Banking Act 1987 (repealed)

Person	Functions
1.The Secretary of State.	Functions 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.
2.The Treasury	Functions under the Insurance Companies Act 1982, under the Financial Services Act 1986 or under Part III or Part VII of the Companies Act 1989 .
3.An inspector appointed under Part XIV of the Companies Act 1985 or section 94 or 177 of the Financial Services Act 1986.	Functions under that Part or that section.
4.A person authorised to exercise powers under section 43A or 44 of the Insurance Companies Act 1982, section 447 of the Companies Act 1985, section 106 of the Financial Services Act 1986 or section 84 of the Companies Act 1989.	Functions under that section.
4A The Bank of England.	Functions in its capacity as a monetary authority or supervisor of systems for the transfer of funds between credit institutions and their customers.
5.The Chief Registrar of friendly societies, . . . and the Assistant Registrar of Friendly Societies for Scotland.	Functions under the enactments relating to friendly societies . . ..
5AThe Friendly Societies Commission.	Functions under the enactments relating to friendly societies or under the Financial Services Act 1986.
6.The Industrial Assurance Commissioner and the Industrial Assurance Commissioner for Northern Ireland.	Functions under the enactments relating to industrial assurance.
7.The Building Societies Commission.	Functions under the Building Societies Act 1986 and protecting the interests of the shareholders and depositors of building societies.
8.The Director General of Fair Trading.	Functions under the Consumer Credit Act 1974.
9.A designated agency (within the meaning of the Financial Services Act 1986.	Functions under the Financial Services Act 1986 or Part VII of the Companies Act 1989.
10.A transferee body or the competent authority (within the meaning of the Financial Services Act 1986).	Functions under the Financial Services Act 1986.
11.A recognised self-regulating organisation, recognised professional body, recognised investment exchange, . . . or recognised self-regulating organisation for friendly societies (within the meaning of the Financial Services Act 1986).	Functions in its capacity as an organisation, body, or exchange recognised under the Financial Services Act 1986.
11AA recognised clearing house (within the meaning of the Financial Services Act 1986).	Functions in its capacity as a clearing house under the Financial Services Act 1986 so far as they are exercisable in relation to defaults or potential defaults by market participants.
11BA person approved under the Uncertificated Securities Regulations 2001 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.
11CA recognised supervisory body (within the meaning of Part II of the Companies Act 1989).	Functions in its capacity as such a body under that Part or functions in relation to disciplinary proceedings against auditors.
. . .	. . .
12.A recognised professional body (within the meaning of section 391 of the Insolvency Act 1986).	Functions in its capacity as such a body under the Insolvency Act 1986 or functions in relation to disciplinary proceedings against insolvency practitioners (within the meaning of that Act).
13.The Department of Economic Development in Northern Ireland.	Functions under Part XV of the Companies (Northern Ireland) Order 1986 or Part XII of the Insolvency (Northern Ireland) Order 1989or Part III of the Companies (Northern Ireland) Order 1990 or Part II or V of the Companies (No. 2) (Northern Ireland) Order 1990.
14.An inspector appointed under Part XV of the Companies (Northern Ireland) Order 1986 . . .	Functions under that Part . . ..
15.A person authorised to exercise powers under Article 440 of the Companies (Northern Ireland) Order 1986 . . ..	Functions under that Article . . ..
16.The Official Receiver or, in Northern Ireland, the Official Receiver for Northern Ireland	Investigating the cause of the failure of an authorised institution or former authorised institution in respect of which a winding-up order, or bankruptcy orderhas been made.
17.Panel on Take-overs and Mergers	All its functions
18.A person included in the list maintained by the Authority for the purposes of section 171 of the Companies Act 1989.	Functions under settlement arrangements to which regulations under that section relate.
19.A recognised professional body (within the meaning of Article 350 of the Insolvency (Northern Ireland) Order 1989).	Functions in its capacity as such a body under the Insolvency (Northern Ireland) Order 1989 or functions in relation to disciplinary proceedings against insolvency practitioners (within the meaning of that Order).
20A recognised supervisory body (within the meaning of 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.
20. The Occupational Pensions Regulatory Authority.	Functions under the Pension Schemes Act 1993 or the Pensions Act 1995 or any enactment in force in Northern Ireland corresponding to either of them.
[21. The Operator within the meaning of the Uncertificated Securities Regulations 1992.]	[Functions of the Treasury under Parts IX, X, XII and XIV of the Uncertificated Securities Regulations 1992 which are for the time being delegated to the Operator. ]

• (2) The Treasury may after consultation with the Authority by order amend the Table in subsection (1) above by—

• (a) adding any person exercising regulatory functions and specifying functions in relation to that person;

• (b) moving any person for the time being specified in the Table; or

• (c) altering the functions for the time being specified in the Table in relation to any person;

and the Treasury may also after consultation with the Authority by order restrict the circumstances in which, or impose conditions subject to which, disclosure is permitted in the case of any person for the time being specified in the Table.

• (3) An order under subsection (2) above shall be subject to annulment in pursuance of a resolution of either House of Parliament.

• (4) Section 82 above does not preclude the disclosure by any person specified in the first column of the Table in subsection (1) above of information obtained by him by virtue of that subsection if he makes the disclosure with the consent of the Authority and for the purpose of enabling or assisting him to discharge any functions specified in relation to him in the second column of that Table; and before deciding whether to give its consent to such a disclosure by any person the Authority shall take account of such representations made by him as to the desirability of or the necessity for the disclosure.

• (5) Section 82 above does not preclude the disclosure by the Authority of information to the Treasury if disclosure appears to the Authority to be—

• (a) desirable or expedient in the interests of depositors; or

• (b) in the public interest,

and (in either case) in accordance with article 30(9) of the Banking Consolidation Directive.

• (5A) Section 82 above does not preclude the disclosure by the Authority of information to the Secretary of State for purposes other than those specified in relation to him in subsection (1) above if the disclosure is made with the consent of the Treasury and—

• (a) the information relates to an authorised institution or former authorised institution and does not enable the financial affairs of any other identifiable person to be ascertained and disclosure appears to the Authority to be necessary in the interests of depositors or in the public interest; or

• (b) in any other case, disclosure appears to the Authority to be necessary in the interests of depositors;

and (in either case) disclosure appears to the Authority to be in accordance with article 30(9) of the Banking Consolidation Directive.

