The Individual Savings Account (Amendment) (No. 2) Regulations 2012

1A

In these Regulations—

a

a “bulk transfer of accounts” occurs where two or more accounts are transferred by an account manager (“the transferor”) to another account manager (“the transferee”)—

i

pursuant to an agreement made between the transferor and transferee, and

ii

the transfers are not made pursuant to requests made by persons who are the account investor or registered contact in relation to the accounts transferred;

b

a “group transfer of accounts” occurs where a bulk transfer of accounts is made between account managers that are members of the same group of companies when the transfer occurs;

c

two companies are members of the same group of companies if—

i

one is a 75% subsidiary of the other, or

ii

both are 75% subsidiaries of a third company.

Special provision in respect of Looked After Children2F

1

A child is a Looked After Child where, after 2nd January 2011, there is a continuous period of at least 12 months during which paragraph (2) applies in relation to the child.

2

This paragraph applies in relation to a child where the child is—

a

looked after by a local authority within the meaning of section 22(1) of the Children Act 1989 (general duty of local authority in relation to children looked after by them)6;

b

provided with accommodation by an authority by virtue of article 21 of the Children (Northern Ireland) Order 1995 (provision of accommodation for children: general)7;

c

the subject of an order made under article 50(1)(a) of the Children (Northern Ireland) Order 1995 (care orders and supervision orders);

d

provided with accommodation by a local authority by virtue of section 25 of the Children (Scotland) Act 1995 (provision of accommodation for children, etc.)8;

e

the subject of a supervision requirement made under section 70(1) of the Children (Scotland) Act 1995 (disposal of referral by children’s hearing: supervision requirements, including residence in secure accommodation);

f

the subject of a permanence order made under section 80 of the Adoption and Children (Scotland) Act 20079 (permanence orders); or

g

treated as if the child were subject to an order described in sub-paragraph (f) by virtue of article 13(1) of the Adoption and Children (Scotland) Act 2007 (Commencement No. 4, Transitional and Savings) Order 200910.

3

In relation to a Looked After Child, regulations 2C(4)(b) (meaning of “registered contact” etc.) and 12A(4)(b)(i) (conditions for application to open an account that is a junior ISA account) must be construed as if the Share Foundation has parental responsibility in respect of that child.

4

In relation to an application to assume responsibility for the management of a junior ISA account by the Share Foundation, regulation 2C(7)(c) must be construed as requiring a declaration that—

a

the applicant is the Share Foundation;

b

the application is in relation to a Looked After Child; and

c

the Share Foundation is to be the registered contact for the account.

5

Where an application to assume responsibility for the management of a junior ISA account is made in relation to which the registered contact is the Share Foundation, regulation 2C(9)(a) must be construed as referring only to sub-paragraphs (e) and (g) of paragraph (10).

6

Where the registered contact in relation to a junior ISA account is the Share Foundation, any reference in these Regulations to the residence of the registered contact must be construed as meaning a reference to the registered offices of the Share Foundation.

7

In this regulation “the Share Foundation” means the company limited by guarantee (number 4500923) and charity registered with the Charity Commission of England and Wales (number 1108068) as “The Share Foundation”.

Subscriptions disregarded for the purposes of the subscription limits in regulations 4ZA and 4ZB5D

1

A subscription to an account made in accordance with this regulation must be disregarded for the purposes of the subscription limits in regulations 4ZA (subscriptions to an account other than a junior ISA account) and 4ZB (subscriptions to a junior ISA account).

2

A subscription to an account held by an account investor is made in accordance with this regulation if—

a

the subscription is—

i

a defaulted cash account subscription;

ii

a defaulted investment subscription; or

iii

permitted in accordance with regulation 5DE; and

b

the account manager of the account to which the subscription is made is provided with the information specified in regulation 5DF as relevant to the subscription.

Defaulted cash account subscription5DA

A subscription is a defaulted cash account subscription if—

a

it is made to an account (which may be a stocks and shares account or a cash account) held by an account investor who held a cash account (“defaulted cash account”) in respect of which a default event occurred no more than 180 days before the subscription is made; and

b

it does not exceed the amount held in the defaulted cash account immediately before the default event occurred (including interest accrued but not paid at that time).

Defaulted investment subscription5DB

A subscription is a defaulted investment subscription if—

a

it is made to a stocks and shares account held by the account investor who held the account in respect of which a defaulted investment payment has been made no more than 180 days before the subscription is made; and

b

it does not exceed the amount of the defaulted investment payment.

Default event in respect of cash account5DC

A default event in respect of a cash account held by an account investor occurs where the account manager of that account is determined to be unable or likely to be unable to satisfy claims against the account manager in accordance with the rules of the scheme for compensation established pursuant to section 213 of the Financial Services and Markets Act 200011.

Defaulted investment payment5DD

A defaulted investment payment occurs where a payment is made (otherwise than by accretion to a stocks and shares account) by way of compensation in respect of the poor performance, loss, depreciation or risk of depreciation of an investment described in regulation 7 (“defaulted investment”) held in a stocks and shares account (whether or not the defaulted investment continues to be held in the account at the time of the payment).

