Legalize / United Kingdom / Public General Act

Banking Act 2009

Type Public General Act

Publication 2009-02-12

Last updated 2026-01-19

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

(5B) In this Part “digital settlement asset exchange provider” means a person who provides one or more of the following services, including as creator or issuer of any of the digital settlement assets, by—

(a) exchanging, or arranging the exchange of—

(i) digital settlement assets for money,

(ii) money for digital settlement assets,

(iii) digital settlement assets and money for digital settlement assets, or

(iv) digital settlement assets and money for money,

(b) exchanging, or arranging the exchange of, one digital settlement asset for another, or

(5C) The Treasury may by regulations amend—

(a) the definition of “digital settlement asset” in subsection (4A);

(b) the definition of “DSA service provider” in subsection (5A);

(c) the definition in section 206AA of a person who provides services connected with a recognised payment system that uses digital settlement assets.

Interpretation: other expressions

183

In this Part—

(a) a reference to the “operator” of a payment system is a reference to any person with responsibility under the system for managing or operating it,

(b) a reference to the operation of a system includes a reference to its management,

(ba) a reference to a “service provider” is to be construed in accordance with section 206A(2),

(c) “the UK financial system” has the meaning given ... by section 1I of the Financial Services and Markets Act 2000 ...,

(d) a reference to the Bank of England's role as a monetary authority is to be construed in accordance with section 244(2)(c),

(e) the FCA” means the Financial Conduct Authority,

(f) “Part 4A permission” has the meaning given by section 55A of the Financial Services and Markets Act 2000,

(g) “the PRA” means the Prudential Regulation Authority,

(h) “PRA-regulated activity” has the meaning given by section 22A of the Financial Services and Markets Act 2000, ...

(i) “recognised investment exchange” has the meaning given by section 285 of that Act.

(j) “the Payment Systems Regulator” means the Payment Systems Regulator established under section 40 of the Financial Services (Banking Reform) Act 2013, and

(k) in sections 188 to 199 (regulation and enforcement), references to the provision of services by a service provider to a payment system or to a DSA service provider include references to—

(i) services provided by the service provider which form part of the arrangements constituting , or connected with, the system, and

(ii) the service provider’s arrangements for governance or risk management, or for any other matters which may affect the provision of the services by the service provider.

Recognised systems and service providers

Recognition order

184

(1) The Treasury may by order (“recognition order”) specify a payment system as a recognised system for the purposes of this Part.

(2) A recognition order must specify in as much detail as is reasonably practicable the arrangements which constitute the ... payment system.

(3) The Treasury may not specify a payment system operated solely by the Bank of England.

(4) See section 206A for the power to specify in a recognition order a person as a person who provides services that form part of the arrangements constituting or connected with the recognised system.

Recognition criteria

185

(1) The Treasury may make a recognition order in respect of a payment system only if satisfied that any deficiencies in the design of the system, or any disruption of its operation, would be likely—

(a) to threaten the stability of, or confidence in, the UK financial system, or

(b) to have serious consequences for business or other interests throughout the United Kingdom.

(2) In considering whether to specify a system the Treasury must have regard to—

(a) the number and value of the transactions that the system presently processes or is likely to process in the future,

(b) the nature of the transactions that the system processes,

(d) the relationship between the system and other systems, and

(e) whether the system is used by the Bank of England in the course of its role as a monetary authority.

Procedure

186

(1) Before making a recognition order in respect of a payment system or a DSA service provider the Treasury must—

(a) consult the Bank of England and the Payment Systems Regulator,

(aa) in the case of a recognition order in respect of a DSA service provider, consult the FCA,

(b) notify the operator of the system or the DSA service provider (as appropriate), and

(See section 206A(4) for the procedure to be followed before specifying a person under section 206A(2)(b) (service providers in relation to recognised payment systems) in a recognition order.)

(2) In addition, the Treasury—

(a) must consult the FCA before making a recognition order in respect of a payment system or a DSA service provider, where the operator of the system or the provider —

(i) is, or has applied to become, a recognised investment exchange, or

(ii) has, or has applied for, a Part 4A permission, and

(b) if the operator or provider has, or has applied for, a Part 4A permission for the carrying on of a PRA-regulated activity, must also consult the PRA.

(3) In considering whether to make a recognition order in respect of a payment system or a DSA service provider the Treasury may rely on information provided by the Bank of England, the FCA or the PRA.

De-recognition

187

(1) The Treasury may revoke a recognition order.

(2) The Treasury must revoke a recognition order if not satisfied—

(a) that the criteria in section 185 are met in respect of the recognised ... payment system. , or

(b) that the criteria in section 185A are met in respect of the recognised DSA service provider.

(3) Before revoking a recognition order the Treasury must—

(a) consult the Bank of England and the Payment Systems Regulator,

(aa) in the case of a recognition order in respect of a DSA service provider, consult the FCA,

(b) notify the operator of the recognised ... payment system or the recognised DSA service provider (as appropriate), and

(4) In addition, the Treasury—

(a) must consult the FCA before revoking a recognition order in respect of a payment system or a DSA service provider, where the operator of the system or the provider —

(i) is, or has applied to become, a recognised investment exchange, or

(ii) has, or has applied for, a Part 4A permission, and

(b) if the operator or provider has, or has applied for, a Part 4A permission for the carrying on of a PRA-regulated activity, must also consult the PRA.

(5) The Treasury must consider any request by the operator of a recognised ... payment system , or by a recognised DSA service provider for the revocation of its recognition order.

Regulation

Principles

188

(1) The Bank of England may publish—

(a) principles to which operators of recognised ... payment systems are to have regard in operating the systems and

(b) principles to which recognised DSA service providers are to have regard in the provision of services to payment systems (whether or not recognised),

(c) principles to which service providers are to have regard in the provision of services to such systems or to such DSA service providers.

(2) Before publishing principles the Bank must obtain the approval of the Treasury.

Codes of practice

189

The Bank of England may publish codes of practice about—

(a) the operation of recognised ... payment systems; ...

(b) the provision of services by DSA service providers in relation to payment systems (whether or not recognised), or

System rules

190

(1) The Bank of England may require the operator of a recognised ... payment system—

(a) to establish rules for the operation of the system including the operation of services that form part of the arrangements constituting , or connected with, the system and are provided by a service provider , or a DSA service provider;

(b) to change the rules in a specified way or so as to achieve a specified purpose;

(d) not to change the rules without the approval of the Bank.

(2) A requirement under subsection (1)(c) or (d) may be general or specific.

Directions

191

(1) The Bank of England may give directions in writing to—

(a) the operator of a recognised ... payment system,

(b) to a recognised DSA service provider, or

(2) A direction may—

(a) require or prohibit the taking of specified action in the operation of the system or the provision of services ...;

(b) set standards to be met in the operation of the system or the provision of services ....

(3) If a direction is given for the purpose of resolving or reducing a threat to the stability of the UK financial system, the operator , DSA service provider or service provider (including the operator’s , DSA service provider’s or service provider’s officers and staff) has immunity from liability in damages in respect of action or inaction in accordance with the direction.

(4) A direction given for the purpose mentioned in subsection (3) must—

(a) include a statement that it is given for that purpose, and

(b) inform the operator , DSA service provider or service provider of the effect of that subsection.

(5) The Treasury may by order confer immunity on any person from liability in damages in respect of action or inaction in accordance with a direction (including a direction given for the purpose mentioned in subsection (3)).

(6) An order—

(a) is to be made by statutory instrument, and

(b) is subject to annulment in pursuance of a resolution of either House of Parliament.