• (6) Section 82 above does not preclude the disclosure of information for the purpose of enabling or assisting an authority in a country or territory outside the United Kingdom to exercise—

• (a) functions corresponding to those of—

• (i) the Authority under this Act or the Banking Coordination (Second Council Directive) Regulations 1992;

• (ii) the Secretary of State or the Treasuryunder the Insurance Companies Act 1982, Part XIII of the Insolvency Act 1986 or the Financial Services Act 1986; or

• (iii) the competent authority under Part IV of the Financial Services Act 1986;

• (b) functions in connection with rules of law corresponding to any of the provisions of Part V of the Criminal Justice Act 1993 (insider dealing) or Part VII of the Financial Services Act 1986; . . .

• (c) supervisory functions in respect of bodies carrying on business corresponding to that of building societies.

• (7) Subsection (6) above does not apply in relation to disclosures to an authority which is not a supervisory authority in another member State unless the Authority is satisfied that the authority is subject to restrictions on further disclosures at least equivalent to those imposed by this Part of this Act.

• (8) Information which is disclosed to a person in pursuance of subsection (1), (4) or (6) above shall not be used otherwise than for the purpose mentioned in that subsection.

• (9) Any person who uses information in contravention of subsection (8) above shall be liable on summary conviction to imprisonment for a term not exceeding three months or to a fine not exceeding the fifth level on the standard scale or to both.

• (10) Subject to subsection (11) below,Any reference in this section to enabling or assisting any person to discharge or exercise any functions is a reference to enabling or assisting that person to discharge or exercise 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.

• (11) Subsection (10) above shall not apply in relation to references to enabling or assisting the discharge or exercise 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;

• (b) functions of an inspector under Part XIV of the Companies Act 1985 or, so far as relating to offences involving securities of a company, under section 177 of the Financial Services Act 1986;

• (b) functions of a person authorised to exercise powers under section 84 of the Companies Act 1989, so far as relating to the breach of any law relating to companies;

• (d) functions of a recognised clearing house (within the meaning of the Financial Services Act 1986);

• (e) functions of a person approved under the Uncertificated Securities Regulations 2001 as an operator of a relevant system (within the meaning of those Regulations);

• (f) functions of a recognised supervisory body (within the meaning of Part II of the Companies Act 1989);

• (g) functions of a recognised professional body (within the meaning of section 391 of the Insolvency Act 1986);

• (h) 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;

• (i) functions of an inspector under Part XV of the Companies (Northern Ireland) Order 1986;

• (j) functions of a recognised professional body (within the meaning of Article 350 of the Insolvency (Northern Ireland) Order 1989);

• (k) functions of a recognised supervisory body (within the meaning of Part III of the Companies (Northern Ireland) Order 1990);

• (l) functions of a supervisory authority in another EEA State in its capacity as a supervisor of systems for the transfer of funds between credit institutions and their customers.

• (12) In this section ’another EEA State’ means a State other than the United Kingdom which is a contracting party to the agreement on the European Economic Area signed at Oporto on 2nd May 1992 as adjusted by the Protocol signed at Brussels on 17th March 1993.

Other permitted disclosures

85

• (1) Section 82 above does not preclude the disclosure of information—

• (a) for the purpose of enabling or assisting the Board of Banking Supervision or the Deposit Protection Board or any other person to discharge its or his functions under this Act;

• (b) for the purpose of enabling or assisting a person to do anything which he is required to do in pursuance of a requirement imposed under section 39(1)(b) above;

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

• (d) in connection with any other proceedings arising out of this Act;

• (e) with a view to the institution of, or otherwise for the purposes of, proceedings under section 7 or 8 of the Company Directors Disqualification Act 1986 or Article 10 or 11 of the Companies (Northern Ireland) Order 1989 in respect of a director or former director of an authorised institution or former authorised institution;

• (f) in connection with any proceedings in respect of an authorised institution or former authorised institution under the Bankruptcy (Scotland) Act 1985 or Parts I to VII or IX to XI of the Insolvency Act 1986 or Parts II to VII or IX and X of the Insolvency (Northern Ireland) Order 1989 which the Authority has instituted or in which it has a right to be heard;

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

• (h) in pursuance of a Community obligation.

• (1A) The disclosures permitted by subsection (1)(f) above do not include the disclosure of information relating to a person who (not being a director, controller or manager of the institution) is or has been, to the knowledge of the person making the disclosure, involved in an attempt to secure the survival of the institution as a going concern.

• (2) Section 82 above does not preclude the disclosure by the Authority to the Director of Public Prosecutions, the Director of Public Prosecutions for Northern Ireland, the Lord Advocate, a procurator fiscal or a constable of information obtained by virtue of section 41, 42 or 43 above or of information in the possession of the Authority as to any suspected contravention in relation to which the powers conferred by those sections are exercisable.

• (3) Section 82 above does not preclude the disclosure of information by the Deposit Protection Board to any person or body responsible for a scheme for protecting depositors or investors (whether in the United Kingdom or elsewhere) similar to that for which provision is made by Part II of this Act if it appears to the Board that disclosing the information would enable or assist the recipient of the information or the Board to discharge his or its functions.

Information supplied to Bank by relevant overseas authority

86

• (1) Section 82 above applies also to information which—

• (a) has been supplied to the Authority for the purposes of any relevant functions by the relevant supervisory authority in a country or territory outside the United Kingdom; or

• (b) has been obtained for those purposes by the Authority, or by a person acting on its behalf, in another member State.

• (2) Subject to subsections (3) and (4) below, information supplied or obtained as mentioned in subsection (1)(a) or (b) above shall not be disclosed except as provided by section 82 above or—

• (a) for the purpose of enabling or assisting the Authority to discharge any relevant functions or any functions in its capacity as a designated agency within the meaning of the Financial Services Act 1986; or

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

• (3) Information supplied to the Authority for the purposes of any relevant functions by the relevant supervisory authority in another member State may be disclosed—

• (a) to a relevant recipient, if the authority consents to its disclosure and the case is one in which information to which section 82 above applies could be so disclosed by virtue of section 84(1) or (2) above; or

• (b) to the Treasury or the Secretary of State, if the authority consents to its disclosure and the case is one in which information to which section 82 above applies could be so disclosed by virtue of section 84(5) or (5A) above.

• (4) Information obtained as mentioned in subsection (1)(b) above may be disclosed—

• (a) to a relevant recipient, if the relevant supervisory authority in the member State concerned consents to its disclosure and the case is one in which information to which section 82 above applies could be so disclosed by virtue of section 84(1) or (2) above; or

• (b) to the Treasury or the Secretary of State, if that authority consents to its disclosure and the case is one in which information to which section 82 above applies could be so disclosed by virtue of section 84(5) or (5A) above.

• (4A) Before the Authority discloses information to any person under subsection (3) above, it shall notify the relevant supervisory authority which supplied the information of the name and responsibilities of that person.

