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Financial Services Act 2012

Type Public General Act

Publication 2012-12-19

Last updated 2025-01-14

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

(1) A regulator is not obliged to investigate in accordance with the complaints scheme a complaint which it reasonably considers would be more appropriately dealt with in another way (for example by referring the matter to the Upper Tribunal or by the institution of other legal proceedings).

(2) The complaints scheme must provide—

(a) for reference to the investigator of any complaint which a regulator is investigating,

(b) for the investigator—

(i) to have the means to conduct a full investigation of the complaint,

(ii) to report to the regulator to which the complaint relates and the complainant on the result of the investigator's investigation, and

(iii) to be able to publish the investigator's report (or part of it) if the investigator considers that it (or the part) ought to be brought to the attention of the public, and

(3) If a regulator has decided not to investigate a complaint, it must notify the investigator.

(4) If the investigator considers that a complaint of which the investigator has been notified under subsection (3) ought to be investigated, the investigator may proceed as if the complaint had been referred to the investigator under the complaints scheme.

(5) The complaints scheme must confer on the investigator the power to recommend, if the investigator thinks it appropriate, that the regulator to which a complaint relates takes either or both of the following steps—

(a) makes a compensatory payment to the complainant, or

(b) remedies the matter complained of.

(6) The complaints scheme must require the regulator to which a complaint relates, in a case where the investigator—

(a) has reported that the complaint is well-founded, or

(b) has criticised the regulator in a report,

to inform the investigator and the complainant of the steps which it proposes to take in response to the report.

(7) The investigator may require the regulator to which a complaint relates to publish the whole or a specified part of the response.

(8) The investigator may appoint a person to conduct the investigation on the investigator's behalf but subject to the investigator's direction.

(9) An officer or employee of any of the regulators may not be appointed under subsection (8).

(9A) The complaints scheme must provide—

(a) for the investigator to prepare an annual report on its investigations under the scheme, to publish it and send a copy of it to each regulator and to the Treasury;

(b) for each regulator to respond to any recommendations or criticisms relating to it in the report, to publish the response and send a copy of it to the investigator and the Treasury;

(ba) for the regulator’s response under paragraph (b) to include a summary of—

(i) the cases in which the regulator decided not to follow any relevant recommendations, and

(ii) the reasons for not following those recommendations;

(9B) The complaints scheme may make provision about the period to which each annual report must relate (“the reporting period”) and the contents of the report and must in particular provide for it to include—

(a) information concerning any general trends emerging from the investigations undertaken during the reporting period;

(b) any recommendations which the investigator considers appropriate as to the steps a regulator should take in response to such trends;

(c) a review of the effectiveness during the reporting period of the procedures (both formal and informal) of each regulator for handling and resolving complaints which have been investigated by the investigator during the reporting period;

(d) an assessment of the extent to which those procedures were accessible and fair, including where appropriate an assessment in relation to different categories of complainant;

(e) any recommendations about how those procedures, or the way in which they are operated, could be improved.

(f) such other matters as the Treasury may from time to time direct.

(9C) In subsection (9A)(ba) the reference to “relevant recommendations”, in relation to the regulator’s response in respect of an annual report, is a reference to—

(a) any recommendations to the regulator contained in that annual report, and

(b) any recommendations to the regulator contained in final reports relating to individual complaints given during the period to which that annual report relates.

(10) Subsection (2) is not to be taken as preventing a regulator from making arrangements for the initial investigation of a complaint to be conducted by the regulator.

Exemption from liability in damages

88

(1) Neither the investigator appointed under section 84 nor a person appointed to conduct an investigation on the investigator's behalf under section 87(8) is to be liable in damages for anything done or omitted in the discharge, or purported discharge, of functions in relation to the investigation of a complaint.

(2) Subsection (1) does not apply—

(a) if the act or omission is shown to have been in bad faith, or

(b) so as to prevent an award of damages made in respect of an act or omission on the ground that the act or omission was unlawful as a result of section 6(1) of the Human Rights Act 1998.

PART 7 — Offences relating to financial services

Misleading statements

89

(1) Subsection (2) applies to a person (“P”) who—

(a) makes a statement which P knows to be false or misleading in a material respect,

(b) makes a statement which is false or misleading in a material respect, being reckless as to whether it is, or

(2) P commits an offence if P makes the statement or conceals the facts with the intention of inducing, or is reckless as to whether making it or concealing them may induce, another person (whether or not the person to whom the statement is made)—

(a) to enter into or offer to enter into, or to refrain from entering or offering to enter into, a relevant agreement, or

(b) to exercise, or refrain from exercising, any rights conferred by a relevant investment.