(7) An immunity conferred by or under this section does not extend to action or inaction—

(a) in bad faith, or

(b) in contravention of section 6(1) of the Human Rights Act 1998.

Role of FSA

192

(1) In exercising powers under this Part the Bank of England shall have regard to any action that the FCA or the PRA has taken or could take.

(2) The Bank of England—

(a) must consult the FCA before taking action under this Part in respect of a recognised ... payment system the operator of which satisfies section 186(2)(a) , a service provider in relation to such a system or a service provider which itself satisfies section 186(2)(a) and

(b) must consult the PRA before taking action under this Part in respect of a recognised ... payment system the operator of which satisfies section 186(2)(b) , a service provider in relation to such a system or a service provider which itself satisfies section 186(2)(b).

(3) If the FCA or the PRA gives the Bank of England notice that it is considering taking action in respect of the operator of a recognised ... payment system who satisfies section 186(2)(a) or (b) , a service provider in relation to such a system or a service provider which itself satisfies section 186(2)(a) or (b) the Bank may not take action under this Part in respect of the operator or service provider unless—

(a) the FCA or (as the case may be) the PRA consents, or

(b) the notice is withdrawn.

Enforcement

Inspection

193

(1) The Bank of England may appoint one or more persons to inspect the operation of a recognised ... payment system , a recognised DSA service provider or the provision of services to such a system or such a DSA service provider by a service provider.

(2) The operator of a recognised ... payment system , or a recognised DSA service provider , or a service provider in relation to such a system or such a DSA service provider, must—

(a) grant an inspector access, on request and at any reasonable time, to premises on or from which any part of the system is operated or (as the case may be) premises on or from which any part of the services is provided, and

(b) otherwise co-operate with an inspector.

Inspection: warrant

194

(1) A justice of the peace may on the application of an inspector issue a warrant entitling an inspector or a constable to enter premises if—

(a) there is conducted on the premises any part of the management or operation of—

(i) a recognised payment system (whether by an operator of the system or by someone providing services used by an operator), ...

(ia) a recognised DSA service provider, or

(ii) a service provider in relation to a recognised payment system or a recognised DSA service provider, and

(b) any of the following conditions is satisfied.

(2) Condition 1 is that—

(a) a requirement under section 204 in connection with the payment system , the DSA service provider or the service provider has not been complied with, and

(b) there is reason to believe that information relevant to the requirement is on the premises.

(3) Condition 2 is that there is reason to suspect that if a requirement under section 204 were imposed in connection with the payment system , the DSA service provider or the service provider in respect of information on the premises—

(a) the requirement would not be complied with, and

(b) the information would be destroyed or otherwise tampered with.

(4) Condition 3 is that an inspector—

(a) gave reasonable notice of a wish to enter the premises, and

(b) was refused entry.

(5) Condition 4 is that a person occupying or managing the premises has failed to co-operate with an inspector.

(6) A warrant—

(a) permits an inspector or a constable to enter the premises,

(b) permits an inspector or a constable to search the premises and copy or take possession of information or documents, and

(7) Sections 15(5) to (8) and 16 of the Police and Criminal Evidence Act 1984 (warrants: procedure) apply to warrants under this section.

(8) In the application of this section to Scotland—

(a) the reference to a justice of the peace includes a reference to a sheriff, and

(b) ignore subsection (7).

(9) In the application of this section to Northern Ireland—

(a) the reference to a justice of the peace is a reference to a lay magistrate, and

(b) the reference to sections 15(5) to (8) and 16 of the Police and Criminal Evidence Act 1984 is a reference to the equivalent provisions of the Police and Criminal Evidence (Northern Ireland) Order 1989.

Independent report

195

(1) The Bank of England may require

(a) the operator of a recognised ... payment system to appoint an expert to report on the operation of the system ; ...

(b) a service provider in relation to a recognised payment system to appoint an expert to report on the provision of services to the system.

(c) a recognised DSA service provider to appoint an expert to report on the provision of services to payment systems (whether or not recognised), or

(d) a service provider in relation to a recognised DSA service provider to appoint an expert to report on the provision of services to the DSA service provider.

(2) The Bank may impose a requirement only if it thinks—

(a) the operator , recognised DSA service provider or service provider is not taking sufficient account of principles published by the Bank under section 188,

(b) the operator , recognised DSA service provider or service provider is failing to comply with a code of practice under section 189, or

(3) The Bank may impose requirements about—

(a) the nature of the expert to be appointed;

(b) the content of the report;

(d) timing.

Compliance failure

196

In this Part “compliance failure” means a failure by the operator of a recognised ... payment system , a recognised DSA service provider , or a service provider in relation to such a system, or such a DSA service provider to—

(a) comply with a code of practice under section 189,

(b) comply with a requirement under section 190,

(d) ensure compliance with a requirement under section 195.

Publication

197

(1) The Bank of England may publish details of a compliance failure by the operator of a recognised ... payment system , a recognised DSA service provider or a service provider in relation to such a system or such a DSA service provider.

(2) The Bank may publish details of a sanction imposed under sections 198 to 200.

Penalty

198

(1) The Bank of England may require the operator of a recognised ... payment system , a recognised DSA service provider , or a service provider in relation to such a system, or such a DSA service provider to pay a penalty in respect of a compliance failure.

(2) A penalty—

(a) must be paid to the Bank of England, and

(b) may be enforced by the Bank as a debt.

(3) The Bank must prepare a statement of the principles which it will apply in determining—

(a) whether to impose a penalty, and

(b) the amount of a penalty.

(4) The Bank must—

(a) publish the statement on its internet website,

(b) send a copy to the Treasury,

(c) review the statement from time to time and revise it if necessary (and paragraphs (a) and (b) apply to a revision), and

(d) in applying the statement to a compliance failure, apply the version in force when the failure occurred.

Closure

199

(1) This section applies if the Bank of England thinks that a compliance failure—

(a) threatens the stability of, or confidence in, the UK financial system, or

(b) has serious consequences for business or other interests throughout the United Kingdom.

(2) The Bank may give the operator of the ... payment system concerned , the DSA service provider concerned , or the service provider concerned, an order to stop operating the system , providing services, or (as the case may be) providing services to a recognised payment system or recognised DSA service provider (a “closure order”)—

(a) for a specified period,

(b) until further notice, or

(3) A closure order may apply to—

(a) all activities of the payment system , or DSA service provider or all services provided to a recognised payment system , or a recognised DSA service provider by the service provider, or

(b) specified activities or specified services.

(3A) Before giving a closure order to a service provider, the Bank must have regard to the public interest in the continued operation of each recognised payment system , or of each recognised DSA service provider, in relation to which the service provider is specified under section 206A(2)(b) or 206A(2A)(b) (as the case may be).

(4) An operator , DSA service provider, or service provider who fails to comply with a closure order commits an offence.

(5) A person guilty of an offence is liable—

(a) on summary conviction, to a fine not exceeding the statutory maximum, or

(b) on conviction on indictment, to a fine.

Management disqualification

200

(1) The Bank of England may by order prohibit a specified person from being an operator of a recognised ... payment system or from being a DSA service provider—

(a) for a specified period,

(b) until further notice, or

(2) The Bank may by order prohibit a specified person from holding an office or position involving responsibility for taking decisions about the management of a recognised ... payment system , or a recognised DSA service provider, or about the management of a service provider in relation to such a system or such a DSA service provider—

(a) for a specified period,

(b) until further notice, or

(2A) Before making an order under subsection (2) in respect of a service provider, the Bank must have regard to the public interest in the continued operation of each recognised payment system , or of each recognised DSA service provider, in relation to which the service provider is specified under section 206A(2)(b). or 206A(2A)(b) (as the case may be).

