Building Societies Act 1986

Power to hedge

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• (1) Subject to subsections (3) and (4) below, a building society may effect contracts of a prescribed description for the purpose of reducing the risk of loss arising from changes in interest rates, currency rates or other factors of a prescribed description which affect its business.

• (2) The Commission, with the consent of the Treasury, may by order—

• (a) specify as contracts which building societies have power to effect under this section descriptions of contract whose purpose or one of whose purposes is the reduction of the risk to businesses of loss arising from the factors specified in subsection (1) above or other similar factors, and

• (b) regulate, or provide for the regulation of, the terms on which, the persons or descriptions of persons with whom, and the circumstances in which, contracts of a description specified under paragraph (a) above, may be effected by building societies.

• (3) Except as provided under subsection (4) below, the powers conferred by this section are not available to a building society which does not for the time being have a qualifying asset holding, but the cessation of their availability does not require the disposal of any property or rights.

• (4) The Commission, with the consent of the Treasury, may by order provide that subsection (3) above shall not have effect, as regards prescribed powers, in relation to prescribed descriptions of building societies.

• (5) The powers conferred by this section on a building society, if available to it, must, in order to be exercisable, be adopted by the society.

• (6) The power to make an order under subsection (2) or (4) above—

• (a) includes power to make such transitional provision as the Commission considers necessary or expedient, and

• (b) is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

• (7) In this section “prescribed” means prescribed in an order under subsection (2) or (4) above, as the case may be.

Part IV — Protection of Investors

Investor Protection Scheme

The Building Societies Investor Protection Board

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The Investor Protection Fund

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Power to levy contributions and to borrow money in event of insolvency

26

Payments to investors

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Liability of insolvent society in respect of payments by Board

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Repayments in respect of contributions

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Tax treatment of contributions and repayments

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Other provisions

Voluntary schemes

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Special provisions as regards investors

32

The Provisions of Schedule 7 to this Act relating to shareholders in and depositors with a building society shall have effect.

Assistance by building societies to other building societies

33

Where it appears to the Commission that a building society is in financial difficulties it may authorise a building society to lend money to that society, and a building society shall have power to do so accordingly.

Part V — Powers to Provide Services

Powers to provide financial services or services relating to land

34

• (1) A building society may provide services of the descriptions for the time being specified in Part I of Schedule 8 to this Act subject to the restrictions (if any) for the time being specified in Part II or III of that Schedule.

• (2) The appropriate authority may by order vary Schedule 8 by adding to or deleting from it any description of service or any provision or by varying any description of service or any provision for the time being specified or contained in it but not so as to confer any power to provide services other than services that appear to the authority making the order to be financial services or services relating to land or to be services similar to any such services.

• (3) Any power conferred on building societies under subsection (2) above may be conferred on building societies of a specified description or all building societies other than those of a specified description.

• (4) Where a provision of Part III of that Schedule states that a power to provide a specified service is available only to a subsidiary or other associated body of a building society the power to provide that service is to be treated as a power of the society for the purposes of section 18 only.

• (5) Any power to provide a specified service, if available to a building society or any subsidiary or other associated body, must, in order to be exercisable, be adopted by the society.

• (6) Subject to any specified restriction, any power to provide a specified service shall be exercisable in relation to members of the building society or other persons.

• (7) Part IV of Schedule 8 has effect for supplementing Parts I, II and III of that Schedule and the power under subsection (2) above to vary that Schedule includes, without prejudice to the generality of that subsection, power to make such provision as appears to the authority making the order to be appropriate by way of a sanction for contravention of any restriction for the time being contained in Part III.

• (8) The “appropriate authority” for the purpose of exercising the powers conferred by this section is the Treasury as regards any variation of Part I of Schedule 8 with or without other provision and the Commission in any other case.

• (9) The power to make an order under subsection (2) above is exercisable by statutory instrument and—

• (a) in the case of an order varying Part I of Schedule 8 with or without other provision no such order shall be made unless a draft of it has been laid before and approved by a resolution of each House of Parliament, and

• (b) in the case of any other order, the instrument containing it shall be subject to annulment in pursuance of a resolution of either House of Parliament.

• (10) An order under subsection (2) above may make such incidental and transitional provision as appears to the authority making the order to be necessary or expedient.

• (11) In this section—

• “financial services” means any of the following services, that is to say, banking, insurance, investment, trusteeship and executorship;

• “services relating to land” means any service relating to the acquisition, management, development or disposal of land; and

• “specified” means specified for the time being in Schedule 8 to this Act.

Prohibition on linking services

35

• (1) A building society which, or a subsidiary of which, provides services of any description specified in Part I of Schedule 8 to this Act shall not offer to make a class 1 advance to any person subject to a condition that any services of that description which are or may be required by that person in connection with the making of the advance shall be provided by the society or its subsidiary.

• (2) Where, in connection with a class 1 advance by a building society, several services are made available by a building society or by a building society and one or more of its subsidiaries the society shall not, and shall secure that each of its subsidiaries does not,make the services available on terms other than terms which distinguish the consideration payable for each service so made available; nor shall any of its subsidiaries make the services available on terms other than terms which make that distinction.

• (3) Nothing in subsection (2) above prevents a service from being provided free of charge in particular circumstances.

• (4) If a building society contravenes subsection (1) or (2) above the society shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale and so shall any officer who is also guilty of the offence.

• (5) If a body corporate which is a subsidiary of a building society contravenes subsection (2) above the body corporate shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale.

Part VI — Powers of Control of the appropriate authority

Powers in relation to principal purpose and nature limits

Powers in event of breach of limits on certain assets and liabilities

36

• (1) The provisions of this section have effect where, by reason of a building society’s failure to comply with—

• (a) the requirement imposed by section 5(1)(a) or (b) (purpose or principal purpose and principal office);

• (b) the requirement imposed by section 6(1) (the lending limit); or

• (c) the requirement imposed by section 7(1) (the funding limit),

the powers conferred by this section become exercisable by the appropriate authority in relation to the society (the requirements referred to in paragraphs (a), (b) and (c) above being referred to in this section as “the relevant statutory requirements”).

• (2) The appropriate authority may give the society a direction under subsection (3), (5) or (6) below.

• (3) A direction by the appropriate authority under this subsection is a direction requiring the society, within a specified period, to submit for its approval a plan (in this section referred to as a “restructuring plan”) designed to secure the following purposes, that is to say—

• (a) that the society will, by the end of a specified period, comply with the relevant statutory requirements as applied at the last day of that period, and

• (b) that it will not thereafter fail to comply with those requirements.

• (4) For the purpose of applying the relevant statutory requirements as directed by subsection (3)(a) above—

• (a) in the case of a requirement which operates by reference to a quarter day, the day as at which the requirements are to be applied shall be treated as such a day; and

• (b) the assets and liabilities of the society shall be determined by reference to a balance sheet prepared by the directors by reference to that day and sent to the appropriate authority within the period of three months beginning with that day;

and subsection (4) of section 81 shall apply in the event of a default in complying with this provision as it applies in the event of a default in complying with subsection (2) of that section.

• (5) A direction by the appropriate authority under this subsection is a direction requiring the society—

• (a) within a specified period, to submit to its members for their approval at a meeting the requisite transfer resolutions for a transfer of the business of the society to a company under section 97; and

• (b) to notify the appropriate authority and, if the appropriate authority is the PRA, the FCA of the result of the meeting.

• (6) A direction by the appropriate authority under this subsection is a direction requiring the society, at its option, either—

• (a) within a specified period, to submit for approval a restructuring plan; or

• (b) within a specified period, to submit to its members for their approval at a meeting the requisite transfer resolutions for a transfer of the business of the society to a company under section 97;

and, within a specified period, to notify the appropriate authority and, if the appropriate authority is the PRA, the FCA of the option it has decided to pursue.