• (5) In this section— “relevant functions”, in relation to the Authority, means its functions under this Act and its functions as a supervisor of money market institutions;

’relevant recipient’ means a person specified in any of entries 1 to 8, 13 to 15 and 17 in the Table in section 84(1) above.

Disclosure of information obtained under other Acts

87

• (1) After section 174(3) of the Consumer Credit Act 1974 there shall be inserted—

(3A) Subsections (1) and (2) do not apply to any disclosure of information by the Director to the Bank of England for the purpose of enabling or assisting the Bank to discharge its functions under the Banking Act 1987 or the Director to discharge his functions under this Act.

• (2) Information disclosed to the Authority under subsection (1) of section 449 of the Companies Act 1985 for the purpose of enabling or assisting it to discharge its functions under this Act or in its capacity as a competent authority under subsection (3)(ha) of that section may be disclosed—

• (a) with the consent of the Secretary of State, in any case in which information to which section 82 applies could be disclosed by virtue of section 84(1) or (2) above; and

• (b) in any case in which information to which section 82 above applies could be disclosed by virtue of any of the other provisions of this Part of this Act.

• (3) Information disclosed to the Authority under paragraph (1) of Article 442 of the Companies (Northern Ireland) Order 1986 for the purpose of enabling or assisting it to discharge its functions under this Act or in its capacity as a competent authority under paragraph (3)(ha) of that Article may be disclosed—

• (a) with the consent of the Department of Economic Development in Northern Ireland, in any case in which information to which section 82 above applies could be disclosed by virtue of section 84(1) or (2) above; and

• (b) in any case in which information to which section 82 above applies could be disclosed by virtue of any of the other provisions of this Part of this Act.

• (3A) Information disclosed by the Building Societies Commission to the Authority for the purpose of enabling or assisting it to discharge any relevant functions may be disclosed—

• (a) to a relevant recipient, if the Commission consents to its disclosure and the case is one in which information to which section 82 above applies could be so disclosed by virtue of section 84(1) or (2) above; or

• (b) to the Treasury or the Secretary of State, if the Commission consents to its disclosure and the case is one in which information to which section 82 above applies could be so disclosed by virtue of section 84(5)(a) or (5A) above;

and in this subsection “relevant functions” has the same meaning as in section 86 above and “relevant recipient” means a person specified in any of entries 1 to 8, 13 to 15 and 17 in the Table in section 84(1) above.

• (4) Any information which has been lawfully disclosed to the Authority may be disclosed by it to the Board of Banking Supervision so far as necessary for enabling or assisting the Board to discharge its functions under this Act.

Part VI — Miscellaneous and Supplementary

Exclusion of authorised institution's agreements from Consumer Credit Act 1974

88

• (1) The Consumer Credit Act 1974 shall be amended as follows.

• (2) In section 16(1) (consumer credit agreements with certain bodies exempt from regulation) after paragraph (g) there shall be inserted

, or (h) an authorised institution or wholly-owned subsidiary (within the meaning of the Companies Act 1985) of such an institution.

.

• (3) In section 16(3) (Secretary of State’s duty to consult before making orders) after paragraph (e) there shall be inserted

or (f) under subsection (1)(h) without consulting the Treasury and the Bank of England.

.

• (4) In section 189(1) (definitions) after the definition of “association” there shall be inserted—

“authorised institution” means an institution authorised under the Banking Act 1987;

.

Electronic transfer of funds

89

After section 187(3) of the Consumer Credit Act 1974 (arrangements to be disregarded in determining whether a consumer credit agreement is to be treated as entered into in accordance with prior or in contemplation of future arrangements between creditor and supplier) there shall be inserted—

(3A) Arrangements shall also be disregarded for the purposes of subsections (1) and (2) if they are arrangements for the electronic transfer of funds from a current account at a bank within the meaning of the Bankers’ Books Evidence Act 1879.

Disclosure of transactions by authorised institutions with chief executives and managers

90

• (1) For section 233(3) of the Companies Act 1985 there shall be substituted—

(3) Subsections (1) and (2) do not apply in relation to any transaction, arrangement or agreement made by an authorised institution for any officer of the institution or for any officer of its holding company unless the officer is a chief executive or manager within the meaning of the Banking Act 1987; and references to officers in Part II of Schedule 6 shall be construed accordingly.

• (2) For Article 241(3) of the Companies (Northern Ireland) Order 1986 there shall be substituted—

(3) Paragraphs (1) and (2) do not apply in relation to any transaction, arrangement or agreement made by an authorised institution for any officer of the institution or for any officer of its holding company unless that officer is a chief executive or manager within the meaning of the Banking Act 1987; and references to officers in Part II of Schedule 6 shall be construed accordingly.

Powers for securing reciprocal facilities for banking and other financial business

91

For the avoidance of doubt it is hereby declared that a notice under section 183 of the Financial Services Act 1986 (disqualification or restriction of persons connected with overseas countries which do not afford reciprocal facilities for financial business) may be served on any person connected with the country in question who is carrying on or appears to the Secretary of State or the Treasury to intend to carry on in, or in relation to, the United Kingdom business of any of the descriptions specified in subsection (1) of that section whether or not it is of the same description as that affected by the less favourable terms which are the occasion for the service of the notice.

Winding up on petition from the Bank

92

• (1) On a petition presented by the Authority by virtue of this section the court having jurisdiction under the Insolvency Act 1986 may wind up an authorised institution or former authorised institution if—

• (a) the institution is unable to pay its debts within the meaning of section 123 or, as the case may be, section 221 of that Act; or

• (b) the court is of the opinion that it is just and equitable that the institution should be wound up;

and for the purposes of such a petition an institution which defaults in an obligation to pay any sum due and payable in respect of a deposit shall be deemed to be unable to pay its debts as mentioned in paragraph (a) above.

• (2) Where a petition is presented under subsection (1) above for the winding up of a partnership on the ground mentioned in paragraph (b) of that subsection or, in Scotland, on the ground mentioned in paragraph (a) or (b) of that subsection, the court shall have jurisdiction and the Insolvency Act 1986 shall have effect as if the partnership were an unregistered company within the meaning of section 220 of that Act.

• (3) On a petition presented by the Authority by virtue of this section the High Court in Northern Ireland may wind up an authorised institution if—

• (a) the institution is unable to pay its debts within the meaning of Article 103 or, as the case may be, Article 185 of the Insolvency (Northern Ireland) Order 1989; or

• (b) the court is of the opinion that it is just and equitable that the institution should be wound up;

and for the purposes of such a petition an institution which defaults in an obligation to pay any sum due and payable in respect of a deposit shall be deemed to be unable to pay its debts as mentioned in paragraph (a) above.