(3) A person who breaches a prohibition under subsection (1) or (2) commits an offence.

(4) A person guilty of an offence is liable—

(a) on summary conviction, to a fine not exceeding the statutory maximum, or

(b) on conviction on indictment, to a fine.

Warning

201

(1) Before imposing a sanction on the operator of a payment system , on a DSA service provider, , on a service provider in relation to such a system or such a DSA service provider or on another person the Bank of England must—

(a) give the operator , DSA service provider , service provider or other person a notice (a “warning notice”),

(b) give the operator , DSA service provider , service provider or other person at least 21 days to make representations,

(d) as soon as is reasonably practicable, give the operator , DSA service provider , service provider or other person a notice stating whether or not the Bank intends to impose the sanction.

(1A) Before imposing a sanction on a person who is a service provider in relation to a recognised payment system or recognised DSA service provider the Bank must also—

(a) give the operator of the payment system , or DSA service provider a notice (a “warning notice”),

(b) give the operator , or DSA service provider at least 21 days to make representations,

(d) as soon as reasonably practicable, give the operator or DSA service provider a notice stating whether the Bank intends to impose the sanction.

(2) In subsections (1) and (1A) “imposing a sanction” means—

(a) publishing details under section 197(1),

(b) requiring the payment of a penalty under section 198,

(d) making an order under section 200.

(3) Despite subsections (1) and (1A), if satisfied that it is necessary the Bank may without notice—

(a) give a closure order under section 199, or

(b) make an order under section 200.

Appeal

202

(1) Where the Bank of England notifies a person under section 201(1)(d) or (1A)(d) that the Bank intends to impose a sanction, the person may appeal to the Upper Tribunal.

(2) Where the Bank of England imposes a sanction on a person without notice in reliance on section 201(3), the person and, if the person is a service provider in relation to a recognised payment system or recognised DSA service provider, the operator of the payment system or DSA service provider (as the case may be), may appeal to the Upper Tribunal.

(3) The Bank of England may not impose a sanction while an appeal under this section could be brought or is pending.

Miscellaneous

Fees

203

(1) The Bank of England may require operators of recognised ... payment systems , recognised DSA service providers, , and service providers in relation to such systems or such DSA service providers, to pay fees.

(2) A requirement under subsection (1) must relate to a scale of fees approved by the Treasury by regulations.

(3) Regulations under subsection (2)—

(a) shall be made by statutory instrument, and

(b) shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(4) A requirement under subsection (1) may be enforced by the Bank as a debt.

Information

204

(1) The Bank of England may by notice in writing require a person to provide information—

(a) which the Bank thinks will help the Treasury in determining whether to make a recognition order or an order under section 206A , or to specify a person under section 206A(2)(b) or 206A(2A)(b), or

(b) which the Bank otherwise requires in connection with its functions under this Part.

(1A) The Bank of England may by notice in writing require the operator of a recognised ... payment system , a recognised DSA service provider, or a service provider in relation to such a system or such a DSA service provider to provide information which the Bank requires in connection with the exercise of its functions (whether under this Part or otherwise) in pursuance of its financial stability objective.

(2) In particular, a notice under subsection (1) or (1A) may require the operator of a recognised ... payment system , a recognised DSA service provider, or a service provider in relation to such a system or such a DSA service provider to notify the Bank if events of a specified kind occur.

(3) A notice under subsection (1) or (1A) may require information to be provided—

(a) in a specified form or manner;

(b) at a specified time;

(4) The Bank may disclose information obtained by virtue of this section to—

(a) the Treasury;

(b) the FCA;

(ba) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c) an authority in a country or territory outside the United Kingdom which exercises functions similar to those of the Treasury, the Bank of England , the FCA or the PRA in relation to ... payment systems;

(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(e) the Bank for International Settlements.

(5) Subsection (4)—

(a) overrides a contractual or other requirement to keep information in confidence, and

(b) is without prejudice to any other power to disclose information.

(6) The Treasury may by regulations permit the disclosure of information obtained by virtue of this section to a specified person.

(7) The Bank may publish information obtained by virtue of this section.

(8) The Treasury may make regulations about the manner and extent of publication under subsection (7).

(9) Regulations under this section—

(a) shall be made by statutory instrument, and

(b) shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(10) It is an offence—

(a) to fail without reasonable excuse to comply with a requirement under this section;

(b) knowingly or recklessly to give false information in pursuance of this section.

(11) A person guilty of an offence is liable—

(a) on summary conviction, to a fine not exceeding the statutory maximum, or

(b) on conviction on indictment, to a fine.

Pretending to be recognised

205

(1) It is an offence for the operator of a non-recognised ... payment system or DSA service provider—

(a) to assert that the system or provider is recognised, or

(b) to do anything which suggests that the system or provider is recognised.

(1A) It is an offence for a person who is not a service provider in relation to a recognised payment system or recognised DSA service provider—

(a) to assert that the person is such a service provider, or

(b) to do anything which suggests that the person is such a service provider.

(2) A person guilty of an offence is liable—

(a) on summary conviction, to a fine not exceeding the statutory maximum, or

(b) on conviction on indictment, to a fine.

Saving for informal oversight

206

(1) Nothing in this Part prevents the Bank of England from having dealings with the operators of payment systems , DSA service providers , or persons who provide services in relation to payment systems, or DSA service providers to which this Part does not apply.

(2) Nothing in this Part prevents the Bank from having dealings, other than through the provisions of this Part, with the operators of payment systems , DSA service providers , or persons who provide services in relation to payment systems, or DSA service providers to which this Part does apply.

Part 6 — Banknotes: Scotland and Northern Ireland

Introduction

Overview

207

This Part—

(a) repeals existing provisions about permission to issue banknotes in Scotland and Northern Ireland, and

(b) replaces the provisions, but only for authorised banks (see section 210).

Key terms

“Banknote”

208

In this Part “banknote” means a promissory note, bill of exchange or other document which—

(a) records an engagement to pay money,

(b) is payable to the bearer on demand, and

“Issue”

209

(1) For the purposes of this Part a banknote is issued when it passes—

(a) from a person who holds it not as bearer but as a person carrying on the business of banking (“the issuing bank”), and

(b) to a person taking as bearer (“the bearer”).

(2) In subsection (1)(a) the reference to a banknote passing from the issuing bank includes a reference to it passing—

(a) from the issuing bank's agent, or

(b) from a person printing or preparing the banknote for, or taking it to, the issuing bank or its agent.

(3) For the purposes of subsection (1)(b) it does not matter whether the bearer also holds the banknote for use in the business of banking.

“Authorised bank”

210

In this Part “authorised bank” means

(a) a bank which immediately before commencement was authorised to issue banknotes in Scotland or Northern Ireland (unless by virtue of regulations under section 214A it is no longer an authorised bank for the purposes of this Part), or

(b) a bank which is designated as an authorised bank for the purposes of this Part by regulations under section 214A(1)(a).

“Commencement”

211

In this Part “commencement” means the date set for the coming into force of section 212 (under the commencement power in section 263).

Authorisation to issue

Repeal of old authorising enactments

212

The following shall cease to have effect—

(a) section 1 of the Bank Notes (Scotland) Act 1845 (authorisation to issue banknotes), and

(b) section 8 of the Bankers (Ireland) Act 1845 (authorisation to issue banknotes).

Saving for existing issuers

213

(1) An authorised bank within section 210(a) may continue to issue banknotes after commencement, but only—

(a) in accordance with the provisions of this Part, and

(b) in the part of the United Kingdom in which it was authorised to issue banknotes before commencement.