• (7) Where the appropriate authority gives a direction under subsection (3), (5) or (6) above, it may also give a direction under this subsection—

• (a) imposing limitations on the issue of shares, the acceptance of deposits or the making of loans;

• (b) requiring the society within a specified period to take certain steps, or to refrain from adopting or pursuing a particular course of action, or to restrict the scope of its business in a particular way;

• (c) requiring the society within a specified period to take steps with regard to the conduct of the business of any connected undertaking of the society;

• (d) requiring within a specified period the removal of any director or other officer.

• (8) Where a restructuring plan is submitted by a society to the appropriate authority under subsection (3) or (6) above then—

• (a) if it appears to the appropriate authority that the plan is reasonably likely to secure its purposes, the appropriate authority shall approve it and direct the society to carry it out;

• (b) if it appears to it that the plan is, with modifications, likely to secure its purposes and the appropriate authority and the society agree on appropriate modifications within the period of 21 days from the date on which the appropriate authority notifies the society of the modifications it proposes for the society’s agreement, the appropriate authority shall approve the plan as modified and direct the society to carry it out;

but otherwise it shall reject the plan.

• (9) Where a meeting is held, in pursuance of a direction under subsection (5) or (6) above, for the purpose of voting on the requisite transfer resolutions, then—

• (a) if the resolutions are agreed to and the confirmation of the transfer by the appropriate authority is obtained, the society shall proceed under section 97 to transfer its business to a successor company;

• (b) if either resolution is disagreed to, the society shall notify the appropriate authority of that fact as soon as it is practicable to do so.

• (10) In the event of the appropriate authority receiving a notice from a society under subsection (9)(b) above, it may, if it thinks fit, serve on the society a direction requiring it, within a specified period, to submit to the appropriate authority for its approval a restructuring plan; and if the appropriate authority does so, subsection (8) above shall apply as if the plan had been submitted under subsection (3) above.

• (11) The appropriate authority may, if it thinks fit, extend or further extend any period during which a building society is to take any steps required of it under any of the foregoing provisions of this section and may do so whether or not application is made to it before the expiry of the period in question.

• (12) If a building society which has been directed under subsection (8) above to carry out a restructuring plan fails, within the period allowed to it under the foregoing provisions of this section, to secure the purpose of the plan specified in subsection (3)(a) above, the powers conferred on the appropriate authority by section 36A shall become exercisable in relation to the society.

• (13) If a building society fails, within the period allowed to it under the foregoing provisions of this section—

• (a) where it has been given a direction under subsection (3) or (10) above, to submit a restructuring plan;

• (b) where it has been given a direction under subsection (5) above, to submit to members the requisite transfer resolutions;

• (c) where it has been given a direction under subsection (6) above, to either submit a restructuring plan or submit to members the requisite transfer resolutions;

• (d) where it has been given a direction under subsection (7) above, to comply with any requirement imposed by the direction;

• (e) where it has been directed under subsection (8) above to carry out a restructuring plan, to secure the purpose of the plan specified in subsection (3)(a) above;

• (f) to agree to the requisite transfer resolutions submitted to the members in pursuance of subsection (5) or (6) above; or

• (g) where it has agreed to the requisite transfer resolutions, to proceed under section 97 to transfer its business to the successor company,

or if the appropriate authority rejects a restructuring plan under subsection (8) above, the powers conferred on the appropriate authority by section 37 shall become exercisable in relation to the society.

• (14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (15) In this section—

• “confirmation”, “the requisite transfer resolutions” and “transfer” have the same meaning as in section 97;

• “quarter day” has the same meaning as in sections 6 and 7.

• (16) Nothing in this section implies that it is improper for the appropriate authority to give to a building society or building societies generally an indication of the action it might or might not take in relation to any proposed activity of theirs.

• (17) The PRA must consult the FCA before issuing a direction under this section.

Powers in event of breach of limits on assets or liabilities or abuse of purpose of building society

37

• (1) Where—

• (a) by virtue of section 36(13) the powers conferred by this section become exercisable in relation to a building society;

• (b) by virtue of section 36A(12) the power conferred by this subsection becomes so exercisable; or

• (c) the appropriate authority has reason to believe that a building society has ceased to comply with the requirement imposed by section 5(1)(a) (purpose or principal purpose),

the appropriate authority may present a petition to the High Court for the winding up of the society under the applicable winding up legislation; and the power conferred by this subsection is available to the appropriate authority whether or not it has previously presented a petition.

• (2) Where by virtue of section 36(13) the powers conferred by this section become exercisable in relation to a building society, the appropriate authority may make an application to the High Court for an order giving directions to the society under subsection (3) below; and the power conferred by this subsection is available to the appropriate authority whether or not it has previously made an application for such an order.

• (3) An order under this subsection is an order directing the society to comply with a direction under subsection (3), (5), (6), (7) or (10) of section 36 as directed in the order, or to carry out a restructuring plan as so directed.

• (4) Where the High Court makes an order under subsection (3)—

• (a) if the appropriate authority is the PRA, it must give a copy of the order to the FCA; and

• (b) in any case, the FCA must keep a copy of the order in the public file of the society.

• (5) The High Court shall not make an order winding up the society on an application under subsection (1)(c) above unless it is satisfied that the society has ceased to comply with the requirement imposed by section 5(1)(a).

• (6) In the application of this section to a building society whose principal office is in Scotland, references to the High Court shall be read as references to the Court of Session.

Power to determine extent of building society powers

Power to determine building society's powers

38

• (1) The Commission shall have power to determine whether a particular activity of a building society or its subsidiary is or is not within the existing powers of the society and may, if it thinks fit, take such professional advice as it considers it needs to enable it to make the determination.

• (2) A determination may be made under this section in relation to an activity which is proposed to be carried on as well as in relation to one which is being carried on.

• (3) The powers of the Commission in relation to a building society are exercisable—

• (a) on an application made by the society, requesting the Commission to make the determination,

• (b) on an application made by the society at the direction of the central office under Part II of Schedule 2 to this Act, or

• (c) on the Commission’s own motion or on an application made by the society at its direction,

as provided in subsection (4), (5), (6) or (8) below.

• (4) A building society may at any time, on complying with the following provisions of this section, make an application to the Commission for a determination under this section whether an activity specified in the application is or is not within its powers if the directors of the society are of the opinion that there is a doubt about the existence or extent of the powers to carry on the activity which requires to be resolved in the interests of the society.

• (5) A building society which has been directed by the central office under Part II of Schedule 2 to this Act to make an application to the Commission under this section shall, in accordance with the direction, make an application to the Commission for a determination whether the activity specified in the application is or is not within its powers.

• (6) If it appears to the Commission at any time that a building society or its subsidiary is carrying on or is about to carry on an activity which is or may be outside the existing powers of the society, the Commission may, by notice to the society specifying the activity and its opinion, direct it to make an application for a determination under this section whether the activity is or is not within its powers and it shall be the duty of the society to comply with the direction.

• (7) A direction under subsection (6) shall require the application to be made within the period of 21 days beginning with the date on which the notice is given, but the Commission may extend or further extend the period within which the application is to be made.

• (8) If a building society fails, within the time allowed by or under subsection (7) above, to make an application as directed under subsection (6) above, the Commission may, of its own motion, proceed to make a determination under this section as if an application had been made by the society.

• (9) An application by a building society under subsection (4), (5) or (6) above shall be made in writing, signed by the secretary as such an application, and shall comprise—

• (a) a statement of the question for determination, specifying the activity and the powers in question, the nature of the doubt and (except in the case of an application under subsection (6)) the arguments for and against the activity being within those powers, as they appear to the society, and

• (b) such documents or draft documents and such other information as are necessary to enable the determination to be made.

• (10) The statement of the question for determination may, with the agreement of the Commission, be amended at any time before the determination is made and in that event further documents and other information may be included in the application.

• (11) The Commission may, by notice to the society, require a society making an application under subsection (4), (5) or (6) above to amend the statement of the question for determination or to furnish such further documents or other information or such explanations of the statement, documents or information as appear to it to be necessary to enable the determination of the question to be made; and the Commission may allow or require the explanations to be made orally instead of in writing.

