection, the area of any land which comprises a building or other structure containing two or more storeys shall be taken to be the aggregate of the floor areas of each of those storeys.]

Annotations:

Amendments (Textual)

F12S. 5(1) substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)-(5) of S.I. 1997/2668) by 1997 c. 32, ss. 1(1), 47(3); S.I. 1997/2668, art. 2, Sch. Pt. II(a)

F14S. 5(4A) inserted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)-(5) of S.I. 1997/2668) by 1997 c. 32, ss. 1(2), 47(3); S.I. 1997/2668, art. 2, Sch. Pt. II(a)

F16S. 5(5) substituted for s. 5(5)-(7) (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)-(5) of S.I. 1997/2668) by 1997 c. 32, ss. 1(3), 47(3); S.I. 1997/2668, art. 2, Sch. Pt. II(a)

F17S. 5(8)(b) substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 3(1)(a), 47(3); S.I. 1997/2668, art. 2, Sch. Pt. II(c)

F18Words in s. 5(8) substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 3(1)(b), 47(3); S.I. 1997/2668, art. 2, Sch. Pt. II(c)

F19S. 5(10) substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)-(5) of S.I. 1997/2668) by 1997 c. 32, ss. 1(4), 47(3); S.I. 1997/2668, art. 2, Sch. Pt. II(a)

Modifications etc. (not altering text)

C13S. 5(8)(c) excluded (temp.) by S.I. 1986/2168, art. 3(1)(2)

F20 [Making loans]E+W+S+N.I.

Annotations:

Amendments (Textual)

F20S. 6 and cross-heading substituted for s. 6 (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 4, 47(3); S.I. 1997/2668, art. 2, Sch. Pt. II(d)

6F21[The lending limit.]E+W+S+N.I.

(1)A building society shall secure that the difference between—

(a)the value of X on any quarter day; and

(b)the value of Y on that day or the value of Y on the immediately preceding quarter day, whichever is the greater,

does not exceed 25 per cent of that value of X.

(2)For the purposes of subsection (1) above—

X = the difference between the total assets of the society and any subsidiary undertakings of the society as shown in the society’s accounts and the aggregate of—

(a)the liquid assets of the society and any such undertakings as shown in those accounts F22...;

(b)the fixed assets of the society and any such undertakings as so shown; and

(c)where any such undertakings are [F23effecting or carrying out contracts of insurance], such of their assets as shown in those accounts as represent long term insurance funds; and

Y = the principal of, and interest accrued on, loans which are owed to the society or any subsidiary undertaking of the society and are fully secured on residential property;

and for the purposes of this subsection the total assets of a society and any subsidiary undertakings of the society shall be taken to be increased by the amount of any provision made for bad or doubtful debts of the society or any such undertaking.

(3)Any loans owed to the society or any subsidiary undertaking of the society shall be disregarded for the purposes of the definition of “Y” in subsection (2) above to the extent that they are not included in the total assets of the society and any such undertakings as shown in the society’s accounts.

(4)Any reference in subsection (2) or (3) above to anything being shown in a society’s accounts shall be construed—

(a)in relation to a quarter day on which a financial year of the society ends, as a reference to its being shown in the accounts prepared by the society for that year;

(b)in relation to any other quarter day, as a reference to its being shown in the accounts which would have been prepared by the society for the year ending on that day if that year were a financial year of the society.

(5)If a building society fails to comply with the requirement imposed by subsection (1) above—

(a)the powers conferred on the [F24appropriate authority] by section 36 shall become exercisable in relation to the society; but

(b)the failure shall not affect the validity of any transaction or other act.

(6)The Treasury may by order substitute for the percentage specified in subsection (1) above such greater percentage (not greater than 40 per cent) as appears to them to be appropriate; and an order under this subsection may make such supplementary, transitional and saving provision as appears to the Treasury to be necessary or expedient.

(7)The [F25Treasury may], by order—

(a)modify subsections (2) and (3) above in their application to assets of subsidiary undertakings;

(b)apply those subsections to corresponding assets of associated undertakings; or

(c)modify those subsections in their application to such assets.

(8)An order under subsection (7) above may make—

(a)different provision for different circumstances;

(b)provision for particular assets of undertakings to be disregarded; and

(c)such supplementary, transitional and saving provision as appears to the [F26Treasury] to be necessary or expedient.

(9)The power to make an order under subsection (6) or (7) above is exercisable by statutory instrument.

(10)No order shall be made under subsection (6) above unless a draft of the order has been laid before and approved by a resolution of each House of Parliament.

(11)A statutory instrument containing an order under subsection (7) above shall be subject to annulment in pursuance of a resolution of either House of Parliament.

[F27(12)In this section “long term insurance funds", in relation to an undertaking effecting or carrying out contracts of insurance, means funds maintained by it—

[F28(a)in respect of its business in effecting or carrying out contracts of long term insurance in accordance with rules made by—

(i)the FCA under section 137A of the Financial Services and Markets Act 2000, or

(ii)the PRA under section 137G of that Act,

which require an authorised person who has permission to effect or carry out contracts of insurance to identify assets which belong to that person and which are maintained in respect of a particular aspect of that person’s business; or]

(b)where it is incorporated in a country or territory outside the United Kingdom, under the corresponding provisions of the law of that country or territory.]

F29[(12A)The definition of X in subsection (2) and subsection (12) must be read with—

(a)section 22 of the Financial Services and Markets Act 2000;

(b)any relevant order under that section; and

(c)Schedule 2 to that Act.]

(13)Where a loan is owed to a lending syndicate of which a building society or connected undertaking of a building society is a member, so much of the loan as is referable to the society’s or undertaking’s participation in the syndicate shall be treated for the purposes of this section and sections 6A and 6B as a loan owed to the society or undertaking.

(14)In this section and section 7—

and references to any value on a quarter day are references to that value at the close of business on that day.

(15)If an agreement between the [F31appropriate authority] and a building society so provides, the definition of “quarter day” in subsection (14) above shall have effect in relation to the society as if for any reference to a number of months there were substituted a reference to a number of days specified in the agreement.

[F32(16)In this section, in the case of societies which produce IAS individual accounts or IAS group accounts;

Annotations:

Amendments (Textual)

F21S. 6 and cross-heading substituted for s. 6 (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 4, 47(3); S.I. 1997/2668, art. 2, Sch. Pt. II(d)

F22Words in s. 6(2) omitted (22.12.2004) (with effect in accordance with art. 1(2) of the amending S.I.) by virtue of The Building Societies Act 1986 (International Accounting Standards and Other Accounting Amendments) Order 2004 (S.I. 2004/3380), art. 1, Sch. para. 2(2)

F23S. 6(2): Words in para. (c) of the definition of “X" substituted (1.12.2001) by S.I. 2001/3649, arts. 1, 194(2)

F25Words in s. 6(7) substituted (17.8.2001 for certain purposes and otherwise 1.12.2001) by S.I. 2001/2617, arts. 2, 8, 13(1), Sch. 3 Pt. II para. 134(b) (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(a)

F26Word in s. 6(8)(c) substituted (17.8.2001 for specified purposes and otherwise 1.12.2001) by S.I. 2001/2617, arts. 2, 8, 13(1), Sch. 3 Pt. II para 134(c) (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(a)

F27S. 6(12) substituted (1.12.2001) by S.I. 2001/3649, arts. 1, 194(3)

F29S. 6(12A) inserted (1.12.2001) by S.I. 2001/3649, arts. 1, 194(4)

F30Words in s. 6(14) omitted (22.12.2004) (with effect in accordance with art. 1(2) of the amending S.I.) by virtue of The Building Societies Act 1986 (International Accounting Standards and Other Accounting Amendments) Order 2004 (S.I. 2004/3380), art. 1, Sch. para. 2(3)

F32S. 6(16) inserted (22.12.2004) (with effect in accordance with art. 1(2) of the amending S.I.) by The Building Societies Act 1986 (International Accounting Standards and Other Accounting Amendments) Order 2004 (S.I. 2004/3380), art. 1, Sch. para. 2(4)

Modifications etc. (not altering text)

C16S. 6(7)(8): Functions of Building Societies Commission transferred (1.12.2001) to the Treasury by S.I. 2001/2617, arts. 2(b), 4(1), Sch. 1 Pt. III; S.I. 2001/3538, art. 2(a)

[F336A Loans secured on land.E+W+S+N.I.

(1)For the purposes of this Act a loan is secured on land if it is secured by—

(a)a mortgage of a legal estate in land in England and Wales or Northern Ireland;

(b)a heritable security over land in Scotland; or

(c)a qualifying security over land in an EEA country or territory other than the United Kingdom.

(2)For the purposes of this Act a loan is also secured on land if—

(a)it is secured by a mortgage of an equitable interest in land in England and Wales or Northern Ireland;

(b)the equitable interest is an equitable interest in land of a description, and is created in circumstances, prescribed in an order made by the F34. . . Treasury; and

(c)any conditions prescribed in the order are complied with;

and an order under this subsection may apply in relation to securities held by or on behalf of building societies or connected undertakings of a description specified in the order, or securities held by or on behalf of all such societies or undertakings other than those of a description so specified.

(3)For the purposes of this Act—

(a)a loan shall be treated as secured by a mortgage of a legal estate in registered land in England and Wales or Northern Ireland notwithstanding that the loan is made before the mortgagor is registered as proprietor of the estate; and

(b)a loan shall be treated as secured by a heritable security over land in Scotland notwithstanding that the loan is made before title to that land has been transferred to the debtor in the heritable security.

(4)The [F35Treasury may], by order provide for any provisions of this Act to have effect in relation to loans secured on land outside the European Economic Area with such modifications as appear to [F36them] to be appropriate.

(5)An order under subsection (2) or (4) above may make such incidental, supplementary and transitional provision as appears to the [F37Treasury] to be necessary or expedient.

(6)The power to make an order under subsection (2) or (4) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(7)In this section and section 6B—

(8)In this Act “land”, in the expression “loan secured on land”, means—

(a)land in an EEA country or territory; and

(b)in so far as land in any other country or territory is, under any provision of this Act, land on which loans may be secured, land in that other country or territory.]

Annotations:

Amendments (Textual)

F33S. 6A inserted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 5, 47(3); S.I. 1997/2668, art. 2, Sch. Pt. II(e)

F34Words in s. 6A(2)(b) repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2), Sch. 4 (with art. 13(3), Sch. 5 and with saving in S.I. 2001/2967, arts. 1(2), 9(1)(c)); S.I. 2001/3538, art. 2(1)

F35Words in s. 6A(4) substituted (17.8.2001 for certain purposes and otherwise 1.12.2001) by S.I. 2001/2617, arts. 2, 8, 13(1), Sch. 3 Pt. II para. 135(b)(i) (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(a)

F36Word in s. 6(4) substituted (17.8.2001 for certain purposes and otherwise 1.12.2001) by S.I. 2001/2617, arts. 2, 8, 13(1), Sch. 3 Pt. II para. 135(b)(ii) (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(a)

F37Word in s. 6(5) substituted (17.8.2001 for certain purposes and otherwise 1.12.2001) by S.I. 2001/2617, arts. 2, 8, 13(1), Sch. 3 Pt. II para. 135(c) (with art. 13(3), Sch. 5; S.I. 2001/3538, art. 2(a)

Modifications etc. (not altering text)

C17S. 6A(2)(b)(4)(5): Functions of Building Societies Commission transferred (1.12.2001) by S.I. 2001/2617, arts. 2(b), 4(1), Sch. 1 Pt. III; S.I. 2001/3538, art. 2(a)

[F386B Loans fully secured on land.E+W+S+N.I.

(1)For the purposes of this Act a loan which is owed to a building society or a subsidiary undertaking of a building society and is secured on residential property or other land is fully secured on the land if—

(a)the principal of, and interest accrued on, the loan does not exceed the value of the requisite security; and

(b)no, or no more than one, mortgage of the land which has priority over the society’s or undertaking’s mortgage is outstanding in favour of an outside person.

(2)Where a mortgage of the residential property or other land which has priority over the society’s or undertaking’s mortgage is outstanding, the principal of the loan secured or, in the case of a loan by instalments, intended to be secured by that mortgage shall be deducted from the value of the requisite security for the purposes of subsection (1)(a) above.

(3)Where the loan is secured on residential property or other land in the United Kingdom, any outstanding charge over the land which—

(a)in the case of land in England and Wales, is registered in the appropriate local land charges register;

(b)in the case of land in Scotland, is recorded in the Register of Sasines, or registered in the Land Register, under section 108 of the M1Civic Government (Scotland) Act 1982 or Schedule 9 to the M2Housing (Scotland) Act 1987;

(c)in the case of land in Northern Ireland, is registered in the statutory charges register under section 87 of, and Schedule 11 to, the M3Land Registration Act (Northern Ireland) 1970,

shall be disregarded for the purposes of subsections (1)(b) and (2) above.

(4)Where, on the occasion on which a building society or a subsidiary undertaking of a building society makes or acquires a loan which is secured on land, the society or undertaking is satisfied that the loan is—

(a)a loan which is fully secured on residential property;

(b)a loan which is not so secured but is fully secured on land; or

(c)a loan which is not fully secured on land,

the loan shall be treated as such a loan for the purposes of this Act until such time (if any) as subsection (7) below applies.

(5)Subsection (4) above shall have effect in relation to a loan which the society or undertaking makes by two or more payments on different dates as if—

(a)the reference to the occasion on which the society or undertaking makes the loan were a reference to the occasion on which it makes the first of the payments;

(b)other references to the loan were references to it in its intended maximum amount; and

(c)the value of any security for the loan were its expected maximum value.

(6)Where a building society or a subsidiary undertaking of a building society makes or acquires a loan which is secured on land, the society or undertaking shall be deemed to be satisfied as mentioned in paragraph (c) of subsection (4) above until such time (if any) as it is satisfied as mentioned in paragraph (a) or (b) of that subsection.

(7)Where at any time, in the case of a loan treated as falling within paragraph (a), (b) or (c) of subsection (4) above, the society or undertaking—

(a)is satisfied—

(i)on a revaluation that the value of the requisite security has changed;

(ii)on notice given to it by the borrower that there has been a change in the use of the land;

(iii)that so much of the mortgage debt as represents the principal of the loan has changed;

(iv)that the principal of the loan secured by a prior mortgage has changed or has been repaid; or

(v)that the relative priority of the mortgage of the land on which the loan is secured has changed;

(b)is also satisfied that the change or repayment is such that, if it were to make a loan equal to the mortgage debt at that time, the loan would instead be a loan falling within another of those paragraphs; and

(c)in a case falling within paragraph (a)(i) above, elects that this subsection shall apply,

the loan shall be treated as such a loan for the purposes of this Act until such time (if any) as this subsection again applies.

(8)In this section—

(9)In the application of subsections (1), (2) and (7) above to residential property or other land in Scotland or an EEA country or territory other than the United Kingdom, references to a mortgage of the land shall be construed as references to a heritable or, as the case may require, qualifying security over the land.]

Annotations:

Amendments (Textual)

F38S. 6B inserted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 6, 47(3); S.I. 1997/2668, art. 2, Sch. Pt. II(f)

Modifications etc. (not altering text)

C18S. 6B(4)(a) modified (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 46(1), 47(3), Sch. 8 para. 6(1)(a)(b); S.I. 1997/2668, art. 2, Sch. Pt. II(y)(aa)(iii)

C19S. 6B(4)(b) modified (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 46(1), 47(3), Sch. 8 para. 6(1)(c); S.I. 1997/2668, art. 2, Sch. Pt. II(y)(aa)(iii)

C20S. 6B(4)(c) modified (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 46(1), 47(3), Sch. 8 para. 6(1)(d); S.I. 1997/2668, art. 2, Sch. Pt. II(y)(aa)(iii)

Marginal Citations

[F396C Discharge of mortgages.E+W+S+N.I.

Schedule 2A to this Act, which contains supplementary provisions as to the discharge of mortgages, shall have effect.]

Annotations:

Amendments (Textual)

F39S. 6C inserted (1.12.1997) by 1997 c. 32, s. 7(1); S.I. 1997/2668, art. 2, Sch. Pt. I(a)

Raising funds and borrowingE+W+S+N.I.

[F407 The funding limit.E+W+S+N.I.

(1)A building society shall secure that the difference between—

(a)the value of X on any quarter day; and

(b)the value of Y on that day or the value of Y on the immediately preceding quarter day, whichever is the greater,

does not exceed 50 per cent of that value of X.

(2)For the purposes of subsection (1) above—

X = the aggregate of the following, namely—

(a)the principal value of, and interest accrued on, shares in the society;

(b)the principal of, and interest accrued on, sums deposited with the society or any subsidiary undertaking of the society; and

(c)the principal value of, and interest accrued under, bills of exchange, instruments or agreements creating or acknowledging indebtedness and accepted, made, issued or entered into by the society or any such undertaking; and

Y = the principal value of, and interest accrued on, shares in the society held by individuals otherwise than as bare trustees (or, in Scotland, simple trustees) for bodies corporate or for persons who include bodies corporate.

(3)The following shall be disregarded for the purposes of subsection (2) above, namely—

(a)any sums or amounts which are own funds; F41...

[F42(aa)subject to subsection (3A), the principal of, and interest accrued on, sums deposited with the society or any subsidiary undertaking of the society by a small business (see subsection (10));]

(b)to the extent that they are not included in the total liabilities of the society and any subsidiary undertakings of the society as shown in the society’s accounts—

(i)any sums deposited with the society or any such undertaking; and

(ii)any indebtedness created or acknowledged by bills of exchange, instruments or agreements accepted, made, issued or entered into by the society or any such undertaking.

[F43(3A)In respect of any day by reference to which the value of X falls to be calculated for the purposes of subsection (1) in relation to the society, the total amount to be disregarded under subsection (3)(aa) may not exceed 10% of the amount that would, in the absence of subsection (3)(aa), be the value of X on that day.]

(4)The reference in subsection (3) above to anything being shown in a society’s accounts shall be construed—

(a)in relation to a quarter day on which a financial year of the society ends, as a reference to its being shown in the accounts prepared by the society for that year;

(b)in relation to any other quarter day, as a reference to its being shown in the accounts which would have been prepared by the society for the year ending on that day if that year were a financial year of the society.

(5)If a building society fails to comply with the requirement imposed by subsection (1) above—

(a)the powers conferred on the [F44appropriate authority] by section 36 shall become exercisable in relation to the society; but

(b)the failure shall not affect the validity of any transaction or other act.

(6)Where an individual declares that he is acquiring any shares in a building society otherwise than as a bare trustee (or, in Scotland, a simple trustee) for a body corporate, or for persons who include a body corporate, he shall, unless the contrary is shown, be conclusively presumed for the purposes of this section to hold the shares otherwise than as such a trustee.

[F45(6ZA)Where a person declares that the person is a small business, the person shall, unless the contrary is shown, be conclusively presumed for the purposes of this section to be a small business.]

(7)The [F46Treasury may], by order—

(a)modify subsections (2) and (3) above in their application to liabilities of subsidiary undertakings;

(b)apply those subsections to corresponding liabilities of associated undertakings; or

(c)modify those subsections in their application to such liabilities.

(8)An order under subsection (7) above may make—

(a)different provision for different circumstances;

(b)provision for particular liabilities of undertakings to be disregarded; and

(c)such supplementary, transitional and saving provision as appears to the [F47Treasury] to be necessary or expedient.

(9)The power to make an order under subsection (7) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.]

[F48(10)In this section “small business” means any person (other than an individual acting as a sole trader) carrying on a business which had a turnover in the relevant financial year of less than £1,000,000.

(11)For the purposes of subsection (10)—

(a)the “relevant financial year”, in relation to any day by reference to which the value of X falls to be calculated for the purposes of subsection (1) in relation to a building society, means the last financial year ending before that day;

(b)turnover”, in relation to a small business, means the amount derived from the provision of goods and services falling within the business's ordinary activities, after deduction of trade discounts, value added tax and any other taxes based on the amounts so derived;

(c)in respect of any relevant financial year, the reference to £1,000,000 includes the equivalent amount in any other currency, calculated as at the last day of that year.

(12)The Treasury may, by order made by statutory instrument, amend the figure for the time being specified in subsections (10) and (11)(c).