(2) An authorised bank within section 210(b) may issue banknotes, but only—

(a) in accordance with the provisions of this Part, and

(b) in the part of the United Kingdom which is specified in relation to the bank in regulations under section 214A(1)(b).

Consequential repeals and amendments

214

(1) In the Bankers (Ireland) Act 1845—

(a) sections 9 to 23 cease to have effect,

(b) in section 26 for “except the Bank Notes of such Bankers as are hereby authorised to continue to issue Bank Notes as aforesaid” substitute “ except banknotes issued in reliance on section 213 of the Banking Act 2009 ”,

(d) Schedules A and B cease to have effect.

(2) In the Bank Notes (Scotland) Act 1845—

(a) every section ceases to have effect except for sections 16, 18, 21 and 22, and

(b) in section 18 for “except the Bank Notes of such Bankers as are hereby authorised to continue to issue Bank Notes as aforesaid” substitute “ except banknotes issued in reliance on section 213 of the Banking Act 2009 ”.

(3) The following cease to have effect—

(a) section 12 of the Bank Charter Act 1844,

(b) section 9 of the Currency and Bank Notes Act 1928,

(d) in the Coinage Act 1971—

(i) section 12(4)(b) and (c), and

(ii) in Schedule 2 the entries relating to—

(a) the Bankers (Ireland) Act 1845,

(b) the Bank Notes (Scotland) Act 1845, and

Regulations and rules

Banknote regulations

215

(1) The Treasury shall make regulations about the treatment, holding and issuing of banknotes by authorised banks (“banknote regulations”).

(2) Banknote regulations—

(a) shall be made by statutory instrument, and

(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

Banknote rules

216

(1) Banknote regulations may require or permit the Bank of England to make rules (“banknote rules”) about any aspect of the treatment, holding or issuing of banknotes by authorised banks.

(2) In particular, banknote regulations may require or permit banknote rules to do anything which banknote regulations may do.

(3) Banknote rules—

(a) may make provision generally or only for specified purposes, cases or circumstances, and

(b) may make different provision for different purposes, cases or circumstances.

Specific issues

Backing assets

217

(1) Banknote regulations must require authorised banks to have backing assets.

(2) “Backing assets” means assets of a kind specified by banknote regulations; and the regulations may, in particular, specify—

(a) banknotes issued by the Bank of England,

(b) current coins of the United Kingdom, and

(c) funds in a specified kind of account held with the Bank of England or with another specified institution or class of institution.

(3) The regulations must—

(a) require banknote rules to include provision for determining the value of backing assets to be held,

(b) require backing assets in the form of banknotes to be held either—

(i) by the Bank of England, or

(ii) at one or more locations approved by the Bank of England, and

(c) require backing assets held in the form of coins to be held at one or more locations approved by the Bank of England.

(4) The regulations may make other provision about backing assets; including, in particular—

(a) provision requiring a proportion of a bank's backing assets to consist of assets of a specified kind;

(b) provision about the manner in which backing assets may or must be held;

(d) provision permitting backing assets to be held by an agent of an authorised bank.

(5) Banknote regulations may make provision about the treatment of backing assets in relation to insolvency; in particular, the regulations may—

(a) modify or disapply a provision or rule of law about insolvency;

(b) protect backing assets from being treated in the same way as other assets of the bank;

(d) allow the Treasury to extend the period for exchange;

(e) provide for exchange to be funded from backing assets;

(f) provide for the Bank of England to acquire or control a bank's backing assets for the purpose of administering arrangements for exchange.

(6) In subsection (5) a reference to “insolvency” includes a reference to—

(a) liquidation,

(b) bank insolvency,

(d) bank administration,

(e) receivership,

(f) a composition between a bank and its creditors,

(g) a scheme of arrangement of a bank's affairs, and

(h) a process under the law of a country or territory outside the United Kingdom which the Treasury identify, in banknote regulations, as serving a similar purpose to any of the processes listed in paragraphs (a) to (g).

Information

218

(1) Banknote regulations or rules may make provision about—

(a) reports to be made by an authorised bank in respect of the treatment, holding or issue of banknotes or in respect of compliance with banknote regulations or rules, and

(b) information to be given by an authorised bank or an agent of an authorised bank.

(2) Banknote regulations may make provision enabling the publication or disclosure of—

(a) information provided in accordance with banknote regulations or rules;

(b) details of anything done in contravention of this Part or banknote regulations or rules;

(c) details of action taken under sections 221 to 224 (which may include details of the reason for the action and its result).

(3) Her Majesty's Revenue and Customs shall transfer to the Bank of England any information acquired or held in connection with functions in respect of the issue of banknotes in Scotland or Northern Ireland.

(4) The Bank of England may use information received in accordance with subsection (3) only for the purposes of its functions under or by virtue of this Part.

Ceasing the business of issuing notes

219

(1) If an authorised bank at any time after commencement stops issuing banknotes, it may not resume issuing banknotes in reliance on section 213.

(2) Banknote regulations or rules—

(a) may specify procedures to be followed by an authorised bank that intends to stop issuing banknotes, and

(b) may apply to an authorised bank for two years after it stops issuing banknotes.

Insolvency, &c.

220

(1) Banknote regulations may make provision in connection with the application to an authorised bank of—

(a) the special resolution regime (under Parts 1 to 3), or

(b) a provision about insolvency within the meaning of section 217(6).

(2) The regulations may, in particular—

(a) provide for the destruction of banknotes which have not been issued;

(b) provide for the destruction of banknotes which have been exchanged in accordance with section 217(5)(c);

(3) A right to rely on section 213 cannot be transferred by or acquired from an authorised bank (and, in particular, cannot be acquired by virtue of or in connection with anything done under Part 1).

(4) The fact that an authorised bank is taken into temporary public ownership in accordance with section 13 does not itself prevent the bank from relying on section 213.

(4A) The fact that ownership of an authorised bank is transferred or otherwise changed as a result of a resolution instrument (or an instrument treated as a resolution instrument) does not itself prevent the bank from relying on section 213.

(5) If an authorised bank enters insolvency (within the meaning of section 217(6)) it loses the right to rely on section 213.

(6) Transitional provision of banknote regulations (included in reliance on section 259(1)(c)) may include provision for a case where a bank loses the right to rely on section 213; in particular, the regulations may allow the bank to rely on the section for a specified transitional period or in respect of a specified class of transitional case.

(7) A reference in this section to the special resolution regime includes a reference to any provision of the law of a country or territory outside the United Kingdom which the Treasury identifies, in banknote regulations, as serving a similar purpose.

Enforcement

Offence: unlawful issue

221

(1) A person who issues banknotes in Scotland or Northern Ireland otherwise than in reliance on section 213 commits an offence.

(2) A person guilty of an offence under subsection (1) is liable—

(a) on conviction on indictment, to imprisonment for a term not exceeding 10 years, to a fine or to both, or

(b) on summary conviction, to imprisonment for a term not exceeding 12 months, to a fine not exceeding the statutory maximum or to both.

(3) An offence under subsection (1) committed by a body corporate is also committed by an officer of the body (“O”) if the offence—

(a) is committed with O's consent or connivance, or

(b) is attributable to O's negligence.

(4) In subsection (3) “officer” means—

(a) a director,

(b) a manager,

(d) a person purporting to act as an officer within paragraphs (a) to (c).

(5) Subsection (3) applies to a partnership constituted under the law of Scotland as to a body corporate; for which purpose “officer” means—

(a) a partner, or

(b) a person purporting to act as a partner.

(6) Proceedings for an offence under subsection (1) may be instituted—

(a) in England and Wales, only by the Director of Public Prosecutions, and

(b) in Northern Ireland, only by the Director of Public Prosecutions for Northern Ireland.