• (12) In this section and sections 39 and 40—

• “activity” includes the exercise, or purported exercise, of any power under this Act, including the holding of any property or rights;

• “existing”, with reference to powers, means existing at the relevant date and, in relation to a building society, “existing powers” denotes the powers it has, or has adopted, under this Act, with any restrictions it has assumed, as at that date but disregarding anything done by the Commission and then in force (otherwise than under section 39 or 40) by virtue of which the society is precluded from exercising, or is subject to restrictions on the exercise of, its powers;

• “the relevant date”, in relation to a building society, means—

• (a) in a case where the Commission decides to proceed of its own motion, the date when the Commission so decides;

• (b) in a case where the society makes the application at the direction of the central office, the date specified in the direction; and

• (c) in any other case, the date on which the society makes the application.

• (13) Nothing in this section or section 39 or 40 implies that it is improper for the Commission to give to a building society or building societies generally an indication of the action it might or might not take in relation to any proposed activity of theirs; and if any determination comes to be made in relation to the activity the proceedings shall not be liable to be set aside by reason of the indication having been given.

The determination: notification, effect, appeal

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• (1) A determination of the Commission under section 38 shall be in writing and, as soon as practicable after it is made, the Commission shall notify the society of the determination and the reasons for it.

• (2) On receiving notice of the determination the society shall, if it is a determination that the activity in question was outside its powers, forthwith send a copy of it to every person who the society has reason to believe will or may be affected by it other than a person whose only interest is as a shareholder in, or depositor with, the society.

• (3) Subject to subsection (4) below, the Commission shall, within the period of one month beginning with the date of the notice to the society under subsection (1) above, publish the determination in such manner as it thinks appropriate.

• (4) Where the determination is made on an application made by the society under section 38(4), the Commission may, on the application of the society, postpone the publication of the determination for such period as it thinks fit, not exceeding the period of six months beginning with the date of the notice to the society under subsection (1) above, if it appears to the Commission that it is just to do so.

• (5) A determination under section 38 shall bind all persons, whether or not (in the case of an application) they were parties to it and, subject to any appeal under subsection (8) below, shall be final and conclusive for all purposes.

• (6) Where the activity in question was at the relevant date being carried on by the society and the determination is that the activity is outside the powers of the society the directors of the society shall be personally liable, jointly and severally, for any loss or expense to the society consequent on the activity’s being outside its powers (including, if a prohibition order under section 40 is made, any loss or expense consequent on the order).

• (7) If it appears to the Commission that proceedings under subsection (6) above have not been, but ought in the interests of the society to be, brought, the Commission may bring such proceedings in the name and on behalf of the society; and if it does so the Commission may indemnify the society against the costs or expenses incurred by the society in, or in connection with, proceedings brought by virtue of this subsection.

• (8) Any person affected by a determination under section 38 shall be entitled within the period of six weeks beginning with the date of the notice under subsection (1) above or such further period as the Court may allow, to appeal to the High Court against the determination in accordance with rules of court on the ground that it is erroneous in law and the Commission shall be made respondent on the appeal.

• (9) On any appeal to the High Court under subsection (8) above the High Court may confirm, reverse or vary the determination appealed from.

• (10) In the application of this section to a building society whose principal office is in Scotland, references to the High Court shall be read as references to the Court of Session.

• (11) The Commission may, if it thinks fit, require a building society in whose case it has made a determination under section 38 to pay such fee as the Commission directs.

Power to make prohibition orders

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• (1) On or at any time after making a determination under section 38 that a specified activity is outside the powers of a building society, the Commission shall, if it appears to it—

• (a) that the activity is being carried on by the society, or

• (b) that the activity has not been but, unless a prohibition order is made under this section, may be carried on by the society.

serve on the society a notice of the Commission’s intention to issue a prohibition order directed to the society.

• (2) A prohibition order under this section is an order prohibiting, subject to the saving or transitional provisions of the order, the continuance or, as the case may be, the carrying on of the activity specified in the order, either absolutely or unless conditions specified in the order are complied with, after a date specified in the order and requiring, subject to the saving or transitional provisions of the order, the disposal within a specified period of all assets acquired or otherwise in its possession by virtue of the activity.

• (3) A disposal of assets in pursuance of a prohibition order shall vest the assets in the transferee but without prejudice to any claim against the society by a person who had an interest in the assets.

• (4) The saving or transitional provisions which may be included in a prohibition order shall be such as appear to the Commission to be just having regard to the interests of shareholders of and the depositors with the society and the interests of other persons who will be affected by the order; but the provisions shall not in any respect suspend the operation of the order beyond the period of one year.

• (5) A prohibition order may include a direction for treating assets of any description as assets of the class specified in the direction for the purposes of the requirements of Part III for the structure of commercial assets.

• (6) A notice under subsection (1) above of the Commission’s intention to issue a prohibition order shall—

• (a) specify the date on which the order is to be issued, being a date not earlier than the end of the period of 21 days beginning with the date of the notice;

• (b) specify the terms of the order, including any saving or transitional provisions proposed to be included in it;

• (c) inform the society of its right to make representations to the Commission before the order is issued as to the saving or transitional provisions to be included in the order; and

• (d) inform the society of its duty under subsection (7) below.

• (7) On receiving a notice under subsection (1) above the society shall forthwith send a copy of it to every other person whom it has reason to believe will or may be affected by the determination under section 38 on which the order will be founded.

• (8) Any person who may be affected by the determination under section 38 on which the order will be founded may, at any time before the order is made, make representations to the Commission as to the inclusion in it of saving or transitional provisions affecting his interests and they may be made orally or in writing.

• (9) After considering any representations made under subsection (8) above the Commission shall make the prohibition order with such saving and transitionalprovisions (if any) as it thinks just, shall issue the order by causing it to be served on the society and shall direct the central office to keep a copy of it in the public file of the society.

• (10) A prohibition order so made and issued shall, subject to subsection (15) below, take effect on the date specified in the order.

• (11) A copy of any order issued under subsection (9) above shall also be served on each director and on the chief executive of the society.

• (12) The requirement of subsection (11) above, so far as it relates to directors, is satisfied by serving a copy on each director whose appointment has been officially notified and the non-receipt of a copy by a director or the chief executive does not affect the validity of the direction.

• (13) Subject to subsection (14) below, a prohibition order shall remain in force until revoked by the Commission.

• (14) The Commission may suspend or revoke a prohibition order so far as it relates to an asset the disposal of which appears to it, on the application of the society, to be impracticable.

• (15) If, when a prohibition order has been made, an appeal is pending before the High Court under section 39(8) against the determination on which the order is founded the High Court may, on application made to it, order that the operation of the prohibition order be stayed until the determination of the appeal; but it shall not do so unless it is satisfied that it is in the public interest that it be stayed.

• (16) If a society contravenes a prohibition order issued against it under this section the Commission may certify the contravention in writing to the High Court; and the Court may thereupon inquire into the case and, after hearing any witnesses who may be produced against or on behalf of the society and after hearing any statement which may be offered in defence, may punish the society in like manner as if it had been guilty of contempt of the court.

• (17) In the application of this section to a building society whose principal office is in Scotland, references to the High Court shall be read as references to the Court of Session and references to staying shall be read as references to sisting.

Powers in relation to authorisation

Power to direct application to renew authorisation

41

Imposition of conditions on current authorisation

42

Revocation of authorisation

43

Reauthorisation

44

The criteria for prudent management

45

Notices, hearings and appeals

Rights of appeal

46

• (1) A building society which is aggrieved by a decision of the Commission—

• (a) to refuse to grant authorisation;

• (b) to revoke authorisation;

• (c) to impose or vary conditions or as to the conditions imposed or varied; or

• (d) to give a direction,

may appeal against the decision to a tribunal constituted in accordance with section 47.

• (2) Any person in relation to whom the Commission, in deciding to refuse to grant or to revoke authorisation, to impose or vary conditions or to give a direction, makes a determination that a person is not a fit and proper person to hold, or as the case may be, to remain in an office in the society or imposes a requirement that he be removed from an office in the society, may appeal against the decision so far as it relates to that determination or requirement.