Additional permitted subscription to a junior ISA account5DE

A subscription is permitted by this regulation if it is made to a junior ISA account that is a cash account but would have been a defaulted investment subscription if it had been made to a stocks and shares account.

Information required by regulation 5D5DF

1

The information specified by this regulation is—

a

in relation to a defaulted cash account subscription—

i

the amount held in the defaulted cash account to which the subscription relates immediately before the default event occurred (including interest accrued but not paid at that time);

ii

the current year’s subscription made to that account; and

iii

the date on which the first subscription (if any) was made to that account, in the year in which the defaulted cash subscription is made;

b

in relation to a defaulted investment subscription or a subscription permitted by regulation 5DE—

i

evidence of the amount of the defaulted investment payment to which the subscription relates and the date it was paid;

ii

details of the defaulted investment in respect of which the defaulted investment payment was made;

iii

the full name and address (including postcode) of the account manager of the stocks and shares account in which the defaulted investment was held;

iv

the full name and address (including postcode) of the maker of the defaulted investment payment.

2

In this regulation—

• “current year’s subscription” in relation to a defaulted cash account means—

  1. a

     subscriptions made to the account in the year in which the defaulted cash account subscription is made, but before the default event; and

  2. b

     subscriptions made to any other account held by the account investor in the year in which the defaulted cash account subscription is made and transferred to the account before the subscription is made.

Single regulation 5D subscription5DG

Only one defaulted cash account subscription, defaulted investment subscription or subscription permitted by regulation 5DE may be made in respect of a defaulted cash account or a defaulted investment payment as the case may be even if the subscription made is an amount less than that which could have been made by way of such subscription in accordance with regulation 5D.

Default event or default investment payment occurring in the period beginning on 6th April 2011 and ending on 7th August 20125DH

Anything occurring in the period commencing on 6th April 2011 and ending on 7th August 2012 that, if it had occurred after that period, would have been—

i

a default event in respect of a cash account within regulation 5DC, or

ii

a defaulted investment payment within regulation 5DD,

shall be treated as occurring on 8th August 2012 for the purposes of regulations 5D to 5DG.

Special provision in respect of Lehman Brothers investments and Keydata investments5DI

1

Regulations 5DJ to 5DM make special provision in respect of an investment that is a Lehman Brothers investment or a Keydata investment.

2

An investment is a Lehman Brothers investment if—

a

the investment was a qualifying investment held by an account investor in a stocks and shares account on 15th September 2008;

b

Lehman Brothers Holdings Inc. acted as the sole counterparty underwriting the investment on that day; and

c

the investment was not sold or otherwise disposed of on that day so as to cause it to cease to be a qualifying investment of the account on that day or any other day.

3

An investment is a Keydata investment if—

a

the investment was a qualifying investment held by an account investor in a stocks and shares account on 8th June 2009;

b

Keydata Investment Services Limited (Keydata) on that day—

i

was the account manager of the account, or

ii

administered the account for another account manager; and

c

the investment was not sold or otherwise disposed of on that day so as to cause it to cease to be a qualifying investment of the account on that day or any other day.

Special application of regulations 5DB, 5DD, 5DF and 5DH in respect of a Lehman Brothers investment5DJ

In respect of a Lehman Brothers investment—

a

regulation 5D shall apply as if after paragraph (2) there is added—

3

No defaulted investment subscription may be made in respect of a defaulted investment payment made or treated as made on 8th August 2012 other than a single defaulted investment payment treated as made by virtue of regulation 5DL(2).

b

regulation 5DB shall apply as if paragraph (b) provided that a defaulted investment subscription must not exceed the amount of the defaulted investment payment determined in accordance with regulation 5DL;

c

regulation 5DD is subject to regulation 5DL(2);

d

regulation 5DF(1)(b) shall apply as if the information specified by it is—

i

the information specified in paragraphs (i)-(iv) of that regulation;

ii

the value of the defaulted investment at the opening of trading on the London Stock Exchange on 15th September 2008;

iii

the date and amount of any earlier defaulted investment subscriptions in respect of the Lehman Brothers investment in question made before the making of the defaulted investment subscription;

iv

the name and address (including postcode) of the account manager to whom any subscription referred to in sub-paragraph (iii) of this paragraph was made;

e

regulation 5DH—

i

shall apply as if the period mentioned in that regulation were the period commencing on 16th September 2008 and ending on 7th August 2012;

ii

is subject to regulation 5DL(2).

Deemed defaulted investment payment in respect of a Lehman Brothers investment5DK

A defaulted investment payment shall be treated as made on 8th August 2012 in respect of a Lehman Brothers investment to the account investor who held it.

Specified amount for the purposes of a defaulted investment subscription in respect of a Lehman Brothers investment5DL

1

This regulation determines the amount which a defaulted investment subscription must not exceed for the purposes of regulation 5DB(b) in relation to a defaulted investment payment made or treated as made in respect of a Lehman Brothers investment.