(13)A statutory instrument containing an order under subsection (12) is subject to annulment in pursuance of a resolution of either House of Parliament.]

Annotations:

Amendments (Textual)

F40S. 7 substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 8, 47(3); S.I. 1997/2668, art. 2, Sch. Pt. II(g)

F46Words in s. 7(7) substituted (17.8.2001 for certain purposes and otherwise 1.12.2001) by S.I. 2001/2617, arts. 2, 8, 13(1), Sch. 3 Pt. I para. 136(b) (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(a)

F47Word in s. 7(8)(c) substituted (17.8.2001 for certain purposes and otherwise 1.12.2001) by S.I. 2001/2617, arts. 2, 8, 13(1), Sch. 3 Pt. II para. 136(c) (with art. 13(3), Sch. 4); S.I. 2001/3538, art. 2(a)

Modifications etc. (not altering text)

C26S. 7(7)(8): Functions of the Building Societies Commission transferred (1.12.2001) to the Treasury by S.I. 2001/2617, art. 2(b), 4(1), Sch. 1 Pt. III; S.I. 2001/3538, art. 2(a)

[F498 Raising funds and borrowing.E+W+S+N.I.

(1)Subject to subsection (2) below, a building society shall not do any of the following things, namely—

(a)accept a deposit from an individual;

(b)raise funds from an individual otherwise than by the issue of shares; and

(c)raise funds from a body corporate, or from a bare trustee (or, in Scotland, a simple trustee) for a body corporate or for persons who include a body corporate, otherwise than by the issue of deferred shares.

(2)Nothing in subsection (1)(a) above shall apply in relation to—

(a)the maintenance on behalf of an individual of a current account, or a deposit account which contains in its title the word “client” or the word “trust” or “trustee”;

(b)the issue to an individual of a transferable instrument;

(c)the acceptance from an individual of a qualifying time deposit or an overseas deposit; or

(d)in the case of a building society which has announced publicly that it intends, in accordance with section 97 and the other applicable provisions of this Act, to transfer the whole of its business to a company, anything done by the society during the period of two years beginning with the date of the announcement.

(3)The [F50appropriate authority] may, if it thinks fit, extend or further extend the period mentioned in subsection (2)(d) above if written application is made to it before the expiry of that period or that period as extended; and a direction under this subsection—

(a)shall be in writing;

(b)may be given subject to such limitations or conditions as the [F50appropriate authority] may think fit.

(4)A contravention of subsection (1) above shall not invalidate any transaction or other act.

(5)The power of a building society to raise funds by the issue of shares is a power—

(a)to issue shares of one or more denominations, whether in sterling or another currency; and

(b)to issue them either as shares paid up in full or as shares to be paid by periodical or other payments, and (in either case) with accumulating or other interest;

and funds so raised may be repaid when they are no longer required for the purposes of the society.

(6)In the case of deferred shares, the power of a building society to raise funds by the issue of shares includes the issue of shares at a premium.

(7)If a building society issues deferred shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount or value of the premiums on those shares shall be transferred to the society’s reserves.

(8)For the purposes of this section the acceptance of deposits (including the issue of debt securities) shall not constitute the raising of funds.

(9)In this section, in relation to a building society—

(10)A right is transferable for the purposes of the definition of “transferable instrument” in subsection (9) above if it is transferable by delivery of the instrument, or it is a right—

(a)which may, under the terms of the instrument, be held by any person, or by any person other than a person of a description specified in the instrument;

(b)express provision for the transfer of which is included in the instrument; and

(c)the transfer of which, under the terms of the instrument, does not require the consent of any person.

(11)Where an individual declares that he is acquiring any shares in a building society otherwise than as a bare trustee (or, in Scotland, a simple trustee) for a body corporate, or for persons who include a body corporate, he shall, unless the contrary is shown, be conclusively presumed for the purposes of this section to hold the shares otherwise than as such a trustee.

(12)The [F52Treasury may] by order vary subsections (2), (9) and (10) above by adding to or deleting from them any provision or by varying any provision contained in them; and an order under this subsection may make such supplementary, transitional and saving provision as appears to the [F52Treasury] to be necessary or expedient.

(13)The power to make an order under subsection (12) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.]

Annotations:

Amendments (Textual)

F49S. 8 substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 9, 47(3) (with s. 46(1), Sch. 8 para. 9); S.I. 1997/2668, art. 2, Sch. Pt. II(h)

F51Words in s. 8(9) substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 273 (with Sch. 2)

F52Words in s. 8(12) substituted (17.8.2001 for specified purposes and otherwise 1.12.2001) by S.I. 2001/2617, arts. 2, 8, 13(1), Sch. 3 Pt. II para. 137(b)(i)(ii), (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(a)

Modifications etc. (not altering text)

C29S. 8(12): Functions of Building Societies Commission transferred (1.12.2001) to the Treasury by S.I. 2001/2617, arts. 1(2)(b), 4(1),Sch. 1 Pt. III; S.I. 2001/3538, art. 2(a)

F539. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

Annotations:

Amendments (Textual)

F54[Restrictions on powers]E+W+S+N.I.

Annotations:

Amendments (Textual)

F54S. 9A and cross-heading inserted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 10, 47(3); S.I. 1997/2668, art. 2, Sch. Pt. II(i)

[F559ARestrictions on certain transactions.E+W+S+N.I.

(1)Subject to subsections (2) to (4) below, a building society shall not do, and shall secure that each of its subsidiary undertakings does not do, any of the following things, namely—

(a)act as a market maker in securities, commodities or currencies;

(b)trade in commodities or currencies; and

(c)enter into any transaction involving derivative investments;

but a contravention of this subsection shall not invalidate any transaction or other act.

(2)No transaction entered into by a building society, or a subsidiary undertaking of a building society, shall be taken into account for the purposes of subsection (1)(a) above if—

(a)it relates only to securities or currencies or both and the amount or value of the consideration given by the society or undertaking does not exceed £100,000; or

(b)it is entered into in the society’s or undertaking’s capacity as the manager of a collective investment scheme.

(3)No transaction so entered into shall be taken into account for the purposes of subsection (1)(b) above if—

(a)it relates only to currencies and the amount or value of the consideration given by the society or undertaking does not exceed [F56£3 million] ; or

(b)it is ancillary or incidental to another transaction entered into by the society or undertaking.

(4)Nothing in subsection (1)(c) above shall apply in relation to any transaction entered into by a building society, or a subsidiary undertaking of a building society, if—

(a)it is entered into in the society’s or undertaking’s capacity as the manager of a collective investment scheme;

(b)it is entered into for the purpose of limiting the extent to which the society, or a connected undertaking of the society, will be affected by changes in any of the following factors, namely—

(i)interest rates;

(ii)exchange rates;

(iii)any index of retail prices;

(iv)any index of residential property prices; F57 . . .

(v)any index of the prices of securities; [F58and

(vi)the ability or willingness of one or more persons to pay or repay a sum or sums owing at law or in equity to the society or a connected undertaking of the society;F59...]

(c)it involves a derivative investment falling within paragraph (d) of the definition in subsection (9) below and it is entered into for the purpose of limiting the extent to which any person will be affected by changes in any interest or exchange rate applicable to—

(i)a loan owed by him to;

(ii)shares held by him in; or

(iii)a deposit of his with,

the society, or a connected undertaking of the society [F60; or]

[F61(d)it is entered into in order to comply with an obligation imposed by a recognised clearing house or an EEA central counterparty pursuant to Article 37 of Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories.]

(5)Nothing in subsection (1)(c) above shall apply in relation to any transaction entered into by a subsidiary undertaking of a building society, if it is entered into in the undertaking’s capacity—

[F62(a)as a person who has permission under [F63Part 4A] of the Financial Services and Markets Act 2000 to effect or carry out contracts of long-term insurance, or

(b)an EEA firm of the kind mentioned in paragraph 5(d) of Schedule 3 to that Act, which has permission under paragraph 15 of that Schedule (as a result of qualifying for authorisation under paragraph 12 of that Schedule) to effect or carry out contracts of long-term insurance.]

. . .

(6)A building society shall also do all that is reasonably practicable to secure that neither it nor any of its subsidiary undertakings (either alone or with any or any others of those undertakings)—

(a)holds at any time more than 5 per cent of the issued share capital; or

(b)is at any time entitled to exercise, or to control the exercise of, more than 5 per cent of the voting power at any general meeting,

of an undertaking which is, at that time, doing any of the things which the society is prohibited from doing by subsection (1) above, or an undertaking whose subsidiary undertaking is, at that time, doing any of those things.

(7)The monetary limit in subsection (2) or (3) above refers to the time when the transaction is entered into; and where the amount or value of the consideration there referred to is not in sterling, it shall be converted at the rate of exchange prevailing at that time.

(8)For the purposes of subsection (2) or (3) above, two or more transactions which form part of a larger transaction or series of transactions shall be treated as a single transaction.

(9)In this section—

[F68(9A)Subsection (5) and the definition of “derivative investment” in subsection (9) must be read with—

(a)section 22 of the Financial Services and Markets Act 2000;

(b)any relevant order under that section; and

(c)Schedule 2 to that Act;]

(10)A building society, or subsidiary undertaking of a building society, shall not by reason of holding itself out as willing to issue its own securities be regarded for the purposes of this section as acting as a market maker in such securities.

(11)The Treasury may by order vary subsections (1) to (10) above by adding to or deleting from them any provision or by varying any provision contained in them.

(12)[F69The Treasury may] by order—

(a)substitute for the amount specified in subsection (2) or (3) above, or for the percentage specified in subsection (6) above, such other amount or percentage as they think appropriate; or

(b)vary subsection (4)(b) above by adding to or deleting from it any reference to a factor or by varying any reference to a factor contained in it.

(13)An order under subsection (11) or (12) above may make—

(a)different provision for different cases or purposes; and

(b)such supplementary, transitional and saving provision as appears to the Treasury F70 . . .to be necessary or expedient;

and the power to make such an order is exercisable by statutory instrument.

(14)No order shall be made under subsection (11) above unless a draft of the order has been laid before and approved by a resolution of each House of Parliament.

(15)A statutory instrument containing an order under subsection (12) above shall be subject to annulment in pursuance of a resolution of either House of Parliament.]

Annotations:

Amendments (Textual)

F55S. 9A and cross-heading inserted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 10, 47(3); S.I. 1997/2668, art. 2, Sch. Pt. II(i)

F57Word in s. 9A(4) omitted (1.7.2001) by virtue of S.I. 2001/1826, art. 2(a)

F58S. 9A(4)(b)(vi) and the word "and" immediately preceding inserted (1.7.2001) by S.I. 2001/1826, art. 2(b)

F62. 9A(5)(a)(b) substituted (1.12.2001) by S.I. 2001/3649, arts. 1, 195(2)(a)

F64Words in the definition of "collective investment scheme" in s. 9A(9) substituted (1.12.2001) by S.I. 2001/3649, arts. 1, 195(3)(a)

F65Definition of "derivative investment" in s. 9A(9) substituted (1.12.2001) by S.I. 2001/3649, arts. 1, 195(3)(b)

F68S. 9A(9A) inserted (1.12.2001) by S.I. 2001/3649, arts. 1, 195(4)

F69Words in s. 9A(12) substituted (17.8.2001 for certain purposes and otherwise prosp. ) by S.I. 2001/2617, arts. 2(a), 8, 13(1), Sch. 3 Pt. II, para. 138 (a)(i)(ii) (with art. 13(3), Sch. 5)

F70Words in s. 9A(13)(b) repealed (1.12.2001) by S.I. 2001/2617, arts. 2, 13(2), Sch. 4 (with art. 13(3), Sch. 5); S.I2001/3538, art. 2(a)

Modifications etc. (not altering text)

C30S. 9A(12): Functions of Building Societies Commission transferred (1.12.2001) to the Treasury by S.I. 2001/2617, arts. 2(b), 4(1), Sch. 1 Pt. III; S.I. 2001/3538, art. 2(a)

F719BRestriction on creation of floating charges.E+W+S+N.I.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Annotations:

Amendments (Textual)

F72[Part IIIE+W+S+N.I. Advances, Loans and Other Assets]

Annotations:

Amendments (Textual)

F72Pt. III (ss. 10-23) repealed (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 12(1)(a), 46(2), 47(3), Sch. 9; S.I. 1997/2668, art. 2, Sch. Pts. I(b), II(j)

Class 1 advances and class 2 advances secured on landE+W+S+N.I.

[F7310 Advances secured on land.E+W+S+N.I.

(1)A building society may make advances to members (in this Act referred to as “advances secured on land”) secured by—

(a)a mortgage of a legal estate or, as provided under subsection (6) below, an equitable interest in land in England and Wales or Northern Ireland, or

(b)a heritable security over land in Scotland,

and for that purpose may (in England and Wales or Northern Ireland) hold land with the right of foreclosure.

(2)Advances secured on land may, in accordance with sections 11 and 12—

(a)be fully or partly secured by a mortgage of the legal estate or equitable interest in land in England and Wales or Northern Ireland, or

(b)be fully secured by a heritable security over land in Scotland,

and in this Part “the basic security” means the security constituted by the legal estate in or heritable security over the land or, in a case where an equitable interest in land in England and Wales or Northern Ireland is or is also taken as security by virtue of this section, that constituted by that security or, as the case may be, the combined securities; and a reference to the land which is to secure an advance or on which an advance is secured is a reference to the estate or interest or the heritable security which constitutes or will constitute the basic security.

(3)The power to make an advance secured on land includes power, subject to the restriction imposed by subsection (4) below, to make, as a separate advance, an advance which is to be applied in or towards payment of the deposit for the purchase of the land (in this Part referred to as “an advance for a deposit for the purchase of land.”)

(4)The restriction referred to is that an advance for a deposit for the purchase of land must not exceed 10 per cent. of the total amount to be paid for the purchase of the land.

F74[(4A)The power to make an advance secured on land includes power to make an advance which is secured as mentioned in subsection (1) above by virtue of security granted otherwise than by the borrower (in this Act referred to as “an advance secured on third party land”).]

(5)An advance shall be treated for the purposes of this Act as secured by a mortgage of a legal estate in registered land in England and Wales or Northern Ireland notwithstanding that the advance is made before the [F75mortgagor] is registered as proprietor of the estate.

(6)A building society may advance money on the security of an equitable interest in land in England and Wales or Northern Ireland if the equitable interest is an equitable interest in land of a description and is created in circumstances prescribed in an order made by the Commission with the consent of the Treasury under this subsection and any conditions prescribed in the order are complied with.

(7)Any powers conferred on building societies by an order under subsection (6) above may be conferred on building societies of a description specified in the order or all building societies other than those of a description so specified.

(8)The power to make an order under subsection (6) above includes power—

(a)to prescribe the circumstances in which the power conferred by section 17(10) on building societies of the description specified therein is to be available to them; and

(b)to make such incidental, supplementary and transitional provision as the Commission considers necessary or expedient.

(9)An instrument containing an order under subsection (6) above shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(10)The power to make advances secured on land includes power to make them on terms that include provision as respects the capital element in the mortgage debt (with or without similar provision as respects the interest element)—

(a)that the amount due to the society may be adjusted from time to time by reference to such public index of prices other than housing prices as is specified in the mortgage;

(b)that the amount due to the society may be adjusted from time to time by reference to such public index of housing prices as is specified in the mortgage;

(c)that the amount due to the society at any time shall be determined by reference to a share, specified or referred to in the mortgage, in the open market value of the property at that time;

and, in cases where the amount due to the society in respect of capital exceeds the amount advanced, references in this Act to the repayment of an advance include references to payment of the excess.

(11)Advances secured on land shallbe classified for the purposes of the requirements of this Part for the structure of commercial assets into—

(a)class 1 advances, and

(b)class 2 advances;

and in this Act “advances fully secured on land” means advances which are class 1 or class 2 advances, and any reference to “fully secured” shall be construed accordingly.

(12)Nothing in this section or section 11 or 12 is to be taken as precluding a society from taking other security for an advance secured on land than such security as is required for an advance to be a class 1 or class 2 advance under those sections; but the value of the other security shall be disregarded for the purpose of classifying the advance as a class 1 or class 2 advance.]

Annotations:

Amendments (Textual)

F73Pt. III (ss. 10-23) repealed (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 12(1)(a), 46(2), 47(3), Sch. 9; S.I. 1997/2668, art. 2, Sch. Pts. I(b), II(j)

F74S. 10(4A) inserted (3.1.1995) by 1994 c. 40, ss. 16(2), 82(2)(a)

F75Word in s. 10(5) substituted (3.1.1995) by 1994 c. 40, ss. 39, 82(2)(e), Sch. 11 para. 7(2)

Modifications etc. (not altering text)

C31S. 10 restricted (1. 7. 1992) by S.I. 1992/1547, arts. 5, 6, Sch. 2

C32S. 10 excluded by S.I. 1987/1498, art. 7, Sch. 2 para. 1

[F7611 Class 1 and class 2 advancesE+W+S+N.I.

(1)The provisions of this section and section 12 define what is a class 1 advance and what is a class 2 advance for the purpose of the requirements of this Part for the structure of commercial assets and when an advance may, for those purposes, be treated partly as a class 1 advance and partly as a class 2 advance.

(2)Class 1 advances are advances as to which the society when it makes the advance is satisfied that the advance is an advance secured on land and that—

(a)the borrower is an individual;

(b)[F77where the advance is not an advance secured on third party land,]the land is for the residential use of the borrower or a dependant of his of a prescribed description;

F78[(ba)where the advance is an advance secured on third party land—

(i)the borrower intends that the advance will be used for the purpose of acquiring land for the residential use of himself or a dependant of his of a prescribed description; and

(ii)the land on which the advance is secured is for the residential use of the mortgagor or a dependant of his of a prescribed description;]

(c)the amount advanced will not exceed the value of the basic security (after deducting from that value any [F79outstanding amount secured by a mortgage of the land in favour of the society)]; and

(d)subject to subsection (5) below, no other mortgage of the land which is to secure the advance is outstanding in favour of a person other than the society;

and which are not made on terms as respects the capital element of the mortgage debt authorised by section 10(10)(b) or (c).

(3)Subject to any order made under section 12(1),

[F80(a)]the requirement in subsection (2)(b) above shall be treated as satisfied if no less than 40 per cent. of the area of the land is used for the residential purposes by the borrower or a dependant of his of a prescribed description;

[F81(b)the requirement in subsection (2)(ba)(i) above shall be treated as satisfied if the borrower intends that no less than 40 per cent. of the area of the land will be for the residential use of himself or a dependant of his of a prescribed description; and

(c)the requirement in subsection (2)(ba)(ii) above shall be treated as satisfied if no less than 40 per cent. of the area of the land is used for residential purposes by the mortgagor or a dependant of his of a prescribed description.]

(4)Class 2 advances are advances as to which the society when it makes the advance—

(a)either is not satisfied that the requirements for the time being of subsection (2) above are fulfilled or is satisfied that any of them is not fulfilled, but

(b)is satisfied that the advance is an advance secured on land, and

(c)is satisfied, where the amount advanced will exceed the value of the basic security (after deducting from that value any [F82outstanding amount secured by a mortgage of the land)], that the excess will be secured by the taking of security of a prescribed description in addition to the basic security, and

(d)is satisfied that no, or no more than one, other mortgage of the land which is to secure the advance is outstanding in favour of a person other than the society.

(5)The requirement in subsection (2)(d) and (4)(d) above shall be treated as satisfied if the advance is made on terms that the other mortgage is redeemed or postponed to the basic security.

(6)An advance for a deposit for the purchase of land is also a class 1 or class 2 advance according as it is made with a view to the making of a class 1 or class 2 advance secured on the land.

(7)Advances which would be class 2, and not class 1, advances by reason only that the extent of the residential use of the land is not such as to satisfy the requirement in subsection (2)(b) [F83or (2)(ba)(i) or (ii)] above shall be treated as class 1 advances if and to the extent prescribed by an order under section 12(5).

(8)For the purposes of the requirements of this Part for the structure of commercial assets—

(a)class 1 advances constitute class 1 assets, and

(b)class 2 advances constitute class 2 assets,

and accordingly the aggregate amount of mortgage debts outstanding in respect of class 2 advances counts in accordance with section 20 towards the limit applicable to class 2 assets under that section.