• (3) The revocation of a society’s authorisation, or a direction under section 36(3), (5), (6), (7) or (10), shall not have effect until—

• (a) the end of the period within which an appeal can be brought against the Commission’s decision to revoke the authorisation or give the direction; and

• (b) if such an appeal is brought, until it is determined or withdrawn.

• (4) Subsection (3) above applies in relation to the expiry of a society’s authorisation on a refusal to grant authorisation under section 41 as it applies to the revocation of a society’s authorisation.

• (5) Subject to subsection (3) above and any order of the tribunal made under section 47(5), an appeal under subsection (1)(c) or (d) or (2) above shall not affect the operation, pending the determination of the appeal, of any condition or direction which is the subject of the appeal; and no determination of an appeal by any person under subsection (2) above shall affect the revocation or direction for the purposes of which the Commission made its determination or requirement in relation to that person.

• (6) In this section and section 47—

• “conditions” means conditions to be complied with by a building society and imposed on the grant of authorisation under section 9, on the renewal of authorisation under section 41, on reauthorisation under section 44, or under section 42, or imposed or varied under section 42A;

• “direction” means a direction under section 36(3), (5), (6), (7) or (10), section 42B(1) or section 43A;

• “grant” includes renew;

• “revoke” means revoke under section 43(1).

Determination of appeals

47

• (1) Where an appeal is brought under section 46, a tribunal to determine the appeal shall be constituted in accordance with subsection (2) below.

• (2) The tribunal shall consist of—

• (a) a chairman appointed by the Lord Chancellor or the Lord Advocate, and

• (b) two other members appointed by the Chancellor of the Exchequer.

• (3) The chairman shall be

• (a) a person who has a 7 year general qualification, within the meaning of section 71 of the Courts and Legal Services Act 1990;

• (b) an advocate or solicitor in Scotland of at least 7 years’ standing; or

• (c) a member of the Bar of Northern Ireland or solicitor of the Supreme Court of Northern Ireland of at least 7 years’ standing;

; and the other two members shall be persons appearing to the Chancellor of the Exchequer to have respectively experience of accountancy and experience of the business of building societies or of other financial institutions.

• (3A) A person shall not be appointed after the day on which he attains the age of 70 to be the chairman of a tribunal under this section.

• (4) On any appeal against any decision of the Commission the question for the determination of the tribunal shall be whether, for the reasons adduced by the appellant, the decision was unlawful or not justified by the evidence on which it was based.

• (5) The tribunal may, on the application of the building society concerned, order that the operation of—

• (a) any condition or variation of a condition; or

• (b) any direction under section 36(3), (5), (6), (7) or (10), section 42B(1) or section 43A,

which is the subject of an appeal by the society be suspended pending the determination of the appeal.

• (6) The tribunal may confirm or reverse the decision which is the subject of the appeal but shall not have power to vary it except by directing the Commission—

• (a) in the case of an appeal against a decision to refuse to grant authorisation, to determine the conditions to which the grant of authorisation is to be subject;

• (b) in the case of an appeal against a decision to revoke authorisation, to determine the conditions or different conditions subject to which the authorisation is to continue in force, as the case may be;

• (c) in the case of an appeal against the imposition of conditions or as to the conditions imposed by the decision, to determine different conditions subject to which the authorisation is to be granted or is to continue, as the case may be;

• (d) in the case of an appeal against the variation of conditions or as to the variation imposed by the decision, to determine different variations of the conditions subject to which the authorisation is to continue;

• (e) in the case of an appeal against the giving of a direction under section 36(3), to give a direction under section 36(5) or (6);

• (f) in the case of an appeal against the giving of a direction under section 36(5), to give a direction under section 36(3) or (6);

• (g) in the case of an appeal against the giving of a direction under section 36(7), section 42B(1) or section 43A, to give a direction imposing different requirements.

• (7) Where by virtue of subsection (6) above the tribunal directs the Commission to determine conditions or different conditions or to determine different variations of conditions—

• (a) the Commission shall by notice to the society concerned impose such conditions, or such variations of conditions, to be complied with by the society as it considers expedient in order to protect the investments of shareholders or depositors;

• (b) Part III of Schedule 3 to this Act shall apply subject to the modifications made by paragraph 9 of that Schedule; and

• (c) the society concerned may appeal to the tribunal against any of those conditions or variations;

and on any such appeal the tribunal may confirm or reverse the Commission’s decision with respect to the conditions or variations which are the subject of the appeal or may direct the Commission to determine different conditions or variations.

• (7A) Where by virtue of subsection (6) above the tribunal directs the Commission to give a different direction under section 36—

• (a) the Commission shall by notice to the society concerned give such direction as it considers expedient in order to ensure compliance with the relevant statutory requirements within the meaning of that section;

• (b) paragraphs 2 and 3 of Schedule 7A to this Act shall apply subject to the modifications made by paragraph 4 of that Schedule; and

• (c) the society concerned may appeal to the tribunal against that direction;

and on any such appeal the tribunal may confirm or reverse the Commission’s decision with respect to the direction which is the subject of the appeal or may direct the Commission to give a different direction.

• (7B) Where by virtue of subsection (6) above the tribunal directs the Commission to give a different direction under section 43A—

• (a) the Commission shall by notice to the society concerned give such direction as it considers desirable in the interests of shareholders or depositors; and

• (b) the society concerned may appeal to the tribunal against that direction;

and on any such appeal the tribunal may confirm or reverse the Commission’s decision with respect to the direction which is the subject of the appeal or may direct the Commission to give a different direction.

• (8) Where by virtue of subsection (7), (7A) or (7B) above the tribunal, on an appeal against any conditions or variations of conditions or any direction, directs the Commission—

• (a) to determine different conditions or variations; or

• (b) to give a different direction,

the other provisions of that subsection shall apply as they apply where the tribunal gives such a direction by virtue of subsection (6) above.

• (9) Where the tribunal reverses a decision of the Commission to refuse to grant authorisation, it shall direct the Commission to grant it; and where the tribunal reverses a decision of the Commission to make the grant of authorisation subject to conditions, it shall direct the Commission to grant it unconditionally.

• (10) Notice of a tribunal’s determination, together with a statement of its reasons, shall be given to the appellant and to the Commission; and unless the tribunal has directed the Commission to determine conditions, variations or directions or, in any other case, the tribunal directs otherwise, the determination shall come into operation when the notice is given to the appellant.

• (11) The Treasury may out of money provided by Parliament pay to the persons appointed as members of a tribunal under this section such fees and allowances in respect of expenses as the Treasury may determine and any other expenses incurred for the purposes of this section.

Costs, procedure and evidence

48

• (1) A tribunal may give such directions as it thinks fit for the payment of costs or expenses by any party to the appeal.

• (2) On an appeal under section 46(2) the building society in relation to which the determination was made, or upon which the requirement was imposed, shall be entitled to be heard.

• (3) The Treasury may, . . ., make regulations with respect to appeals under section 46; and those regulations may in particular make provision—

• (a) as to the period within which and the manner in which such appeals are to brought;

• (b) as to the manner in which such appeals are to be conducted, including provision for any hearing to be held in private;

• (c) for requiring any person, on tender of the necessary expenses of his attendance, to attend and give evidence or produce documents in his custody or under his control and for authorising the administration of oaths to witnesses;

• (d) for granting to any person such discovery or inspection of documents or right to further particulars as might be granted by a county court in England and Wales or Northern Ireland or, in Scotland, for granting to any person such recovery or inspection of documents as might be granted by the sheriff;

• (e) for enabling an appellant to withdraw an appeal or the Commission to withdraw its opposition to an appeal and for the consequences of any such withdrawal;

• (f) for taxing or otherwise settling any costs or expenses directed to be paid by the tribunal and for the enforcement of any such direction;

• (g) for enabling any functions in relation to an appeal to be discharged by the chairman of the tribunal; and

• (h) as to any other matter connected with such appeals.

• (4) A person who, having been required in accordance with regulations under this section to attend and give evidence, fails without reasonable excuse to attend or give evidence shall be liable on summary conviction to a fine not exceeding level 5 on the standard scale.