2

Where one or more defaulted investment payments in respect of a Lehman Brothers investment are made on 8th August 2012 or are treated as made on that day by virtue of regulations 5DH or 5DK, they shall be treated as if they comprised a single defaulted investment payment made on that day of an amount which is the greater of—

a

the value of the investment at the opening of trading on the London Stock Exchange on 15th September 2008; or

b

the total of the payments made or treated as made by virtue of regulation 5DH on 8th August 2012.

3

Where a defaulted investment payment in respect of a Lehman Brothers investment is made after 8th August 2012, its amount for the purposes of regulation 5DB(b) is the greater of—

a

the amount determined by the formula $A-B$where—

i

“A” is the total of the single defaulted investment payment treated as made on 8th August 2012 in respect of the investment by virtue of paragraph (2) and all defaulted investment payments made in respect of it in the period commencing immediately after that day and ending immediately after the defaulted investment payment in question;

ii

“B” is the total of all defaulted investment subscriptions made in respect of the Lehman Brothers investment before the subscription in question; or

b

the amount determined by the formula $C-D$where—

i

“C” is the value of the investment at the opening of trading on the London Stock Exchange on 15th September 2008;

ii

“D” is the total of all defaulted investment subscriptions made in respect of the Lehman Brothers investment before the subscription in question.

Special application of regulations 5DJ to 5DL in respect of a Keydata investment5DM

In respect of a Keydata investment—

a

regulations 5DJ to 5DL shall apply as if—

i

a reference to a Lehman Brothers investment were a reference to a Keydata investment;

ii

the reference in regulation 5DJ(e)(i) to 16th September 2008 were a reference to 9th June 2009;

b

regulation 5DJ(d)(ii) shall apply as if the information it requires is the amount for which the Keydata investment in question was acquired;

c

regulation 5DL(2)(a) shall apply as if it referred to the amount of subscriptions made to the account (or any other account or personal equity plan) and other proceeds (including income) representing those subscriptions used to purchase the investment;

d

regulation 5DL(3)(a)(i) shall apply as if element “A” is the amount described in regulation 5DL(2)(a) as construed in accordance with paragraph (c) of this regulation;

e

regulation 5DL(3)(b)(i) shall apply as if element “C” is the total of the single defaulted investment payment treated as made on 8th August 2012 in respect of the investment by virtue of regulation 5DL(2) and all defaulted investment payments made in respect of it in the period commencing immediately after that day and ending immediately after the defaulted investment payment in question.

3

A deposit account or share account which is a qualifying investment for a cash component falling within sub-paragraphs (a) or (b) of paragraph (2) respectively (“Account A”) must not be connected with any other account falling within the descriptions in those sub-paragraphs (“Account B”), held by the account investor or any other person.

4

For the purposes of paragraph (3), Account A is connected with Account B if all of the following circumstances apply—

a

either of the accounts was opened with reference to the other, or with a view to enabling the other to be opened on particular terms, or with a view to facilitating the opening of the other on particular terms,

b

the terms on which Account A was opened would have been significantly less favourable to the holder if Account B had not been opened, and

c

Account B is not a tax exempt account.

5

The following are tax exempt accounts for the purposes of paragraph (4)—

a

an account opened (or treated as opened) in accordance with regulation 12 or 12A;

b

a child trust fund.

Account manager’s intention to make a bulk transfer of accounts or to cease to act as an account manager19

1

An account manager must give notice to the Board if the account manager—

a

intends to cease to act as an account manager; or

b

intends to make a bulk transfer of accounts.

2

An account manager must give notice to a person who is the account investor in relation to an account held with the account manager if the account manager—

a

intends to cease to act as an account manager; or

b

intends that the account will be one of the accounts transferred in a bulk transfer of accounts.

3

The notices described in paragraphs (1) and (2) must—

a

specify whether the account manager—

i

intends to cease to act as an account manager; or

ii

intends to make a bulk transfer of accounts;

b

where the notice specifies an intention to cease to act as an account manager,—

i

specify the day on or after which the account manager intends to cease to act as an account manager; and

ii

be given no less than 30 days before that day;

c

where the notice specifies an intention to make a bulk transfer of accounts,—

i

specify the day on or after which the account manager intends to make the first transfer in the bulk transfer of accounts;

ii

be given no less than 30 days before that day; and

iii

advise the name and address of the person to whom the account manager intends to transfer accounts.

4

The notice described in paragraph (2) must also—

a

identify the account to which it relates;

b

advise the account investor that the account may be transferred in accordance with regulation 21 or 21B otherwise than in a bulk transfer of accounts if sufficient instructions are provided to enable the account manager to do so;

c

advise the day by which the account manager must receive sufficient instructions for the account to be transferred otherwise than in a bulk transfer of accounts.

5

Where an account manager intends to make a bulk transfer of accounts in consequence of an intention to cease to act as an account manager, such intention may be specified in the same notice to the Board or an account investor (as appropriate) provided the requirements of paragraphs (3) and (4) are met.