(9)For the purposes of subsections (2) and (4) above, where a building society makes an advance by instalments, any reference to the time when the society makes the advance is a reference to the time when it pays the first of the instalments, disregarding for this purpose any instalment which is to be applied towards payment of the deposit in respect of the purchase of the land which is to secure the advance.

(10)Subject to subsection (11) below, any land to which a building society becomes absolutely entitled by foreclosure or by release or other extinguishment of a right of redemption—

(a)shall as soon as may be conveniently practicable be sold or converted into money; and

(b)shall, until the sale or conversion, constitute a class 1 asset if the advance secured on the land was a class 1 advance and a class 2 asset if it was a class 2 advance.

(11)Where a building society which has for the time being adopted the powers conferred by section 17 becomes entitled to land as mentioned in subsection (10) above, and the land is land that may be held under that section, then, if the society—

(a)elects to hold the land under that section, or

(b)without such an election, retains the land after the expiry of the period of twelve months immediately following the date on which it so becomes entitled to the land.

the society shall be taken to hold the land under that section.

(12)An election under subsection (11) above shall be made by resolution of the board of directors and shall be irrevocable.

(13)If a building society contravenes subsection (10) above the society shall be liable on summary conviction to a fine not exceeding level 5 on the standard scale and so shall any officer who is also guilty of the offence.

(14)For the purposes of this Act, the mortgage debt at any time, in relation to an advance secured on land, is the total amount outstanding at that time in respect of—

(a)the principal of the advance;

(b)interest on the advance; and

(c)any other sum which the borrower is obliged to pay the society under the terms of the advance.

(15)The reference in subsection (10) above to land to which a building society becomes absolutely entitled by foreclosure includes a reference to land which a building society has acquired by virtue of a decree of foreclosure under section 28 of the M4Conveyancing and Feudal Reform (Scotland) Act 1970.]

Annotations:

Amendments (Textual)

F76Pt. III (ss. 10-23) repealed (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 12(1)(a), 46(2), 47(3), Sch. 9; S.I. 1997/2668, art. 2, Sch. Pts. I(b), II(j)

F77Words in s. 11(2)(b) inserted (3.1.1995) by 1994 c. 40, ss. 16(3)(a), 82(2)(a)

F78S. 11(2)(ba) inserted (3.1.1995) by 1994 c. 40, ss. 16(3)(b), 82(2)(a)

F79Words in s. 11(2)(c) substituted (3.1.1995) by 1994 c. 40, ss. 16(3)(c), 82(2)(a)

F80Words in s. 11(3) renumbered as s. 11(3)(a) (3.1.1995) by 1994 c. 40, ss. 16(4), 82(2)(a)

F81S. 11(3)(b)(c) inserted (3.1.1995) by 1994 c. 40, ss. 16(4), 82(2)(a)

F82Words in s. 11(4)(c) substituted (3.1.1995) by 1994 c. 40, ss. 16(5), 82(2)(a)

F83Words in s. 11(7) inserted (3.1.1995) by 1994 c. 40, ss. 39, 82(2)(e), Sch. 11 para. 7(3)

Modifications etc. (not altering text)

C33S. 11(1)(2)(4)–(7)(9)–(13)(15) excluded by S.I. 1987/1498, art. 7, Sch. 2 para. 2

C34S. 11(1)-(7), (9)-(13)(15) restricted (1. 7. 1992) by S.I. 1992/1547, arts. 5, 6, Sch. 2

C35S. 11(2)(b) extended by S.I. 1986/2169, art. 5(2)

C36S. 11(3) excluded by S.I. 1986/2169, art. 5(2) and by S.I. 1987/1498, art. 7, Sch. 2 para. 2

Marginal Citations

[F8412 Class 1 and class 2 advances: supplementary provisions.E+W+S+N.I.

(1)The Commission, by order in a statutory instrument, may as respects class 1 advances—

(a)specify the circumstances in which land is for a person’s residential use,

(b)specify who are to be a person’s dependants, and

(c)make such other incidental and supplementary and such transitional provision as the Commission considers necessary or expedient,

for the purposes of section 11(2); and in that subsection “prescribed” means prescribed in an order under this subsection.

(2)Without prejudice to the generality of subsection (1)(c) above, an order may prescribe evidence on which a building society is to be entitled to be satisfied (in the absence of evidence to the contrary) that the requirements of section 11(2) are fulfilled as respects an advance secured on land.

(3)The Commission, by order in a statutory instrument, may as respects class 2 advances—

(a)specify descriptions of security falling within this subsection which, for the purposes of paragraph (c) of section 11(4), may be taken for class 2 advances in addition to the basic security; and

(b)make such other incidental or supplementary and such transitional provision as it considers necessary or expedient for the purposes of paragraph (c) or (d) of that subsection;

and in that subsection “prescribed” means prescribed in an order under this subsection.

(4)The descriptions of additional security which fall within subsection (3)(a) above are guarantees, indemnities or other contractual promises made by virtue of, or by a public body established by or under, any enactment for the time being in force.

(5)The Commission, by order in a statutory instrument, may, as respects advances to be secured on land which is to any extent to be used for the residential use of borrowers or persons who are dependants of theirs for the purposes of section 11(2)—

(a)require so much of the amount to be advanced as is determined by or under the order to be treated as a class 1 advance;

(b)specify the circumstances in which and the conditions subject to which advances are to be so treated; and

(c)make such incidental, supplementary and transitional provision as the Commission considers necessary or expedient.

F85[(5A)Subsection (5) above shall also apply as respects advances secured on third party land which is to any extent used for the residential use of mortgagors or persons who are dependants of theirs for the purposes of section 11(2).]

(6)The Commission shall not make an order under this section, except with the consent of the Treasury.

(7)An instrument containing an order under this section shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(8)For the purpose of facilitating the repayment to a building society of a class 1 advance or a class 2 advance, the society may make to the borrower, by way of addition to the advance, a further advance of or towards the cost of a single premium payable in respect of an appropriate policy of life assurance; and a sum added to an advance under this subsection shall be treated as not forming part of the advance for the purpose of determining whether the requirements of section 11(2) or (4) are satisfied with respect to the advance.

(9)Where an advance secured on land in England and Wales or Northern Ireland is made, then, for the purpose of determining whether the land is subject to a prior mortgage for the purposes of section 11(2)(d) or (4)(d) above, any outstanding charge over the land which is registered—

(a)in the case of land in England and Wales, in the appropriate local land charges register, and

(b)in the case of land in Northern Ireland, in the statutory charges register under section 87 of, and Schedule 11 to, the M5Land Registration Act (Northern Ireland) 1970,

shall be disregarded.

(10)If at any time when a class 1 advance or a class 2 advance secured on land is outstanding the building society—

(a)is satisfied on a revaluation that the value of the basic security has changed,

(b)is satisfied that so much of the mortgage debt as represents the principal of the advance has changed,

(c)[F86 in the case of an advance which is not an advance secured on third party land]is satisfied on notice given to it by the borrower that there has been a change in the use of the land,

F87[(ca)in the case of an advance which is an advance secured on third party land—

(i)is satisfied on notice given to it by the borrower that there has been a change in the use of the land acquired with the advance, or

(ii)is satisfied on notice given to it by the mortgagor that there has been a change in the use of the land on which the advance is secured, or]

(d)agrees to a change in the relative priority of the mortgage on which the advance is secured,

and is satisfied that the change is such that, if it were to make an advance equal to the mortgage debt at that time, the advance would instead be a class 2 advance or a class 1 advance, as the case may be, the advance shall be reclassified as from that time.

(11)Nothing in subsection (10) above requires a building society to revalue its securities from time to time.

(12)Every building society shall establish and maintain a system to ensure the safe custody of all documents relating to property mortgaged to the society.

(13)In this section “appropriate policy of life assurance”, with reference to an advance, means a policy of insurance which satisfies the following requirements, that is to say—

(a)the life assured is that of the person to whom the advance is made or his spouse, his son or his daughter, and

(b)it provides, in the event of the death, before the advance has been repaid, of the person on whose life the policy is effected, for payment of a sum not exceeding the amount sufficient to defray the sums which are, at and after the time of the death, payable to the society in respect of the advance and any addition made in respect of the premium.]

Annotations:

Amendments (Textual)

F84Pt. III (ss. 10-23) repealed (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 12(1)(a), 46(2), 47(3), Sch. 9; S.I. 1997/2668, art. 2, Sch. Pts. I(b), II(j)

F85S. 12(5A) inserted (3.1.1995) by 1994 c. 40, ss. 16(6), 82(2)(a)

F86Words in s. 12(10)(c) inserted (3.1.1995) by 1994 c. 40, ss. 16(7)(a), 82(2)(a)

F87S. 12(1)(ca) substituted for word in s. 12(1)(c) (3.1.1995) by 1994 c. 40, ss. 16(7)(b), 82(2)(a)

Modifications etc. (not altering text)

C37S. 12(1)–(11)(13) excluded by S.I. 1987/1498, art. 7, Sch. 2 para. 3

C38S. 12(1)-(11)(13) restricted (1. 7. 1992) by S.I. 1992/1547, arts. 5, 6, Sch. 2

C39S. 12(12) excluded (temp) by S.I. 1986/2168, art. 12(2)(a)

C40S. 12(12) excluded by S.I. 1986/2168, art. 12(1)(a)

Marginal Citations

[F8813 Security for advances: valuation and supplementary and related provisions.E+W+S+N.I.

(1)It shall be the duty of every director of a building society to satisfy himself that the arrangements made for assessing the adequacy of the security for any advance to be fully secured on land which is to be made by the society are such as may reasonably be expected to ensure that—

(a)an assessment will be made on the occasion of each advance whether or not any previous assessment was made with a view to further advances or re-advances;

(b)each assessment will be made by a person holding office in or employed by the society who is competent to make the assessment and is not disqualified under this section from making it;

(c)each person making the assessment will have furnished to him a written report on the value of the land and any factors likely materially to affect its value made by a person who is competent to value, and is not disqualified under this section from making a report on, the land in question;

but the arrangements need not require each report to be made with a view to a particular assessment so long as it is adequate for the purpose of making the assessment.

(2)In relation to any land which is to secure an advance, the following persons are disqualified from making a report on its value, that is to say—

(a)the directors and any other officer or employee of the society who makes assessments of the adequacy of securities for advances secured on land or who authorises the making of such advances;

(b)where the society has made, or undertaken to make, to any person a payment for introducing to it an applicant for the advance, that person;

(c)where the advance is to be made following a disposition of the land, any person having a financial interest in the disposition of the land and any director, other officer or employee of his or of an associated employer; F89. . .

(d)where the advance is to be made following a disposition of the land, any person receiving a commission for introducing the parties to the transaction involving the disposition and any director, other officer or employee of his.

F90[(e)where the advance is to be made in connection with a disposition of other land to the borrower, any person having a financial interest in the disposition of the other land and any director, other officer or employee of his or of an associated employer; and

(f)where the advance is to be made in connection with a disposition of other land to the borrower, any person receiving a commission for introducing the parties to the transaction involving the disposition and any director, other officer or employee of his.]

(3)In relation to any land which is to secure an advance where the advance is to be made following a disposition of the land [F91or in connection with a disposition of other land to the borrower], the following persons are disqualified from making an assessment of the security or authorising the making of the advance, that is to say—

(a)any person, other than the building society making the advance, having a financial interest in the disposition F92. . . and any director, other officer or employee of his or of an associated employer; and

(b)any person receiving a commission for introducing the parties to the transaction involving the disposition and any director, other officer or employee of his.

(4)Any person who, being disqualified from doing so—

(a)makes a report on any land which is to secure an advance,

(b)makes an assessment of the adequacy of the security for an advance, or

(c)authorises the making of an advance,

and in the case of a person making a report does so knowing or having reason to believe that the report will be used or is likely to be used for the purposes of the advance, shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale.

(5)For the purposes of this section, any two employers are associated if one is a body corporate of which the other (directly or indirectly) has control or if both are bodies corporate of which a third person directly or indirectly has control; and the expression “associated employer” shall be construed accordingly.

(6)In this section “commission” includes any gift, bonus or benefit and, for its purposes, a person shall be taken to have a financial interest in the disposition of any land if, but only if, he would, on a disposition of that land, be entitled (whether directly or indirectly, and whether in possession or not) to the whole or part of the proceeds of the disposition.

F88(7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Annotations:

Amendments (Textual)

F88Pt. III (ss. 10-23) repealed (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 12(1)(a), 46(2), 47(3), Sch. 9; S.I. 1997/2668, art. 2, Sch. Pts. I(b)(o)(i), II(j)

F89Word immediately preceding s. 13(2)(d) repealed (3.1.1995) by 1994 c. 40, ss. 81, 82(2)(g), Sch. 17

F90S. 13(2)(e)(f) inserted (3.1.1995) by 1994 c. 40, ss. 39, 82(2)(e), Sch. 11 para. 7(4)

F91Words in s. 13(3) inserted (3.1.1995) by 1994 c. 40, ss. 39, 82(2)(e), Sch. 11 para. 7(5)(a)

F92Words in s. 13(3)(a) repealed (3.1.1995) by 1994 c. 40, ss. 39, 81, 82(2)(e)(g), Sch. 11 para. 7(5)(b), Sch. 17

Modifications etc. (not altering text)

C41S. 13 modified by S.I. 1986/2169, art. 6

C42S. 13(7) excluded by S.I. 1987/1498, art. 7, Sch. 2 para. 4

C43S. 13(7) restricted (1. 7. 1992) by S.I. 1992/1547, arts. 5, 6, Sch. 2

Other advances secured on landE+W+S+N.I.

[F9314 Power to make advances secured on land overseas.E+W+S+N.I.

(1)The appropriate authority may, with a view to conferring on building societies or building societies of particular descriptions powers to make advances to members secured on land outside the United Kingdom corresponding to the powers to make advances secured on land within the United Kingdom, by order—

(a)designate countries or territories outside the United Kingdom as countries or territories as respects which advances under this section may be made secured on the land;

(b)specify, or provide for the specification by direction of the Commission under the order of, the forms of security on land which may be taken for advances under this section, in any prescribed circumstances and subject to any prescribed conditions;

(c)determine, or provide for the determination under the order of, the classification of the advances (and accordingly of the mortgage debts) as class 1 advances or class 2 advances for the purposes of the requirements of this Part for the structure of commercial assets;

(d)provide for the application of the provisions of this Part applicable to advances secured on land to advances under this section with such modifications as appear to be appropriate;

(e)provide for any other provisions of this Act to have effect in relation to advances under this section with such modifications as appear to be appropriate; and

(f)make such incidental, supplemental or transitional provision as appears to be necessary or expedient.

(2)Any powers conferred on building societies under this section may be conferred on building societies of a specified description or all building societies other than those of a specified description.

(3)Where, by virtue of an order under subsection (1) above, advances are made by a building society on the security of land outside the United Kingdom, the aggregate amount of mortgage debts outstanding in respect of such of those advances as are class 2 advances under the order shall count in accordance with section 20 towards the limit applicable to class 2 assets under that section.

(4)Subsection (3) above is subject to any provision contained in the order.

(5)The “appropriate authority” for making an order under subsection (1) above is—

(a)as regards the relevant British overseas territories, the Commission acting with the consent of the Treasury, and

(b)as regards other countries or territories, the Treasury.

(6)An order under this section made as regards any of the relevant British overseas territories may make all or any of the powers conferred thereby exercisable by building societies without the need for adoption, but, in the absence of such a provision any power conferred under this section must, in order to be exercisable by a building society, be adopted by the society.

(7)The power to make an order under subsection (1) above is exercisable by statutory instrument and, as regards the procedure applicable to such an order,—

(a)if the instrument designates other countries or territories than any of the relevant British overseas territories, the order shall not be made unless a draft of it has been laid before and approved by resolution of each House of Parliament, and

(b)if the instrument designates any relevant British overseas territory and no other country or territory, the instrument shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(8)In this section—

and any reference to a provision of this Part is a reference to that provision as applied to advances under this section.]

Annotations:

Amendments (Textual)

F93Pt. III (ss. 10-23) repealed (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 12(1)(a), 46(2), 47(3), Sch. 9; S.I. 1997/2668, art. 2, Sch. Pts. I(b), II(j)

F94[F9514A Power to participate in secured syndicated lending.E+W+S+N.I.

(1)Subject to subsection (2) below, a building society may participate in syndicated lending—

(a)as a member of the lending syndicate, or

(b)as a person whose rights as a participant arise under an arrangement with a member of the lending syndicate (“a sub-participant”).

(2)Subsection (1) above only applies if—

(a)the syndicated lending is appropriately secured, and

(b)where the society’s participation is as a sub-participant, the society’s rights as such a participant are appropriately secured.

(3)The Commission may, with the consent of the Treasury, by order—

(a)make provision with respect to what constitutes appropriate security for the purposes of subsection (2)(a) or (b) above;

(b)make provision with respect to the classification, for the purposes of the requirements of this Part for the structure of commercial assets, of a society’s participation under this section in syndicated lending; and

(c)provide for the application of the provisions of this Part, with such modifications as appear to the Commission to be appropriate, to a society’s participation under this section in syndicated lending.

(4)The power conferred by subsection (3) above shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

(5)A building society may only exercise the power conferred by this section if it has adopted it.]

Annotations:

Amendments (Textual)

F94Pt. III (ss. 10-23) repealed (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 12(1)(a), 46(2), 47(3), Sch. 9; S.I. 1997/2668, art. 2, Sch. Pts. I(b), II(j)

F95S. 14A inserted (3.1.1995) by 1994 c. 40, ss. 17(1), 82(2)(a)

Other commercial assetsE+W+S+N.I.

[F9615 Loans for mobile homes.E+W+S+N.I.

(1)Subject to the provisions of this section, a building society may make mobile home loans to individuals, whether or not they are members of the society.

(2)A mobile home loan is a loan made for the purchase of a mobile home and secured by such security as the Commission may, with the consent of the Treasury, prescribe by order in a statutory instrument.

(3)No such loan shall be made unless the building society, when it makes the loan, is satisfied that—

(a)the borrower or a dependant of his of a prescribed description is or will be entitled under an agreement to which the M6Mobile Homes Act 1983 applies to station the mobile home on land forming part of a protected site;

(b)the mobile home is for the residential use of the borrower or a dependent of his of a prescribed description;

(c)the amount lent will not exceed the amount likely to be realised on a sale of the mobile home on the open market; and

(d)subject to subsection (4) below, no other security prescribed under subsection (2) above which is to secure the loan is outstanding in favour of a person other than the society.

(4)The requirement in subsection (3)(d) above shall be treated as satisfied if the loan is made on terms that the other loan is redeemed or postponed to it.

(5)A building society shall not make a mobile home loan to an individual if the principal exceeds—

(a)the limit for the time being imposed by or under subsection (7) below; or

(b)the balance remaining after deducting from that limit the aggregate of any other sums outstanding in respect of loans made under this section or section 16 by the society to that individual [F97and any facility limits agreed for the time being between the society and that individual][F98and also the cost of leasable chattels bailed under any current leasing agreement between the society and that individual];

and if two or more loans under this section or this section and section 16 are made simultaneously by the society to the same individual they shall be treated for the purposes of this subsection as a single loan of an amount equal to the aggregate of the principal of each of those loans.

(6)Joint borrowers under this section shall be treated, for the purpose of the limit on loans under this section, as a single individual and any sums outstanding in respect of loans made under this section or section 16 by the society to any one of the joint borrowers [F99and also the cost of leasable chattels bailed under any current leasing agreement between the society and any one of the joint borrowers are] to be taken into account in determining the balance available for any further loan to him or to him and any joint borrower with him [F100, and so is any facility limit which is agreed for the time being between the society and any one of the joint borrowers].

(7)The limit on loans to any one individual under this section is £10,000 or such sum as the Commission may, with the consent of the Treasury, specify by order in a statutory instrument.

(8)Loans under this section constitute class 3 assets for the purposes of the requirements of this Part for the structure of commercial assets and accordingly the aggregate of the amounts outstanding in respect of—

(a)the principal of loans under this section,

(b)the interest on those loans, and

(c)any other sums which borrowers are obliged to pay the society under the terms of those loans,

counts in accordance with section 20 towards the limits applicable to class 3 assets under that section.