Financial penalty

222

(1) Banknote regulations may enable the Bank of England to impose a penalty on an authorised bank that fails to comply with banknote regulations or rules.

(2) A penalty—

(a) shall be paid to the Bank of England, and

(b) is enforceable by the Bank of England as a debt.

(3) Banknote regulations must establish a method for determining the maximum amount of a penalty.

Termination of right to issue

223

(1) The Treasury may determine—

(a) that an authorised bank has failed to comply with banknote regulations or banknote rules, and

(b) that, having regard to the nature of the failure, the authorised bank should no longer be permitted to issue banknotes in reliance on section 213.

(2) Before making a determination the Treasury must consult the Bank of England.

(3) On making a determination the Treasury shall notify the authorised bank.

(4) Upon receipt of the notice the authorised bank loses the right to rely on section 213.

(5) If an authorised bank ceases to have permission under Part 4A of the Financial Services and Markets Act 2000 (regulated activities) to carry on the regulated activity of accepting deposits, it loses the right to rely on section 213 above.

(6) The reference in subsection (5) to Part 4A of the Financial Services and Markets Act 2000 includes a reference to any provision of the law of another country which the Treasury identify, in banknote regulations, as serving a similar purpose.

(7) Transitional provision of banknote regulations (included in reliance on section 259(1)(c)) may include provision for a case where a bank loses the right to rely on section 213; in particular, the regulations may allow the bank to rely on the section for a specified transitional period or in respect of a specified class of transitional case.

Application to court

224

Banknote regulations may enable the Bank of England to apply to the High Court or Court of Session for—

(a) relief in respect of failure to comply with banknote regulations or rules, or

(b) any order designed to ensure, or facilitate monitoring of, compliance with a provision of banknote regulations or rules.

Bank of England

Organisation

225

Expenses incurred and sums received by the Bank of England in connection with its functions under this Part are to be treated as expenses and receipts of the Issue Department.

Discretionary functions

226

(1) Banknote regulations may confer a discretionary function on the Bank of England.

(2) In particular, banknote regulations—

(a) may require compliance with conditions to be imposed (whether generally or only for specified cases or circumstances) by the Bank of England, and

(b) may make a permission or option subject to the approval of the Bank of England (which may be general or only for specified cases or circumstances).

(3) Subsection (2) is in addition to express references in this Part to Bank of England approval.

Exemption

227

Section 221(1) does not prohibit the issue of banknotes by the Bank of England.

Part 7 — Miscellaneous

Treasury support for banks

Consolidated Fund

228

(1) There shall be paid out of money provided by Parliament expenditure incurred—

(a) by the Treasury for any purpose in connection with Parts 1 to 3 of this Act,

(b) by the Treasury, or by the Secretary of State with the consent of the Treasury, in respect of, or in connection with giving, financial assistance to or in respect of a bank or other financial institution (other than in respect of loans made in accordance with section 229), or

(2) For the purpose of subsection (1)(b) expenditure is incurred in respect of financial assistance in respect of banks or other financial institutions if it is incurred in respect of an activity, transaction or arrangement, or class of activity, transaction or arrangement, which is expected to facilitate any part of the business of one or more banks or other financial institutions; and for that purpose it does not matter—

(a) whether or not that is the sole or principal expected effect of the activity, transaction or arrangement, or

(b) whether the sole or principal motive for the activity, transaction or arrangement is (i) its effect on banks or other financial institutions, (ii) its effect on the economy as a whole, (iii) its effect on a particular industry or sector of the economy, or (iv) its effect on actual or potential customers of banks or other financial institutions.

(3) In this section “financial assistance” has the meaning given by section 257 (and an order under that section may restrict or expand the effect of subsection (2)).

(4) This section has effect in relation to expenditure whether incurred—

(a) before or after Royal Assent, and

(b) in pursuance of obligations entered into before or after Royal Assent.

(5) Expenditure which could be paid out of money provided by Parliament under subsection (1) shall be charged on and paid out of the Consolidated Fund if the Treasury are satisfied that the need for the expenditure is too urgent to permit arrangements to be made for the provision of money by Parliament.

(6) Where money is paid in reliance on subsection (5) the Treasury shall as soon as is reasonably practicable lay a report before Parliament specifying the amount paid (but not the identity of the institution to or in respect of which it is paid).

(7) If the Treasury think it necessary on public interest grounds, they may delay or dispense with a report under subsection (6).

National Loans Fund

229

(1) Where the Treasury propose to make a loan to or in respect of a bank or other financial institution, they may arrange for money to be paid out of the National Loans Fund.

(2) The Treasury may make arrangements under subsection (1) only where they think it necessary to make the loan urgently in order to protect the stability of the financial systems of the United Kingdom.

(3) The Treasury shall determine—

(a) the rate of interest on a loan, and

(b) other terms and conditions.

(4) Sums received by the Treasury in respect of loans by virtue of this section shall be paid into the National Loans Fund.

(5) Neither section 16 of the Banking (Special Provisions) Act 2008 (finance) nor any other enactment restricts the breadth of application of this section.

(6) Where money is paid in reliance on subsection (1) the Treasury shall as soon as is reasonably practicable lay a report before Parliament specifying the amount paid (but not the identity of the institution to or in respect of which it is paid).

(7) If the Treasury think it necessary on public interest grounds, they may delay or dispense with a report under subsection (6).

“Financial institution”

230

(1) The Treasury may by order provide that a specified institution, or an institution of a specified class, is or is not to be treated as a financial institution for the purposes of section 228 or 229.

(2) An order—

(a) shall be made by statutory instrument, and

(b) shall be subject to annulment in pursuance of a resolution of either House of Parliament.

Reports

231

(1) The Treasury shall prepare reports about any arrangements entered into which involve or may require reliance on section 228(1).

(2) A report must be prepared in respect of—

(a) the period beginning with 1st April 2009 and ending with 30th September 2009, and

(b) each successive period of 6 months;

but no report is required for a period in respect of which there is nothing to record.

(3) The Treasury shall lay each report before the House of Commons as soon as is reasonably practicable.

(4) A report must not—

(a) specify individual arrangements, or

(b) identify, or enable the identification of, individual beneficiaries.

(5) The Treasury must aim to give as much information as possible in a report, subject to subsection (4) and other considerations of public interest.

Investment banks

Definition

232

(1) In this group of sections “investment bank” means an institution which satisfies the following conditions.

(2) Condition 1 is that the institution has permission under Part 4A of the Financial Services and Markets Act 2000 to carry on the regulated activity of—

(a) safeguarding and administering investments,

(aa) managing an AIF or a UCITS,

(ab) acting as trustee or depositary of an AIF or a UCITS,

(b) dealing in investments as principal, or

(2A) Subsection (2) must be read with section 22 of the Financial Services and Markets Act 2000, taken with Schedule 2 to that Act and any order under section 22.

(3) Condition 2 is that the institution holds client assets.

(4) In this group of sections “client assets” means assets which an institution has undertaken to hold for a client (whether or not on trust and whether or not the undertaking has been complied with).

(5) Condition 3 is that the institution is incorporated in, or formed under the law of any part of, the United Kingdom.

(5A) In subsection (4), “assets”—

(a) includes money, but

(b) does not include anything which an institution holds for the purposes of carrying on an insurance mediation activity unless—

(i) the activity arises in the course of carrying on an investment activity, or

(ii) the institution has elected, in relation to the thing, to comply with rules that would apply in relation to it if the activity were not an insurance mediation activity.