• (5) A person who intentionally alters, suppresses, conceals, destroys or refuses to produce any document which he has been required to produce in accordance with regulations under this section, or which he is liable to be so required to produce, shall be liable—

• (a) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or both;

• (b) on summary conviction, to a fine not exceeding the statutory maximum.

• (6) The power to make regulations under this section is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

Further appeals on points of law

49

• (1) An appeal shall lie to the High Court at the instance of the building society or other person concerned or of the Commission on any question of law arising from any decision of a tribunal under section 47; and if the court is of the opinion that the decision was erroneous in law, it shall remit the matter to the tribunal for re-hearing and determination by it.

• (2) In the application of this section to a building society whose principal office is in Scotland, references to the High Court shall be construed as references to the Court of Session.

• (3) No appeal to the Court of Appeal or to the Court of Appeal in Northern Ireland shall be brought from a decision under subsection (1) above except with the leave of that court or of the court or judge from whose decision the appeal is brought.

• (4) An appeal shall lie, with the leave of the Court of Session or the House of Lords, from any decision of the Court of Session under this section, and such leave may be given on such terms as to costs, expenses or otherwise as the Court of Session or the House of Lords may determine.

Advertising etc.

Powers to control advertising

50

Power to avoid apparent association with other bodies

51

• (1) If, as regards a building society and another body corporate which is not an associated body by virtue of section 18, it appears to the Commission that persons who might invest in or otherwise deal with that other body may be misled into believing that there is such a business relationship between the society and that body as indicates that the society has assumed an obligation to discharge that body’s liabilities in any event, the Commission may give the society a direction under subsection (2) below.

• (2) A direction under this subsection is a direction requiring the society—

• (a) if they are available to it, to assume and make exercisable, or to make exercisable, as regards a body specified in the direction, the powers conferred by section 18; or

• (b) to take such steps as are agreed with the Commission for the purpose of removing the appearance of a business relationship with the specified body which indicates the assumption of an obligation of the description referred to in subsection (1) above;

and, within a specified period, to notify the Commission of the course it has decided to take.

• (3) The steps that a building society may be required to take for the purpose of complying with a direction under subsection (2) above may relate to the conduct of its business or to its business relationship (if any) with the other body and, in particular, may require the removal of any person from any office in the society or that body.

• (4) A direction under subsection (2) above shall—

• (a) specify the matters which appear to the Commission to be capable of giving rise to such a belief as is mentioned in subsection (1) above;

• (b) specify the period within which the society must comply with the direction;

• (c) require the society, if it decides to comply with the direction by taking steps to secure the purpose mentioned in subsection (2)(b) above, to notify the Commission of the steps it proposes to take.

• (5) Where a building society, in pursuance of subsection (2)(b) above notifies the Commission of steps which it proposes to take to secure the purpose mentioned in that paragraph then—

• (a) if it appears to the Commission that the steps proposed are reasonably likely to secure that purpose, the Commission shall approve them and direct the society to carry them out;

• (b) if it appears to the Commission that the steps proposed are, with modifications, likely to secure that purpose and the Commission and the society agree on appropriate modifications within the period of 21 days from the date on which the Commission notifies the society of the modifications it proposes for their agreement, the Commission shall approve the steps as modified and direct the society to carry them out;

but otherwise the Commission shall reject the society’s proposals.

• (6) If the Commission rejects a society’s proposals under subsection (5) above the Commission shall direct the society, within a specified period, to take the steps specified in the direction.

• (7) Any direction under subsection (2), (5) or (6) above shall be given by the Commission by notice served on the society.

• (8) The Commission may, if it thinks fit, extend, or further extend, any period during which a building society is to take any steps required of it under any of the foregoing provisions of this section and may do so whether or not application is made to it before the expiry of the period in question.

• (9) If a building society fails, within the period allowed to it under the foregoing provisions of this section, to comply with a direction under subsection (2) or (6) above, the Commission may serve on the society an aggregation notice to take effect on such date as is specified in the notice.

• (10) An aggregation notice under subsection (9) above is a notice directing that, from the date specified in the notice until the notice is withdrawn by the Commission, the assets and liabilities of the body specified in the notice will be aggregated with those of the society for the purposes of the provisions of this Act requiring aggregation of assets or liabilities; and where such a notice is served, and whilst it remains in force, the assets and liabilities of the body specified in the notice shall for the purposes of those provisions be aggregated with those of the society in accordance with the aggregation rules in force under sections 7(10), 8(3) and 20(9).

• (11) A copy of any aggregation notice served on a building society under subsection (9) above shall, whilst in force, be kept in the public file of the society.

• (12) In this section—

• “business relationship” includes the use of business names and the holding by one individual of offices in more than one body;

• “specified” means specified in a direction under any provision of this section;

and “the provisions of this Act requiring aggregation of assets or liabilities” are sections 7, 8 and 20.

Information

Powers to obtain information and documents etc.

52

• (1) This section applies to information, documents or other material, or explanations of matters, which relate to the business of a building society or its plans for future development and, in relation to the obtaining under this section of information or explanations or the production under this section of documents or other material to which it applies “the purposes of its supervisory functions” means the purposes of the discharge by the FCA or the PRA of any of their respective functions under Part I, sections 36, 36A, 37, 42B, 42C and 46A, Part X and section 107.

• (2) Where a building society has connected undertakings this section also applies to information, documents or other material, or explanations of matters, which relate to, or also relate to, the business, or the plans for future development, of every such connected undertaking.

• (3) Where the Commission has grounds under section 51(1) for giving a direction to a building society under subsection (2) of that section in relation to another body corporate this section also applies to information, documents or other material, or explanations of matters, which relate to the business of that other body.

• (4) This section does not authorise any requirement in relation to information, documents or other material to be imposed on a connected undertaking of a building society unless that undertaking carries on business in the United Kingdom; but a requirement may be imposed under this section on a building society in relation to information, documents or other material in the possession or control of a connected undertaking outside the United Kingdom.

• (5) Subject to subsection (4) above, the FCA and the PRA may by notice to a building society, or connected undertaking—

• (a) require the society or undertaking to which it is addressed to furnish to it, within a specified period or at a specified time or times, such specified information as the it considers it needs for the purposes of its supervisory functions;

• (b) require the society or undertaking to which it is addressed to produce to it, at a specified time and place, such specified documents or other material as the it considers it needs for the purposes of its supervisory functions;

• (c) require the society or undertaking to which it is addressed to provide to it, within specified period, such explanations of specified matters as the it considers it needs for the purposes of its supervisory functions;

• (d) require the society or undertaking to which it is addressed to furnish to it a report by an approved accountant or other person with relevant professional skill on, or on specified aspects of, information or documents or other material furnished or produced to the it .

• (5A) Subject to subsection (4) above, any person authorised for the purpose by the FCA or the PRA (“an authorised officer”) may, on producing evidence of his authority, require a building society or connected undertaking—

• (a) to furnish to him forthwith such specified information as the body which authorised the person considers it needs for the purposes of its supervisory functions;

• (b) to produce to him forthwith such documents or other material as the body which authorised the person considers it needs for those purposes;

• (c) to provide to him forthwith such explanations of specified matters as the body which authorised the person considers it needs for those purposes.

• (6) Where by virtue of subsection (5)(a) to (c) above the FCA or the PRA has power , or by virtue of subsection (5A) above an authorised officer has power, to require the furnishing of any information, the production of any document or material or the provision of any explanation, by a building society or connected undertaking, the FCA, the PRA or the authorised officer (as the case may be) shall have the like power as regards any person who—

• (a) is or has been an officer or employee or agent of the society or undertaking; or

• (b) in the case of documents or material, appears to the FCA, the PRA or the authorised officer (as the case may be) to have the document or material in his possession or under his control.

• (7) Where any person from whom production of a document or material is required under subsection (6) above claims a lien on the document or material, the production of it shall be without prejudice to the lien.

• (8) Nothing in the foregoing provisions of this section shall compel the production by a relevant lawyer of a document or material containing a privileged communication made by him or to him in that capacity or the furnishing of information contained in a privileged communication so made.