(9)The power conferred by this section is not available to a building society which does not for the time being have a qualitying asset holding, but the cessation of its availability does not require the disposal of any property or rights.

(10)The power conferred by this section on a building society, if available to it, must in order to be exercisable, be adopted by the society.

(11)An instrument containing an order under subsection (2) or (7) above shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(12)In this section—

Annotations:

Amendments (Textual)

F96Pt. III (ss. 10-23) repealed (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 12(1)(a), 46(2), 47(3), Sch. 9; S.I. 1997/2668, art. 2, Sch. Pts. I(b), II(j)

F102Definitions inserted by S.I. 1988/1141, art. 4(1), Sch. 2 para. 3

Marginal Citations

[F10316 Power to lend to individuals otherwise than by class 1 or class 2 advances etc.E+W+S+N.I.

(1)Subject to the provisions of this section, a building society may, with or without security and whether or not at interest, lend money to individuals, whether or not they are members of the society.

(2)Advances fully secured on land do not constitute loans under this section except that an advance for a deposit for the purchase of land shall, if the purchase is not completed within the period of six months beginning with the date of the advance, be treated after the end of that period as a loan under this section and shall accordingly cease to be a class 1 or class 2 advance.

(3)Mobile home loans do not constitute loans under this section [F104and neither do bridging loans made under Part IV of Schedule 1 to the Building Societies (Commercial Assets and Services) Order 1988].

(4)The power to lend money under this section includes power, as regards members of and depositors with the society, to lend on overdraft on such terms as the society thinks fit.

(5)Subject to subsection (9) below a building society shall not make a loan to an individual under this section if the principal exceeds—

(a)the limit for the time being imposed by or under subsection (8) below; or

(b)the balance remaining after deducting from that limit the aggregate of any other sums outstanding in respect of loans made under this section by the society to that individual [F105and any facility limits agreed for the time being between the society and that individual][F106and also the cost of leasable chattels bailed under any current leasing agreement between the society and that individual];

and if two or more loans under thissection or this section and section 15 are made simultaneously by the society to the same individual they shall be treated for the purposes of this subsection as, in the case of loans under this section, a single loan of an amount equal to the aggregate of the principal of each of those loans and, in the case of loans under this section and section 15, as made on different occasions such that loans under section precede those made under that section.

(6)Subsection (5) above shall have effect (subject to subsection (9) below) in a case where a building society has made a loan under section 15 as if it precluded a building society from making a loan to an individual under this section if the principal exceeds—

(a)the limit referred to in paragraph (a) of it; or

(b)the balance referred to in paragraph (b) of it; or

(c)the balance remaining after deducting from the limit imposed by or under subsection (7) of that section the aggregate of any sums outstanding in respect of loans made under that section and under this section by the society to that individual [F107and any facility limits agreed for the time being between the society and that individual][F108and also the cost of leasable chattels bailed under any current leasing agreement between the society and that individual].

(7)Joint borrowers under this section shall be treated, for the purpose of the limit on loans under this section, as a single individual and any sums outstanding in respect of loans made under this section or section 15 by the society to any one of the joint borrowers [F109and also the cost of leasable chattels bailed under any current leasing agreement between the society and any one of the joint borrowers are] to be taken into account in determining the balance available for any further loan to him or to him and any joint borrower with him [F110, and so is any facility limit which is agreed for the time being between the society and any one of the joint borrowers].

(8)The limit on loans to any one individual under this section is £5,000 or such other sum as the Commission may, with the consent of the Treasury, specify by order in a statutory instrument.

(9)The limit on loans to any one individual under this section does not apply to an advance for a deposit for the purchase of land which has come to be treated as a loan under this section and accordingly no account shall be taken of it for the purposes of subsection (5) above.

(10)An order under subsection (8) above may specify different sums as the limit in relation to individuals in different circumstances.

(11)Loans under this section constitute class 3 assets for the purposes of the requirements of this Part for the structure of commercial assets and accordingly the aggregate of the amounts outstanding in respect of—

(a)the principal of loans under this section,

(b)the interest on those loans,and

(c)any other sums which borrowers are obliged to pay the society under the terms of those loans,

counts in accordance with section 20 towards the limits applicable to class 3 assets under that section.

(12)The power conferred by this section is not available to a building society which does not for the time being have a qualifying asset holding, but the cessation of its availability does not require the disposal of any property or rights.

(13)The powers conferred by this section on a building society, if available to it, must, in order to be exercisable, be adopted by the society.

(14)An instrument containing an order under subsection (8) above shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(15)If at any time when a loan under this section which is secured by a mortgage of any land is outstanding, the building society is satisfied—

(a)on a revaluation, that the value of the security has changed,

(b)[F111where the mortgage is granted by the borrower,] on notice given to it by the borrower that there has been a change in the use of the land,

F112[(c)where the mortgage is granted otherwise than by the borrower and the loan has been used to purchase land—

(i)on notice given to it by the borrower that there has been a change in the use of the land purchased, or

(ii)on notice given to it by the mortgagor that there has been a change in the use of the mortgaged land, or

(d)on notice given to it—

(i)where the mortgage is granted by the borrower, by him, and

(ii)where the mortgage is granted otherwise than by the borrower, by the mortgagor,]

that there has been a change in the relative priority of the mortgage and that the change is such that, if it were to make a loan equal to the mortgage debt at that time and on that security, the loan would be a class 1 advance or, as the case may be, a class 2 advance, then the outstanding loan shall be reclassified as from that time.

(16)Nothing in subsection (15) above requires a building society to revalue its securities from time to time.

[F113(17)In this section—

Annotations:

Amendments (Textual)

F103Pt. III (ss. 10-23) repealed (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 12(1)(a), 46(2), 47(3), Sch. 9; S.I. 1997/2668, art. 2, Sch. Pts. I(b), II(j)

F111Words in s. 16(15)(b) inserted (3.1.1995) by 1994 c. 40, ss. 16(8)(a), 82(2)(a)

F112S. 16(15)(c)(d) substituted for words in s. 16(15) (3.1.1995) by 1994 c. 40, ss. 16(8)(b), 82(2)(a)

[F11417 Power to hold and develop land as commercial asset.E+W+S+N.I.

(1)Subject to subsections (2), (9) and (11) below, a building society may acquire, hold and dispose of land in the United Kingdom for purposes other than those for which it may acquire, hold or dispose of land under section 6 or 10.

(2)Land may not be acquired or held or disposed of by way of lease under this section except where the land is or is to be used—

(a)primarily for residential purposes, or

(b)for purposes incidental to the use of adjoining land held or to be held by the society which is or is to be used primarily for residential purposes.

(3)A building society may develop or participate in developing for use for residential purposes or purposes connected with the residential use of land any land it holds under this section.

(4)If land acquired under this section ceases to be used for the purposes authorised by subsection (2) above the society shall sell its estate or interest in the land as soon as it is conveniently practicable without undue loss to the society.

(5)Land held under this section constitutes a class 3 asset for the purposes of the requirements of this Part for the structure of commercial assets and accordingly the aggregate value of all land so held counts in accordance with section 20 towards the limits applicable to class 3 assets under that section.

(6)Premises held under section 6, by virtue of subsection (5) of that section, shall, in prescribed circumstances, be treated in their entirety (and regardless of their use) as land held under this section for the purposes of the requirements of this Part for the structure of commercial assets and subsection (5) above applies accordingly.

(7)The Commission, with the consent of the Treasury, may by order made by statutory instrument make such provision for the purposes of subsection (6) above as it thinks fit and in that subsection “prescribed” means prescribed in an order under this subsection.

(8)An instrument containingan order under subsection (7) above shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(9)Except as provided in subsection (10) below, the powers conferred by this section are not available to a building society which does not for the time being have a qualifying asset holding, but the cessation of their availability does not require the disposal of any property or rights.

(10)A building society which does not for the time being have a qualifying asset holding may acquire, hold and dispose of land which is or is to be used for residential purposes if the purpose of the acquisition and holding of the land is to enable the society to make advances on the security of equitable interests in the land in the circumstances authorised by an order under section 10(6).

(11)The powers conferred by this section on a building society, if available to it, must in order to be exercisable, be adopted by the society.]

Annotations:

Amendments (Textual)

F114Pt. III (ss. 10-23) repealed (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 12(1)(a), 46(2), 47(3), Sch. 9; S.I. 1997/2668, art. 2, Sch. Pts. I(b), II(j)

Modifications etc. (not altering text)

C44S. 17 extended by S.I. 1987/1942, art. 3

C45S. 17(10) excluded by S.I. 1986/2099, art. 8

F115[18 Power to invest in subsidiaries and other associated bodies.E+W+S+N.I.

(1)Subject to the following provisions of this section, a building society may—

(a)acquire and hold shares or corresponding membership rights in bodies corporate and form or take part in forming bodies corporate, and

(b)provide bodies corporate in which it holds shares or such rights or to which it is, for the purpose of any power under this section, linked by resolution with any of the following supporting services—

(i)loans of money, with or without security and whether or not at interest,

(ii)grants of money, whether or not repayable,

(iii)guarantees of the discharge of their liabilities, and

(iv)the use of services or property, whether or not for payment;

and in this section “invest” means the exercise of any of the powers conferred by paragraph (a) and “support” means the exercise of any of the powers conferred by paragraph (b) above.

(2)A building society may invest in or support the following bodies corporate (referred to as “qualifying bodies”) but no others, that is to say—

(a)companies or industrial and provident societies;

(b)bodies formed in another member State for the purpose of carrying on in another member State businesses which consist wholly or mainly in lending money on the security of land and do not (where that is not the whole business) include lending on land in the United Kingdom (referred to as “corresponding European bodies”), and

(c)bodies corporate (whether or not falling within paragraph (a) or (b) above) designated as suitable for investment and support or for support for the purposes of this section by an order (referred to as “a designation order”) made by the Commission with the consent of the Treasury.

(3)A designation order may—

(a)designate a particular body or designate descriptions of bodies corporate,

(b)make different provision for different descriptions of building society,

(c)determine, or provide for the determination under the order of, the extent to which, the purposes for which, and the conditions subject to which, investment or support is permitted, and

(d)make such transitional and consequential provision as the Commission considers necessary or expedient.

(4)Subject to subsection (5) below, a building society shall not invest in or support a qualifying body so as to enable that body on its own account, in the United Kingdom, to—

(a)lend money to members of the public on the security of land by loans corresponding to advances secured on land,

(b)accept deposits of money otherwise than in such circumstances that their acceptance would not constitute its business a deposit-taking business or in the course of or for the purposes of providing a service for the time being specified in Part I of Schedule 8 to this Act;

but, subject to that, it may invest in or support a qualifying body so as to enable that body to carry on any activity which it is within the powers of the society to carry on, but, subject to subsection (5) below, no others.

(5)In the case of a qualifying body designated, or included in a description of bodies designated, by a designation order a building society may also invest in or support it for such purposes as are permitted by or under the designation order.

(6)Subject to subsection (7) and (8) below, a building society shall not invest in or support a qualifying body whose objects enable it—

(a)to carry on activities which are outside the powers of the society,

(b)to invest in other bodies corporate, or

(c)to support other bodies corporate;

but this does not imply that it is unlawful for the society to complete the performance of any contractual obligations lawfully incurred in providing a supporting service.

(7)Subsection (6) above shall not operate so as to restrict a building society’s powers under this section in relation to a corresponding European body.

(8)Subsection (6) above shall not prevent a building society from investing in or supporting a qualifying body—

(a)if that body is, in relation to the society, a designated body and the investment or support is made in accordance with the designation order,

(b)if, not being a body whose objects enable it to carry on activities outside the powers of the society, the investment or support is made or given with the consent of the Commission and subject to any conditions specified in the instrument giving the consent, or

(c)for a period of three months, pending the alteration of the objects of that body.

and that subsection shall not prevent a building society from investing in a qualifying body if the shares or corresponding membership rights in that body would, by virtue of an order under section 19, constitute class 3 assets in the hands of the society.]

(9)For the purposes of any power conferred by this section a body corporate is “linked by resolution” to a building society if the board of directors of the society has passed a resolution making that power exercisable in relation to that body and the resolution is in force.

(10)No power to invest in or support a corresponding European body is available to a building society which does not for the time being have a qualifying asset holding, but the cessation of its availability by virtue of this subsection does not require the disposal of any property or rights.

(11)The powers conferred by this section on a building society, if available to it, must, in order to be exercisable, be adopted by the society and must be adopted in their entirety without any restriction except a restriction with reference to the description of body corporate in relation to which the powers to invest in or support are to be exercisable.

(12)A building society whose board of directors has passed a resolution in pursuance of subsection (9) above shall send three copies of a record of the resolution signed by the secretary of the society to the central office and paragraph 4(3), (4) and (5) of Schedule 2 to this Act shall apply as it applies to a record of the alteration of a building society’s powers.

(13)Where the board of directors of a building society passes a resolution rescinding a resolution passed in pursuance of subsection (9) above the society shall send three copies of a record of the rescinding resolution signed by the secretary of the society to the central office and paragraph 4(3), (4) and (5) of Schedule 2 to this Act shall apply as it applies to a record of the alteration of a building society’s powers, but subject to subsection (14) below.

(14)No rescinding resolution shall be registered without the consent of the Commission.

(15)Where, by virtue of this section, property is held by a building society the property shall constitute class 3 assets for the purposes of the requirements of this Part for the structure of commercial assets and"accordingly the aggregate value of the property shall count in accordance with section 20 towards the limits applicable to class 3 assets under that section.

(16)The power to make an order under subsection (2)(c) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(17)In this section—

and in this Act “associated body”, in relation to a building society, means a body as respects which any of the following conditions is satisfied, that is to say—

(i)the body is one in which the society holds shares or corresponding membership rights, or

(ii)the body is one to which the society is linked by resolution, or

(iii)the body is one in which, by virtue of subsection (8)(b) above, shares or corresponding membership rights are held by a body which falls within (i) or (ii) above;

and “associated” shall be construed accordingly.

Annotations:

Amendments (Textual)

F115Pt. III (ss. 10-23) repealed (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 12(1)(a), 46(2), 47(3), Sch. 9; S.I. 1997/2668, art. 2, Sch. Pts. I(b), II(j)

Modifications etc. (not altering text)

C46S. 18 modified by S.I. 1987/1498, art. 7, Sch. 2 para. 5

C47S. 18 modified (1.7.1992) by S.I. 1992/1547, arts. 5, 6, Sch. 2

Marginal Citations

[F11719 Power for Treasury to add powers to hold other descriptions of class 3 assets.E+W+S+N.I.

(1)The Treasury may, with a view to extending or altering, or extending to other descriptions of building societies, the forms of property which are to constitute class 3 assets in the hands of building societies or building societies of particular descriptions, by order—

(a)specify forms of property which a building society is to have power to acquire, hold and dispose of as assets of that class, subject to any specified conditions or restrictions;

(b)without prejudice to paragraph (a) above, specify descriptions of bodies corporate shares or other interests or rights in which a building society is to have power to acquire, hold and dispose of as assets of that class, subject to any specified conditions or restrictions;

(c)make any amendments of or repeals in this Act which are consequential on the exercise of its powers under paragraph (a) or (b) above;

(d)make such incidental, supplemental or transitional provision as it considers necessary or expedient.

(2)The powers conferred by subsection (1) above may be exercised so as to apply in relation to property situated or bodies incorporated within the United Kingdom or any other member State or other country or territory and so as to be exercisable for purposes other than the purposes of building societies under the powers conferred on them for the time being by or under this Act.

(3)Any powers conferred on building societies under this section may be conferred on building societies of a specified description or all building societies other than those of a specified description.

(4)Any power conferred on a building society under this section, if available to it, must, in order to be exercisable, be adopted by the society.

(5)Where, by virtue of an order under subsection (1)(a) or (b) above, property is held by a building society the property shall constitute class 3 assets for the purposes of the requirements of this Part for the structure of commercial assets and accordingly the aggregate value of the property, as determined in accordance with the order, shall count in accordance with section 20 towards the limits applicable to class 3 assets under that section.

(6)Subsection (5) above is subject to any provision contained in the order.

(7)The power to make an order under subsection (1) above is exercisable by statutory instrument but no such order shall be made unless a draft of the order has been laid before and approved by a resolution of each House of Parliament.

(8)In this section—

Annotations:

Amendments (Textual)

F117Pt. III (ss. 10-23) repealed (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 12(1)(a), 46(2), 47(3), Sch. 9; S.I. 1997/2668, art. 2, Sch. Pts. I(b), II(j)

Commercial asset structure requirementsE+W+S+N.I.

[F11820 Commercial asset structure requirements for building societies.E+W+S+N.I.

(1)The requirements for the structure of commercial assets applicable to building societies are the following.

(2)The class 2 assets or, if it has class 3 assets, the aggregate of the class 2 and class 3 assets held by a building society at the end of a financial year shall not exceed whichever is the greater of—

(a)10 per cent. of the total commercial assets held by the society at that time, or

(b)an amount corresponding to that percentage of the total commercial assets held by the society at the end of the preceding financial year.

(3)The class 3 assets (if any) held by a building society at the end of a financial year shall not exceed whichever is the greater of—

(a)5 per cent. of the total commercial assets held by the society at that time, or

(b)an amount corresponding to that percentage of the total commercial assets held by the society at the end of the preceding financial year.

(4)The Treasury may by order made by statutory instrument direct that subsection (2) or (3) above shall have effect during the currency of the order as if such percentage as is specified in the order were substituted for the percentage specified in that subsection, not being a percentage greater than 25 per cent. in the case of subsection (2) and 15 per cent. in the case of subsection (3) above.

(5)An order under subsection (4) above may—

(a)divide class 3 assets into sub-classes for the purposes of the order by reference to the provision of or made under this Part from which they arise;

(b)subject to subsection (6) below, prescribe different limits for different sub-classes; and

(c)make such transitional provision as appears to the Treasury to be necessary or expedient;

and any reference in this Act to a limit for a class of commercial assets shall, if a limit is in force under subsection (4) above for any sub-class of class 3 assets, be construed as including a reference to the limit for that sub-class.

(6)No order under subsection (4) above shall prescribe as a limit for a sub-class of class 3 assets a percentage of total commercial assets less than the percentage in force immediately before the making of the order for that sub-class or, if the subclass is created by the order, for class 3 assets generally

(7)An order under subsection (4) above shall not be made unless a draft of it has been laid before and approved by a resolution of each House of Parliament.

(8)The amount or value of the assets of any class of a building society for the purposes of this section is the amount or value as shown in the latest balance sheet or such other amount or value as the Commission determines to be the correct or, as the case requires, appropriate amount or value; and where the Commission determines an amount or value under this subsection the appropriate alterations shall be noted against the annual accounts of the society kept in the public file of the society.

(9)In determining for the purposes of this section the asset holding of a building society with which another body corporate is associated there shall, subject to subsection (12) below, be attributed to the society, in accordance with aggregation rules made by the Commission with the consent of the Treasury under this subsection, the whole or part of the assets of whatever description of the associated body, as provided in the rules and subject to any exceptions provided in the rules.

(10)The power to make aggregation rules under subsection (9) above includes power to make—

(a)different rules for different circumstances,

(b)provision for assets of societies to be disregarded,

(c)provision for assets to be attributed to any class of assets of societies, and

(d)such supplementary, transitional and saving provisions as appear to the Commission to be necessary or expedient.

(11)The power to make aggregation rules under subsection (9) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(12)The Commission may, on the application of a building society, approve rules to be applied for the purposes of this section for the attribution to the society of assets of bodies associated with the society; and so long as the rules continue to be approved by the Commission they, and not the aggregation rules in force under subsection (9) above, shall apply for the attribution of assets for the purposes of this section.

(13)If the commercial assets of any class of a building society exceed the limits in force under this section the powers conferred on the Commission by section 36 shall become exercisable in relation to the society, but exceeding the limit shall not affect the validity of transactions effected in excess of it nor require the disposal of any assets.]

