Search Legislation

Financial Services (Banking Reform) Act 2013

Status:

This is the original version (as it was originally enacted).

Offence

36Offence relating to a decision causing a financial institution to fail

(1)A person (“S”) commits an offence if—

(a)at a time when S is a senior manager in relation to a financial institution (“F”), S—

(i)takes, or agrees to the taking of, a decision by or on behalf of F as to the way in which the business of a group institution is to be carried on, or

(ii)fails to take steps that S could take to prevent such a decision being taken,

(b)at the time of the decision, S is aware of a risk that the implementation of the decision may cause the failure of the group institution,

(c)in all the circumstances, S’s conduct in relation to the taking of the decision falls far below what could reasonably be expected of a person in S’s position, and

(d)the implementation of the decision causes the failure of the group institution.

(2)A “group institution”, in relation to a financial institution (“F”), means F or any other financial institution that is a member of F’s group for the purpose of FSMA 2000 (see section 421 of that Act).

(3)Subsections (1) and (2) are to be read with the interpretative provisions in section 37.

(4)A person guilty of an offence under this section is liable—

(a)on summary conviction—

(i)in England and Wales, to imprisonment for a term not exceeding 12 months (or 6 months, if the offence was committed before the commencement of section 154(1) of the Criminal Justice Act 2003) or a fine, or both;

(ii)in Scotland, to imprisonment for a term not exceeding 12 months or a fine not exceeding the statutory maximum, or both;

(iii)in Northern Ireland, to imprisonment for a term not exceeding 6 months or a fine not exceeding the statutory maximum, or both;

(b)on conviction on indictment, to imprisonment for a term not exceeding 7 years or a fine, or both.

37Section 36: interpretation

(1)This section has effect for the interpretation of section 36.

(2)“Financial institution” means a UK institution which—

(a)meets condition A or B, and

(b)is not an insurer or a credit union.

(3)Condition A is that it has permission under Part 4A of FSMA 2000 to carry on the regulated activity of accepting deposits.

(4)Condition B is that—

(a)it is for the purposes of FSMA 2000 an investment firm (see section 424A of that Act),

(b)it has permission under Part 4A of that Act to carry on the regulated activity of dealing in investments as principal, and

(c)when carried on by it, that activity is a PRA-regulated activity.

(5)In subsection (2)

(a)“UK institution” means an institution which is incorporated in, or formed under the law of any part of, the United Kingdom;

(b)“insurer” means an institution which is authorised under FSMA 2000 to carry on the regulated activity of effecting or carrying out contracts of insurance as principal;

(c)“credit union” means a credit union as defined by section 31 of the Credit Unions Act 1979 or a credit union as defined by Article 2(2) of the Credit Unions (Northern Ireland) Order 1985.

(6)Subsections (3), (4) and (5)(b) are to be read in accordance with sections 22 and 22A of FSMA 2000, taken with Schedule 2 to that Act and any order under section 22.

(7)A person is a “senior manager” in relation to a financial institution if, under an arrangement entered into by the institution, or by a contractor of the institution, in relation to the carrying on by the institution of a regulated activity, the person performs a senior management function.

(8)A “senior management function” is a function designated as such—

(a)by the FCA under subsection (6A) of section 59 of FSMA 2000 (approval for particular arrangements), or

(b)by the PRA under subsection (6B) of that section.

(9)A financial institution (“F”) is to be regarded as failing where—

(a)F enters insolvency,

(b)any of the stabilisation options in Part 1 of the Banking Act 2009 is achieved in relation to F, or

(c)F is taken for the purposes of the Financial Services Compensation Scheme to be unable, or likely to be unable, to satisfy claims against F.

(10)In subsection (9)(a) “insolvency” includes—

(a)bankruptcy,

(b)liquidation,

(c)bank insolvency,

(d)administration,

(e)bank administration,

(f)receivership,

(g)a composition between F and F’s creditors, and

(h)a scheme of arrangement of F’s affairs.

38Institution of proceedings

(1)In this section “an offence” means an offence under section 36.

(2)Proceedings for an offence may be instituted in England and Wales only—

(a)by the FCA, the PRA or the Secretary of State, or

(b)by or with the consent of the Director of Public Prosecutions.

(3)Proceedings for an offence may be instituted in Northern Ireland only—

(a)by the FCA, the PRA or the Secretary of State, or

(b)by or with the consent of the Director of Public Prosecutions for Northern Ireland.

(4)In exercising its power to institute proceedings for an offence, the FCA or the PRA must comply with any conditions or restrictions imposed in writing by the Treasury.

(5)Conditions or restrictions may be imposed under subsection (4) in relation to—

(a)proceedings generally, or

(b)such proceedings, or categories of proceedings, as the Treasury may direct.

Back to top

Options/Help

Print Options

You have chosen to open The Whole Act

The Whole Act you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open The Whole Act as a PDF

The Whole Act you have selected contains over 200 provisions and might take some time to download.

Would you like to continue?

You have chosen to open The Whole Act without Schedules

The Whole Act without Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open The Whole Act without Schedules as a PDF

The Whole Act without Schedules you have selected contains over 200 provisions and might take some time to download.

Would you like to continue?

You have chosen to open the Whole Act

The Whole Act you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open the Whole Act without Schedules

The Whole Act without Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open Schedules only

The Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

Close

Legislation is available in different versions:

Latest Available (revised):The latest available updated version of the legislation incorporating changes made by subsequent legislation and applied by our editorial team. Changes we have not yet applied to the text, can be found in the ‘Changes to Legislation’ area.

Original (As Enacted or Made):The original version of the legislation as it stood when it was enacted or made. No changes have been applied to the text.

Close

See additional information alongside the content

Show Explanatory Notes for Sections: Displays relevant parts of the explanatory notes interweaved within the legislation content.

Close

Opening Options

Different options to open legislation in order to view more content on screen at once

Close

Explanatory Notes

Text created by the government department responsible for the subject matter of the Act to explain what the Act sets out to achieve and to make the Act accessible to readers who are not legally qualified. Explanatory Notes were introduced in 1999 and accompany all Public Acts except Appropriation, Consolidated Fund, Finance and Consolidation Acts.

Close

More Resources

Access essential accompanying documents and information for this legislation item from this tab. Dependent on the legislation item being viewed this may include:

  • the original print PDF of the as enacted version that was used for the print copy
  • lists of changes made by and/or affecting this legislation item
  • confers power and blanket amendment details
  • all formats of all associated documents
  • correction slips
  • links to related legislation and further information resources
Close

More Resources

Use this menu to access essential accompanying documents and information for this legislation item. Dependent on the legislation item being viewed this may include:

  • the original print PDF of the as enacted version that was used for the print copy
  • correction slips

Click 'View More' or select 'More Resources' tab for additional information including:

  • lists of changes made by and/or affecting this legislation item
  • confers power and blanket amendment details
  • all formats of all associated documents
  • links to related legislation and further information resources