Financial Services (Banking Reform) Act 2013

1. Introductory Text

2. PART 1 Ring-fencing

   1. Ring-fencing

      1. 1. Objectives of Prudential Regulation Authority

      2. 2. Modification of objectives of Financial Conduct Authority

      3. 3. Amendment of PRA power of direction

      4. 4. Ring-fencing of certain activities

      5. 5. PRA annual report

      6. 6. Ring-fencing transfer schemes

      7. 7. Building societies: power to make provision about ring-fencing

   2. Reviews

      1. 8. Independent review of operation of legislation relating to ring-fencing

      2. 9. PRA review of proprietary trading

      3. 10. Independent review of proprietary trading

      4. 11. Reviews of proprietary trading: interpretation

      5. 12. Right to obtain documents and information

3. PART 2 Depositor preference and the Financial Services Compensation Scheme

   1. Depositor preference

      1. 13. Preferential debts: Great Britain

   2. Financial Services Compensation Scheme

      1. 14. Discharge of functions by the scheme manager

      2. 15. Power to require information from scheme manager

      3. 16. Scheme manager: appointment of accounting officer

4. PART 3 Bail-in stabilisation option

   1. 17. Bail-in stabilisation option

5. PART 4 Conduct of persons working in financial services sector

   1. Amendments of FSMA 2000

      1. 18. Functions for which approval is required

      2. 19. Senior management functions

      3. 20. Statements of responsibilities

      4. 21. Vetting by relevant authorised persons of candidates for approval

      5. 22. Determination of applications for approval

      6. 23. Power to give approval subject to conditions or for limited period

      7. 24. Changes in responsibilities of senior managers

      8. 25. Duty to notify regulator of grounds for withdrawal of approval

      9. 26. Variation of approval

      10. 27. Statement of policy

      11. 28. Extension of limitation periods for imposing sanctions

      12. 29. Certification of employees by relevant authorised persons

      13. 30. Rules of conduct

      14. 31. Requirement to notify regulator of disciplinary action

      15. 32. Definition of “misconduct”

      16. 33. Meaning of “relevant authorised person”

      17. 34. Recording information about senior managers

      18. 35. Consequential amendments relating to Part 4

   2. Offence

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

      2. 37. Section 36: interpretation

      3. 38. Institution of proceedings

6. PART 5 Regulation of payment systems

   1. Overview

      1. 39. Overview

   2. The Payment Systems Regulator

      1. 40. The Payment Systems Regulator

   3. “Payment system” etc

      1. 41. Meaning of “payment system”

      2. 42. Participants in payment systems etc

   4. Designation as a regulated payment system

      1. 43. Designation orders

      2. 44. Designation criteria

      3. 45. Procedure

      4. 46. Amendment of designation order

      5. 47. Revocation of designation orders

      6. 48. Publication

   5. General duties of Regulator

      1. 49. Regulator’s general duties in relation to payment systems

      2. 50. The competition objective

      3. 51. The innovation objective

      4. 52. The service-user objective

      5. 53. Regulatory principles

   6. Regulatory and competition functions

      1. 54. Directions

      2. 55. System rules

      3. 56. Power to require granting of access to payment systems

      4. 57. Variation of agreements relating to payment systems

      5. 58. Power to require disposal of interest in payment system

      6. 59. The Regulator’s functions under Part 4 of the Enterprise Act 2002

      7. 60. Restrictions on exercise of functions under Part 4 of the Enterprise Act 2002

      8. 61. The Regulator’s functions under the Competition Act 1998

      9. 62. Duty to consider exercise of powers under Competition Act 1998

      10. 63. Provision of information and assistance to a CMA group

      11. 64. Function of keeping markets under review

      12. 65. Exclusion of general duties

      13. 66. Concurrent competition powers: supplementary provision

      14. 67. Amendments relating to Regulator’s competition powers

   7. Complaints

      1. 68. Complaints by representative bodies

      2. 69. Response by Regulator

      3. 70. Complaints: guidance

   8. Enforcement and appeals

      1. 71. Meaning of “compliance failure”

