Bank of England Act 1998

Recommendations to other persons

Meetings between Governor and Chancellor of the Exchequer

Directions requiring information or documents

Operational responsibility.

Publication of statements about decisions.

Power to obtain information.

Reports.

General interpretation.

6A

Schedule 2ZA makes provision for the Bank to impose a charge on financial institutions in connection with the pursuit of its financial stability and monetary policy objectives.

PART 3B — Central counterparties and central securities depositories

30D

• (1) In exercising its FMI functions in a way that advances the Financial Stability Objective (and subject to that), the Bank must have regard to—

• (a) the regulatory principles in section 30E;

• (b) the effects generally that the exercise of FMI functions will or may have on the financial stability of countries or territories (other than the United Kingdom) in which FMI entities are established or provide services;

• (c) the desirability of exercising FMI functions in a manner that is not determined by whether the persons to whom FMI services are provided are located in the United Kingdom or elsewhere.

• (2) In exercising its FMI functions in a way that advances the Financial Stability Objective the Bank must, so far as reasonably possible, act in a way which, as a secondary objective, facilitates innovation in the provision of FMI services (including in the infrastructure used for that purpose) with a view to improving the quality, efficiency and economy of the services.

• (3) For the purposes of this Part the Bank’s “FMI functions” are the following functions so far as exercisable in relation to FMI entities—

• (a) its function of making rules under FSMA 2000 (considered as a whole);

• (b) its function of making technical standards in accordance with Chapter 2A of Part 9A of FSMA 2000;

• (c) its function of preparing and issuing codes under FSMA 2000 (considered as a whole);

• (d) its function of determining the general policy and principles by reference to which it performs particular functions under FSMA 2000.

• (4) In this Part—

• “FMI entities” means—a recognised central counterparty within the meaning of Part 18 of FSMA 2000 (see section 285(1)(b)(i) of that Act),a recognised CSD as defined by section 285(1)(e) of FSMA 2000,a third country central counterparty as defined by section 285(1)(d) of FSMA 2000, anda third country CSD as defined by section 285(1)(g) of FSMA 2000;

• “FMI services” means services provided by FMI entities as part of their business as FMI entities;

• “FSMA 2000” means the Financial Services and Markets Act 2000.

30E

• (1) These are the regulatory principles referred to in section 30D(1)(a)—

• (a) the need to use the resources of the Bank in the most efficient and economic way;

• (b) the principle that a burden or restriction which is imposed on a person, or on the carrying on of an activity, should be proportionate to the benefits, considered in general terms, which are expected to result from the imposition of that burden or restriction;

• (c) the desirability of sustainable growth in the economy of the United Kingdom in the medium or long term, including in a way consistent with contributing towards achieving compliance by the Secretary of State with section 1 of the Climate Change Act 2008 (UK net zero emissions target) and section 5 of the Environment Act 2021 (environmental targets) where the Bank considers the exercise of its FMI functions to be relevant to the making of such a contribution;

• (d) the general principle that consumers should take responsibility for their decisions;

• (e) the responsibilities of the senior management of FMI entities subject to requirements imposed by or under FSMA 2000, including those affecting consumers, in relation to compliance with those requirements;

• (f) the desirability where appropriate of the Bank exercising its FMI functions in a way that recognises differences in the nature of, and objectives of, businesses carried on by different persons;

• (g) the desirability in appropriate cases of the Bank publishing information relating to persons on whom requirements are imposed as a result of the exercise of the Bank’s FMI functions, or requiring such persons to publish information, as a means of contributing to the advancement by the Bank of its Financial Stability Objective and its objective under section 30D(2);

• (h) the principle that the Bank should exercise its FMI functions as transparently as possible;

• (i) the desirability of facilitating fair and reasonable access to FMI services.

• (2) For the purposes of subsection (1) “consumer” has the same meaning as in section 3B of FSMA 2000 (and for these purposes includes in particular persons who receive FMI services).

30F

• (1) There is to be a committee of the Bank known as the Financial Market Infrastructure Committee (the “FMI Committee”).