(5B) In this section—

“rules” means general rules (within the meaning of the Financial Services and Markets Act 2000) made by virtue of section 137B(1) of that Act;

“insurance mediation activity” has the meaning given by paragraph 2(5) of Schedule 6 to that Act (read as mentioned in paragraph 2(6) of that Schedule); and

“investment activity” means—anything that falls within the definition of “investment services and activities” in section 417(1) of that Act; oranything that is “designated investment business” within the meaning of the Financial Conduct Authority Handbook or the Prudential Regulation Authority Handbook.

(6) The Treasury may by order—

(a) provide that a specified class of institution, which has a permission under Part 4A of the Financial Services and Markets Act 2000 to carry on a regulated activity, is to be treated as an investment bank for the purpose of this group of sections;

(b) provide that a specified class of institution is not to be treated as an investment bank for the purpose of this group of sections;

(c) provide that assets of a specified kind, or held in specified circumstances, are to be or not to be treated as client assets for the purpose of this group of sections;

(d) amend a provision of this section in consequence of provision under paragraph (a), (b) or (c).

(7) The Treasury may by order amend the definition of “investment activity” in subsection (5B), including by defining that term by reference to rules or guidance made by the PRA or the FCA under the Financial Services and Markets Act 2000.

Insolvency regulations

233

(1) The Treasury may by regulations (“investment bank insolvency regulations”)—

(a) modify the law of insolvency in its application to investment banks;

(b) establish a new procedure for investment banks where—

(i) they are unable, or are likely to become unable, to pay their debts (within the meaning of section 93(4)), or

(ii) their winding up would be fair (within the meaning of section 93(8)).

(2) Investment bank insolvency regulations may, in particular—

(a) apply or replicate (with or without modifications) or make provision similar to provision made by or under the Insolvency Act 1986 or Part 2 or 3 of this Act;

(b) establish a new procedure either (i) to operate for investment banks in place of liquidation or administration (under the Insolvency Act 1986), or (ii) to operate alongside liquidation or administration in respect of a particular part of the business or affairs of investment banks.

(3) In making investment bank insolvency regulations the Treasury shall have regard to the desirability of—

(a) identifying, protecting, and facilitating the return of, client assets,

(b) protecting creditors' rights,

(d) minimising the disruption of business and markets, and

(e) maximising the efficiency and effectiveness of the financial services industry in the United Kingdom.

(4) A reference to returning client assets includes a reference to—

(a) transferring assets to another institution, and

(b) returning or transferring assets equivalent to those which an institution undertook to hold for clients.

Regulations: details

234

(1) Investment bank insolvency regulations may provide for a procedure to be instituted—

(a) by a court, or

(b) by the action of one or more specified classes of person.

(2) Investment bank insolvency regulations may—

(a) confer functions on persons appointed in accordance with the regulations (which may, in particular, (i) be similar to the functions of a liquidator or administrator under the Insolvency Act 1986, or (ii) involve acting as a trustee of client assets), and

(b) specify objectives to be pursued by a person appointed in accordance with the regulations.

(3) Investment bank insolvency regulations may make the application of a provision depend—

(a) on whether an investment bank is, or is likely to become, unable to pay its debts,

(b) on whether the winding up of an investment bank would be fair, or

(4) Investment bank insolvency regulations may make provision about the relationship between a procedure established by the regulations and—

(a) liquidation or administration under the Insolvency Act 1986,

(b) bank insolvency or bank administration under Part 2 or 3 of this Act, and

(5) Regulations by virtue of subsection (4) may, in particular—

(a) include provision for temporary or permanent moratoria;

(b) amend an enactment.

(6) Investment bank insolvency regulations may include provision—

(a) establishing a mechanism for determining which assets are client assets (subject to section 232);

(b) establishing a mechanism for determining that assets are to be, or not to be, treated as client assets (subject to section 232);

(d) about the treatment of unsettled transactions (and related collateral);

(e) for the transfer to another financial institution of assets or transactions;

(f) for the creation or enforcement of rights (including rights that take preference over creditors' rights) in respect of client assets or other assets;

(g) indemnifying a person who is exercising or purporting to exercise functions under or by virtue of the regulations;

(h) for recovery of assets transferred in error.

(7) Provision may be included under subsection (6)(f) only to the extent that the Treasury think it necessary having regard to the desirability of protecting both—

(a) client assets, and

(b) creditors' rights.

(8) Investment bank insolvency regulations may confer functions on—

(a) a court or tribunal,

(b) the Prudential Regulation Authority,

(ba) the Financial Conduct Authority,

(c) the Financial Services Compensation Scheme (established under Part 15 of the Financial Services and Markets Act 2000),

(d) the scheme manager of that Scheme, and

(e) any other specified person.

(9) Investment bank insolvency regulations may include provision about institutions that are or were group undertakings (within the meaning of section 1161(5) of the Companies Act 2006) of an investment bank.

(10) Investment bank insolvency regulations may replicate or apply, with or without modifications, a power to make procedural rules.

(11) Investment bank insolvency regulations may include provision for assigning or apportioning responsibility for the cost of the application of a procedure established or modified by the regulations.

Regulations: procedure

235

(1) Investment bank insolvency regulations shall be made by statutory instrument.

(2) Investment bank insolvency regulations may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

(3) The Treasury must consult before laying draft investment bank insolvency regulations before Parliament.

(4) If the power to make investment bank insolvency regulations has not been exercised before the end of the period of 2 years beginning with the date on which this Act is passed, it lapses.

(5) An order under section 232(6)—

(a) shall be made by statutory instrument, and

(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

(6) An order under section 232(7)—

(a) is to be made by statutory instrument, and

(b) is subject to annulment in pursuance of a resolution of either House of Parliament.

Review

236

(1) The Treasury shall arrange for a review of the effect of any investment bank insolvency regulations.

(2) The review must be completed during the period of 2 years beginning with the date on which the regulations come into force.

(3) The Treasury shall appoint one or more persons to conduct the review; and a person appointed must have expertise in connection with the law of insolvency or financial services.

(4) The review must consider, in particular—

(a) how far the regulations are achieving the objectives specified in section 233(3), and

(b) whether the regulations should continue to have effect.

(5) The review must result in a report to the Treasury.

(6) The Treasury shall lay a copy of the report before Parliament.

(7) If a review recommends further reviews—

(a) the Treasury may arrange for the further reviews, and

(b) subsections (3) to (6) (and this subsection) shall apply to them.

Banking (Special Provisions) Act 2008

Compensation: valuer

237

Without prejudice to the generality of section 12 of the Banking (Special Provisions) Act 2008 (consequential and supplementary provision), it is declared that the power under section 9 of that Act to make provision for the appointment of a valuer includes power to replicate, or to make provision of a kind that may be made under, section 55(1) to (3) of this Act.