Annotations:

Amendments (Textual)

F118Pt. III (ss. 10-23) repealed (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 12(1)(a), 46(2), 47(3), Sch. 9; S.I. 1997/2668, art. 2, Sch. Pts. I(b), II(j)

Modifications etc. (not altering text)

C48S. 20 modified (temp.) by S.I. 1986/2168, art. 8(3)

C49S. 20 modified by S.I. 1986/2168, art. 4(2)(a)(i)(3)

C50S. 20 amended (temp.) by Building Societies (Limits on Commercial Assets) Order 1988, S.I. 1988/1142, art. 2

C51S. 20(2)(3) excluded by S.I. 1986/2168, art 5

Liquid assetsE+W+S+N.I.

[F11921 Liquid assets.E+W+S+N.I.

(1)Subject to the following provisions of this section, a building society shall secure that, of its total assets, it keeps such a proportion of them having such a composition as will at all times enable the society to meet its liabilities as they arise.

(2)A building society may keep assets of an authorised character beyond those required for the purpose of complying with subsection (1) above.

(3)Subject to subsections (5) and (6) below, the assets held by a building society under subsection (1) or (2) above—

(a)shall not exceed in the aggregate a proportion of its total assets greater than 33 per cent., and

(b)shall be composed of assets of an authorised character and no others;

but, subject to that, a building society, in deciding on the composition and proportion appropriate for the purpose of complying with subsection (1) above, shall have regard to the range and scale of its business and the composition and character of its assets and liabilities.

(4)Subsection (3) above, in its application to a building society with which other bodies corporate are associated, is to be read as requiring the society to have regard to the range and scale of the business, and the composition and character of the assets and liabilities, of the society and the associated bodies.

(5)The Commission may, by order made with the consent of the Treasury, direct that this section shall have effect during the currency of the order as if such percentage as if specified in the order were substituted for the percentage specified in subsection (3) above; but any order under this subsection shall expire (unless previously revoked) at the end of the period of twelve months beginning with the day on which the order came into operation.

(6)The Commission may, at any time, by notice to a building society, direct that the limit in force under this section shall not, subject to any conditions specified in the notice, apply to the society during such period as the Commission specifies in the notice.

(7)Regulations to be known as liquid asset regulations shall be made by the Commission, with the consent of the Treasury, for the purposes of this section and such regulations—

(a)shall prescribe descriptions of assets as assets of a character which societies may, in any prescribed circumstances and subject to any prescribed conditions, hold under this section for the purpose of meeting their liabilities as they arise,

(b)may make different provision for different descriptions of building societies, and

(c)may make such supplementary or incidental provision and such transitional provision as appears to the Commission to be necessary or expedient.

(8)The power to make an order or regulations under subsection (5) or (7) above is exercisable by statutory instrument which shall be subject to annulmentin pursuance of a resolution of either House of Parliament.

(9)If the assets of a building society which are kept in the form directed by subsection (1) above exceed at any time the percentage in force under this section at that time the powers conferred on the Commission by section 36 shall become exercisable in relation to the society, but exceeding the limit shall not affect the validity of transactions effected in excess of it.

(10)In this section—

Annotations:

Amendments (Textual)

F119Pt. III (ss. 10-23) repealed (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 12(1)(a), 46(2), 47(3), Sch. 9; S.I. 1997/2668, art. 2, Sch. Pts. I(b), II(j)

Liabilities of associated bodiesE+W+S+N.I.

F12022. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

Annotations:

Amendments (Textual)

F120S. 22 repealed (11.6.1996) by S.I. 1995/3233, art. 5(1) (with art. 5(2))

Other powersE+W+S+N.I.

[F12123 Power to hedge.E+W+S+N.I.

(1)Subject to subsections (3) and (4) below, a building society may effect contracts of a prescribed description for the purpose of reducing the risk of loss arising from changes in interest rates, currency rates or other factors of a prescribed description which affect its business.

(2)The Commission, with the consent of the Treasury, may by order—

(a)specify as contracts which building societies have power to effect under this section descriptions of contract whose purpose or one of whose purposes is the reduction of the risk to businesses of loss arising from the factors specified in subsection (1) above or other similar factors, and

(b)regulate, or provide for the regulation of, the terms on which, the persons or descriptions of persons with whom, and the circumstances in which, contracts of a description specified under paragraph (a) above, may be effected by building societies.

(3)Except as provided under subsection (4) below, the powers conferred by this section are not available to a building society which does not for the time being have a qualifying asset holding, but the cessation of their availability does not require the disposal of any property or rights.

(4)The Commission, with the consent of the Treasury, may by order provide that subsection (3) above shall not have effect, as regards prescribed powers, in relation to prescribed descriptions of building societies.

(5)The powers conferred by this section on a building society, if available to it, must, in order to be exercisable, be adopted by the society.

(6)The power to make an order under subsection (2) or (4) above—

(a)includes power to make such transitional provision as the Commission considers necessary or expedient, and

(b)is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(7)In this section “prescribed” means prescribed in an order under subsection (2) or (4) above, as the case may be.]

Annotations:

Amendments (Textual)

F121Pt. III (ss. 10-23) repealed (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 12(1)(a), 46(2), 47(3), Sch. 9; S.I. 1997/2668, art. 2, Sch. Pts. I(b), II(j)

Part IVE+W+S+N.I. Protection of Investors

Annotations:

Modifications etc. (not altering text)

C52Pt. IV (ss. 24-33) modified (1.7.1995) (temp. until 31.12.1999) by S.I. 1995/1442, reg. 54(2)

Investor Protection SchemeE+W+S+N.I.

F12224. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

Annotations:

Amendments (Textual)

F122Ss. 24-31 repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2) Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1). Ss. 24-31 continued (with modifications) (1.12.2001) by S.I. 2001/2967, arts. 1(2), 9(c), Sch. 1 Pt. I; S.I. 2001/3538, art. 2

Modifications etc. (not altering text)

C53Ss. 24-31: amendment to earlier affecting provision SI 2001/2967, arts. 1(2), 9(c), Sch. 1 Pt. 1 (1.4.2013) by The Financial Services Act 2012 (Consequential Amendments and Transitional Provisions) Order 2013 (S.I. 2013/472), Sch. 2 para. 56(h)(ii)

F12325. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

Annotations:

Amendments (Textual)

F123Ss. 24-31 repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2), Sch. 4, (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1). Ss. 24-31 continued (with modifications) (1.12.2001) by S.I. 2001/2967, arts. 1(2), 9(c), Sch. 1 Pt. I; S.I. 2001/3538, art. 2(1)

Modifications etc. (not altering text)

C54Ss. 24-31: amendment to earlier affecting provision SI 2001/2967, arts. 1(2), 9(c), Sch. 1 Pt. 1 (1.4.2013) by The Financial Services Act 2012 (Consequential Amendments and Transitional Provisions) Order 2013 (S.I. 2013/472), Sch. 2 para. 56(h)(ii)

F12425A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

Annotations:

Amendments (Textual)

F124S. 24-31 repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2), Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1). Ss. 24-31 continued (with modifications) (1.12.2001) by S.I. 2001/2967, arts. 1(2), 9(c), Sch. 1 Pt. I; S.I. 2001/3538, art. 2(1)

Modifications etc. (not altering text)

C55Ss. 24-31: amendment to earlier affecting provision SI 2001/2967, arts. 1(2), 9(c), Sch. 1 Pt. 1 (1.4.2013) by The Financial Services Act 2012 (Consequential Amendments and Transitional Provisions) Order 2013 (S.I. 2013/472), Sch. 2 para. 56(h)(ii)

F12526. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

Annotations:

Amendments (Textual)

F125Ss. 24-31 repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2), Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538,art. 2(1). Ss. 24-31 continued (with modifications) (1.12.2001) by S.I. 2001/2967, arts. 1(2), 9(c), Sch. 1 Pt. I; S.I. 2001/3538, art. 2(1)

Modifications etc. (not altering text)

C56Ss. 24-31: amendment to earlier affecting provision SI 2001/2967, arts. 1(2), 9(c), Sch. 1 Pt. 1 (1.4.2013) by The Financial Services Act 2012 (Consequential Amendments and Transitional Provisions) Order 2013 (S.I. 2013/472), Sch. 2 para. 56(h)(ii)

F12627. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

Annotations:

Amendments (Textual)

F126Ss. 24-31 repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2), Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1). Ss. 24-31 continued (with modifications) (1.12.2001) by S.I. 2001/2967, arts. 1(2), 9(c), Sch. 1 Pt. I; S.I. 2001/3538, art. 2(1)

Modifications etc. (not altering text)

C57Ss. 24-31: amendment to earlier affecting provision SI 2001/2967, arts. 1(2), 9(c), Sch. 1 Pt. 1 (1.4.2013) by The Financial Services Act 2012 (Consequential Amendments and Transitional Provisions) Order 2013 (S.I. 2013/472), Sch. 2 para. 56(h)(ii)

F12727A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

Annotations:

Amendments (Textual)

F127Ss. 24-31 repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2), Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1). Ss. 24-31 continued (with modifications) (1.12.2001) by S.I. 2001/2967, arts. 1(2), 9(c), Sch. 1 Pt. I; S.I. 2001/3538, art. 2(1)

Modifications etc. (not altering text)

C58Ss. 24-31: amendment to earlier affecting provision SI 2001/2967, arts. 1(2), 9(c), Sch. 1 Pt. 1 (1.4.2013) by The Financial Services Act 2012 (Consequential Amendments and Transitional Provisions) Order 2013 (S.I. 2013/472), Sch. 2 para. 56(h)(ii)

F12828. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

Annotations:

Amendments (Textual)

F128Ss. 24-31 repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2), Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1). Ss. 24-31 continued (with modifications) (1.12.2001) by S.I. 2001/2967, arts. 1(2), 9(c), Sch. 1 Pt. I; S.I. 2001/3538, art. 2(1)

Modifications etc. (not altering text)

C59Ss. 24-31: amendment to earlier affecting provision SI 2001/2967, arts. 1(2), 9(c), Sch. 1 Pt. 1 (1.4.2013) by The Financial Services Act 2012 (Consequential Amendments and Transitional Provisions) Order 2013 (S.I. 2013/472), Sch. 2 para. 56(h)(ii)

F12929. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

Annotations:

Amendments (Textual)

F129Ss. 24-31 repealed (1.12.2001) by S.I. 2001/2617, arts 2(b), 13(2) Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1). Ss. 24-31 continued (with modifications) (1.12.2001) by S.I. 2001/2967, arts. 1(2), 9(c), Sch. 1 Pt. I; S.I. 2001/3538, art. 2(1)

Modifications etc. (not altering text)

C60Ss. 24-31: amendment to earlier affecting provision SI 2001/2967, arts. 1(2), 9(c), Sch. 1 Pt. 1 (1.4.2013) by The Financial Services Act 2012 (Consequential Amendments and Transitional Provisions) Order 2013 (S.I. 2013/472), Sch. 2 para. 56(h)(ii)

F13029A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

Annotations:

Amendments (Textual)

F130Ss. 24-31 repealed (1.12.2001) by S.I. 2001/2617, arts 2(b), 13(2) Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1). Ss. 24-31 continued (with modifications) (1.12.2001) by S.I. 2001/2967, arts. 1(2), 9(c), Sch. 1 Pt. I; S.I. 2001/3538, art. 2(1)

Modifications etc. (not altering text)

C61Ss. 24-31: amendment to earlier affecting provision SI 2001/2967, arts. 1(2), 9(c), Sch. 1 Pt. 1 (1.4.2013) by The Financial Services Act 2012 (Consequential Amendments and Transitional Provisions) Order 2013 (S.I. 2013/472), Sch. 2 para. 56(h)(ii)

F13130. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

Annotations:

Amendments (Textual)

F131Ss. 24-31 repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2) Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1). Ss. 24-31 continued (with modifications) (1.12.2001) by S.I. 2001/2967, arts. 1(2), 9(c), Sch. 1 Pt. I; S.I. 2001/3538, art. 2(1)

Modifications etc. (not altering text)

C62Ss. 24-31: amendment to earlier affecting provision SI 2001/2967, arts. 1(2), 9(c), Sch. 1 Pt. 1 (1.4.2013) by The Financial Services Act 2012 (Consequential Amendments and Transitional Provisions) Order 2013 (S.I. 2013/472), Sch. 2 para. 56(h)(ii)

Other provisionsE+W+S+N.I.

F13231. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

Annotations:

Amendments (Textual)

F132Ss. 24-31 repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2), Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1). Ss. 24-31 continued (with modifications) (1.12.2001) by S.I. 2001/2967, arts. 1(2), 9(c), Sch. 1 Pt. I; S.I. 2001/3538, art. 2(1)

Modifications etc. (not altering text)

C63Ss. 24-31: amendment to earlier affecting provision SI 2001/2967, arts. 1(2), 9(c), Sch. 1 Pt. 1 (1.4.2013) by The Financial Services Act 2012 (Consequential Amendments and Transitional Provisions) Order 2013 (S.I. 2013/472), Sch. 2 para. 56(h)(ii)

32 Special provisions as regards investors.E+W+S+N.I.

The Provisions of Schedule 7 to this Act relating to shareholders in and depositors with a building society shall have effect.

[F13333 Assistance by building societies to other building societies.E+W+S+N.I.

Where it appears to the Commission that a building society is in financial difficulties it may authorise a building society to lend money to that society, and a building society shall have power to do so accordingly.]

Annotations:

Amendments (Textual)

F133S. 33 repealed (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 12(1)(b), 46(2), 47(3), Sch. 9; S.I. 1997/2668, art. 2, Sch. Pt. II(j)(y)(cc)(iii)

[F134Part VE+W+S+N.I. Powers to Provide Services]

Annotations:

Amendments (Textual)

F134Pt. V (ss. 34-35) repealed (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 12(1)(c), 46(2), 47(3), Sch. 9; S.I. 1997/2668, art. 2, Sch. Pt. II(j)(y)(cc)(iv)

[F13534 Powers to provide financial services or services relating to land.E+W+S+N.I.

(1)A building society may provide services of the descriptions for the time being specified in Part I of Schedule 8 to this Act subject to the restrictions (if any) for the time being specified in Part II or III of that Schedule.

(2)The appropriate authority may by order vary Schedule 8 by adding to or deleting from it any description of service or any provision or by varying any description of service or any provision for the time being specified or contained in it but not so as to confer any power to provide services other than services that appear to the authority making the order to be financial services or services relating to land or to be services similar to any such services.

(3)Any power conferred on building societies under subsection (2) above may be conferred on building societies of a specified description or all building societies other than those of a specified description.

(4)Where a provision of Part III of that Schedule states that a power to provide a specified service is available only to a subsidiary or other associated body of a building society the power to provide that service is to be treated as a power of the society for the purposes of section 18 only.

(5)Any power to provide a specified service, if available to a building society or any subsidiary or other associated body, must, in order to be exercisable, be adopted by the society.

(6)Subject to any specified restriction, any power to provide a specified service shall be exercisable in relation to members of the building society or other persons.

(7)Part IV of Schedule 8 has effect for supplementing Parts I, II and III of that Schedule and the power under subsection (2) above to vary that Schedule includes, without prejudice to the generality of that subsection, power to make such provision as appears to the authority making the order to be appropriate by way of a sanction for contravention of any restriction for the time being contained in Part III.

(8)The “appropriate authority” for the purpose of exercising the powers conferred by this section is the Treasury as regards any variation of Part I of Schedule 8 with or without other provision and the Commission in any other case.

(9)The power to make an order under subsection (2) above is exercisable by statutory instrument and—

(a)in the case of an order varying Part I of Schedule 8 with or without other provision no such order shall be made unless a draft of it has been laid before and approved by a resolution of each House of Parliament, and

(b)in the case of any other order, the instrument containing it shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(10)An order under subsection (2) above may make such incidental and transitional provision as appears to the authority making the order to be necessary or expedient.

(11)In this section—

Annotations:

Amendments (Textual)

F135Pt. V (ss. 34-35) repealed (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 12(1)(a), 46(2), 47(3), Sch. 9; S.I. 1997/2668, art. 2, Sch. Pts. I(b), II(j)(y)(cc)(iv)

F136[F13735Prohibition on linking services.E+W+S+N.I.

(1)A building society which, or a subsidiary of which, provides services of any description specified in Part I of Schedule 8 to this Act shall not offer to make a class 1 advance to any person subject to a condition that any services of that description which are or may be required by that person in connection with the making of the advance shall be provided by the society or its subsidiary.

(2)Where, in connection with a class 1 advance by a building society, several services are made available by a building society or by a building society and one or more of its subsidiaries the society shall not, and shall secure that each of its subsidiaries does not,make the services available on terms other than terms which distinguish the consideration payable for each service so made available; nor shall any of its subsidiaries make the services available on terms other than terms which make that distinction.

(3)Nothing in subsection (2) above prevents a service from being provided free of charge in particular circumstances.

(4)If a building society contravenes subsection (1) or (2) above the society shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale and so shall any officer who is also guilty of the offence.

(5)If a body corporate which is a subsidiary of a building society contravenes subsection (2) above the body corporate shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale.]

Annotations:

Amendments (Textual)

F137Pt. V (ss. 34-35) repealed (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 12(1)(a), 46(2), 47(3), Sch. 9; S.I. 1997/2668, art. 2, Sch. Pts. I(b), II(j)(y)(cc)(iv)

Part VIE+W+S+N.I. Powers of Control of the [F138appropriate authority]

Annotations:

Amendments (Textual)

F139[Powers in relation to principal purpose and nature limits]E+W+S+N.I.

Annotations:

Amendments (Textual)

F139S. 36 and cross-heading substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 13(1), 47(3); S.I. 1997/2668, art. 2, Sch. Pt. II(k)

[F14036 Power to direct restructuring of business etc.E+W+S+N.I.

(1)The provisions of this section have effect where, by reason of a building society’s failure to comply with—

(a)the requirement imposed by section 5(1)(a) or (b) (purpose or principal purpose and principal office);

(b)the requirement imposed by section 6(1) (the lending limit); or

(c)the requirement imposed by section 7(1) (the funding limit),

the powers conferred by this section become exercisable by the [F141appropriate authority] in relation to the society (the requirements referred to in paragraphs (a), (b) and (c) above being referred to in this section as “the relevant statutory requirements”).

(2)The [F141appropriate authority] may give the society a direction under subsection (3), (5) or (6) below.

(3)A direction by the [F141appropriate authority] under this subsection is a direction requiring the society, within a specified period, to submit for its approval a plan (in this section referred to as a “restructuring plan”) designed to secure the following purposes, that is to say—

(a)that the society will, by the end of a specified period, comply with the relevant statutory requirements as applied at the last day of that period, and

(b)that it will not thereafter fail to comply with those requirements.

(4)For the purpose of applying the relevant statutory requirements as directed by subsection (3)(a) above—

(a)in the case of a requirement which operates by reference to a quarter day, the day as at which the requirements are to be applied shall be treated as such a day; and

(b)the assets and liabilities of the society shall be determined by reference to a balance sheet prepared by the directors by reference to that day and sent to the [F141appropriate authority] within the period of three months beginning with that day;

and subsection (4) of section 81 shall apply in the event of a default in complying with this provision as it applies in the event of a default in complying with subsection (2) of that section.

(5)A direction by the [F141appropriate authority] under this subsection is a direction requiring the society—

(a)within a specified period, to submit to its members for their approval at a meeting the requisite transfer resolutions for a transfer of the business of the society to a company under section 97; and

(b)to notify the [F141appropriate authority] [F142and, if the appropriate authority is the PRA, the FCA] of the result of the meeting.

(6)A direction by the [F141appropriate authority] under this subsection is a direction requiring the society, at its option, either—

(a)within a specified period, to submit for approval a restructuring plan; or

(b)within a specified period, to submit to its members for their approval at a meeting the requisite transfer resolutions for a transfer of the business of the society to a company under section 97;

and, within a specified period, to notify the [F141appropriate authority] [F143and, if the appropriate authority is the PRA, the FCA] of the option it has decided to pursue.

(7)Where the [F141appropriate authority] gives a direction under subsection (3), (5) or (6) above, it may also give a direction under this subsection—

(a)imposing limitations on the issue of shares, the acceptance of deposits or the making of loans;

(b)requiring the society within a specified period to take certain steps, or to refrain from adopting or pursuing a particular course of action, or to restrict the scope of its business in a particular way;

(c)requiring the society within a specified period to take steps with regard to the conduct of the business of any connected undertaking of the society;

(d)requiring within a specified period the removal of any director or other officer.

