The Dunfermline Building Society Compensation Scheme, Resolution Fund and Third Party Compensation Order 2009

SCHEDULE 1 The Dunfermline Resolution Fund

PART 1 Arrangements for the Dunfermline Resolution Account

The Dunfermline Resolution Account

1.—(1) The Dunfermline Resolution Account shall be held at the Bank of England and must be an interest bearing account.

(2) The Dunfermline Resolution Account must be held in the name of an independent person appointed by the Treasury (“the Account Holder”).

Annual report and accounts

2.—(1) The Account Holder must prepare accounts in relation to the operation of the Dunfermline Resolution Account—

(a) in such form, and in such manner, as the Treasury specify, and

(b) as soon as is reasonably practicable after the end of each financial year in which the Dunfermline Resolution Account is open.

(2) The accounts must set out the details of each payment from the Dunfermline Resolution Account.

(3) The Comptroller and Auditor General must examine, certify and report on the accounts.

(4) The Account Holder must send a copy of the accounts to the Treasury as soon as is reasonably practicable.

(5) The Treasury shall lay a copy of the accounts before each House of Parliament.

PART 2 Arrangements for making payments into the Dunfermline Resolution Account

Payments into the resolution fund

3.—(1) The Bank of England must pay into the Dunfermline Resolution Account—

(a) any distribution made to the Bank of England—

(i) by the Bridge Bank (whether made following the disposal of some or all of the business of the Bridge Bank or otherwise);

(ii) by a liquidator appointed to wind up the Bridge Bank;

(b) any consideration received for shares in the Bridge Bank.

(2) The Bank of England may require the Bridge Bank, a liquidator of the Bridge Bank or a purchaser of the shares in the Bridge Bank to make payment of amounts under paragraph (1) direct to the Dunfermline Resolution Account, and any such payment shall constitute a good discharge to the Bridge Bank, liquidator of the Bridge Bank or purchaser as the case may be.

PART 3 Arrangements for making payments from, and entitlements to, the Dunfermline Resolution Account

Payments from the resolution fund

4.—(1) The Account Holder may only make payments from the Dunfermline Resolution Account in accordance with a direction issued by the Treasury.

(2) The Treasury may direct the Account Holder to make a payment to—

(a) Dunfermline;

(b) the Treasury;

(c) the Bank of England.

(3) The Treasury must not direct the Account Holder to make a payment from the Dunfermline Resolution Account if making the payment would cause the balance of the Dunfermline Resolution Account to fall below zero.

(4) A direction under sub-paragraph (2) must be in writing and the Treasury must send a copy of the direction to—

(a) Dunfermline, and

(b) the Bank of England.

Payments to the Treasury and the Bank of England

5.—(1) The Treasury may direct the Account Holder to make a payment to the Treasury or the Bank of England only where—

(a) the payment is to be made for the purposes of reimbursing the Treasury or the Bank of England (as the case may be) for any costs (including liability for tax) incurred in relation to, or in consequence of, any of the following—

(i) the transfer of the Bridge Bank business;

(ii) the incorporation, authorisation and operation of the Bridge Bank;

(iii) the sale of the Bridge Bank, or some or all of the property, rights or liabilities of the Bridge Bank, to a purchaser;

(iv) the winding up of the Bridge Bank;

(b) the independent valuer has certified, in accordance with paragraph 7, that the costs were properly and reasonably incurred by the Bank of England or the Treasury (as the case may be); and

(c) the direction is made within 12 months of the date of—

(i) the completion of the winding up of the Bridge Bank; or

(ii) if earlier, the sale of shares in the Bridge Bank.

(2) In the event that the Bank of England (as sole member of the Bridge Bank) passes a resolution to wind up the Bridge Bank, the Bank of England must, as soon as is reasonably practicable after the passing of the resolution, send a copy of the resolution to—

(a) Dunfermline, and

(b) the Treasury.

Entitlement to the resolution fund: Dunfermline

6.—(1) The Treasury must notify the Account Holder when no further (if any) directions are to be made under paragraph (4)(2)(b) or (c) (as the case may be).

(2) As soon as is reasonably practicable after the notification specified in sub-paragraph (1) has been made the Treasury must direct the Account Holder to pay to Dunfermline any moneys remaining in the Dunfermline Resolution Account.

Certification of costs

7.—(1) Where the Treasury consider that any costs specified in paragraph 5(1)(a) may be paid from the Dunfermline Resolution Account, the Treasury must supply to the independent valuer—

(a) any invoices in relation to the costs,

(b) an explanation of the reasons for the costs, and

(c) any other information the independent valuer reasonably requests for the purpose of assessing whether the costs were reasonably and properly incurred.

(2) Within 30 days of receipt of the information specified in sub-paragraph (1), the independent valuer must—

(a) inform the Treasury by notice in writing whether, in the independent valuer’s opinion, the costs were reasonably and properly incurred for the purposes specified in paragraph 5(1)(a); or

(b) request further information from the Treasury or the Bank of England (as the case may be).

(3) In the event the independent valuer determines that the costs, or a proportion of the costs, were not properly or reasonably incurred, within 14 days of the receipt of the notification, the Treasury may require, by notice in writing, the independent valuer to reconsider his or her determination.

(4) Where the independent valuer is required to reconsider his or her determination, the independent valuer must issue a revised notice within 14 days of receipt of the notice specified in sub-paragraph (3).

(5) Where the independent valuer determines that only a proportion of the costs were properly and reasonably incurred for the purposes specified in paragraph 5(1)(a), the Treasury may issue a direction, under paragraph 4(2)(b) or (c) (as the case may be), only in relation to that proportion of the costs.