Bank of England

UK financial stability

238

(1) After section 2 of the Bank of England Act 1998 (functions of court of directors) insert—

(2A) (1) An objective of the Bank shall be to contribute to protecting and enhancing the stability of the financial systems of the United Kingdom (the “Financial Stability Objective”). (2) In pursuing the Financial Stability Objective the Bank shall aim to work with other relevant bodies (including the Treasury and the Financial Services Authority). (3) The court of directors shall, consulting the Treasury, determine and review the Bank's strategy in relation to the Financial Stability Objective. (2B) (1) There shall be a sub-committee of the court of directors of the Bank (the “Financial Stability Committee”) consisting of— (a) the Governor of the Bank, who shall chair the Committee (when present), (b) the Deputy Governors of the Bank, and (c) 4 directors of the Bank, appointed by the chair of the court of directors (designated under paragraph 13 of Schedule 1). (2) The Committee shall have the following functions— (a) to make recommendations to the court of directors, which they shall consider, about the nature and implementation of the Bank's strategy in relation to the Financial Stability Objective, (b) to give advice about whether and how the Bank should act in respect of an institution, where the issue appears to the Committee to be relevant to the Financial Stability Objective, (c) in particular, to give advice about whether and how the Bank should use stabilisation powers under Part 1 of the Banking Act 2009 in particular cases, (d) to monitor the Bank's use of the stabilisation powers, (e) to monitor the Bank's exercise of its functions under Part 5 of the Banking Act 2009 (inter-bank payment systems), and (f) any other functions delegated to the Committee by the court of directors for the purpose of pursuing the Financial Stability Objective. (3) The Treasury may appoint a person to represent the Treasury at meetings of the Committee; and the Treasury's representative— (a) may not vote in proceedings of the Committee, (b) shall in all other respects be a member of the Committee, and (c) may be replaced by the Treasury. (4) The Committee may co-opt other non-voting members. (5) The chair of the court of directors may replace members of the Committee appointed under subsection (1)(c). (2C) (1) The Committee shall determine its own procedure (including quorum). (2) If a member of the Committee has any direct or indirect interest (including any reasonably likely future interest) in any dealing or business which falls to be considered by the Committee— (a) he shall disclose his interest to the Committee when it considers the dealing or business, and (b) he shall have no vote in proceedings of the Committee in relation to any question arising from its consideration of the dealing or business, unless the Committee has resolved that the interest does not give rise to a conflict of interest. (3) The Committee may delegate a function under section 2B(2)(b) to (e) to two or more of its members, excluding— (a) the Treasury representative, and (b) co-opted non-voting members.

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

Number of directors

239

(1) Section 1 of the Bank of England Act 1998 (court of directors) is amended as follows.

(2) In subsection (2) omit “16”.

(3) After subsection (2) insert—

(2A) The number of directors must not exceed 9.

(4) The directors immediately before the day on which this section comes into force shall vacate office on that day (without prejudice to re-appointment).

Meetings

240

(1) Paragraph 12 of Schedule 1 to the Bank of England 1998 (court of directors: meetings) is amended as follows.

(2) In sub-paragraph (1) for “once a month” substitute “ 7 times in each calendar year ”.

(3) For sub-paragraph (2) substitute—

(2) Either of the following may summon a meeting at any time on giving such notice as the circumstances appear to require— (a) the Governor of the Bank (or in his absence a Deputy Governor), and (b) the chair of the court.

Chair of court

241

(1) For paragraph 13(3) of Schedule 1 to the Bank of England Act 1998 (court of directors: chairing meetings) substitute—

(3) The Chancellor of the Exchequer may designate— (a) a member of the court to chair its meetings (“the chair of the court”), and (b) one or more members of the court as deputies to chair its meetings in the absence of the chair of the court.

(2) For section 3(4) of that Act (sub-committee: chair) substitute—

(4) The chair of the court (designated under paragraph 13 of Schedule 1) shall chair meetings of the sub-committee (when present).

Quorum

242

(1) The Bank of England Act 1998 is amended as follows.

(2) In section 3 (functions delegated to sub-committee)—

(a) omit subsection (3),

(b) in subsection (7) for “(3)” substitute “ (4) ”, and

(3) In paragraph 13 of Schedule 1 (court of directors: proceedings)—

(a) omit sub-paragraph (2),

(b) in sub-paragraph (6) for “(2)” substitute “ (3) ”, and

Tenure

243

(1) At the end of paragraph 1 of Schedule 1 to the Bank of England Act 1998 (Governor and Deputies: appointment) add—

(3) A person may not be appointed as Governor more than twice. (4) A person may not be appointed as Deputy Governor more than twice.

(2) At the end of paragraph 6 of that Schedule (re-appointment) insert “ (subject to paragraph 1(3) and (4)) ”.

(3) After paragraphs 1 and 2 of Schedule 3 to that Act (Monetary Policy Committee: appointment) insert—

(2A) A person may not be appointed as a member of the Committee under section 13(2)(c) more than twice.

(4) At the end of paragraph 6 of that Schedule (re-appointment) insert “ (subject to paragraph 2A) ”.

Immunity

244

(1) The Bank of England has immunity in its capacity as a monetary authority.

(2) In this section—

(a) a reference to the Bank of England is a reference to the Bank and anyone who acts or purports to act as a director, officer, employee or agent of the Bank,

(b) “immunity” means immunity from liability in damages in respect of action or inaction, and

(c) a reference to the Bank's capacity as a monetary authority includes a reference to the exercise or purported exercise of the Bank's functions under the Financial Services and Markets Act 2000 , of its functions under, or as a result of regulations made under, the Financial Services and Markets Act 2023, of its functions under or as a result of regulations made under section 8 of the European Union (Withdrawal) Act 2018 , of its functions under or in connection with this Act or as a resolution authority for the purposes of the recovery and resolution directive, of its other regulatory functions or of functions undertaken by the Bank for the purpose of or in connection with—

(i) acting as the central bank of the United Kingdom, or

(ii) protecting or enhancing the stability of the financial systems of the United Kingdom.

(2A) The Bank's functions under the Financial Services and Markets Act 2000 are to be taken to include any functions that it may exercise as a result of an appointment under any of sections 97, 166 to 169 and 284 of that Act.

(3) The immunity does not extend to action or inaction—

(a) in bad faith, or

(b) in contravention of section 6(1) of the Human Rights Act 1998.

Weekly return

245

Section 6 of the Bank Charter Act 1844 (Bank to produce weekly account) shall cease to have effect.

Information

246

(1) The Bank of England may disclose information that it thinks relevant to the financial stability of—

(a) individual financial institutions, or

(b) one or more aspects of the financial systems of the United Kingdom.

(2) Information about the business or other affairs of a specified or identifiable person may be disclosed under subsection (1) only to—

(a) the Treasury;

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(ba) the Financial Conduct Authority;

(c) the scheme manager of the Financial Services Compensation Scheme (established under Part 15 of the Financial Services and Markets Act 2000);

(ca) the Payment Systems Regulator (established under section 40 of the Financial Services (Banking Reform) Act 2013);

(d) an authority in a country or territory outside the United Kingdom which exercises functions similar to those of the Treasury, the Bank of England, the Prudential Regulation Authority or the Financial Conduct Authority in relation to financial stability;

(e) the European Central Bank.

(3) This section—

(a) overrides a contractual or other requirement to keep information in confidence, and

(b) is without prejudice to any other power to disclose information.

Bank of England Act 1946

247

Nothing in this Act affects the generality of section 4 of the Bank of England Act 1946 (directions and relations with other banks).

Financial Services Authority

Variation of permission

248

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Functions

249

(1) A reference in an enactment to functions conferred on the Prudential Regulation Authority or the Financial Conduct Authority by or under the Financial Services and Markets Act 2000 (or any part of it) includes a reference to functions conferred on that authority by or under this Act.

(2) A reference in an enactment to functions of the Prudential Regulation Authority or the Financial Conduct Authority includes a reference to functions conferred by or under this Act (irrespective of whether the enactment was passed or made before or after the commencement of this Act).

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

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

Information

250

(1) The Prudential Regulation Authority shall collect information that it thinks is or may be relevant to the stability of—

(a) individual financial institutions, or

(b) one or more aspects of the financial systems of the United Kingdom.

(2) The Authority may perform its function under subsection (1) by the exercise of the power in section 165 or 165A of the Financial Services and Markets Act 2000 (power to require information–as qualified, in the case of the section 165 power, by section 249 above) or in any other way.