• (2) The FMI Committee is to consist of—

• (a) a chair appointed by the Bank;

• (b) at least three independent members appointed by the Bank;

• (c) such other members as may be appointed from time to time by the Bank.

• (3) The person appointed as chair under subsection (2)(a) must be the Governor, or a Deputy Governor, of the Bank.

• (4) A person is an independent member for the purposes of subsection (2)(b) if the person is an officer, employee or agent of the Bank—

• (a) as a result only of their membership of one or more of the Bank’s committees, or

• (b) is appointed as an independent member to the FMI Committee with the consent of the Treasury.

• (5) For the purposes of subsection (4)(a)—

• (a) the Bank’s committees are—

• (i) the FMI Committee,

• (ii) the Financial Policy Committee,

• (iii) the Monetary Policy Committee, and

• (iv) the Prudential Regulation Committee;

• (b) the reference to a person who is an officer, employee or agent of the Bank as result of their membership of one or more of those committees includes a reference to a person who becomes such an officer, employee or agent as a result of their appointment to the FMI Committee under this section.

• (6) Before appointing a person under subsection (2)(b) the Bank must—

• (a) be satisfied that the person has knowledge or experience which is likely to be relevant to the FMI Committee’s functions, and

• (b) consider whether the person has any financial or other interests that could substantially affect the functions as member that it would be proper for the person to discharge.

30G

• (1) The following functions of the Bank are to be exercised by the Bank acting through the FMI Committee (and, except as authorised by this section, are not to be exercised in any other way)—

• (a) its FMI functions;

• (b) such other functions of the Bank as the court of directors may specify as functions that are to be discharged by the FMI Committee.

• (2) The FMI Committee may arrange for such of its functions as it thinks fit to be carried out only by, or after consultation with, the Governor of the Bank.

• (3) Except as provided by subsection (4), the FMI Committee may delegate such of its functions as it thinks fit to—

• (a) a member of the FMI Committee;

• (b) a sub-committee of the FMI Committee consisting of members of the FMI Committee or one or more such members and one or more officers, employees or agents of the Bank;

• (c) an officer, employee or agent of the Bank;

• (d) a committee consisting of officers, employees or agents of the Bank.

• (4) The FMI Committee may not delegate under subsection (3) its FMI functions under FSMA 2000 of making rules or technical standards (but this does not prevent arrangements under subsection (2) being made in respect of such functions).

30H

• (1) The Bank must publish a statement setting out the following matters in respect of the FMI Committee—

• (a) the number of members and whether each such member is a Bank member or an independent member;

• (b) if the Committee includes any Bank members, the role of each such member within the Bank;

• (c) arrangements for meetings and how proceedings at meetings are conducted;

• (d) arrangements for the taking of decisions otherwise than at meetings;

• (e) arrangements for any functions to be carried out by, or after consultation with, the Governor of the Bank (including details of the functions to which such arrangements relate);

• (f) arrangements for the delegation of functions.

• (2) If there is a material change in any of the matters contained in the statement the Bank must publish an updated statement.

• (3) Publication under this section is to be made in such manner as the Bank considers best designed to bring the statement to the attention of the public.

• (4) For the purposes of subsection (1)—

• (a) a person is an independent member if they are appointed in accordance with section 30F(2)(b) and (4);

• (b) a person is a Bank member if they are an officer or employee of the Bank who is not appointed as mentioned in paragraph (a).

30I

• (1) The Treasury may at any time by notice in writing to the FMI Committee make recommendations about aspects of the economic policy of His Majesty’s Government to which the Bank should have regard—

• (a) when considering how to advance the Financial Stability Objective and the objective under section 30D(2), and

• (b) when considering the application of the regulatory principles set out in section 30E.

• (2) The Treasury must make recommendations under subsection (1) at least once in each Parliament.

• (3) The Treasury must—

• (a) publish in such manner as they think fit any notice given under subsection (1), and

• (b) lay a copy of it before Parliament.