• (4) Where a petition is presented under subsection (3) above for the winding up of a partnership on the ground mentioned in paragraph (b) of that subsection, the court shall have jurisdiction and the said Order of 1989 shall have effect as if the partnership were an unregistered company within the meaning of Article184 of that Order.

• (5) For the purposes of this section the definition of deposit in section 5 above shall be treated as including any sum that would otherwise be excluded by subsection (3)(a), (b) or (c) of that section.

• (6) This section applies to a company or partnership which has contravened section 3 above as it applies to an authorised institution.

Injunctions

93

• (1) If on the application of the Authority, the Director of Public Prosecutions, the Lord Advocate or the Director of Public Prosecutions for Northern Ireland the court is satisfied—

• (a) that there is a reasonable likelihood that a person will contravene section 3, 18, 35, 67, 69, 71, or 77 above, a direction under section 19 above or regulations under section 32, 34, or 80 above; or

• (b) that any person has been guilty of any such contravention and that there is a reasonable likelihood that the contravention will continue or be repeated,

the court may grant an injunction restraining, or in Scotland an interdict prohibiting, the contravention.

• (2) If on the application of the Authority, the Director of Public Prosecutions, the Lord Advocate or the Director of Public Prosecutions for Northern Ireland it appears to the court that a person may have been guilty of such a contravention as is mentioned in subsection (1) above the court may grant an injunction restraining, or in Scotland an interdict prohibiting, him from disposing of or otherwise dealing with any of his assets while the suspected contravention is investigated.

• (3) The jurisdiction conferred by this section shall be exercisable by the High Court and the Court of Session.

False and misleading information

94

• (1) Any person who knowingly or recklessly provides the Authority or any other person with information which is false or misleading in a material particular shall be guilty of an offence if the information is provided—

• (a) in purported compliance with a requirement imposed by or under this Act; or

• (b) otherwise than as mentioned in paragraph (a) above but in circumstances in which the person providing the information intends, or could reasonably be expected to know, that the information would be used by the Authority for the purpose of exercising its functions under this Act.

• (2) Any person who knowingly or recklessly provides the Authority or any other person with information which is false or misleading in a material particular shall be guilty of an offence if the information is provided in connection with an application for authorisation under this Act.

• (3) An authorised institution or former authorised institution shall be guilty of an offence if it fails to provide the Authority with any information in its possession knowing or having reasonable cause to believe—

• (a) that the information is relevant to the exercise by the Authority of its functions under this Act in relation to the institution; and

• (b) that the withholding of the information is likely to result in the Authority being misled as to any matter which is relevant to and of material significance for the exercise of those functions in relation to the institution.

• (4) Any person who knowingly or recklessly provides any person appointed under section 41 above with information which is false or misleading in a material particular shall be guilty of an offence.

• (5) Any person guilty of an offence under this section shall be liable—

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

• (b) on summary conviction, to imprisonment for a term not exceeding six months or to a fine not exceeding the statutory maximum or to both.

Restriction of Rehabilitation of Offenders Act 1974

95

• (1) The Rehabilitation of Offenders Act 1974 shall have effect subject to the provisions of this section in cases where the spent conviction is for—

• (a) an offence involving fraud or other dishonesty; or

• (b) an offence under legislation (whether or not of the United Kingdom) relating to companies (including insider dealing), building societies, industrial and provident societies, credit unions, friendly societies, insurance, banking or other financial services, insolvency, consumer credit or consumer protection.

• (2) Nothing in section 4(1) (restriction on evidence as to spent convictions in proceedings) shall prevent the determination in any proceeding arising out of any such decision of the Authority as is mentioned in section 27(1) or (3) above (including proceedings on appeal to any court) of any issue, or prevent the admission or requirement in any such proceedings of any evidence, relating to a person’s previous convictions for any such offence as is mentioned in subsection (1) above or the circumstances ancillary thereto.

• (3) A conviction for such an offence as is mentioned in subsection (1) above shall not be regarded as spent for the purposes of section 4(2) (questions relating to an individual’s previous convictions) if—

• (a) the question is put by or on behalf of the Authority and the individual is a person who is or is seeking to become a director, controller or manager of an authorised institution, a former authorised institution or an institution which has made an application for authorisation which has not been disposed of; or

• (b) the question is put by or on behalf of any such institution and the individual is or is seeking to become a director, controller or manager of that institution,

and the person questioned is informed that by virtue of this section convictions for any such offence are to be disclosed.

• (4) Section 4(3)(b) (spent conviction not to be ground for excluding person from office, occupation etc.) shall not—

• (a) prevent the Authority from refusing to grant or revoking an authorisation on the ground that an individual is not a fit and proper person to be a director, controller or manager of the institution in question or from imposing a restriction or giving a direction requiring the removal of an individual as director, controller or manager of an institution; or

• (b) prevent an authorised institution, a former authorised institution or an institution which has made an application for authorisation which has not yet been disposed of from dismissing or excluding an individual from being a director, controller or manager of the institution,

by reason, or partly by reason, of a spent conviction of that individual for such an offence as is mentioned in subsection (1) above or any circumstances ancillary to such a conviction or of a failure (whether or not by that individual) to disclose such a conviction or any such circumstances.

• (5) For the purposes of subsections (3) and (4) above an application by an institution is not disposed of until the decision of the Authority on the application is communicated to the institution.

• (6) This section shall apply to Northern Ireland with the substitution for the references to the said Act of 1974 and section 4(1), (2) and (3)(b) of that Act of references to the Rehabilitation of Offenders (Northern Ireland) Order 1978 and Article 5(1), (2) and (3)(b) of that Order.

Offences

96

• (1) Where an offence under this Act committed by a body corporate is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of any director, manager, secretary or other similar officer of the body corporate, or any person who was purporting to act in any such capacity, he, as well as the body corporate, shall be guilty of that offence and be liable to be proceeded against and punished accordingly.

• (2) Where the affairs of a body corporate are managed by its members, subsection (1) above shall apply in relation to the acts and defaults of a member in connection with his functions of management as if he were a director of the body corporate.

• (3) In the case of a person who by virtue of subsection (1) or (2) above or section 98(6) or (7) below is guilty of an offence under section 12(6) or 19(6) above the penalty that can be imposed on conviction on indictment shall be imprisonment for a term not exceeding two years or a fine or both.

• (4) In any proceedings for an offence under this Act it shall be a defence for the person charged to prove that he took all reasonable precautions and exercised all due diligence to avoid the commission of such an offence by himself or any person under his control.

• (5) No proceedings for an offence under this Act shall be instituted—

• (a) in England and Wales, except by or with the consent of the Director of Public Prosecutions or the Authority; or

• (b) in Northern Ireland, except by or with the consent of the Director of Public Prosecutions for Northern Ireland or the Authority.