Central banks

Financial assistance to building societies

251

(1) The Treasury may by order modify the Building Societies Act 1986 for the purpose of facilitating, or in connection with, the provision of financial assistance to building societies by—

(a) the Treasury, or

(b) the Bank of England,

(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) An order may affect any provision of the Building Societies Act 1986 which appears to the Treasury otherwise capable of preventing, impeding or affecting the provision of financial assistance; including, in particular, provision—

(a) about the establishment, constitution or powers of building societies,

(b) restricting or otherwise dealing with raising funds or borrowing,

(d) about security, or

(e) about the application of insolvency law or other legislation relating to companies.

(3) An order—

(a) may disapply or modify a provision;

(b) may (but need not) take the form of textual amendment.

(4) Incidental provision of an order (included in reliance on section 259(1)(c)) may, in particular—

(a) impose conditions, limits or other restrictions on what may be done in reliance on a provision of the order;

(b) confer a discretion on the Treasury, the Bank of England or another person or class of person.

(5) Incidental or consequential provision of an order (included in reliance on section 259(1)(c)) may disapply or modify an enactment, whether by textual amendment or otherwise.

(6) An order—

(a) shall be made by statutory instrument, and

(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) In this section, “financial assistance” has the meaning given by section 257.

Registration of charges

252

(1) Part 25 of the Companies Act 2006 (registration of charges) does not apply to a charge if the person interested in it is—

(a) the Bank of England,

(b) the central bank of a country or territory outside the United Kingdom, or

(2) The reference in subsection (1) to Part 25 of the Companies Act 2006 includes a reference to—

(a) Part 12 of the Companies Act 1985 (which has effect until the commencement of Part 25 of the 2006 Act),

(b) Part 13 of the Companies (Northern Ireland) Order 1986 (which has effect until the commencement of Part 25 of the 2006 Act), and

Registration of charges: Scotland

253

(1) The Bankruptcy and Diligence etc. (Scotland) Act 2007 is amended as follows.

(2) In section 38 (creation of floating charges)—

(a) in subsection (3), after “to” insert “ subsection (3A) and ”, and

(b) after that subsection insert—

(3A) If a floating charge is granted in favour of a central institution, it is created only when the document granting the floating charge is executed by the company granting the charge.

(3) In section 39 (advance notice of floating charges), after subsection (3) add—

(4) This section does not apply where a company proposes to grant a floating charge in favour of a central institution.

(4) In section 42 (assignation of floating charges), after subsection (3) add—

(4) This section does not apply where a floating charge is assigned (whether in whole or to a specified extent) to or by a central institution.

(5) In section 43 (alteration of floating charges)—

(a) in subsection (4), for “But paragraph” substitute “ Paragraph ”, and

(b) after that subsection insert—

(4A) Paragraph (b) of subsection (3) above does not apply in respect of an alteration if— (a) the holder of the floating charge is a central institution, or (b) the holder of the floating charge is not a central institution but the alteration is to be made in connection with a floating charge which is held (or which has been or is to be held) by a central institution.

(6) In section 44 (discharge of floating charges), after subsection (3) add—

(4) This section does not apply where the floating charge to be discharged (whether in whole or to a specified extent) is or has been held by a central institution.

(7) In section 47 (interpretation), after “Part—” insert—

“central institution” means— 1. the Bank of England, 2. the central bank of a country or territory outside the United Kingdom, or 3. the European Central Bank;

Funds attached rule (Scotland)

Abolition for cheques

254

(1) A reference to the “funds attached” rule is a reference to the rule of law in Scotland by virtue of which a bill of exchange, when presented to the drawee for payment, operates as an assignation of the sum for which it is drawn (or, if the drawee holds insufficient funds, of those funds) in favour of the holder of the bill.

(2) The “funds attached” rule is abolished for cheques presented for payment after the commencement of this section.

(3) Expressions used in this section have the same meaning as in the Bills of Exchange Act 1882.

(4) In that Act—

(a) in section 53(2) (funds in hands of drawee: Scotland)—

(i) the words “Subject to section 75A of this Act,” cease to have effect, and

(ii) after “drawee of a bill” insert “ other than a cheque ”, and

(b) section 75A(countermanded cheques) ceases to have effect.

(5) Section 11 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985 (countermanded cheques) ceases to have effect.

Financial collateral arrangements

Regulations

255

(1) The Treasury may make regulations about financial collateral arrangements.

(2) “Financial collateral arrangements” are arrangements under which financial collateral is used as security in respect of a loan or other liability; and for that purpose—

(a) collateral may be in cash, securities or any other form,

(b) use as security may involve transfer of the collateral or the creation or transfer of any kind of right, interest or charge (fixed or floating) in respect of it, and

(c) in particular, use as security can include use under arrangements of a kind described commercially as “title transfer financial collateral arrangements”.

(3) The regulations—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) are not restricted to doing things done ... by the Financial Collateral Arrangements (No. 2) Regulations 2003 (S.I. 2003/3226), but may make any provision that the Treasury think necessary or desirable for the purpose of enabling financial collateral arrangements, whether or not with an international element, to be commercially useful and effective.

(4) The regulations may, in particular—

(a) disapply or modify an enactment or rule of law about formalities or evidence,

(b) disapply or modify an enactment about insolvency, administration, receivership or any similar procedure,

(d) disapply or modify an enactment about companies or other commercial entities or groupings,

(e) provide for provisions of financial collateral arrangements to have effect despite a reorganisation, winding-up or other process affecting a party to the arrangements,

(f) make provision for the enforcement of financial collateral arrangements (which may include, in particular, provision—

(i) about sale, appropriation and set-off,

(ii) about the use of collateral while subject to the arrangements,

(iii) about “close out netting arrangements”, under which obligations under a number of contracts may be set off against each other in the event of default under a specified contract,

(iv) permitting a person to foreclose or exercise another right under the arrangements with or without an order of a court,

(v) permitting or requiring the disclosure of information, and

(vi) for enforcement after the commencement of, and despite, reorganisation, winding-up or another process),

(g) make provision for the choice of law according to which, or under which, matters arising under financial collateral arrangements are to be determined, and

(h) apply to persons whether or not provisions of the Financial Collateral Arrangements (No. 2) Regulations 2003 apply to them.

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

(6) Regulations under this section are to be made by statutory instrument.

(7) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.

(8) Section 41 of the Financial Services Act 2021 makes further provision in relation to the Financial Collateral Arrangements (No. 2) Regulations 2003 (S.I. 2003/3226).

Supplemental

256

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part 8 — General

“Financial assistance”

257

(1) In this Act “financial assistance” includes giving guarantees or indemnities and any other kind of financial assistance (actual or contingent).

(2) The Treasury may by order provide that a specified activity or transaction, or class of activity or transaction, is to be or not to be treated as financial assistance for a specified purpose of this Act; and subsection (1) is subject to this subsection.

(3) An order—

(a) shall be made by statutory instrument, and

(b) shall be subject to annulment in pursuance of a resolution of either House of Parliament.

“Enactment”

258

In this Act “enactment” includes—

(a) subordinate legislation,

(b) an Act of the Scottish Parliament and an instrument under an Act of the Scottish Parliament, and

Statutory instruments

259

(1) A statutory instrument under this Act—

(a) may make provision that applies generally or only for specified purposes, cases or circumstances,

(b) may make different provision for different purposes, cases or circumstances, and

(2) No statutory instrument under this Act shall be treated as a hybrid instrument under Standing Orders of either House of Parliament.

(3) The Table lists the powers to make statutory instruments under this Act and the arrangements for Parliamentary scrutiny in each case (which are subject to subsections (4) to (6)).

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