• (9) Where, by virtue of subsection (5), (5A) or (6) above, the FCA, the PRA or an authorised officer requires the production by a building society or connected undertaking or any other person of documents or material, the FCA, the PRA or the authorised officer (as the case may be) may—

• (a) if the documents or material are produced, take copies of or extracts from them and require the person who produced them, or any other person who is a present or past director or officer of, or is or was at any time employed by, the building society or connected undertaking concerned, to provide an explanation of the documents or material; and

• (b) if the documents or material are not produced, require the person who was required to produce the documents or material to state, to the best of his knowledge and belief, where the documents or material are.

• (10) Any person who, when required to do so under this section, fails without reasonable excuse to furnish any information or accountant’s report, to produce any documents or material, or to provide any explanation or make any statement, shall be liable on summary conviction—

• (a) to a fine not exceeding level 5 on the standard scale; and

• (b) in the case of a continuing offence, to an additional fine not exceeding £200 for every day during which the offence continues.

• (11) Any building society which furnishes any information, provides any explanation or makes any statement which is false or misleading in a material particular shall be liable, on conviction on indictment or on summary conviction, to a fine which, on summary conviction, shall not exceed the statutory maximum.

• (12) Any person who knowingly or recklessly furnishes any information, provides any explanation or makes any statement which is false or misleading in a material particular shall be liable—

• (a) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or both; and

• (b) on summary conviction, to a fine not exceeding the statutory maximum.

• (13) In this section—

• “agent”, in relation to a building society or connected undertaking, includes its bankers, accountants, solicitors and auditors;

• “approved”, in relation to an accountant or other person with relevant professional skill, means approved by the FCA or the PRA ;

• “relevant lawyer” means a barrister, advocate, solicitor or other legal representative communications with whom may be the subject of a claim to professional privilege;

• “specified” means specified in a notice or requirement under this section.

Confidentiality of certain information obtained by Commission

53

• (1) Subject to the provisions of this section and section 54, no information obtained by or furnished to the Commission under or for the purposes of this Act and relating to the business of the building society or other body or its or their plans for future development or to any person who is or has been or has been appointed or, in the case of a director, nominated or proposed as, an officer of a building society or other body may be disclosed (otherwise than to an officer or employee of the recipient authority) except—

• (a) with the consent of the body to which, or person to whom, the information relates and (if different) of the person who furnishes it to the Commission; or

• (b) to the extent that it is information which is at the time of the disclosure, or has previously been, available to the public from other sources; or

• (c) in the form of a summary or collection of information so framed as not to enable information relating to any particular body or person to be ascertained from it; or

• (d) to the extent that it is information which is provided for the purpose, under any provision of this Act, of its being made (in whatever manner) available to the public.

• (2) Nothing in subsection (1) above prohibits the disclosure of information—

• (a) with a view to the institution of, or otherwise for the purposes of, any criminal proceedings, whether under this Act or otherwise;

• (b) with a view to the institution of, or otherwise for the purposes of—

• (i) any civil proceedings by or at the relation of or against the Commission or by the Investor Protection Board arising out of the discharge of their respective functions under this Act; or

• (ii) any civil proceedings in which the Commission will have or has a right to be heard;

• (c) in order to enable or assistthe Commission to discharge any of its functions under this Act or any Community obligation;

• (d) in order to enable or assistthe central office to discharge any of its functions under this Act;

• (e) in order to enable or assistany person appointed investigator under section 55 or inspector under section 56 to discharge his duties under that section;

• (f) in order to enable or assistthe auditors of the society to discharge their duties to the Commission;

• (g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2A) As regards the disclosure of information with a view to the institution of, or otherwise for the purposes of, any proceedings in respect of the society under the Bankruptcy (Scotland) Act 1985 or the Insolvency Act 1986 , the disclosures permitted by subsection (2)(b) above do not include the disclosure of information relating to a person who (not being a director or other officer of the society) is or has been, to the knowledge of the Commission, involved in an attempt to secure the survival of the society as a going concern.

• (3) If, in order to enable or assistthe Commission properly to discharge any of its functions under this Act or any such obligation, the Commission considers it necessary to seek advice from any qualified person on any matter of law, accountancy, valuation of property or other matter requiring the exercise of professional skill, nothing in subsection (1) above prohibits the disclosure to that person of such information as may appear to the Commission to be necessary to ensure that he is properly informed with respect to the matters on which his advice is sought.

• (4) Nothing in subsection (1) above prohibits the disclosure of information—

• (a) to the Treasury in circumstances where, in the opinion of the Commission, it is desirable or expedient that the information should be disclosed—

• (i) in the interests of shareholders or depositors or in the public interest; or

• (ii) with a view to the exercise by the Treasury of any of its functions under this Actand (in either case) the disclosure would, in its opinion, be in accordance with article 12(7) of the First Council Directive

; or

• (b) to the Investor Protection Board in order to enable the Board to discharge any of its functions under the protective scheme provisions of Part IV.

• (5) Nothing in subsection (1) above prohibits the disclosure of information to the Financial Services Authority in circumstances where, in the opinion of the Commission, it is desirable or expedient that the information should be disclosed with a view to facilitating the discharge—

• (a) by the Commission, of any of its functions under this Act; or

• (b) by the Authority of any of its functions under the Banking Act 1987 or as a supervisor of money market institutions;

nor does subsection (1) above prohibit further disclosure of the information by the Authority with the consent of the Commission and within the limits permitted by Part V of that Act other than section 84(5) so far as it relates to disclosure in the public interest.

• (5A) Nothing in subsection (1) above prohibits the disclosure of information to the Bank of England where, in the opinion of the Commission, it is desirable or expedient that the information should be disclosed with a view to facilitating the discharge—

• (a) by the Commission of any of its functions under this Act; or

• (b) by the Bank of any of its functions;

nor does subsection (1) above prohibit further disclosure of the information by the Bank of England with the consent of the Commission.

• (6) Nothing in subsection (1) above prohibits the disclosure of information, with the consent of the Treasury, to the Secretary of State or the Department of Economic Development in circumstances where, in the opinion of the Commission,

• (a) it is desirable or expedient that the information should be disclosed in the interests of shareholders or depositors or, in the case of information for the Secretary of State, in the public interest; and

• (b) disclosure is in accordance with article 12(7) of the First Council Directive.

• (7) Nothing in subsection (1) above prohibits the disclosure of information to the Secretary of State or the Department of Economic Development in circumstances where, in the opinion of the Commission, it is desirable or expedient that the information should be disclosed with a view to facilitating the discharge—

• (a) by the Commission, of any of its functions under this Act, or

• (b) by the Secretary of State, of any functions of his under the Insurance Companies Act 1982, Part XIV of the Companies Act 1985, Part XIII of the Insolvency Act 1986, the Financial Services Act 1986 or Part II, III or VII of the Companies Act 1989;

• (c) by the Department, of any of its functions under Articles 424, 425(2), 435, 437, 439(1) or 440(2) or (3) of the Companies (Northern Ireland) Order 1986 (appointment of investigators and requirement to produce documents) Part XII of the Insolvency (Northern Ireland) Order 1989,Part III of the Companies (Northern Ireland) Order 1990 or Part II or V of the Companies (No. 2) (Northern Ireland) Order 1990;;

nor does subsection (1) above prohibit further disclosure of the information by the Secretary of State or the Department with the consent of the Commission if the disclosure is made with a view to facilitating the discharge of any of the functions mentioned in paragraph (b) or, as the case may be, paragraph (c) above.

• (8) Subject to subsection (9) below, nothing in subsection (1) above prohibits the disclosure of information to a prescribed regulatory authority in circumstances where, in the opinion of the Commission, it is desirable or expedient that the information should be disclosed—

• (a) in the public interest, or

• (b) in the interests of shareholders or depositors, or

• (c) with a view to facilitating the discharge—

• (i) by the Commission, of any of its functions under this Act, or

• (ii) by the regulatory authority, of any prescribed functions of the authority;

nor does subsection (1) above prohibit further disclosure of the information by a prescribed regulatory authority in prescribed circumstances, subject to prescribed conditions and with the consent of the Commission if the disclosure is made with a view to facilitating the discharge of any prescribed functions of the authority.