• (6) In relation to proceedings against a building society incorporated (or deemed to be incorporated) under the Building Societies Act 1986 subsection (5) above shall have effect with the substitution for references to the Authority of references to the Building Societies Commission.

• (7) In relation to proceedings against a friendly society within the meaning of section 7(1)(a) of the Friendly Societies Act 1974 the reference in paragraph (a) of subsection (5) above to the Authority shall include a reference to the Chief Registrar of friendly societies; . . ..

Summary proceedings

97

• (1) Summary proceedings for any offence under this Act may, without prejudice to any jurisdiction exercisable apart from this subsection, be taken against an institution, including an unincorporated institution, at any place at which it has a place of business, and against an individual at any place at which he is for the time being.

• (2) Notwithstanding anything in section 127(1) of the Magistrates’ Courts Act 1980, any information relating to an offence under this Act which is triable by a magistrates’ court in England and Wales may be so tried if it is laid at any time within three years after the commission of the offence and within six months after the relevant date.

• (3) Notwithstanding anything in section 136 of the Criminal Procedure (Scotland) Act 1995, summary proceedings for such an offence may be commenced in Scotland at any time within three years after the commission of the offence and within six months after the relevant date; and subsection (3) of that section shall apply for the purposes of this subsection as it applies for the purposes of that section.

• (4) Notwithstanding anything in Article 19(1) of the Magistrates’ Courts (Northern Ireland) Order 1981, a complaint relating to such an offence which is triable by a court of summary jurisdiction in Northern Ireland may be so tried if it is made at any time within three years after the commission of the offence and within six months after the relevant date.

• (5) In this section—

• “the relevant date” means the date on which evidence sufficient in the opinion of the prosecuting authority to justify proceedings comes to its knowledge; and

• “the prosecuting authority” means the authority by or with whose consent the proceedings are instituted in accordance with section 96 above or, in Scotland, the Lord Advocate.

• (6) For the purposes of subsection (5) above, a certificate of any prosecuting authority as to the date on which such evidence as is there mentioned came to its knowledge shall be conclusive evidence of that fact.

Offences committed by unincorporated associations

98

• (1) Proceedings for an offence alleged to have been committed under this Act by an unincorporated association shall be brought in the name of that association (and not in that of any of its members) and, for the purposes of any such proceedings, any rules of court relating to the service of documents shall have effect as if the association were a corporation.

• (2) A fine imposed on an unincorporated association on its conviction of an offence under this Act shall be paid out of the funds of the association.

• (3) Section 33 of the Criminal Justice Act 1925 and Schedule 3 to the Magistrates’ Courts Act 1980 (procedure on charge of offence against a corporation) shall have effect in a case in which an unincorporated association is charged in England or Wales with an offence under this Act in like manner as they have effect in the case of a corporation so charged.

• (4) In relation to any proceedings on indictment in Scotland for an offence alleged to have been committed under this Act by an unincorporated association, section 70 of the Criminal Procedure (Scotland) Act 1995 (proceedings on indictment against bodies corporate) shall have effect as if the association were a body corporate.

• (5) Section 18 of the Criminal Justice Act (Northern Ireland) 1945 and Schedule 4 to the Magistrates’ Courts (Northern Ireland) Order 1981 (procedure on charge of offence against a corporation) shall have effect in a case in which an unincorporated association is charged in Northern Ireland with an offence under this Act in like manner as they have effect in the case of a corporation so charged.

• (6) Where a partnership is guilty of an offence under this Act, every partner, other than a partner who is proved to have been ignorant of, or to have attempted to prevent the commission of the offence, shall also be guilty of that offence and be liable to be proceeded against and punished accordingly.

• (7) Where any other unincorporated association is guilty of an offence under this Act, every officer of the association who is bound to fulfil any duty whereof the offence is a breach, or if there is no such officer then every member of the committee or other similar governing body, other than a member who is proved to have been ignorant of, or to have attempted to prevent the commission of the offence, shall also be guilty of that offence and be liable to be proceeded against and punished accordingly.

Service of notices on the Bank

99

• (1) No notice required by this Act to be given to or served on the Authority shall be regarded as given or served until it is received.

• (2) Subject to subsection (1) above, any such notice may be given or served by telex or other similar means which produce a document containing the text of the communication.

Service of other notices

100

• (1) This section has effect in relation to any notice, direction or other document required or authorised by or under this Act to be given to or served on any person other than the Authority.

• (2) Any such document may be given to or served on the person in question—

• (a) by delivering it to him; or

• (b) by leaving it at his proper address; or

• (c) by sending it by post to him at that address; or

• (d) by sending it to him at that address by telex or other similar means which produce a document containing the text of the communication.

• (3) Any such document may—

• (a) in the case of a body corporate, be given to or served on the secretary or clerk of that body; and

• (b) in the case of any other description of institution, be given to or served on a controller of the institution.

• (4) For the purposes of this section and section 7 of the Interpretation Act 1978 (service of documents by post) in its application to this section, the proper address of any person to or on whom a document is to be given or served shall be his last known address, except that—

• (a) in the case of a body corporate or its secretary or clerk, it shall be the address of the registered or principal office of that body in the United Kingdom; and

• (b) in the case of any other description of institution or a person having control or management of its business, it shall be that of the principal office of the institution in the United Kingdom.

• (5) If the person to or on whom any document mentioned in subsection (1) above is to be given or served has notified the Authority of an address within the United Kingdom, other than his proper address within the meaning of subsection (4) above, as the one at which he or someone on his behalf will accept documents of the same description as that document, that address shall also be treated for the purposes of this section and section 7 of the Interpretation Act 1978 as his proper address.

Evidence

101

• (1) In any proceedings, a certificate purporting to be signed on behalf of the Authority and certifying—

• (a) that a particular person is or is not an authorised institution or was or was not such an institution at a particular time;

• (b) the date on which a particular institution became or ceased to be authorised;

• (c) whether or not a particular institution’s authorisation is or was restricted;

• (d) the date on which a restricted authorisation expires; or

• (e) the date on which a particular institution became or ceased to be a recognised bank or licensed institution under the Banking Act 1979,

shall be admissible in evidence and, in Scotland, shall be sufficient evidence of the facts stated in the certificate.

• (2) A certificate purporting to be signed as mentioned in subsection (1) above shall be deemed to have been duly signed unless the contrary is shown.

Orders and regulations

102

Any power of the Treasury to make orders or regulations under this Act shall be exercisable by statutory instrument.

Municipal banks

103

• (1) References in this Act to a municipal bank are to a company within the meaning of the Companies Act 1985 which—

• (a) carries on a deposit-taking business,

• (b) is connected with a local authority as mentioned in subsection (2) below, and

• (c) has its deposits guaranteed by that local authority in accordance with subsection (5) below.