      2. 72. Publication of compliance failures etc

      3. 73. Penalties

      4. 74. Warning notices

      5. 75. Injunctions

      6. 76. Appeals: general

      7. 77. Appeals to Competition Appeal Tribunal

      8. 78. Appeals in relation to penalties

      9. 79. Appeals to Competition and Markets Authority

      10. 80. Enforcement of requirement to dispose of interest in payment system

   9. Information and investigation powers

      1. 81. Power to obtain information or documents

      2. 82. Reports by skilled persons

      3. 83. Appointment of persons to conduct investigations

      4. 84. Investigations: general

      5. 85. Powers of persons appointed under section 83

      6. 86. Information and documents: supplemental provisions

      7. 87. Admissibility of statements made to investigators

      8. 88. Entry of premises under warrant

      9. 89. Retention of documents taken under section 88

      10. 90. Enforcement of information and investigation powers

   10. Disclosure of information

       1. 91. Restrictions on disclosure of confidential information

       2. 92. Exemptions from section 91

       3. 93. Offences relating to disclosure of confidential information

       4. 94. Information received from Bank of England

       5. 95. Disclosure of information by Bank to Regulator

   11. Guidance

       1. 96. Guidance

   12. Reports

       1. 97. Reports

   13. Relationship with other regulators

       1. 98. Duty of regulators to ensure co-ordinated exercise of functions

       2. 99. Memorandum of understanding

       3. 100. Power of Bank to require Regulator to refrain from specified action

       4. 101. Power of FCA to require Regulator to refrain from specified action

       5. 102. Power of PRA to require Regulator to refrain from specified action

   14. Consultation, accountability and oversight

       1. 103. Regulator’s general duty to consult

       2. 104. Consultation in relation to generally applicable requirements

       3. 105. Independent inquiries

       4. 106. Investigations into regulatory failure

       5. 107. Competition scrutiny

   15. Miscellaneous and supplemental

       1. 108. Relationship with Part 8 of the Payment Services Regulations 2009

       2. 109. Exemption from liability in damages for FCA and PRA

       3. 110. Interpretation of Part

7. PART 6 Special administration for operators of certain infrastructure systems

   1. Introductory

      1. 111. Financial market infrastructure administration

      2. 112. Interpretation: infrastructure companies

      3. 113. Interpretation: other expressions

   2. FMI administration orders

      1. 114. FMI administration orders

      2. 115. Objective of FMI administration

      3. 116. Application for FMI administration order

      4. 117. Powers of court

      5. 118. FMI administrators

      6. 119. Continuity of supply

      7. 120. Power to direct FMI administrator

      8. 121. Conduct of administration, transfer schemes etc.

   3. Restrictions on other insolvency procedures

      1. 122. Restriction on winding-up orders and voluntary winding up

      2. 123. Restriction on making of ordinary administration orders

      3. 124. Restriction on enforcement of security

   4. Financial support for companies in FMI administration

      1. 125. Loans

      2. 126. Indemnities

   5. Interpretation

      1. 127. Interpretation of Part

   6. Application of Part to Northern Ireland

      1. 128. Northern Ireland

8. PART 7 Miscellaneous

   1. Competition

      1. 129. Functions of FCA under competition legislation

      2. 130. Competition as a secondary objective of the PRA

   2. Consumers

      1. 131. Duty of FCA to make rules restricting charges for high-cost short-term credit

      2. 132. Role of FCA Consumer Panel in relation to PRA

   3. Parent undertakings

      1. 133. Power of FCA and PRA to make rules applying to parent undertakings

   4. Meetings with auditors

      1. 134. Duty to meet auditors of certain institutions

   5. Fees to meet Treasury expenditure

      1. 135. Fees to meet Treasury expenditure relating to international organisations

   6. Parliamentary control of statutory instruments under FSMA 2000

      1. 136. Amendments of section 429 of FSMA 2000

   7. Bank of England

      1. 137. Accounts of Bank of England and its wholly-owned subsidiaries

   8. Building societies

      1. 138. Building societies

   9. Claims management services

      1. 139. Power to impose penalties on persons providing claims management services

      2. 140. Recovery of expenditure incurred by Office for Legal Complaints

   10. Minor amendments

       1. 141. Minor amendments

9. PART 8 Final provisions

   1. 142. Orders and regulations: general

   2. 143. Orders and regulations: Parliamentary control

   3. 144. Interpretation

   4. 145. Power to make further consequential amendments

   5. 146. Transitional provisions and savings

   6. 147. Extent

   7. 148. Commencement and short title

10. SCHEDULES

    1. SCHEDULE 1

       Ring-fencing transfer schemes

       1. 1. Part 7 of FSMA 2000 (control of business transfer schemes)...

       2. 2. For “the authorised person concerned”, wherever occurring in Part 7...

       3. 3. (1) Section 103A (meaning of “the appropriate regulator”) is amended...

       4. 4. In section 106 (banking business transfer schemes), at the end...

       5. 5. After section 106A insert— Ring-fencing transfer scheme (1) A scheme is a ring-fencing transfer scheme if it—...

       6. 6. (1) Section 107 (application for order sanctioning transfer scheme) is...

       7. 7. For the heading to section 109 substitute “Scheme reports: insurance...

       8. 8. After section 109 insert— Scheme reports: ring-fencing transfer schemes (1) An application under section 106B in respect of a...

       9. 9. (1) Section 110 (right to participate in proceedings) is amended...

       10. 10. (1) Section 111 (sanction of court for business transfer schemes)...

