Banking Act 2009

171 Special resolution regime

(1) After section 214A of the Financial Services and Markets Act 2000 (contingency funding – inserted by section 170 above) insert—

“214B Contribution to costs of special resolution regime

(1) This section applies where—

(a) a stabilisation power under Part 1 of the Banking Act 2009 has been exercised in respect of a bank, building society or credit union (within the meaning of that Part), and

(b) the Treasury think that the bank, building society or credit union was, or but for the exercise of the stabilisation power would have become, unable to satisfy claims against it.

(2) Where this section applies—

(a) the Treasury may require the scheme manager to make payments in connection with the exercise of the stabilisation power, and

(b) payments shall be treated as expenditure under the scheme for all purposes (including levies, contingency funds and borrowing).

(3) The Treasury shall make regulations—

(a) specifying what expenses the scheme manager may be required to incur under subsection (2),

(b) providing for independent verification of the nature and amount of expenses incurred in connection with the exercise of the stabilisation power (which may include provision about appointment and payment of an auditor), and

(c) providing for the method by which amounts to be paid are to be determined.

(4) The regulations must ensure that payments required do not exceed the amount of compensation that would have been payable under the scheme if the stabilisation power had not been exercised and the bank had been unable to satisfy claims against it; and for that purpose the amount of compensation that would have been payable does not include—

(a) amounts that would have been likely, at the time when the stabilisation power was exercised, to be recovered by the scheme from the bank, or

(b) any compensation actually paid to an eligible depositor of the bank.

(5) The regulations must provide for the appointment of an independent valuer (who may be the person appointed as valuer under section 54 of the Banking Act 2009 in respect of the exercise of the stabilisation power) to calculate the amounts referred to in subsection (4)(a); and the regulations—

(a) must provide for the valuer to be appointed by the Treasury or by a person designated by the Treasury,

(b) must include provision enabling the valuer to reconsider a decision,

(c) must provide a right of appeal to a court or tribunal,

(d) must provide for payment of the valuer,

(e) may replicate or apply a provision of section 54 or 55, and

(f) may apply or include any provision that is or could be made under that section.

(6) Payments required to be made by the scheme by virtue of section 61 of the Banking Act 2009 (special resolution regime: compensation) shall be treated for the purposes of subsection (4) as if required to be made under this section.

(7) The regulations may include provision for payments (including payments under those provisions of the Banking Act 2009) to be made—

(a) before verification in accordance with subsection (3)(b), and

(b) before the calculation of the limit imposed by subsection (4), by reference to estimates of that limit and subject to any necessary later adjustment.

(8) The regulations may include provision—

(a) about timing;

(b) about procedures to be followed;

(c) for discretionary functions to be exercised by a specified body or by persons of a specified class;

(d) about the resolution of disputes (which may include provision conferring jurisdiction on a court or tribunal).

(9) The compensation scheme may include provision about payments under and levies in connection with this section, provided that it is not inconsistent with this section or regulations under it.”

(2) At the end of section 223(3) of the Financial Services and Markets Act 2000 (management expenses) add “;

(c) under section 214B.”.