(8)Where a restructuring plan is submitted by a society to the [F141appropriate authority] under subsection (3) or (6) above then—

(a)if it appears to the [F141appropriate authority] that the plan is reasonably likely to secure its purposes, the [F141appropriate authority] shall approve it and direct the society to carry it out;

(b)if it appears to it that the plan is, with modifications, likely to secure its purposes and the [F141appropriate authority] and the society agree on appropriate modifications within the period of 21 days from the date on which the [F141appropriate authority] notifies the society of the modifications it proposes for the society’s agreement, the [F141appropriate authority] shall approve the plan as modified and direct the society to carry it out;

but otherwise it shall reject the plan.

(9)Where a meeting is held, in pursuance of a direction under subsection (5) or (6) above, for the purpose of voting on the requisite transfer resolutions, then—

(a)if the resolutions are agreed to and the confirmation of the transfer by the [F141appropriate authority] is obtained, the society shall proceed under section 97 to transfer its business to a successor company;

(b)if either resolution is disagreed to, the society shall notify the [F141appropriate authority] of that fact as soon as it is practicable to do so.

(10)In the event of the [F141appropriate authority] receiving a notice from a society under subsection (9)(b) above, it may, if it thinks fit, serve on the society a direction requiring it, within a specified period, to submit to the [F141appropriate authority] for its approval a restructuring plan; and if the [F141appropriate authority] does so, subsection (8) above shall apply as if the plan had been submitted under subsection (3) above.

(11)The [F141appropriate authority] may, if it thinks fit, extend or further extend any period during which a building society is to take any steps required of it under any of the foregoing provisions of this section and may do so whether or not application is made to it before the expiry of the period in question.

(12)If a building society which has been directed under subsection (8) above to carry out a restructuring plan fails, within the period allowed to it under the foregoing provisions of this section, to secure the purpose of the plan specified in subsection (3)(a) above, the powers conferred on the [F141appropriate authority] by section 36A shall become exercisable in relation to the society.

(13)If a building society fails, within the period allowed to it under the foregoing provisions of this section—

(a)where it has been given a direction under subsection (3) or (10) above, to submit a restructuring plan;

(b)where it has been given a direction under subsection (5) above, to submit to members the requisite transfer resolutions;

(c)where it has been given a direction under subsection (6) above, to either submit a restructuring plan or submit to members the requisite transfer resolutions;

(d)where it has been given a direction under subsection (7) above, to comply with any requirement imposed by the direction;

(e)where it has been directed under subsection (8) above to carry out a restructuring plan, to secure the purpose of the plan specified in subsection (3)(a) above;

(f)to agree to the requisite transfer resolutions submitted to the members in pursuance of subsection (5) or (6) above; or

(g)where it has agreed to the requisite transfer resolutions, to proceed under section 97 to transfer its business to the successor company,

or if the [F141appropriate authority] rejects a restructuring plan under subsection (8) above, the powers conferred on the [F141appropriate authority] by section 37 shall become exercisable in relation to the society.

F144(14). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(15)In this section—

(16)Nothing in this section implies that it is improper for the [F141appropriate authority] to give to a building society or building societies generally an indication of the action it might or might not take in relation to any proposed activity of theirs.]

[F145(17)The PRA must consult the FCA before issuing a direction under this section.]

Annotations:

Amendments (Textual)

F140S. 36 and cross-heading substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 13(1), 47(3); S.I. 1997/2668, art. 2, Sch. Pt. II(k)

F144S. 36(14) repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2), Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

Modifications etc. (not altering text)

[F14636A Power to make prohibition orders.E+W+S+N.I.

(1)Where by virtue of section 36(12) the powers conferred by this section become exercisable in relation to a building society, the [F147[F148appropriate authority] may] issue a prohibition order directed to the society.

(2)A prohibition order under this section is an order—

(a)prohibiting, subject to the saving or transitional provisions of the order, the continuance or, as the case may be, the carrying on of the activity specified in the order after a date so specified, either absolutely or unless conditions so specified are complied with; and

(b)requiring, subject to the saving or transitional provisions of the order, the disposal within a period specified in the order of all assets acquired or otherwise in its possession by virtue of the activity.

(3)A disposal of assets in pursuance of a prohibition order shall vest the assets in the transferee but without prejudice to any claim against the society by a person who had an interest in the assets.

(4)The saving or transitional provisions which may be included in a prohibition order shall be such as appear to the [F148appropriate authority] to be just having regard to—

(a)the interests of shareholders of and depositors with the society; and

(b)the interests of other persons who will be affected by the order.

[F149(5)If the [F148appropriate authority] proposes to issue a prohibition order under this section it must give the society a warning notice.

(5A)If the [F148appropriate authority] decides to issue a prohibition order under this section it must give the society a decision notice, and may issue the order at the same time as or after giving the decision notice.

(5B)A warning notice or decision notice about a prohibition order under this section must set out the terms of the order which the [F148appropriate authority] proposes (or has decided) to make, including any saving or transitional provisions to be included in it.

(5C)Part XXVI of the Financial Services and Markets Act 2000 (notices) is to be treated as applying in respect of warning notices and decision notices given under this section as it applies in respect of warning notices and decision notices given under that Act, subject to subsection (5D) below.

(5D)In the application of Part XXVI of that Act in respect of warning notices and decision notices given under this section—

(a)section 388(1)(e) is to be omitted,

(b)section 388(2) (which makes provision for the type of action to which a decision notice may relate if it was preceded by a warning notice) is to be read as if, for the word “Part”, there were substituted the word “ section ”,

(c)section 390 (final notices) is to be omitted, and

(d)for the purposes of section 391 (publication) a decision notice given under this section is to be treated as if it were a final notice rather than a decision notice.]

[F150(5E)The PRA must consult the FCA about the terms of the prohibition order in question before giving a warning notice or a decision notice under this section.]

F151[(6)If the [F148appropriate authority] issues a prohibition order under this section it shall serve the order on the societyF152....]

(7)A prohibition order so F153. . . issued shall, subject to subsection (11) below, take effect on the date specified in the order.

(8)A copy of any order issued under subsection (6) above shall also be served on each director and on the chief executive of the society.

(9)The requirement of subsection (8) above, so far as it relates to directors, is satisfied by serving a copy on each director whose appointment has been officially notified and the non-receipt of a copy by a director or the chief executive does not affect the validity of the order.

[F154(9A)The PRA must give the FCA a copy of any order issued under this section.

(9B)The FCA must keep a copy of any order issued under this section in the public file of the society.]

(10)Subject to subsection (11) below, a prohibition order shall remain in force until revoked by the [F148appropriate authority] .

(11)The [F148appropriate authority] may suspend or revoke a prohibition order so far as it relates to an asset the disposal of which appears to it, on the application of the society, to be impracticable.

(12)If a society contravenes a prohibition order issued against it under this section—

(a)the power conferred on the [F148appropriate authority] by section 37(1) shall become exercisable in relation to the society; and

(b)the [F148appropriate authority] may exercise that power or certify the contravention in writing to the High Court, or do both of those things;

but the contravention shall not invalidate any transaction or other act.

(13)On receiving such a certification, the High Court—

(a)may inquire into the case; and

(b)after hearing any witnesses who may be produced against or on behalf of the society and after hearing any statement which may be offered in defence, may punish the society in like manner as if it had been guilty of contempt of the court.

(14)Where a contravention of a prohibition order which is so certified is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, any officer of the society he, as well as the society, may be punished in like manner as if he had been guilty of contempt of the court.

(15)In the application of this section to a building society whose principal office is in Scotland, references to the High Court shall be read as references to the Court of Session.]

Annotations:

Amendments (Textual)

F146S. 36A inserted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 14, 47(3); S.I. 1997/2668, art. 2, Sch. Pt. II(l)

F147Words in s. 36A(1) substituted (17.8.2001 for specified purposes and otherwise 1.12.2001) by S.I. 2001/2617, arts. 2, 8, 13(1), Sch. 3 Pt. II, para. 142(a) (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

F149S. 36A(5)-(5D) substituted (17.8.2001 for specified purposes and otherwise 1.12.2001) for s. 36A(5) by S.I. 2001/2617, arts. 2, 8, 13(1), Sch. 3 Pt. II, para. 142(c) (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

F151S. 36A(6) substituted (17.8.2001 for specified purposes and otherwise 1.12.2001) by S.I. 2001/2617, arts. 2, 8, 13(1), Sch. 3 Pt. II, para. 142(d) (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

F153Words in s. 36A(7) repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2), Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

Modifications etc. (not altering text)

C66S. 36A(5) extended (1.12.2001) by S.I. 2001/3592, art. 37(1)(b) (with art. 23(2))

[F15537 Powers to petition for winding up etc.E+W+S+N.I.

(1)Where—

(a)by virtue of section 36(13) the powers conferred by this section become exercisable in relation to a building society;

(b)by virtue of section 36A(12) the power conferred by this subsection becomes so exercisable; or

(c)the [F156appropriate authority] has reason to believe that a building society has ceased to comply with the requirement imposed by section 5(1)(a) (purpose or principal purpose),

the [F156appropriate authority] may present a petition to the High Court for the winding up of the society under the applicable winding up legislation; and the power conferred by this subsection is available to the [F156appropriate authority] whether or not it has previously presented a petition.

(2)Where by virtue of section 36(13) the powers conferred by this section become exercisable in relation to a building society, the [F156appropriate authority] may make an application to the High Court for an order giving directions to the society under subsection (3) below; and the power conferred by this subsection is available to the [F156appropriate authority] whether or not it has previously made an application for such an order.

(3)An order under this subsection is an order directing the society to comply with a direction under subsection (3), (5), (6), (7) or (10) of section 36 as directed in the order, or to carry out a restructuring plan as so directed.

[F157(4) Where the High Court makes an order under subsection (3)—

(a)if the appropriate authority is the PRA, it must give a copy of the order to the FCA; and

(b)in any case, the FCA must keep a copy of the order in the public file of the society.]

(5)The High Court shall not make an order winding up the society on an application under subsection (1)(c) above unless it is satisfied that the society has ceased to comply with the requirement imposed by section 5(1)(a).

(6)In the application of this section to a building society whose principal office is in Scotland, references to the High Court shall be read as references to the Court of Session.]

Annotations:

Amendments (Textual)

F155S. 37 substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 15, 47(3); S.I. 1997/2668, art. 2, Sch. Pt. II(m)

Modifications etc. (not altering text)

Power to determine extent of building society powersE+W+S+N.I.

[F15838 Power to determine building society’s powers.E+W+S+N.I.

(1)The Commission shall have power to determine whether a particular activity of a building society or its subsidiary is or is not within the existing powers of the society and may, if it thinks fit, take such professional advice as it considers it needs to enable it to make the determination.

(2)A determination may be made under this section in relation to an activity which is proposed to be carried on as well as in relation to one which is being carried on.

(3)The powers of the Commission in relation to a building society are exercisable—

(a)on an application made by the society, requesting the Commission to make the determination,

(b)on an application made by the society at the direction of the central office under Part II of Schedule 2 to this Act, or

(c)on the Commission’s own motion or on an application made by the society at its direction,

as provided in subsection (4), (5), (6) or (8) below.

(4)A building society may at any time, on complying with the following provisions of this section, make an application to the Commission for a determination under this section whether an activity specified in the application is or is not within its powers if the directors of the society are of the opinion that there is a doubt about the existence or extent of the powers to carry on the activity which requires to be resolved in the interests of the society.

(5)A building society which has been directed by the central office under Part II of Schedule 2 to this Act to make an application to the Commission under this section shall, in accordance with the direction, make an application to the Commission for a determination whether the activity specified in the application is or is not within its powers.

(6)If it appears to the Commission at any time that a building society or its subsidiary is carrying on or is about to carry on an activity which is or may be outside the existing powers of the society, the Commission may, by notice to the society specifying the activity and its opinion, direct it to make an application for a determination under this section whether the activity is or is not within its powers and it shall be the duty of the society to comply with the direction.

(7)A direction under subsection (6) shall require the application to be made within the period of 21 days beginning with the date on which the notice is given, but the Commission may extend or further extend the period within which the application is to be made.

(8)If a building society fails, within the time allowed by or under subsection (7) above, to make an application as directed under subsection (6) above, the Commission may, of its own motion, proceed to make a determination under this section as if an application had been made by the society.

(9)An application by a building society under subsection (4), (5) or (6) above shall be made in writing, signed by the secretary as such an application, and shall comprise—

(a)a statement of the question for determination, specifying the activity and the powers in question, the nature of the doubt and (except in the case of an application under subsection (6)) the arguments for and against the activity being within those powers, as they appear to the society, and

(b)such documents or draft documents and such other information as are necessary to enable the determination to be made.

(10)The statement of the question for determination may, with the agreement of the Commission, be amended at any time before the determination is made and in that event further documents and other information may be included in the application.

(11)The Commission may, by notice to the society, require a society making an application under subsection (4), (5) or (6) above to amend the statement of the question for determination or to furnish such further documents or other information or such explanations of the statement, documents or information as appear to it to be necessary to enable the determination of the question to be made; and the Commission may allow or require the explanations to be made orally instead of in writing.

(12)In this section and sections 39 and 40—

(a)in a case where the Commission decides to proceed of its own motion, the date when the Commission so decides;

(b)in a case where the society makes the application at the direction of the central office, the date specified in the direction; and

(c)in any other case, the date on which the society makes the application.

(13)Nothing in this section or section 39 or 40 implies that it is improper for the Commission to give to a building society or building societies generally an indication of the action it might or might not take in relation to any proposed activity of theirs; and if any determination comes to be made in relation to the activity the proceedings shall not be liable to be set aside by reason of the indication having been given.]

Annotations:

Amendments (Textual)

F158Ss. 38-40 repealed (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 12(1)(d), 46(2), Sch. 9; S.I. 1997/2668, art. 2, Sch. Pt. II(j)(y)(cc)(v)

[F15939 The determination: notification, effect, appeal.E+W+S+N.I.

(1)A determination of the Commission under section 38 shall be in writing and, as soon as practicable after it is made, the Commission shall notify the society of the determination and the reasons for it.

(2)On receiving notice of the determination the society shall, if it is a determination that the activity in question was outside its powers, forthwith send a copy of it to every person who the society has reason to believe will or may be affected by it other than a person whose only interest is as a shareholder in, or depositor with, the society.

(3)Subject to subsection (4) below, the Commission shall, within the period of one month beginning with the date of the notice to the society under subsection (1) above, publish the determination in such manner as it thinks appropriate.

(4)Where the determination is made on an application made by the society under section 38(4), the Commission may, on the application of the society, postpone the publication of the determination for such period as it thinks fit, not exceeding the period of six months beginning with the date of the notice to the society under subsection (1) above, if it appears to the Commission that it is just to do so.

(5)A determination under section 38 shall bind all persons, whether or not (in the case of an application) they were parties to it and, subject to any appeal under subsection (8) below, shall be final and conclusive for all purposes.

(6)Where the activity in question was at the relevant date being carried on by the society and the determination is that the activity is outside the powers of the society the directors of the society shall be personally liable, jointly and severally, for any loss or expense to the society consequent on the activity’s being outside its powers (including, if a prohibition order under section 40 is made, any loss or expense consequent on the order).

(7)If it appears to the Commission that proceedings under subsection (6) above have not been, but ought in the interests of the society to be, brought, the Commission may bring such proceedings in the name and on behalf of the society; and if it does so the Commission may indemnify the society against the costs or expenses incurred by the society in, or in connection with, proceedings brought by virtue of this subsection.

(8)Any person affected by a determination under section 38 shall be entitled within the period of six weeks beginning with the date of the notice under subsection (1) above or such further period as the Court may allow, to appeal to the High Court against the determination in accordance with rules of court on the ground that it is erroneous in law and the Commission shall be made respondent on the appeal.

(9)On any appeal to the High Court under subsection (8) above the High Court may confirm, reverse or vary the determination appealed from.

(10)In the application of this section to a building society whose principal office is in Scotland, references to the High Court shall be read as references to the Court of Session.

(11)The Commission may, if it thinks fit, require a building society in whose case it has made a determination under section 38 to pay such fee as the Commission directs.]

Annotations:

Amendments (Textual)

F159Ss. 38-40 repealed (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 12(1)(d), 46(2), Sch. 9; S.I. 1997/2668, art. 2, Sch. Pt. II(j)(y)(cc)(v)

[F16040 Power to make prohibition orders.E+W+S+N.I.

(1)On or at any time after making a determination under section 38 that a specified activity is outside the powers of a building society, the Commission shall, if it appears to it—

(a)that the activity is being carried on by the society, or

(b)that the activity has not been but, unless a prohibition order is made under this section, may be carried on by the society.

serve on the society a notice of the Commission’s intention to issue a prohibition order directed to the society.

(2)A prohibition order under this section is an order prohibiting, subject to the saving or transitional provisions of the order, the continuance or, as the case may be, the carrying on of the activity specified in the order, either absolutely or unless conditions specified in the order are complied with, after a date specified in the order and requiring, subject to the saving or transitional provisions of the order, the disposal within a specified period of all assets acquired or otherwise in its possession by virtue of the activity.

(3)A disposal of assets in pursuance of a prohibition order shall vest the assets in the transferee but without prejudice to any claim against the society by a person who had an interest in the assets.

(4)The saving or transitional provisions which may be included in a prohibition order shall be such as appear to the Commission to be just having regard to the interests of shareholders of and the depositors with the society and the interests of other persons who will be affected by the order; but the provisions shall not in any respect suspend the operation of the order beyond the period of one year.

(5)A prohibition order may include a direction for treating assets of any description as assets of the class specified in the direction for the purposes of the requirements of Part III for the structure of commercial assets.

(6)A notice under subsection (1) above of the Commission’s intention to issue a prohibition order shall—

(a)specify the date on which the order is to be issued, being a date not earlier than the end of the period of 21 days beginning with the date of the notice;

(b)specify the terms of the order, including any saving or transitional provisions proposed to be included in it;

(c)inform the society of its right to make representations to the Commission before the order is issued as to the saving or transitional provisions to be included in the order; and

(d)inform the society of its duty under subsection (7) below.

(7)On receiving a notice under subsection (1) above the society shall forthwith send a copy of it to every other person whom it has reason to believe will or may be affected by the determination under section 38 on which the order will be founded.

(8)Any person who may be affected by the determination under section 38 on which the order will be founded may, at any time before the order is made, make representations to the Commission as to the inclusion in it of saving or transitional provisions affecting his interests and they may be made orally or in writing.

(9)After considering any representations made under subsection (8) above the Commission shall make the prohibition order with such saving and transitionalprovisions (if any) as it thinks just, shall issue the order by causing it to be served on the society and shall direct the central office to keep a copy of it in the public file of the society.

(10)A prohibition order so made and issued shall, subject to subsection (15) below, take effect on the date specified in the order.

(11)A copy of any order issued under subsection (9) above shall also be served on each director and on the chief executive of the society.

(12)The requirement of subsection (11) above, so far as it relates to directors, is satisfied by serving a copy on each director whose appointment has been officially notified and the non-receipt of a copy by a director or the chief executive does not affect the validity of the direction.

(13)Subject to subsection (14) below, a prohibition order shall remain in force until revoked by the Commission.

(14)The Commission may suspend or revoke a prohibition order so far as it relates to an asset the disposal of which appears to it, on the application of the society, to be impracticable.

(15)If, when a prohibition order has been made, an appeal is pending before the High Court under section 39(8) against the determination on which the order is founded the High Court may, on application made to it, order that the operation of the prohibition order be stayed until the determination of the appeal; but it shall not do so unless it is satisfied that it is in the public interest that it be stayed.

(16)If a society contravenes a prohibition order issued against it under this section the Commission may certify the contravention in writing to the High Court; and the Court may thereupon inquire into the case and, after hearing any witnesses who may be produced against or on behalf of the society and after hearing any statement which may be offered in defence, may punish the society in like manner as if it had been guilty of contempt of the court.

(17)In the application of this section to a building society whose principal office is in Scotland, references to the High Court shall be read as references to the Court of Session and references to staying shall be read as references to sisting.]