• (2) The connection referred to in paragraph (b) of subsection (1) above between a company and a local authority is that—

• (a) the company’s articles of association provide that the shares in the company are to be held only by members of the local authority; and

• (b) substantially all the funds lent by the company are lent to the local authority.

• (3) Where on 9th November 1978 a company or its predecessor—

• (a) was carrying on a deposit-taking business, and

• (b) was connected with a local authority as mentioned in subsection (2) above,

that local authority or its successor may for the purposes of this Act resolve to guarantee deposits with the company.

• (4) A resolution passed by a local authority under subsection (3) above may not be rescinded.

• (5) Where a local authority has passed a resolution under subsection (3) above or under section 48(3) of the Banking Act 1979, that local authority and any local authority which is its successor shall be liable, if the company concerned defaults in payment, to make good to a depositor the principal and interest owing in respect of any deposit with the company, whether made before or after the passing of the resolution.

• (6) For the purposes of this section—

• (a) one company is the predecessor of another if that other succeeds to its obligations in respect of its deposit-taking business; and

• (b) one local authority is the successor of another if, as a result of, or in connection with, an order under Part IV of the Local Government Act 1972 Part II of the Local Government Act 1992 or Part II of the Local Government and Rating Act 1997 or under Part II of the Local Government (Scotland) Act 1973 (change of local government area), it becomes connected as mentioned in subsection (2) above with a company formerly so connected with that other local authority.

Scottish 1819 savings banks

104

• (1) This section applies to any savings bank established before 28th July 1863 under an Act passed in the 59th year of King George III entitled an Act for the Protection of Banks for Savings in Scotland.

• (2) For the purposes of Part II of this Act a savings bank to which this section applies becomes insolvent on the making of a winding-up order against it under Part V of the Insolvency Act 1986 or on the making of an award of sequestration on the estate of the bank.

• (3) A savings bank to which this section applies shall be regarded as a relevant savings bank for the purposes of sections 68 and 69 above.

Meaning of "director", "controller", "manager" and "associate"

105

• (1) In the provisions of this Act other than section 96 “director”, “controller”, “manager” and “associate” shall be construed in accordance with the provisions of this section.

• (2) “Director”, in relation to an institution, includes—

• (a) any person who occupies the position of a director, by whatever name called; and

• (b) in the case of an institution established in a country or territory outside the United Kingdom, any person, including a member of a managing board, who occupies a position appearing to the Authority to be analogous to that of a director of a company registered under the Companies Act 1985;

and in the case of a partnership “director”, where it is used in subsections (6) and (7) below, includes a partner.

• (3) “Controller”, in relation to an institution, means—

• (a) a managing director of the institution or of another institution of which it is a subsidiary or, in the case of an institution which is a partnership, a partner;

• (b) a chief executive of the institution or of another institution of which it is a subsidiary;

• (c) a person who, satisfies the requirements of this paragraph

• (d) a person in accordance with whose directions or instructions the directors of the institution or of another institution of which it is a subsidiary or persons who are controllers of the institution by virtue of paragraph (c) above (or any of them) are accustomed to act.

• (3A) A person satisfies the requirements of subsection (3)(c) above in relation to an institution if, either alone or with any associate or associates—

• (a) he holds 10 per cent. or more of the shares in the institution or another institution of which it is a subsidiary undertaking;

• (b) he is entitled to exercise, or control the exercise of, 10 per cent. or more of the voting power at any general meeting of the institution or another institution of which it is such an undertaking; or

• (c) he is able to exercise a significant influence over the management of the institution or another institution of which it is such an undertaking by virtue of—

• (i) a holding of shares in; or

• (ii) an entitlement to exercise, or control the exercise of, the voting power at any general meeting of,

the institution or, as the case may be, the other institution concerned;

• (4) A person who is a controller of an institution by virtue of subsection (3)(c) above is in this Act referred to as a ’shareholder controller’ of the institution; and in this Act—

• (a) a ’minority shareholder controller’ means a shareholder controller not falling within paragraph (a) or (b) of subsection (3A) above;

• (b) a ’10 per cent. shareholder controller’ means a shareholder controller in whose case the percentage referred to in the relevant paragraph is 10 or more but less than 20;

• (c) a ’20 per cent. shareholder controller’ means a shareholder controller in whose case that percentage is 20 or more but less than 33;

• (d) a ’33 per cent. shareholder controller’ means a shareholder controller in whose case that percentage is 33 or more but less than 50;

• (e) a ’50 per cent. shareholder controller’ means a shareholder controller in whose case that percentage is 50 or more;

• (f) a ’majority shareholder controller’ means a shareholder controller in whose case that percentage is 50 or more but less than 75; and

• (g) a ’principal shareholder controller’ means a shareholder in whose case that percentage is 75 or more;

and in this subsection ’the relevant paragraph’, in relation to a shareholder controller, means whichever one of paragraphs (a) and (b) of subsection (3A) above gives the greater percentage in his case.

• (5) A person who is a controller of an institution by virtue of subsection (3)(d) above is in this Act referred to as “an indirect controller” of the institution.

• (5A) A person who is a controller of an institution by virtue of subsection (3)(e) above is in this Act referred to as a ’parent controller’ of the institution.

• (6) “Manager”, in relation to an institution, means a person (other than a chief executive) who, under the immediate authority of a director or chief executive of the institution—

• (a) exercises managerial functions; or

• (b) is responsible for maintaining accounts or other records of the institution.

• (7) In this section “chief executive”, in relation to an institution, means a person who, either alone or jointly with one or more other persons, is responsible under the immediate authority of the directors for the conduct of the business of the institution.

• (8) Without prejudice to subsection (7) above, in relation to an institution whose principal place of business is in a country or territory outside the United Kingdom, “chief executive” also includes a person who, either alone or jointly with one or more other persons, is responsible for the conduct of its business in the United Kingdom.

• (9) In this Act ’associate’, in relation to a person entitled to exercise or control the exercise of voting power in relation to, or holding shares in, an undertaking, means—

• (a) the wife or husband or son or daughter of that person;

• (b) the trustees of any settlement under which that person has a life interest in possession or, in Scotland, a life interest;

• (c) any company of which that person is a director;

• (d) any person who is an employee or partner of that person;

• (e) if that person is a company—

• (i) any director of that company;

• (ii) any subsidiary undertaking of that company; and

• (iii) any director or employee of any such subsidiary undertaking; and

• (f) if that person has with any other person an agreement or arrangement with respect to the acquisition, holding or disposal of shares or other interests in that undertaking or body corporate or under which they undertake to act together in exercising their voting power in relation to it, that other person.