• (9) The Commission, with the consent of the Treasury, may, by order designate public and other authorities as prescribed regulatory authorities for the purposes of subsection (8) above and an order under this subsection—

• (a) shall specify the supervisory functions of prescribed regulatory authorities which are prescribed functions for those purposes;

• (b) may restrict thecircumstances in which information may, by virtue of that subsection, be disclosed or further disclosed, whether by excluding any of paragraphs (a), (b) or (c) of that subsection or otherwise; and

• (c) may impose conditions subject to which the information may be disclosed or further disclosed;

and in that subsection “prescribed” means prescribed by an order under this subsection.

• (10) The power to make an order under subsection (9) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

• (11) Nothing in subsection (1) above prohibits the disclosure to an overseas regulatory authority of information which relates to a building society which, or a building society’s connected undertaking which,—

• (a) carries on or proposes to carry on any business in that country or territory, or

• (b) has or proposes to acquire an interest in a body corporate which carries on or proposes to carry on in that country or territory any business corresponding to any business of a building society, or

• (c) appears to the Commission to be associated with a body incorporated under the law of that country or territory or whose principal place is, or is proposed to be, in that country or territory,

if it appears to the Commission that the disclosure of the information would assist that authority in the discharge of its functions or would assist the Commission in the discharge of any of its functions under this Act.

• (11A) Subsection (11) above does not apply in relation to disclosures to an overseas regulatory authority which is not a supervisory authority in another member State unless the Commission is satisfied that the authority is subject to restrictions on further disclosures at least equivalent to those imposed by this section and section 54.

• (12) Subsection (11) above applies in relation to the disclosure of information which relates to any person who is or has been or has been appointed or, in the case of a director, nominated or proposed as an officer of a building society or other body in the case of which that subsection authorises the disclosure of information which relates to it as it applies to the disclosure of information which relates to the society or other body.

• (12A) Nothing in subsection (1) above prohibits the disclosure of information to the persons specified in the first column of the following Table if, in the opinion of the Commission, it is desirable or expedient that the information should be disclosed with a view to facilitating the discharge—

• (a) by the Commission, of any of its functions under this Act; or

• (b) by that person of the functions specified in relation to him in the second column of that Table.

Person	Function
1 An inspector appointed under Part XIV of the Companies Act 1985 or Part XV of the Companies (Northern Ireland) Order 1986 or, so far as relating to offences involving securities of a company, section 177 of the Financial Services Act 1986.	Functions under that Part or, so far as so relating, that section.
2 A person authorised to exercise powers under section 84 of the Companies Act 1989.	Functions under that section, so far as relating to the breach of any law relating to companies.
3 A recognised clearing house (within the meaning of the Financial Services Act 1986).	Functions in its capacity as a clearing house recognised under the Financial Services Act 1986 so far as they are exercisable in relation to defaults or potential defaults by market participants.
4 A person approved under the Uncertificated Securities Regulations 1995 as an operator of a relevant system (within the meaning of those Regulations).	Functions as a person so approved so far as they are exercisable in relation to defaults or potential defaults by market participants.
5 A recognised supervisory body (within the meaning of Part II of the Companies Act 1989 or Part III of the Companies (Northern Ireland) Order 1990).	Functions in its capacity as such a body under that Part, or functions in relation to disciplinary proceedings against auditors.
6 A recognised professional body (within the meaning of section 391 of the Insolvency Act 1986 or Article 350 of the Insolvency (Northern Ireland) Order 1989).	Functions in its capacity as such a body under that Act or Order or functions in relation to disciplinary proceedings against insolvency practitioners (within the meaning of that Act or Order).
7 A supervisory authority in another EEA State.	Functions in its capacity as a supervisor of systems for the transfer of funds between credit institutions and their customers."

• (13) Any person who discloses information in contravention of subsection (1) above shall be liable—

• (a) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or both; and

• (b) on summary conviction, to a fine not exceeding the statutory maximum.

• (13A) Information which is disclosed to a person with a view to enabling, facilitating or assisting the discharge of any functions shall not be used otherwise than with a view to enabling, facilitating or assisting the discharge of those functions.

• (13B) Any person who uses information in contravention of subsection (13A) above shall be liable on summary conviction to imprisonment for a term not exceeding three months or to a fine not exceeding level 5 on the standard scale or to both.

• (14) In this section—

• (15) Subject to subsection (15A) below,any reference in this section to enabling, facilitating or assisting the discharge of any functions is a reference to enabling, facilitating or assisting the discharge of those functions in relation to—

• (a) a financial market; . . .

• (b) persons carrying on the business of banking or insurance, Consumer Credit Act businesses or the business of providing other financial services; or

• (c) persons involved in the operation of occupational pension schemes (within the meaning of the Pension Schemes Act 1993 or, in Northern Ireland, the Pension Schemes (Northern Ireland) Act 1993)

and in this subsection 'Consumer Credit Act business’ has the same meaning as in the Banking Coordination (Second Council Directive) Regulations 1992.

• (15A) Subsection (15) above shall not apply to disclosures made by virtue of subsection (12A) above, or to disclosures made with a view to facilitating the discharge of any of the following functions, namely—

• (a) functions of the Secretary of State under Part XIV of the Companies Act 1985, Part XIII of the Insolvency Act 1986 or Part II of the Companies Act 1989 or, so far as relating to the breach of any law relating to companies, under section 83 of the Companies Act 1989; or

• (b) functions of the Department of Economic Development in Northern Ireland under Part XV of the Companies (Northern Ireland) Order 1986, Part XII of the Insolvency (Northern Ireland) Order 1989 or Part III of the Companies (Northern Ireland) Order 1990.

• (16) Any reference in this section or section 54 to the Commission’s functions under this Act includes a reference to its functions under those Regulations.

Information disclosed to Commission from other sources

54

• (1) If and in so far as it appears to the Secretary of State that the disclosure of any information will enable the FCA or the PRA better to discharge its functions under this Act (but not otherwise),—

• (a) information obtained by the Secretary of State under section 447 or 448 of the Companies Act 1985 (inspection of companies’ books and papers) may be disclosed to the FCA or the PRA or further disclosed, notwithstanding the provision as to security of information contained in section 449 or that Act; and

• (b) where the information is contained in a report made by inspectors appointed under section 431, 432 or 442 of the Companies Act 1985 (investigation of affairs or ownership of companies and certain other bodies corporate) the Secretary of State may furnish a copy of the report to the FCA or the PRA .

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Inspections, etc

Investigations on behalf of Commission

55

• (1) If it appears to the FCA or the PRA desirable to do so for the purposes of its supervisory functions in relation to a building society, it may appoint one or more competent persons to investigate and report to it on the state and conduct of the business of the society concerned, or any particular aspect of that business.

• (2) If a person appointed under subsection (1) above thinks it necessary for the purposes of his investigation, he may also investigate the business of any body corporate which is or has at any relevant time been a connected undertaking of the building society under investigation

• (3) It shall be the duty of every officer, employee and agent of a building society or other body which is under investigation—

• (a) to produce to the persons appointed under subsection (1) above all records, books and papers relating to the body concerned which are in his custody or power; and

• (b) to attend before those persons when required to do so; and

• (c) otherwise to give to those persons all assistance in connection with the investigation which he is reasonably able to give.

• (4) Any officer, employee or agent of a building society or other body who—

• (a) without reasonable excuse fails to produce any records, books or papers which it is his duty to produce under subsection (3) above, or

• (b) without reasonable excuse fails to attend before the person appointed under subsection (1) above when required to do so, or

• (c) without reasonable excuse fails to answer any question which is put to him by persons so appointed with respect to any building society or other body corporate which is under investigation,

shall be liable on summary conviction to a fine not exceeding level 5 on the standard scale.

• (5) Any officer, employee or agent of a building society or other body who knowingly or recklessly furnishes to any person appointed under subsection (1) above any information which is false or misleading in a material particular, shall be liable—

• (a) on conviction on indictment to imprisonment for a term not exceeding two years or to a fine or both; and

• (b) on summary conviction to a fine not exceeding the statutory maximum.