Annotations:

Amendments (Textual)

F160Ss. 38-40 repealed (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 12(1)(d), 46(2), Sch. 9; S.I. 1997/2668, art. 2, Sch. Pt. II(j)(y)(cc)(v)

Powers in relation to authorisationE+W+S+N.I.

F16141. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

Annotations:

Amendments (Textual)

F161S. 41 repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2), Sch. 4, (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

F16242. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

Annotations:

Amendments (Textual)

F16342A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

Annotations:

Amendments (Textual)

[F16442B Power to direct transfers of engagements or business.E+W+S+N.I.

(1)If, with respect to a building society [F165which has a permission under [F166Part 4A] of the Financial Services and Markets Act 2000 to accept deposits, the [F167appropriate authority]] considers it expedient to do so in order to protect the investments of shareholders or depositors, it may either—

(a)direct the society, within a specified period, to transfer all its engagements to one or more other building societies under section 94;

[F168(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 society by a transfer to which provision made by order under section 3 of the 2007 Act (transfers to subsidiaries of other mutuals) applies;]or

(b)direct the society, within a specified period, to transfer its business [F169under section 97 to an existing company that is not a subsidiary of another mutual society] .

[F170(1A)In this section—

(a)the 2007 Act” means the Building Societies (Funding) and Mutual Societies (Transfers) Act 2007;

(b)mutual society” has the same meaning as in section 3 of that Act.]

[F171(2)If it appears to the [F167appropriate authority] that a society has failed to comply with a direction under subsection (1), the [F167appropriate authority] may exercise its power under [F172section 55J (variation or cancellation on initiative of regulator), section 55L (imposition of requirements by FCA) or section 55M (imposition of requirements by PRA)] of the Financial Services and Markets Act 2000 in relation to the society F173....

(2A)Subsection (2) does not affect the [F167appropriate authority] ’s ability to exercise that power, in relation to the society, on any other ground.]

(3)Where the [F167appropriate authority]

(a)gives a building society a direction under subsection (1)(a) above; or

(b)does not give a building society such a direction solely because the society is already seeking to transfer all its engagements to one or more other building societies under section 94,

the [F167appropriate authority] may, if it considers it expedient to do so in order to protect the investments of shareholders or depositors, direct that, instead of resolving to transfer its engagements by the two resolutions required by section 94(2) (with or without the additional resolution required by section 94(3)), the society may resolve to do so by a resolution of the board of directors.

(4)Where the [F167appropriate authority]

(a)gives a building society a direction under subsection [F174(1)(aa) or (b) ] above; or

(b)does not give a building society such a direction solely because the society is already seeking to transfer its business to an existing company [F175, or to a specially formed company that is a subsidiary of another mutual society,] under section 97,

the [F167appropriate authority] may, if it considers it expedient to do so in order to protect the investments of shareholders or depositors, direct that, instead of approving the transfer and the terms of the transfer by the two resolutions required by section 97(4)(c), the society may approve the transfer and those terms by a resolution of the board of directors.

(5)A direction under subsection (3) or (4) above—

(a)shall be in writing;

(b)may be given subject to such limitations or conditions as the [F167appropriate authority] may think fit; and

(c)unless renewed by a further direction, shall cease to have effect at the end of the period of 90 days beginning with the day on which it is given.

[F176(5A)The PRA must consult the FCA before giving a direction under this section.]

F177(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7)In Schedule 8A to this Act—

(a)Part I (which contains provisions modifying sections 94 to 96 and Schedule 16 to this Act) shall apply where a direction is given under subsection (3) above; and

(b)Part II (which contains provisions modifying sections 97 to 100 and Schedule 17 to this Act) shall apply where a direction is given under subsection (4) above.

(8)The [F178Treasury] may make regulations for the purpose of specifying, as prescribed matters—

(a)the matters of which statements under paragraph 3 of Schedule 8A to this Act are to give particulars; and

(b)the matters of which statements under paragraph 9 of that Schedule are to give particulars.

(9)The power to make regulations under this section is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.]

Annotations:

Amendments (Textual)

F164S. 42B inserted (9.6.1997) by 1997 c. 32, s. 17(1); S.I. 1997/1427, art. 2(c)

F165Words in s. 42B(1) substituted (17.8.2001 for specified purposes and otherwise 1.12.2001) by S.I. 2001/2617, arts. 2, 8, 13(1), Sch. 3 Pt. II para. 145(a) (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

F169Words in s. 42B(1)(b) substituted (1.4.2013) by Financial Services Act 2012 (c. 21), ss. 56(2)(b), 122(3) (with Sch. 20); S.I. 2013/423, art. 3, Sch.

F171S. 42B(2)(2A) substituted (17.8.2001 for specified purposes and otherwise 1.12.2001) for s. 42B(2) by S.I. 2001/2617, arts. 2, 8, 13(1), Sch. 3 Pt. II, para. 145(b) (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

F174Words in s. 42B(4)(a) substituted (1.4.2013) by Financial Services Act 2012 (c. 21), ss. 56(4)(a), 122(3) (with Sch. 20); S.I. 2013/423, art. 3, Sch.

F175Words in s. 42B(4)(b) inserted (1.4.2013) by Financial Services Act 2012 (c. 21), ss. 56(4)(b), 122(3) (with Sch. 20); S.I. 2013/423, art. 3, Sch.

F177S. 42B(6) repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2), Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

F178Word in s. 42B(8) substituted (17.8.2001 for certain purposes and otherwise 1.12.2001) by S.I. 2001/2617, arts. 2, 8, 13(1), Sch. 3 Pt. II para. 145(e) (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

Modifications etc. (not altering text)

C69S. 42B(8): Functions of Building Societies Commission transferred (1.12.2001) to the Treasury by S.I. 2001/2617, arts. 2(b), 4(1), Sch. 1 Pt. III; S.I. 2001/3538, art. 2(1)

[F18042C[F179Variation and revocation of transfer directions]E+W+S+N.I.

(1)A direction under section 42B(1) F181. . . may be varied by a further direction; and a direction may be revoked by the [F182appropriate authority] by a notice in writing to the building society concerned.

[F183(1A)If the appropriate authority is the PRA, it must consult the FCA before varying or revoking a direction.]

F184(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F184(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Annotations:

Amendments (Textual)

F179Side-note to s. 42C substituted (17.8.2001 for specified purposes and otherwise 1.12.2001) by S.I. 2001/2617, art. 2, 8, 13(1), Sch. 3 Pt. II para. 146(a) (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

F180S. 42C inserted (9.6.1997) by 1997 c. 32, s. 18; S.I. 1997/1427, art. 2(c)

F181Words in s. 42C(1) repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2), Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

F184S. 42C(2)(3) repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2), Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

F18543. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

Annotations:

Amendments (Textual)

F185Ss. 43-45A repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2), Sch. 4 (with art. 13(3) Sch. 5); S.I. 2001/3538, art. 2(1)

Ss. 43-45A continued (1.12.2001) by S.I. 2001/2657, art. 11 (which was revoked (8.10.2001) by S.I. 2001/3083, arts. 1(2), 23(1))

Ss. 43-45A continued (with modifications) (1.12.2001) by S.I. 2001/3083, arts. 1(2), 11; S.I. 2001/3538, art. 2(1)

F18643A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

Annotations:

Amendments (Textual)

F186Ss. 43-45A repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2) Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

Ss. 43-45A continued (1.12.2001) by S.I. 2001/2657, art. 11 (which was revoked (8.10.2001) by S.I. 2001/3083, art. 23(1))

Ss. 43-45A continued (1.12.2001) by S.I. 2001/3083, arts. 1(2), 11; S.I. 2001/3538, art. 2(1)

F18743B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

Annotations:

Amendments (Textual)

F187Ss. 43-45A repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2), Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

Ss. 43-45A continued (1.12.2001) by S.I. 2001/2657, art. 11 (which was revoked (8.10.2001) by S.I. 2001/3083, art. 23(1))

Ss. 43-45A continued (1.12.2001) by S.I. 2001/3083, arts. 1(2), 11; S.I. 2001/3538, art. 2(1)

F18844. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

Annotations:

Amendments (Textual)

F188Ss. 43-45A repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2), Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

F18945. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

Annotations:

Amendments (Textual)

F189Ss. 43-45A repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2), Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

[F190General functions of Commission]E+W+S+N.I.

Annotations:

Amendments (Textual)

F190S. 45AA and cross-heading inserted (1.12.1997) by 1997 c. 32, s. 22; S.I. 1997/2668, art. 2, Sch. Pt. I(d)

F19145AA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

Annotations:

Amendments (Textual)

F191Ss. 43-45A repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2), Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

F19245A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

Annotations:

Amendments (Textual)

F192Ss. 43-45A repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2), Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

[F193Notices, hearings and appeals]E+W+S+N.I.

Annotations:

Amendments (Textual)

F193S. 46A and cross-heading substituted (17.8.2001 for specified purposes and otherwise 1.12.2001) for ss. 46-49 and cross-heading by S.I. 2001/2617, arts. 2, 8, 13(1), Sch. 3 Pt. II para. 148 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

[F19446A Notices, hearings and appeals.E+W+S+N.I.

(1)If the [F195appropriate authority] proposes—

(a)to give a direction to a society under section 36(3), (5), (6), (7) or (10), or

(b)to give a direction to a society under section 42B(1), other than a direction varying a previous direction with the agreement of the society concerned,

it must give the society a warning notice.

(2)The warning notice must set out the terms of the direction which the [F195appropriate authority] proposes to give.

(3)If the [F195appropriate authority] decides—

(a)to give a direction to a society under section 36(3), (5), (6), (7) or (10), or

(b)to give a direction to a society under section 42B(1), other than a direction varying a previous direction with the agreement of the society concerned,

it must give the society a decision notice.

(4)The decision notice must set out the terms of the direction which the [F195appropriate authority] has decided to give.

(5)A society to whom a decision notice is given under this section may refer the matter to the [F196Upper Tribunal].

(6)Part XXVI of the Financial Services and Markets Act 2000 (notices) is to be treated as applying in respect of warning notices and decision notices given under this section as it applies in respect of warning notices and decision notices given under that Act, subject to subsection (8) below.

F197(7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8)In the application of Part XXVI of that Act in respect of warning notices and decision notices given under this section—

(a)section 388(1)(e)(i) (which requires a decision notice to indicate any right given under that Act to refer a decision to the Tribunal) is to be read as if, for the words “this Act”, there were substituted “ the Building Societies Act 1986 ”;

(b)section 388(2) (which makes provision for the type of action which may be proposed in a decision notice which was preceded by a warning notice) is to be read as if, for the word “Part”, there were substituted “ section ”;

(c)section 390(4) (which provides for the content of a final notice about an order) is to be read as if—

(i)for the words “an order” there were substituted “ a direction ”, and

(ii)for the words “the order”, in both places where they appear, there were substituted “ the direction ”; and

(d)section 392 (application of sections 393 (third party rights) and 394 (access to [F195appropriate authority] material)) is to be read—

(i)as if paragraph (a) of that section contained a reference to a warning notice given under subsection (1) above, and

(ii)as if paragraph (b) of that section contained a reference to a decision notice given under subsection (3) above.]

Annotations:

Amendments (Textual)

F194S. 46A substituted (17.8.2001 for specified purposes and otherwise 1.12.2001) for ss. 46-49 by S.I. 2001/2617, arts. 2, 8, 13(1), Sch. 3 Pt. II para. 148 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

Modifications etc. (not altering text)

C70S. 46A(1) extended (1.12.2001) by S.I. 2001/3592, arts. 36(2), 38(1) (with art. 23(2))

C71S. 46A(8)(d)(i) excluded (1.12.2001) by S.I. 2001/3592, arts. 36(3), 38(2) (with art. 23(2))

46. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

47. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

48. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

49. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Advertising etc.E+W+S+N.I.

F20850. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E+W+S+N.I.

Annotations:

Amendments (Textual)

F208S. 50 repealed (1.12.2001) by S.I. 2001/2617, arts. 2, 13(2), Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

[F20951 Powers to avoid apparent association with other bodies.E+W+S+N.I.

(1)If, as regards a building society and another body corporate which is not an associated body by virtue of section 18, it appears to the Commission that persons who might invest in or otherwise deal with that other body may be misled into believing that there is such a business relationship between the society and that body as indicates that the society has assumed an obligation to discharge that body’s liabilities in any event, the Commission may give the society a direction under subsection (2) below.

(2)A direction under this subsection is a direction requiring the society—

(a)if they are available to it, to assume and make exercisable, or to make exercisable, as regards a body specified in the direction, the powers conferred by section 18; or

(b)to take such steps as are agreed with the Commission for the purpose of removing the appearance of a business relationship with the specified body which indicates the assumption of an obligation of the description referred to in subsection (1) above;

and, within a specified period, to notify the Commission of the course it has decided to take.

(3)The steps that a building society may be required to take for the purpose of complying with a direction under subsection (2) above may relate to the conduct of its business or to its business relationship (if any) with the other body and, in particular, may require the removal of any person from any office in the society or that body.

(4)A direction under subsection (2) above shall—

(a)specify the matters which appear to the Commission to be capable of giving rise to such a belief as is mentioned in subsection (1) above;

(b)specify the period within which the society must comply with the direction;

(c)require the society, if it decides to comply with the direction by taking steps to secure the purpose mentioned in subsection (2)(b) above, to notify the Commission of the steps it proposes to take.

(5)Where a building society, in pursuance of subsection (2)(b) above notifies the Commission of steps which it proposes to take to secure the purpose mentioned in that paragraph then—

(a)if it appears to the Commission that the steps proposed are reasonably likely to secure that purpose, the Commission shall approve them and direct the society to carry them out;

(b)if it appears to the Commission that the steps proposed are, with modifications, likely to secure that purpose and the Commission and the society agree on appropriate modifications within the period of 21 days from the date on which the Commission notifies the society of the modifications it proposes for their agreement, the Commission shall approve the steps as modified and direct the society to carry them out;

but otherwise the Commission shall reject the society’s proposals.

(6)If the Commission rejects a society’s proposals under subsection (5) above the Commission shall direct the society, within a specified period, to take the steps specified in the direction.

(7)Any direction under subsection (2), (5) or (6) above shall be given by the Commission by notice served on the society.

(8)The Commission may, if it thinks fit, extend, or further extend, any period during which a building society is to take any steps required of it under any of the foregoing provisions of this section and may do so whether or not application is made to it before the expiry of the period in question.

(9)If a building society fails, within the period allowed to it under the foregoing provisions of this section, to comply with a direction under subsection (2) or (6) above, the Commission may serve on the society an aggregation notice to take effect on such date as is specified in the notice.

(10)An aggregation notice under subsection (9) above is a notice directing that, from the date specified in the notice until the notice is withdrawn by the Commission, the assets and liabilities of the body specified in the notice will be aggregated with those of the society for the purposes of the provisions of this Act requiring aggregation of assets or liabilities; and where such a notice is served, and whilst it remains in force, the assets and liabilities of the body specified in the notice shall for the purposes of those provisions be aggregated with those of the society in accordance with the aggregation rules in force under sections 7(10), 8(3) and 20(9).

(11)A copy of any aggregation notice served on a building society under subsection (9) above shall, whilst in force, be kept in the public file of the society.

(12)In this section—

and “the provisions of this Act requiring aggregation of assets or liabilities” are sections 7, 8 and 20.]

Annotations:

Amendments (Textual)

F209S. 51 repealed (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 46(2), 47(3), Sch. 7 para. 16, Sch. 9; S.I. 1997/2668, art. 2, Sch. Pt. II(w)(y)(z)(vii)(cc)(vi)

InformationE+W+S+N.I.

52 Powers to obtain information and documents etc.E+W+S+N.I.

(1)This section applies to information, documents or other material, or explanations of matters, which relate to the business of a building society or its plans for future development and, in relation to the obtaining under this section of information or explanations or the production under this section of documents or other material to which it applies “the purposes of its supervisory functions” means the purposes of the discharge by the [F210[F211FCA or the PRA of any of their respective functions] under Part I, sections 36, 36A, 37, 42B, 42C and 46A, Part X and section 107.]

(2)Where a building society has [F212connected undertakings] this section also applies to information, documents or other material, or explanations of matters, which relate to, or also relate to, the business, or the plans for future development, of every such [F213connected undertaking].

[F214(3)Where the Commission has grounds under section 51(1) for giving a direction to a building society under subsection (2) of that section in relation to another body corporate this section also applies to information, documents or other material, or explanations of matters, which relate to the business of that other body.]

(4)This section does not authorise any requirement in relation to information, documents or other material to be imposed on a [F215connected undertaking of] a building society unless [F216that undertaking] carries on business in the United Kingdom; but a requirement may be imposed under this section on a building society in relation to information, documents or other material in the possession or control of a [F217connected undertaking] outside the United Kingdom.

(5)Subject to subsection (4) above, the [F218FCA and the PRA] may by notice to a building society, [F219or connected undertaking]

(a)require [F220the society or undertaking] to which it is addressed to furnish to it, within a specified period or at a specified time or times, such specified information as the [F221it] considers it needs for the purposes of its supervisory functions;

(b)require [F220the society or undertaking] to which it is addressed to produce to it, at a specified time and place, such specified documents or other material as the [F221it] considers it needs for the purposes of its supervisory functions;

(c)require [F220the society or undertaking] to which it is addressed to provide to it, within specified period, such explanations of specified matters as the [F221it] considers it needs for the purposes of its supervisory functions;

(d)require [F220the society or undertaking] to which it is addressed to furnish to it a report by an [F222approved accountant or other person with relevant professional skill] on, or on specified aspects of, information or documents or other material furnished or produced to the [F221it] .

[F223(5A)Subject to subsection (4) above, [F224any person authorised for the purpose by the [F225FCA or the PRA] (“an authorised officer”) may, on producing evidence of his authority,] require a building society or connected undertaking—

(a)to furnish to him forthwith such specified information as the [F226body which authorised the person] considers it needs for the purposes of its supervisory functions;

(b)to produce to him forthwith such documents or other material as the [F226body which authorised the person] considers it needs for those purposes;

(c)to provide to him forthwith such explanations of specified matters as the [F226body which authorised the person] considers it needs for those purposes.

(6)Where by virtue of subsection (5)(a) to (c) above the [F227FCA or the PRA has power] , or by virtue of subsection (5A) above an authorised [F228officer] has power, to require the furnishing of any information, the production of any document or material or the provision of any explanation, by a building society or connected undertaking, the [F229FCA, the PRA or the authorised officer (as the case may be)] shall have the like power as regards any person who—

(a)is or has been an officer or employee or agent of the society or undertaking; or

(b)in the case of documents or material, appears to the [F229FCA, the PRA or the authorised officer (as the case may be)] to have the document or material in his possession or under his control.]

(7)Where any person from whom production of a document or material is required under subsection (6) above claims a lien on the document or material, the production of it shall be without prejudice to the lien.

(8)Nothing in the foregoing provisions of this section shall compel the production by a [F230relevant lawyer] of a document or material containing a privileged communication made by him or to him in that capacity or the furnishing of information contained in a privileged communication so made.

[F231(9)Where, by virtue of subsection (5), (5A) or (6) above, the [F232FCA, the PRA or an authorised officer] requires the production by a building society or connected undertaking or any other person of documents or material, the [F233FCA, the PRA or the authorised officer (as the case may be)] may—

(a)if the documents or material are produced, take copies of or extracts from them and require the person who produced them, or any other person who is a present or past director or officer of, or is or was at any time employed by, the building society or connected undertaking concerned, to provide an explanation of the documents or material; and

(b)if the documents or material are not produced, require the person who was required to produce the documents or material to state, to the best of his knowledge and belief, where the documents or material are.]

(10)Any person who, when required to do so under this section, fails without reasonable excuse to furnish any information or accountant’s report, to produce any documents or material, or to provide any explanation or make any statement, shall be liable on summary conviction—

(a)to a fine not exceeding level 5 on the standard scale; and

(b)in the case of a continuing offence, to an additional fine not exceeding £200 for every day during which the offence continues.

(11)Any building society which furnishes any information, provides any explanation or makes any statement which is false or misleading in a material particular shall be liable, on conviction on indictment or on summary conviction, to a fine which, on summary conviction, shall not exceed the statutory maximum.