       11. 11. In section 112 (effect of order sanctioning business transfer scheme),...

       12. 12. In section 112A (rights to terminate etc.), in subsection (1),...

       13. 13. In Schedule 12 (transfer schemes: certificates) after Part 2A insert—...

    2. SCHEDULE 2

       Bail-in stabilisation option

       1. PART 1 Amendments of Banking Act 2009

          1. 1. The Banking Act 2009 is amended as follows.

          2. 2. New stabilisation option: bail-in

          3. 3. After section 8 insert— Specific condition: bail-in (1) The Bank of England may exercise a stabilisation power...

          4. 4. Further provision about the bail-in option

          5. 5. Transfers of property

          6. 6. Compensation

          7. 7. Groups

          8. 8. Banks regulated by the Financial Conduct Authority

          9. 9. Recognised central counterparties

          10. 10. Insolvency proceedings

          11. 11. State aid

          12. 12. Other amendments of the Act

          13. 13. In section 13 (temporary public ownership), in subsection (1), for...

          14. 14. In section 17 (share transfers: effect)— (a) in subsection (1),...

          15. 15. In section 18 (share transfers: continuity), after subsection (5) insert—...

          16. 16. In section 44 (reverse property transfer)— (a) in subsection (2),...

          17. 17. In section 63 (general continuity obligation: property transfers), in subsection...

          18. 18. In section 66 (general continuity obligation: share transfers)—

          19. 19. In section 67 (special continuity obligation: share transfers), in subsection...

          20. 20. In section 68 (continuity obligations: onward share transfers), in subsection...

          21. 21. In section 71 (pensions), in subsection (1)—

          22. 22. In section 72 (enforcement), in subsection (1)—

          23. 23. In section 73 (disputes), in subsection (1)—

          24. 24. In section 74 (tax), in subsection (6), for “or 45”...

          25. 25. After section 80 insert— Transfer for bail-in purposes: report (1) This section applies where the Bank of England makes...

          26. 26. In section 81A (accounting information to be included in reports...

          27. 27. In section 85 (temporary public ownership), in subsection (1), for...

          28. 28. In section 136 (overview), in the Table in subsection (3),...

          29. 29. After section 152 insert— Property transfer from transferred institution (1) This section applies where the Bank of England—

          30. 30. In section 220 (insolvency etc), after subsection (4) insert—

          31. 31. In section 259 (statutory instruments)— (a) in the Table in...

          32. 32. In section 261 (index of defined terms), in the Table,...

       2. PART 2 Modification of Investment Bank Special Administration Regulations 2011

          1. 33. (1) This paragraph modifies the application of the Investment Bank...

    3. SCHEDULE 3

       Consequential amendments relating to Part 4

       1. 1. Financial Services and Markets Act 2000

       2. 2. (1) Section 59A of FSMA 2000 (specifying functions as controlled...

       3. 3. (1) Section 63 of FSMA 2000 (withdrawal of approval) is...

       4. 4. In section 63A of FSMA 2000 (power to impose penalties),...

       5. 5. (1) Section 66 of FSMA 2000 (disciplinary powers) is amended...

       6. 6. (1) Section 67 of FSMA 2000 (disciplinary measures: procedure and...

       7. 7. In section 69 of FSMA 2000 (statement of policy), in...

       8. 8. In section 138A of FSMA 2000 (modification or waiver of...

       9. 9. In section 138D of FSMA 2000 (actions for damages), in...

       10. 10. In section 140A of FSMA 2000 (interpretation), in the definition...

       11. 11. In section 347 of FSMA 2000 (the record of authorised...

       12. 12. In section 387 of FSMA 2000 (warning notices), in subsection...

       13. 13. In section 388 of FSMA 2000 (decision notices), in subsection...

       14. 14. In section 395 of FSMA 2000 (supervisory notices), in subsection...

       15. 15. (1) Section 415B of FSMA 2000 (consultation in relation to...

       16. 16. In Schedule 1ZA to FSMA 2000 (the Financial Conduct Authority),...

       17. 17. In Schedule 1ZB to FSMA 2000 (the Prudential Regulation Authority),...

       18. 18. Financial Services Act 2012

       19. 19. (1) Section 85 of the Financial Services Act 2012 (relevant...

    4. SCHEDULE 4

       The Payment Systems Regulator

       1. 1. Introductory

       2. 2. Constitution

       3. 3. Status

       4. 4. Budget

       5. 5. Arrangements for discharging functions

       6. 6. Annual plan

       7. 7. Annual report

       8. 8. Audit of accounts

       9. 9. Funding

       10. 10. Penalty receipts

       11. 11. (1) The Regulator must prepare and operate a scheme (“the...

       12. 12. (1) The scheme details must be published by the Regulator...