• (10) For the purposes of subsection (9) above—

’son’ includes stepson and ’daughter’ includes stepdaughter;

’settlement’ includes any disposition or arrangement under which property is held in trust.

Interpretation

106

• (1) In this Act—

• “associate” has the meaning given in section 105(9) above;

• “authorisation” means authorisation granted by the Authority under this Act and “authorised” shall be construed accordingly;

• “the Authority” means the Financial Services Authority;

• “the Bank” means the Bank of England;

• “bare trustee”, in relation to a deposit, means a person holding the deposit on trust for another person who has the exclusive right to direct how it shall be dealt with subject only to satisfying any outstanding charge, lien or other right of the trustee to resort to it for the payment of duty, taxes, costs or other outgoings;

• “controller” has the meaning given in section 105(3) above;

• “director” has the meaning given in section 105(2) above;

• “debenture” has the same meaning as in the Companies Act 1985;

• “deposit” and “deposit-taking business” have the meaning given in sections 5 and 6 above but subject to any order under section 7 above;

• “documents” includes information recorded in any form and, in relation to information recorded otherwise than in legible form, references to its production include references to producing a copy of the information in legible form;

• “former authorised institution” means an institution which was formerly an authorised institution or a recognised bank or licensed institution under the Banking Act 1979 and continues to have a liability in respect of any deposit for which it had a liability at a time when it was an authorised institution, recognised bank or licensed institution;

• “group”, in relation to a body corporate, means that body corporate, any other body corporate which is its holding company or subsidiary and any other body corporate which is a subsidiary of that holding company;

• “indirect controller” has the meaning given in section 105(5) above;

• “institution”, except in the expression “overseas institution” means—

• (a) a body corporate wherever incorporated;

• (b) a partnership formed under the law of any part of the United Kingdom;

• (c) a partnership or other unincorporated association of two or more persons formed under the law of a member State other than the United Kingdom; or

• (d) a savings bank to which section 104 above applies;

• “liquidator”, in relation to a partnership having its principal place of business in Scotland, includes a trustee appointed on the sequestrated estate of the partnership under the Bankruptcy (Scotland) Act 1985;

• “local authority” means—

• (a) in England and Wales, a local authority within the meaning of the Local Government Act 1972, the Common Council of the City of London or the Council of the Isles of Scilly;

• (b) in Scotland, a local authority within the meaning of the Local Government (Scotland) Act 1973; and

• (c) in Northern Ireland, a district council within the meaning of the Local Government Act (Northern Ireland) 1972;

• “manager” has the meaning given in section 105(6) above;

• “municipal bank” has the meaning given in section 103 above;

• ’parent controller’ has the meaning given in section 105(5A) above;

• “penny savings bank” has the same meaning as in the National Savings Bank Act 1971;

• “related company” has the meaning given by section 105A above;

• ’relevant supervisory authority’—in relation to another member State, has the meaning given in regulation 2 of the Banking Coordination (Second Council Directive) Regulations 1992;in relation to any other country or territory outside the United Kingdom, means the authority discharging in that country or territory functions corresponding to those of the Authority under this Act;

• ’shareholder controller’, ’minority shareholder controller’, ’10 per cent. shareholder controller’, ’20 per cent. shareholder controller’, ’33 per cent. shareholder controller’, ’50 per cent. shareholder controller’, ’majority shareholder controller’ and ’principal shareholder controller’ have the meanings given in section 105(4) above

• (2) Section 736 of the Companies Act 1985 (meaning of subsidiary and holding company) shall apply for the purposes of this Act.

• (2A) In this Act the following expressions, namely—

another member State;

connected UK authority;

credit institution;

European authorised institution;

. . .

home State;

listed activity;

parent undertaking;

recognised self-regulating organisation;

relevant supervisory authority;

. . .

subsidiary undertaking;

supervisory authority;

undertaking,

have the same meanings as in the Banking Coordination (Second Council Directive) Regulations 1992.

• (2B) In this Act “The Banking Consolidation Directive” means Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000 relating to the taking up and pursuit of the business of credit institutions.

• (2C) Any reference in this Act—

• (a) to an undertaking being closely linked with any person, or being closely linked with any person by control; or

• (b) to an undertaking’s close links with any person,

shall be construed in accordance with regulation 2 of the Financial Institutions (Prudential Supervision) Regulations 1996.

• (3) Any reference in this Act to any provision of Northern Ireland legislation within the meaning of section 24 of the Interpretation Act 1978 includes a reference to any subsequent provision of that legislation which, with or without modification, re-enacts the provision referred to in this Act.

Transitional provisions

107

Schedule 5 to this Act shall have effect with respect to the transitional matters there mentioned.

Minor and consequential amendments, repeals and revocations

108

• (1) The enactments mentioned in Schedule 6 to this Act, shall have effect with the amendments there specified, being minor amendments and amendments consequential on the provisions of this Act, but subject to any savings there mentioned.

• (2) The enactments mentioned in Part I of Schedule 7 to this Act and the instruments mentioned in Part II of that Schedule are hereby repealed or revoked to the extent specified in the third column of those Parts.

Northern Ireland

109

• (1) This Act extends to Northern Ireland.

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

Short title and commencement

110

• (1) This Act may be cited as the Banking Act 1987.

• (2) Section 91 above shall come into force on the passing of this Act and the other provisions of this Act shall come into force on such day as the Treasury may by order appoint; and different days may be appointed for different provisions or different purposes.

SCHEDULE 1

Terms of office

1

• (1) The independent members of the Board shall hold office for five years except that some of those first appointed may be appointed to hold office for shorter and different periods so as to secure that all the members do not retire simultaneously.

• (2) An independent member may resign his office by written notice to the Authority and the Chancellor of the Exchequer.

• (3) A person shall vacate his office as an independent member if he takes up a post with executive responsibility in the Authority.

• (4) Subject to sub-paragraph (3) above, a person who has ceased to be an independent member of the Board shall be eligible for re-appointment.

Removal from office

2

An independent member may be removed by the Authority with the consent of the Chancellor of the Exchequer if it is satisfied—

• (a) that he has been absent from meetings of the Board for more than three months without the permission of the Board;

• (b) that he has become bankrupt, that his estate has been sequestrated or that he has made an arrangement with or granted a trust deed for his creditors;

• (c) that he is incapacitated by physical or mental illness; or

• (d) that he is otherwise unable or unfit to discharge his functions as a member of the Board.

Increase in number of members

3

• (1) The Treasury may, after consultation with the Authority, by order increase or, subject to section 2(2) of this Act, reduce the number of ex officio or independent members of the Board, provided always that there shall be a majority of independent members on the Board.