(12)Any person who knowingly or recklessly furnishes any information, provides any explanation or makes any statement which is false or misleading in a material particular shall be liable—

(a)on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or both; and

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

[F234(13)In this section—

Annotations:

Amendments (Textual)

F210Words in s. 52(1) substituted (17.8.2001 for certain purposes and otherwise 1.12.2001) for s. 52(1)(a)(b) by S.I. 2001/2617, arts. 2, 8, 13(1), Sch. 3 para. 150(a) (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

F212Words in s. 52(2) substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 47(3), Sch. 7 para. 17(2)(a); S.I. 1997/2668, art. 2, Sch. Pt. II(w)(z)(viii)

F213Words in s. 52(2) substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 47(3), Sch. 7 para. 17(2)(b); S.I. 1997/2668, art. 2, Sch. Pt. II(w)(z)(viii)

F214S. 52(3) repealed (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 46(2), 47(3), Sch. 7 para. 17(3), Sch. 9; S.I. 1997/2668, art. 2, Sch. Pt. II(w)(z)(viii)(cc)(vii)

F215Words in s. 52(4) substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 47(3), Sch. 7 para. 17(4)(a); S.I. 1997/2668, art. 2, Sch. Pt. II(w)(z)(viii)

F216Words in s. 52(4) substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 47(3), Sch. 7 para. 17(4)(b); S.I. 1997/2668, art. 2, Sch. Pt. II(w)(z)(viii)

F217Words in s. 52(4) substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 47(3), Sch. 7 para. 17(4)(c); S.I. 1997/2668, art. 2, Sch. Pt. II(w)(z)(viii)

F219Words in s. 52(5) substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 47(3), Sch. 7 para. 17(5)(a); S.I. 1997/2668, art. 2, Sch. Pt. II(w)(z)(viii)

F220Words in s. 52(5) substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 47(3), Sch. 7 para. 17(5)(b); S.I. 1997/2668, art. 2, Sch. Pt. II(w)(z)(viii)

F222Words in s. 52(5)(d) substituted (9.6.1997) by 1997 c. 32, s. 43, Sch. 7 para. 17(5)(c); S.I. 1997/1427, art. 2(k)(n)(iii)

F223S. 52(5A)(6) substituted for s. 52(6) (9.6.1997) by 1997 c. 32, s. 43, Sch. 7 para. 17(6); S.I. 1997/1427, art. 2(k)(n)(iii)

F224Words in s. 52(5A) substituted (17.8.2001 for certain purposes and otherwise 1.12.2001) by S.I. 2001/2617, arts. 2(a)(b), 8, 13(1), Sch. 3 para. 150(c)(i) (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

F228Word in s. 52(6) substituted (17.8.2001 for certain purposes and otherwise 1.12.2001) by S.I. 2001/2617, arts. 2(a)(b), 8, 13(1), Sch. 3 para. 150(d)(ii) (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

[F23752B Entry of premises under warrant under section 176 of the Financial Services and Markets Act 2000.E+W+S+N.I.

(1)A justice of the peace may issue a warrant under section 176 of the Financial Services and Markets Act 2000 if satisfied on information on oath given by or on behalf of the [F238FCA or the PRA] , an authorised officer within the meaning of section 52(5A) above, or a person appointed as an investigator under section 55(1) below or as an inspector under section 56(1) below, that there are reasonable grounds for believing that the first or second set of conditions below is satisfied.

(2)The first set of conditions is that—

(a)there are on the premises specified in the warrant information, documents or other material in relation to which a requirement has been imposed on any person under section 52(5), (5A) or (6) above or section 57(3) below, or which it is the duty of any person to produce under section 55(3) or 57(2) below, and

(b)that person has failed (wholly or in part) to comply with the requirement or, having been requested to do so, has failed (wholly or in part) to comply with that duty.

(3)The second set of conditions is that—

(a)there are on the premises specified in the warrant information, documents or other material in relation to which a requirement could be imposed on any person under section 52(5), (5A) or (6) above or section 57(3) below, or which any person could be requested to produce in compliance with the duty imposed on them by section 55(3) or 57(2) below, and

(b)if such a requirement were imposed, or such a request made,—

(i)it would not be complied with, or

(ii)any information, documents or other material to which it related would be removed, tampered with or destroyed.]

Annotations:

Amendments (Textual)

F237S. 52B substituted (17.8.2001 for certain purposes and otherwise 1.12.2001) for s. 52A by S.I. 2001/2617, arts. 2(a)(b), 8, 13(1), Sch. 3 para. 151 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

[F23953A Disclosure of information.E+W+S+N.I.

(1)For the purposes of sections 348 to 353 of the Financial Services and Markets Act 2000 (restrictions on disclosure of confidential information)—

(a)information to which this section applies is to be treated as confidential information; and

(b)in relation to such information, each of the following is a primary recipient—

[F240(i)the FCA;

(ia)the PRA;]

(ii)any person who is or has been employed by the [F241FCA or the PRA] ; and

(iii)any person appointed by the [F241FCA or the PRA] to carry out functions under this Act.

(2)This section applies to information which—

(a)relates to—

(i)the business or other affairs of a building society or other body, or its or their plans for future development; or

(ii)any person who is or has been, or has been appointed (or, in the case of a director, nominated or proposed as), an officer of a building society or other body;

(b)was received by a primary recipient (within the meaning of subsection (1)(b)) for the purposes of, or in the discharge of, any functions of the [F242FCA or the PRA] under any provision made by or under this Act; and

(c)is not excluded information by virtue of subsection (4).

(3)It is immaterial for the purposes of subsection (2) whether or not the information was received—

(a)by virtue of a requirement to provide it imposed by or under this Act;

(b)for other purposes as well as purposes mentioned in that subsection.

(4)Information is excluded information if—

(a)it has been made available to the public by virtue of being disclosed in any circumstances in which, or for any purposes for which, disclosure is not precluded by section 348 of the Financial Services and Markets Act 2000; or

(b)it is in the form of a summary or collection of information so framed that it is not possible to ascertain from it information relating to any particular person.]

Annotations:

Amendments (Textual)

F239S. 53A substituted (17.8.2001 for certain purposes and otherwise 1.12.2001) for s. 53 by S.I. 2001/2617, arts. 2(a)(b), 8, 13(1), Sch. 3 para. 152 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

F240S. 53A(1)(b)(i)(ia) substituted for s. 53A(1)(b)(i) (1.4.2013) by The Financial Services Act 2012 (Mutual Societies) Order 2013 (S.I. 2013/496), art. 1(1), Sch. 8 para. 18(2) (with Sch. 12)

Modifications etc. (not altering text)

C86S. 53A(1) restricted (temp. from 3.9.2001 until 30.11.2001) by S.I. 2001/2966, art. 6

54Information disclosed to [F243FCA or PRA] from other sources.E+W+S+N.I.

(1)If and in so far as it appears to the Secretary of State that the disclosure of any information will enable the [F244FCA or the PRA] better to discharge its functions under this Act (but not otherwise),—

(a)information obtained by the Secretary of State under section 447 or 448 of the M13Companies Act 1985 (inspection of companies’ books and papers) may be disclosed to the [F244FCA or the PRA] or further disclosed, notwithstanding the provision as to security of information contained in section 449 or that Act; and

(b)where the information is contained in a report made by inspectors appointed under section 431, 432 [F245or 442] of the Companies Act 1985 (investigation of affairs or ownership of companies and certain other bodies corporate) the Secretary of State may furnish a copy of the report to the [F244FCA or the PRA] .

F246(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F247(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F247(3A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F247(3B). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F247(3C). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F248(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F248(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F247(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Inspections, etcE+W+S+N.I.

55Investigations on behalf of [F249FCA or PRA] .E+W+S+N.I.

(1)If it appears to [F250the FCA or the PRA] desirable to do so for the purposes of its supervisory functions in relation to a building society, [F251it] may appoint one or more competent persons to investigate and report to it on the state and conduct of the business of the society concerned, or any particular aspect of that business.

(2)If a person appointed under subsection (1) above thinks it necessary for the purposes of his investigation, he may also investigate the business of any body corporate which is or has at any relevant time been [F252a connected undertaking of the building society under investigation]

(3)It shall be the duty of every officer, employee and agent of a building society or other body which is under investigation—

(a)to produce to the persons appointed under subsection (1) above all records, books and papers relating to the body concerned which are in his custody or power; and

(b)to attend before those persons when required to do so; and

(c)otherwise to give to those persons all assistance in connection with the investigation which he is reasonably able to give.

(4)Any officer, employee or agent of a building society or other body who—

(a)without reasonable excuse fails to produce any records, books or papers which it is his duty to produce under subsection (3) above, or

(b)without reasonable excuse fails to attend before the person appointed under subsection (1) above when required to do so, or

(c)without reasonable excuse fails to answer any question which is put to him by persons so appointed with respect to any building society or other body corporate which is under investigation,

shall be liable on summary conviction to a fine not exceeding level 5 on the standard scale.

(5)Any officer, employee or agent of a building society or other body who knowingly or recklessly furnishes to any person appointed under subsection (1) above any information which is false or misleading in a material particular, shall be liable—

(a)on conviction on indictment to imprisonment for a term not exceeding two years or to a fine or both; and

(b)on summary conviction to a fine not exceeding the statutory maximum.

(6)In this section—

(a)agent”, in relation to a building society or other body whose business is under investigation, includes its bankers, its accountants and solictors and any persons, where they are not officers of the other body concerned, who are employed as its auditors;

(b)the purposes of its supervisory functions”, in relation to the [F253FCA or the PRA] , has the same meaning as in section 52; and

(c)any reference to an officer, employee or agent of a building society or other body includes a reference to a person who has been but no longer is an officer, employee or agent of that society or other body.

Annotations:

Amendments (Textual)

F252Words in s. 55(2) substituted for s. 55(2)(a)(b) (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 47(3), Sch. 7 para. 21; S.I. 1997/2668, art. 2, Sch. Pt. II(w)(z)(x)

Modifications etc. (not altering text)

C88S. 55 extended (1.1.2003) by 2000 c. 39, s. 2, Sch. 2 para. 13(1); S.I. 2002/2711, art. 2 (subject to arts. 3-5)

S. 55 extended (prosp.) by S.I. 2002/3152, arts. 1(2)(3), 4, Sch. 2 para. 13(1)

C90S. 55(6)(a) amended (E.W.) (1.1.1992) by S.I. 1991/2684, arts. 2(1), 4, Sch. 1

56 Inspections and special meetings: general.E+W+S+N.I.

(1)In the circumstances mentioned in subsection (2) below, the [F254FCA and the PRA]

(a)may appoint one or more competent inspectors to investigate and report on the affairs of a building society, or

(b)may call a special meeting of a building society to consider its affairs, or

(c)may (either on the same or on different occasions) both appoint an inspector or inspectors and call a special meeting for those purposes;

and, in the circumstances mentioned in subsection (3) below, the investigation or consideration may extend to the affairs of any body corporate which is or at any relevant time has been a [F255connected undertaking of] the building society.

[F256(1A)The FCA must consult the PRA before exercising the power in subsection (1).

(1B)The PRA must consult the FCA before exercising the power in subsection (1).]

(2)The powers conferred by subsection (1) above may be exercised either—

(a)on the application of the requisite number of members of the society, or

(b)where no such application is made but the [F257FCA or the PRA (as the case may be)] is of opinion that an investigation should be held into the affairs of the society, or that the affairs of the society call for consideration by a meeting of its members.

(3)The powers conferred by subsection (1) above may be exercised in relation also to a [F258connected undertaking of] a building society either—

(a)where the application referred to in subsection (2)(a) above so requests, or

(b)where the application contains no such request but the [F257FCA or the PRA (as the case may be)] is of the opinion that it is necessary for the purposes of the investigation into or consideration of the affairs of the building society that the affairs of the [F259connected undertaking] should also be investigated or considered.

(4)Where the inspectors are of the opinion mentioned in subsection (3)(b) above in relation to a [F258connected undertaking of] a building society they may, with the consent of the [F260body exercising its powers under subsection (1)] , extend their investigation to the affairs of the [F259connected undertaking] and make their report accordingly.

(5)For the purposes of subsections (1) to (3) above the requisite number of members—

(a)in the case of a building society having more than 1,000 members, is 100, and

(b)in the case of any other building society, is one-tenth of the whole number of members of the society.

(6)The following provisions shall have effect where an application is made as mentioned in subsection (2)(a) above, that is to say—

(a)the application shall be supported by such evidence as the [F261body to which the application was made] may require for the purpose of showing that the applicants have good reason for requiring an investigation by inspectors or consideration by a special meeting, as the case may be, and that the applicants are not actuated by malicious, frivolous, vexatious or scandalous motives in their application;

(b)such notice of the application shall be given to the building society and, in a case where the investigation is to extend to its affairs also, to the society’s [F262connected undertaking], as the [F261body to which the application was made] may direct;

(c)the [F261body to which the application was made] shall require the applicants to give security for payment of the costs of the investigation or meeting before the inspector is appointed or the meeting is called subject, in the case of the costs of an investigation, to an amount not exceeding the corresponding Companies Act limit; and

(d)as regards the expenses of or incidental to the investigation or meeting—

(i)in the case of an investigation (in whichever way instituted), the expenses shall be defrayed in the first instance by the [F261body to which the application was made] but without prejudice to its rights to contribution under section 57(10);

(ii)in the case of a meeting, the expenses shall be defrayed by the applicants, or out of the funds of the society, or by the members or officers or former members or officers of the society, in such proportions as the [F261body to which the application was made] may direct.

(7)[F263Before the FCA or the PRA exercises] its powers under subsection (1) above in a case falling within subsection (2)(b) above, [F264it] shall inform the building society of the action which it proposes to take and the grounds for that action, and the society shall, within 14 days of receiving the information, be entitled to give [F265the body exercising its powers under subsection (1)] an explanatory statement in writing by way of a reply.

(8)Where the [F266FCA or the PRA] proposes to exercise its powers under subsection (1) above in a case falling within subsection (3)(b) above, subsection (7) above shall apply in relation to the [F262connected undertaking] as it applies in relation to the society.

(9)Inspectors appointed under this section shall, in addition to having the powers which are necessary for or incidental to the discharge of their functions under this section, have the powers specified in section 57.

(10)Where a special meeting is called under this section—

(a)the [F267body exercising its powers under subsection (1)] may direct at what time and place the meeting is to be held, and what matters are to be discussed and determined at the meeting, and may give such other directions as it thinks fit with respect to the calling, holding and conduct of the meeting;

(b)the [F267body exercising its powers under subsection (1)] may appoint a person to be chairman at the meeting or, in default of such an appointment, the meeting may appoint its own chairman;

(c)the meeting shall have all the powers of a meeting called according to the rules of the building society;

and the provisions of this subsection and any direction given under it shall have effect notwithstanding anything in the rules of the building society.

(11)In this section “the corresponding Companies Act limit”, in relation to security for the payment of the costs of an investigation, is £5,000 or such other sum as is specified for the time being in an order under section 431(4) of the M14Companies Act 1985 for the purposes of that section.

Annotations:

Amendments (Textual)

F255Words in s. 56(1) substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 47(3), Sch. 7 para. 22(1); S.I. 1997/2668, art. 2, Sch. Pt. II(w)(z)(xi)

F258Words in s. 56(3)(4) substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 47(3), Sch. 7 para. 22(2)(a); S.I. 1997/2668, art. 2, Sch. Pt. II(w)(z)(xi)

F259Words in s. 56(3)(4) substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 47(3), Sch. 7 para. 22(2)(b); S.I. 1997/2668, art. 2, Sch. Pt. II(w)(z)(xi)

F262Words in s. 56(6)(8) substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 47(3), Sch. 7 para. 22(3); S.I. 1997/2668, art. 2, Sch. Pt. II(w)(z)(xi)

Marginal Citations

57 Inspections: supplementary provisions.E+W+S+N.I.

(1)In this section—

and references to officers or to agents include past, as well as present, officers or agents (as the case may be) and “agents”, in relation to a building society or any [F268connected undertaking of] a building society, includes its bankers, its accountants and solicitors and its auditors.

(2)When the inspectors have been appointed it is the duty of all officers and agents of the body under investigation—

(a)to produce to the inspectors all documents and material of or relating to the body under investigation which are in their custody or power;

(b)to attend before the inspectors when required to do so, and

(c)otherwise to give the inspectors all assistance in connection with the investigation which they are reasonably able to give.

(3)If the inspectors consider that a person other than an officer or agent of the body under investigation is or may be in possession of information concerning its affairs, they may require that person to produce to them any documents or material in his custody or power relating to the body under investigation, to attend before them and otherwise to give them all assistance in connection with the investigation which he is reasonably able to give; and it is that person’s duty to comply with the requirement.

(4)The inspectors may examine on oath the officers and agents of the body under investigation, and any such person as is mentioned in subsection (3) above, in relation to the affairs of the body under investigation, and may administer an oath accordingly.

(5)An answer given by a person to a question put to him under the foregoing provisions of this section may be used in evidence against him.

[F270(5A)However, in criminal proceedings in which that person is charged with an offence to which this subsection applies—

(a)no evidence relating to the answer may be adduced, and

(b)no question relating to it may be asked,

by or on behalf of the prosecution, unless evidence relating to it is adduced, or a question relating to it is asked, in the proceedings by or on behalf of that person.

(5B)Subsection (5A) above applies to any offence other than—

(a)an offence under section 2 or 5 of the Perjury Act 1911 (false statements made on oath otherwise than in judicial proceedings or made otherwise than on oath);

(b)an offence under section 44(1) or (2) of the Criminal Law (Consolidation) (Scotland) Act 1995 (false statements made on oath or otherwise than on oath); or

(c)an offence under Article 7 or 10 of the M15Perjury (Northern Ireland) Order 1979 (false statements made on oath otherwise than in judicial proceedings or made otherwise than on oath).]

(6)If an officer or agent of the body under investigation or any such person as is mentioned in subsection (3) above—

(a)refuses to produce any document or material which it is his duty under this section to produce, or

(b)refuses to attend before the inspectors when required to do so, or

(c)refuses to answer any question put to him by the inspectors with respect to the affairs of the body under investigation,

the inspectors may certify the refusal in writing to the High Court; and the court may thereupon inquire into the case and, after hearing any witnesses who may be produced against or on behalf of the alleged offender and after hearing any statement which may be offered in defence, may punish the offender in like manner as if he had been guilty of contempt of the court.

(7)The inspectors may, and if so directed by the [F271body which appointed the inspectors] shall, make interim reports to the [F271body which appointed the inspectors] , but they may at any time in the course of the investigation, without making an interim report, inform the [F271body which appointed the inspectors] of matters coming to their knowledge as a result of the investigation tending to show that an offence has been committed.

(8)The [F272body which appointed the inspectors] may, if it thinks fit—

(a)send a copy of any report made by the inspectors to the body whose affairs are or were the subject of the investigation;

(b)furnish a copy of any such report on request F273. . . to—

(i)any member of the body whose affairs are or were the subject of the investigation;

(ii)the auditors of that body;

(iii)any person whose conduct is referred to in the report;

(iv)any other person whose financial interests appear to the [F272body which appointed the inspectors] to be affected by matters dealt with in the report, whether as creditor or otherwise; and

(c)cause the report to be printed and published.

[F274(8A)The [F275body which appointed the inspectors] may charge a reasonable fee for furnishing to any person a copy of a report under subsection (8)(b) above.]

(9)A copy of a report of inspectors appointed under section 56 to hold an investigation under that section, certified by the [F276body which appointed the inspectors] to be a true copy, is admissable in any legal proceedings as evidence of the opinion of the inspectors in relation to any matter contained in the report; and a document purporting to be such a certificate shall be received in evidence and be deemed to be such a certificate, unless the contrary is proved.

(10)The [F277body which appointed the inspectors] shall be entitled to be repaid the expenses of the investigation defrayed by it under section 56(6)(d) as provided in the following paragraphs, that is to say—

(a)by the applicants for the investigation, to such extent (if any) as the [F277body which appointed the inspectors] may direct;

(c)by any person convicted of an offence in proceedings instituted as a result of the investigation, to such extent (if any) as the court by or before which he was convicted may order;

and a person liable under any one of paragraphs (a) to (c) above is entitled to contribution from any other person liable under the same paragraph, according to the amount of their respective liabilities under it.