       13. 13. Records

       14. 14. Exemption from liability in damages

       15. 15. Freedom of information

       16. 16. Equality

    5. SCHEDULE 5

       Procedure for appeals to the CMA

       1. 1. Functions of CMA to be discharged by group

       2. 2. (1) Schedule 4 to the Enterprise and Regulatory Reform Act...

       3. 3. Application for permission to bring appeal

       4. 4. Suspension of decision

       5. 5. Time limit for representations and observations by the Regulator

       6. 6. Consideration and determination of appeal by group

       7. 7. Time limits for determining appeal

       8. 8. Matters to be considered on appeal

       9. 9. Production of documents etc

       10. 10. Oral hearings

       11. 11. Written statements

       12. 12. Expert advice

       13. 13. Defaults in relation to evidence

       14. 14. (1) A person who wilfully alters, suppresses or destroys a...

       15. 15. Determination of appeal by CMA

       16. 16. Appeal rules

       17. 17. Costs

       18. 18. Interpretation

    6. SCHEDULE 6

       Conduct of FMI administration

       1. 1. The following provisions of this Schedule provide for—

       2. 2. The provisions set out in the Tables apply in relation...

       3. 3. The modifications are that— (a) a reference to the administrator...

       4. 4. Powers conferred by this Part of this Act and by...

       5. 5. A reference in an enactment or other document to anything...

       6. 6. (1) The Treasury may by order amend this Schedule so...

    7. SCHEDULE 7

       Financial market infrastructure transfer schemes

       1. 1. Application of Schedule

       2. 2. Interpretation of Schedule

       3. 3. FMI administrator to act on behalf of old company

       4. 4. Making of FMI transfer schemes

       5. 5. Provision that may be made by a scheme

       6. 6. Further provision about transfers

       7. 7. Effect of scheme

       8. 8. Subsequent modification of scheme

       9. 9. Provision relating to foreign property

       10. 10. Application of Schedule to transfers to subsidiaries

    8. SCHEDULE 8

       Functions of FCA under competition legislation

       1. PART 1 Amendments of Financial Services and Markets Act 2000

          1. 1. Part 16A of FSMA 2000 (consumer protection and competition) is...

          2. 2. Omit section 234H (power of FCA to make request to...

          3. 3. After section 234H insert— The FCA’s functions under Part 4...

          4. 4. In section 3I of FSMA 2000 (power of PRA to...

          5. 5. In section 348 of FSMA 2000 (restrictions on disclosure of...

          6. 6. In section 354A of FSMA 2000 (FCA’s duty to co-operate...

          7. 7. (1) Schedule 1ZA to FSMA 2000 (the Financial Conduct Authority)...

       2. PART 2 Amendments of other legislation

          1. 8. Company Directors Disqualification Act 1986

          2. 9. Competition Act 1998

          3. 10. Enterprise Act 2002

          4. 11. Enterprise and Regulatory Reform Act 2013

          5. 12. In Schedule 4 to the Enterprise and Regulatory Reform Act...

    9. SCHEDULE 9

       Building societies

       1. 1. Introductory

       2. 2. Exclusion of small business deposits from funding limit

       3. 3. (1) In article 3 of the Building Societies Act 1986...

       4. 4. Ability to create floating charges

       5. 5. Annual business statements

       6. 6. Summary financial statements

       7. 7. In consequence of the amendments made by paragraph 6—

       8. 8. Transfers of business: distributions and share rights

       9. 9. Methods of communicating with members etc

       10. 10. In the following provisions, omit “, in a manner agreed...

       11. 11. In section 81(3B)(c), omit “, in a manner agreed for...

       12. 12. (1) Schedule 2 is amended as follows.

       13. 13. In paragraphs 3(2B)(c) and 9(2B)(c) of Schedule 8A, omit “in...

       14. 14. (1) Schedule 11 is amended as follows.

       15. 15. Financial year

       16. 16. After section 117 insert— Alteration of financial year (1) A building society may by notice given to the...

       17. 17. In Schedule 20 (transitional and saving provisions), omit paragraph 16...

       18. 18. The amendments made by paragraphs 15 to 17 have effect...

    10. SCHEDULE 10

        Minor amendments

        1. 1. Companies Act 1985

        2. 2. Financial Services and Markets Act 2000

        3. 3. (1) Part 25 of FSMA 2000 (injunctions and restitution) is...

        4. 4. (1) In Schedule 1ZA to FSMA 2000 (the Financial Conduct...

        5. 5. In Schedule 17A to FSMA 2000 (further provision in relation...

        6. 6. Income Tax Act 2007

        7. 7. Banking Act 2009

        8. 8. In section 191 of the Banking Act 2009 (directions), in...

        9. 9. Financial Services Act 2012

        10. 10. (1) Section 85 of the Financial Services Act 2012 (relevant...