• (4) The FMI Committee must respond to each recommendation made under subsection (1) by notifying the Treasury in writing of—

• (a) action that the Bank has taken or intends to take in accordance with the recommendation, or

• (b) the reasons why the Bank has not acted or does not intend to act in accordance with the recommendation.

• (5) The notice under subsection (4) must be given before the end of 12 months beginning with the date the notice containing the recommendation was given under subsection (1).

• (6) Where the FMI Committee has given notice under subsection (4) in relation to a recommendation, it must by notice in writing update the Treasury on the matters mentioned in subsection (4)(a) and (b) before the end of each subsequent period of 12 months.

• (7) Subsection (6) does not apply if the Treasury have notified the FMI Committee in writing that no update (or further update) is required.

• (8) The FMI Committee is not required under subsection (4) or (6) to provide any information whose publication would in the opinion of the Committee be against the public interest.

SCHEDULE 2ZA

“Eligible institutions”

1

• (1) The Bank may impose a charge on eligible institutions in accordance with this Schedule.

• (2) The charge is to be known as the Bank of England levy (and is referred to in this Schedule as “the levy”).

2

• (1) For the purposes of this Schedule, an “eligible institution” is a person who, at any time during a levy year, is an authorised deposit-taker.

• (2) An “authorised deposit-taker” for these purposes is a person who has permission under Part 4A of the Financial Services and Markets Act 2000 to accept deposits, other than—

• (a) a credit union;

• (b) a friendly society;

• (c) a person who has such permission only in the course of effecting or carrying out contracts of insurance in accordance with that permission.

• (3) In this paragraph—

• “credit union” has the meaning given by section 31(1) of the Credit Unions Act 1979 or Article 2(2) of the Credit Unions (Northern Ireland) Order 1985;

• “friendly society” means a society that is registered within the meaning of the Friendly Societies Act 1974 or incorporated under the Friendly Societies Act 1992;

• “levy year” has the meaning given by paragraph 3.

• (4) The Treasury may by regulations—

• (a) amend the foregoing provisions of this paragraph;

• (b) amend any other provision of this Schedule in consequence of provision made under paragraph (a).

3

• (1) For the purposes of this Schedule, a “levy year” is—

• (a) the period of 12 months beginning on such day as the Bank may determine, and

• (b) each subsequent period of 12 months.

• (2) The day determined under sub-paragraph (1)(a) may not be before the day on which the Financial Services and Markets Act 2023 is passed.

4

• (1) The Bank must, in respect of a levy year—

• (a) determine which of its policy functions it intends to fund (in whole or in part) by means of the levy;

• (b) determine the total amount of the levy it reasonably considers it requires in connection with the funding of those functions (“the anticipated levy requirement”).

• (2) The Bank may add to the anticipated levy requirement for a levy year such amount (if any) that—

• (a) was required in connection with the funding of policy functions in the previous levy year, and

• (b) was in excess of the total amount of the levy that it received in respect of that previous levy year.

• (3) For the purposes of this Schedule, a function of the Bank is a “policy function” if it is exercised in pursuit of—

• (a) the Financial Stability Objective (see section 2A), or

• (b) its objectives in relation to monetary policy (see section 11).

• (4) In making a determination in accordance with sub-paragraph (1), the Bank must take account of any other amounts which are, or are likely to be, available in the levy year to fund policy functions (for example, amounts of the levy received in respect of a previous levy year or amounts available from sources other than the levy).

• (5) The Bank must publish a determination made in accordance with sub-paragraph (1)—

• (a) at such time before or during the levy year to which the determination relates as the Bank considers appropriate, and

• (b) in such manner as the Bank considers appropriate.

• (6) The reference in sub-paragraph (3) to the exercise of a function includes anything done in preparation for, to facilitate, or otherwise in connection with, the exercise of the function.

5

• (1) The amount of the levy that an eligible institution is liable to pay in respect of a levy year is to be determined by the Bank in accordance with regulations made by the Treasury.