• (6) In this section—

• (a) “agent”, in relation to a building society or other body whose business is under investigation, includes its bankers, its accountants and solictors and any persons, where they are not officers of the other body concerned, who are employed as its auditors;

• (b) “the purposes of its supervisory functions”, in relation to the FCA or the PRA , has the same meaning as in section 52; and

• (c) any reference to an officer, employee or agent of a building society or other body includes a reference to a person who has been but no longer is an officer, employee or agent of that society or other body.

Inspections and special meetings: general

56

• (1) In the circumstances mentioned in subsection (2) below, the FCA and the PRA —

• (a) may appoint one or more competent inspectors to investigate and report on the affairs of a building society, or

• (b) may call a special meeting of a building society to consider its affairs, or

• (c) may (either on the same or on different occasions) both appoint an inspector or inspectors and call a special meeting for those purposes;

and, in the circumstances mentioned in subsection (3) below, the investigation or consideration may extend to the affairs of any body corporate which is or at any relevant time has been a connected undertaking of the building society.

• (1A) The FCA must consult the PRA before exercising the power in subsection (1).

• (1B) The PRA must consult the FCA before exercising the power in subsection (1).

• (2) The powers conferred by subsection (1) above may be exercised either—

• (a) on the application of the requisite number of members of the society, or

• (b) where no such application is made but the FCA or the PRA (as the case may be) is of opinion that an investigation should be held into the affairs of the society, or that the affairs of the society call for consideration by a meeting of its members.

• (3) The powers conferred by subsection (1) above may be exercised in relation also to a connected undertaking of a building society either—

• (a) where the application referred to in subsection (2)(a) above so requests, or

• (b) where the application contains no such request but the FCA or the PRA (as the case may be) is of the opinion that it is necessary for the purposes of the investigation into or consideration of the affairs of the building society that the affairs of the connected undertaking should also be investigated or considered.

• (4) Where the inspectors are of the opinion mentioned in subsection (3)(b) above in relation to a connected undertaking of a building society they may, with the consent of the body exercising its powers under subsection (1) , extend their investigation to the affairs of the connected undertaking and make their report accordingly.

• (5) For the purposes of subsections (1) to (3) above the requisite number of members—

• (a) in the case of a building society having more than 1,000 members, is 100, and

• (b) in the case of any other building society, is one-tenth of the whole number of members of the society.

• (6) The following provisions shall have effect where an application is made as mentioned in subsection (2)(a) above, that is to say—

• (a) the application shall be supported by such evidence as the body to which the application was made may require for the purpose of showing that the applicants have good reason for requiring an investigation by inspectors or consideration by a special meeting, as the case may be, and that the applicants are not actuated by malicious, frivolous, vexatious or scandalous motives in their application;

• (b) such notice of the application shall be given to the building society and, in a case where the investigation is to extend to its affairs also, to the society’s connected undertaking, as the body to which the application was made may direct;

• (c) the body to which the application was made shall require the applicants to give security for payment of the costs of the investigation or meeting before the inspector is appointed or the meeting is called subject, in the case of the costs of an investigation, to an amount not exceeding the corresponding Companies Act limit; and

• (d) as regards the expenses of or incidental to the investigation or meeting—

• (i) in the case of an investigation (in whichever way instituted), the expenses shall be defrayed in the first instance by the body to which the application was made but without prejudice to its rights to contribution under section 57(10);

• (ii) in the case of a meeting, the expenses shall be defrayed by the applicants, or out of the funds of the society, or by the members or officers or former members or officers of the society, in such proportions as the body to which the application was made may direct.

• (7) Before the FCA or the PRA exercises its powers under subsection (1) above in a case falling within subsection (2)(b) above, it shall inform the building society of the action which it proposes to take and the grounds for that action, and the society shall, within 14 days of receiving the information, be entitled to give the body exercising its powers under subsection (1) an explanatory statement in writing by way of a reply.

• (8) Where the FCA or the PRA proposes to exercise its powers under subsection (1) above in a case falling within subsection (3)(b) above, subsection (7) above shall apply in relation to the connected undertaking as it applies in relation to the society.

• (9) Inspectors appointed under this section shall, in addition to having the powers which are necessary for or incidental to the discharge of their functions under this section, have the powers specified in section 57.

• (10) Where a special meeting is called under this section—

• (a) the body exercising its powers under subsection (1) may direct at what time and place the meeting is to be held, and what matters are to be discussed and determined at the meeting, and may give such other directions as it thinks fit with respect to the calling, holding and conduct of the meeting;

• (b) the body exercising its powers under subsection (1) may appoint a person to be chairman at the meeting or, in default of such an appointment, the meeting may appoint its own chairman;

• (c) the meeting shall have all the powers of a meeting called according to the rules of the building society;

and the provisions of this subsection and any direction given under it shall have effect notwithstanding anything in the rules of the building society.

• (11) In this section “the corresponding Companies Act limit”, in relation to security for the payment of the costs of an investigation, is £5,000 or such other sum as is specified for the time being in an order under section 431(4) of the Companies Act 1985 for the purposes of that section.

Inspections: supplementary provisions

57

• (1) In this section—

• “the body under investigation” means the building society whose affairs or, as the case may be, the building society whose affairs, and each connected undertaking of the building society whose affairs, are the subject of the investigation;

• “the inspectors” means the persons appointed ... under section 56 to conduct the investigation;

• “the investigation” means the investigation under section 56 which the inspectors have been appointed to hold;

and references to officers or to agents include past, as well as present, officers or agents (as the case may be) and “agents”, in relation to a building society or any connected undertaking of a building society, includes its bankers, its accountants and solicitors and its auditors.

• (2) When the inspectors have been appointed it is the duty of all officers and agents of the body under investigation—

• (a) to produce to the inspectors all documents and material of or relating to the body under investigation which are in their custody or power;

• (b) to attend before the inspectors when required to do so, and

• (c) otherwise to give the inspectors all assistance in connection with the investigation which they are reasonably able to give.

• (3) If the inspectors consider that a person other than an officer or agent of the body under investigation is or may be in possession of information concerning its affairs, they may require that person to produce to them any documents or material in his custody or power relating to the body under investigation, to attend before them and otherwise to give them all assistance in connection with the investigation which he is reasonably able to give; and it is that person’s duty to comply with the requirement.

• (4) The inspectors may examine on oath the officers and agents of the body under investigation, and any such person as is mentioned in subsection (3) above, in relation to the affairs of the body under investigation, and may administer an oath accordingly.

• (5) An answer given by a person to a question put to him under the foregoing provisions of this section may be used in evidence against him.

• (5A) However, in criminal proceedings in which that person is charged with an offence to which this subsection applies—

• (a) no evidence relating to the answer may be adduced, and

• (b) no question relating to it may be asked,

by or on behalf of the prosecution, unless evidence relating to it is adduced, or a question relating to it is asked, in the proceedings by or on behalf of that person.

• (5B) Subsection (5A) above applies to any offence other than—

• (a) an offence under section 2 or 5 of the Perjury Act 1911 (false statements made on oath otherwise than in judicial proceedings or made otherwise than on oath);

• (b) an offence under section 44(1) or (2) of the Criminal Law (Consolidation) (Scotland) Act 1995 (false statements made on oath or otherwise than on oath); or

• (c) an offence under Article 7 or 10 of the Perjury (Northern Ireland) Order 1979 (false statements made on oath otherwise than in judicial proceedings or made otherwise than on oath).

• (6) If an officer or agent of the body under investigation or any such person as is mentioned in subsection (3) above—

• (a) refuses to produce any document or material which it is his duty under this section to produce, or

• (b) refuses to attend before the inspectors when required to do so, or

• (c) refuses to answer any question put to him by the inspectors with respect to the affairs of the body under investigation,

the inspectors may certify the refusal in writing to the High Court; and the court may thereupon inquire into the case and, after hearing any witnesses who may be produced against or on behalf of the alleged offender and after hearing any statement which may be offered in defence, may punish the offender in like manner as if he had been guilty of contempt of the court.