• (2) Any order under this paragraph shall be subject to annulment in pursuance of a resolution of either House of Parliament.

Proceedings

4

• (1) The quorum for a meeting of the Board shall be one ex officio member and three independent members.

• (2) Subject to sub-paragraph (1) above, the Board shall determine its own procedure.

Facilities, remuneration and allowances

5

The Authority shall make such provision as it thinks necessary for providing the Board with facilities for the exercise of its functions and for providing remuneration, allowances or other benefits for or in respect of the independent members.

SCHEDULE 2

1

The central bank of a member State other than the United Kingdom.

2

The National Savings Bank.

3

A penny savings bank.

4

A municipal bank.

5

A building society incorporated (or deemed to be incorporated) under the Building Societies Act 1986.

6

• (1) A friendly society within the meaning of section 7(1)(a) of the Friendly Societies Act 1974 . . ..

• (2) This paragraph applies only to the acceptance of deposits in the course of carrying out transactions permitted by the rules of the society.

7

A society registered under either of the Acts mentioned in paragraph 6 above other than such a society as is there mentioned.

8

• (1) Any institution which is for the time being authorised under section 3 or 4 of the Insurance Companies Act 1982 to carry on insurance business of a class specified in Schedule 1 or 2 to that Act.

• (2) This paragraph applies only to the acceptance of deposits in the course of carrying on the authorised insurance business.

9

A loan society whose rules are certified, deposited and enrolled in accordance with the Loan Societies Act 1840.

10

A credit union within the meaning of the Credit Unions Act 1979 or the Credit Unions (Northern Ireland) Order 1985.

11

A body of persons certified as a school bank by the National Savings Bank or an authorised institution.

12

A local authority.

13

Any other body which by virtue of any enactment has power to issue a precept to a local authority in England or Wales or a requisition to a local authority in Scotland.

14

15

The European Atomic Energy Community.

16

The European Coal and Steel Community.

17

The European Economic Community.

18

The European Investment Bank.

19

The International Bank for Reconstruction and Development.

20

The International Finance Corporation.

21

The International Monetary Fund.

22

The African Development Bank.

23

The Asian Development Bank.

24

The Caribbean Development Bank.

25

The Inter-American Development Bank.

SCHEDULE 3

Directors etc. to be fit and proper persons

1

• (1) Every person who is, or is to be, a director, controller or manager of the institution is a fit and proper person to hold the particular position which he holds or is to hold.

• (2) In determining whether a person is a fit and proper person to hold any particular position, regard shall be had to his probity, to his competence and soundness of judgement for fulfilling the responsibilities of that position, to the diligence with which he is fulfilling or likely to fulfil those responsibilities and to whether the interests of depositors or potential depositors of the institution are, or are likely to be, in any way threatened by his holding that position.

• (3) Without prejudice to the generality of the foregoing provisions, regard may be had to the previous conduct and activities in business or financial matters of the person in question and, in particular, to any evidence that he has—

• (a) committed an offence involving fraud or other dishonesty or violence;

• (b) contravened any provision made by or under any enactment appearing to the Authority to be designed for protecting members of the public against financial loss due to dishonesty, incompetence or malpractice by persons concerned in the provision of banking, insurance, investment or other financial services or the management of companies or against financial loss due to the conduct of discharged or undischarged bankrupts;

• (c) engaged in any business practices appearing to the Authority to be deceitful or oppressive or otherwise improper (whether unlawful or not) or which otherwise reflect discredit on his method of conducting business;

• (d) engaged in or been associated with any other business practices or otherwise conducted himself in such a way as to cast doubt on his competence and soundness of judgement.

Business to be directed by at least two individuals

2

At least two individuals effectively direct the business of the institution.

Composition of board of directors

3

In the case of an institution incorporated in the United Kingdom the directors include such number (if any) of directors without executive responsibility for the management of its business as the Authority considers appropriate having regard to the circumstances of the institution and the nature and scale of its operations.

Business to be conducted in prudent manner

4

• (1) The institution conducts, or, in the case of an institution which is not yet carrying on a deposit-taking business, will conduct its business in a prudent manner.

• (2) An institution shall not be regarded as conducting its business in a prudent manner unless it maintains or, as the case may be, will maintain own fundswhich, together with other financial resources available to the institution of such nature and amount as are considered appropriate by the Authority, are—

• (a) of an amount which is commensurate with the nature and scale of the institution’s operations; and

• (b) of an amount and nature sufficient to safeguard the interests of its depositors and potential depositors, having regard to the particular factors mentioned in sub-paragraph (3) below and any other factors appearing to the Authority to be relevant.

• (3) The particular factors referred to above are—

• (a) the nature and scale of the institution’s operations; and

• (b) the risks inherent in those operations and in the operations of any other undertaking in the same group so far as capable of affecting the institution.

• (3A) An institution shall not be regarded as conducting its business in a prudent manner unless it maintains or, as the case may be, will maintain own funds which amount to not less than ecu 5 million (or an amount of equal value denominated wholly or partly in another unit of account).

• (4) An institution shall not be regarded as conducting its business in a prudent manner unless it maintains or, as the case may be, will maintain adequate liquidity, having regard to the relationship between its liquid assets and its actual and contingent liabilities, to the times at which those liabilities will or may fall due and its assets mature, to the factors mentioned in sub-paragraph (3) above and to any other factors appearing to the Authority to be relevant.

• (5) For the purposes of sub-paragraph (4) above the Authority may, to such extent as it thinks appropriate, take into account as liquid assets, assets of the institution and facilities available to it which are capable of providing liquidity within a reasonable period.

• (6) An institution shall not be regarded as conducting its business in a prudent manner unless it makes or, as the case may be, will make adequate provision for depreciation or diminution in the value of its assets (including provision for bad or doubtful debts), for liabilities which will or may fall to be discharged by it and for losses which it will or may incur.

• (7) An institution shall not be regarded as conducting its business in a prudent manner unless it maintains or, as the case may be, will maintain adequate accounting and other records of its business and adequate systems of control of its business and records.

• (8) Those records and systems shall not be regarded as adequate unless they are such as to enable the business of the institution to be prudently managed and the institution to comply with the duties imposed on it by or under this Act and in determining whether those systems are adequate the Authority shall have regard to the functions and responsibilities in respect of them of any such directors of the institution as are mentioned in paragraph 3 above.

• (9) Sub-paragraphs (2) to (7) above are without prejudice to the generality of sub-paragraph (1) above.

• (10) In this paragraph ’ecu’ and ’own funds’ have the same meanings as in the Banking Coordination (Second Council Directive) Regulations 1992.

Integrity and skill

5