• (2) Regulations under sub-paragraph (1) may—

• (a) make provision by reference to the Bank’s anticipated levy requirement in respect of the levy year (see paragraph 4);

• (b) make provision by reference to specified liabilities of an eligible institution;

• (c) make provision for cases in which no amount of the levy or a reduced amount of the levy is payable.

• (3) Regulations made by virtue of sub-paragraph (2)(b) may include (among other things) provision—

• (a) specifying types of liability that may or may not be taken into account for specified purposes;

• (b) about how and when liabilities of a specified type are to be taken into account for specified purposes;

• (c) about how the amount of a liability of a specified type is to be determined, including specifying times, or periods of time, by reference to which the amount is to be determined;

• (d) for an amount of a liability of a specified type to be treated as reduced by the amount of assets of a specified type.

• (4) Regulations under sub-paragraph (1) may include provision conferring a discretion on the Bank to determine specified matters (including matters mentioned in sub-paragraph (2)(b) or (3)).

• (5) Regulations made by virtue of sub-paragraph (4) may, in particular, confer a discretion—

• (a) to determine the method used to determine a matter, and

• (b) to determine different methods to be used in relation to different eligible institutions.

• (6) In this section, “specified” means specified in the regulations.

6

• (1) The Bank must notify each eligible institution that is liable to pay the levy in respect of a levy year of the following matters—

• (a) the levy year in respect of which the levy is payable;

• (b) the amount of the levy the institution is liable to pay;

• (c) the time by which the levy must be paid (or, if the Bank determines that the levy may be paid in instalments, the times by which each instalment must be paid);

• (d) the methods by which the levy may be paid.

• (2) A time notified in accordance with sub-paragraph (1)(c) (or if more than one time is notified, the earliest of them) may not be before the end of the period of 30 days beginning with the day on which the notification is given.

• (3) Notification may be given in such form or in such manner as the Bank considers appropriate (and may be given in a different form or manner to different eligible institutions or eligible institutions of a different description).

7

The levy is recoverable as a civil debt due to the Bank.

8

• (1) This paragraph applies where an eligible person has been notified—

• (a) of an amount of the levy that is payable, and

• (b) the time by which the amount must be paid.

• (2) Interest is payable, at the rate mentioned in sub-paragraph (3), on any part of the amount mentioned in sub-paragraph (1)(a) which remains unpaid after the time mentioned in sub-paragraph (1)(b).

• (3) The rate mentioned in this sub-paragraph is the rate equivalent to an annual percentage rate of 4% above the benchmark rate.

• (4) The “benchmark rate” is—

• (a) the percentage rate announced from time to time by the Monetary Policy Committee of the Bank as the official dealing rate, or

• (b) where an order under section 19 (Treasury reserve powers) is in force, any equivalent percentage rate determined by the Treasury under that order.

• (5) The Treasury may by regulations amend this paragraph so as to change the rate of interest payable on an unpaid amount of the levy.

9

• (1) The Bank may, by written notice, require an eligible institution to provide information or documents in connection with the levy.

• (2) The notice must specify—

• (a) the information required;

• (b) the form or manner in which the information must be provided;

• (c) the time at which, or period within which, the information must be provided;

• (d) the period to which the information must relate.

10

• (1) Before making regulations under this Schedule the Treasury must consult—

• (a) the Bank, and

• (b) such other persons who appear to the Treasury to be representative of persons who are likely to be affected by the regulations.

• (2) When making regulations under this Schedule the Treasury must have regard to the financial needs of the Bank.

• (3) Regulations under this Schedule are to be made by statutory instrument.

• (4) Regulations under this Schedule may—

• (a) make different provision for different purposes;

• (b) make incidental, supplemental, consequential, saving or transitional provision.

• (5) A statutory instrument containing (whether alone or with other provision) regulations under paragraphs 2(4) or 5(1) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.

• (6) A statutory instrument containing only regulations under paragraph 8(5) is subject to annulment in pursuance of a resolution of either House of Parliament.