(3) In proceedings for an offence under subsection (2) brought against a person to whom that subsection applies as a result of paragraph (a) of subsection (1), it is a defence for the person charged (“D”) to show that the statement was made in conformity with—

(a) price stabilising rules,

(b) control of information rules, or

(c) the relevant provisions of Article 5 (exemption for buy-back programmes and stabilisation) of the market abuse regulation.

(4) Subsections (1) and (2) do not apply unless—

(a) the statement is made in or from, or the facts are concealed in or from, the United Kingdom or arrangements are made in or from the United Kingdom for the statement to be made or the facts to be concealed,

(b) the person on whom the inducement is intended to or may have effect is in the United Kingdom, or

Misleading impressions

90

(1) A person (“P”) who does any act or engages in any course of conduct which creates a false or misleading impression as to the market in or the price or value of any relevant investments commits an offence if—

(a) P intends to create the impression, and

(b) the case falls within subsection (2) or (3) (or both).

(2) The case falls within this subsection if P intends, by creating the impression, to induce another person to acquire, dispose of, subscribe for or underwrite the investments or to refrain from doing so or to exercise or refrain from exercising any rights conferred by the investments.

(3) The case falls within this subsection if—

(a) P knows that the impression is false or misleading or is reckless as to whether it is, and

(b) P intends by creating the impression to produce any of the results in subsection (4) or is aware that creating the impression is likely to produce any of the results in that subsection.

(4) Those results are—

(a) the making of a gain for P or another, or

(b) the causing of loss to another person or the exposing of another person to the risk of loss.

(5) References in subsection (4) to gain or loss are to be read in accordance with subsections (6) to (8).

(6) “Gain” and “loss”—

(a) extend only to gain or loss in money or other property of any kind;

(b) include such gain or loss whether temporary or permanent.

(7) “Gain” includes a gain by keeping what one has, as well as a gain by getting what one does not have.

(8) “Loss” includes a loss by not getting what one might get, as well as a loss by parting with what one has.

(9) In proceedings brought against any person (“D”) for an offence under subsection (1) it is a defence for D to show—

(a) to the extent that the offence results from subsection (2), that D reasonably believed that D's conduct would not create an impression that was false or misleading as to the matters mentioned in subsection (1),

(b) that D acted or engaged in the conduct—

(i) for the purpose of stabilising the price of investments, and

(ii) in conformity with price stabilising rules,

(d) that D acted or engaged in the conduct in conformity with the relevant provisions of Article 5 (exemption for buy-back programmes and stabilisation) of the market abuse regulation.

(10) This section does not apply unless—

(a) the act is done, or the course of conduct is engaged in, in the United Kingdom, or

(b) the false or misleading impression is created there.

(11) See section 137Q(3) of FSMA 2000 regarding the power of the FCA to make rules for the purposes of subsection (9)(d).

Misleading statements etc in relation to benchmarks

91

(1) A person (“A”) who makes to another person (“B”) a false or misleading statement commits an offence if—

(a) A makes the statement in the course of arrangements for the setting of a relevant benchmark,

(b) A intends that the statement should be used by B for the purpose of the setting of a relevant benchmark, and

(2) A person (“C”) who does any act or engages in any course of conduct which creates a false or misleading impression as to the price or value of any investment or as to the interest rate appropriate to any transaction commits an offence if—

(a) C intends to create the impression,

(b) the impression may affect the setting of a relevant benchmark,

(d) C knows that the impression may affect the setting of a relevant benchmark.

(3) In proceedings for an offence under subsection (1), it is a defence for the person charged (“D”) to show that the statement was made in conformity with—

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

(b) control of information rules, or

(c) the relevant provisions of Article 5 (exemption for buy-back programmes and stabilisation) of the market abuse regulation.

(4) In proceedings brought against any person (“D”) for an offence under subsection (2) it is a defence for D to show—

(a) that D acted or engaged in the conduct—

(i) for the purpose of stabilising the price of investments, and

(ii) in conformity with price stabilising rules,

(b) that D acted or engaged in the conduct in conformity with control of information rules, or

(c) that D acted or engaged in the conduct in conformity with the relevant provisions of Article 5 (exemption for buy-back programmes and stabilisation) of the market abuse regulation.

(5) Subsection (1) does not apply unless the statement is made in or from the United Kingdom or to a person in the United Kingdom.

(6) Subsection (2) does not apply unless—

(a) the act is done, or the course of conduct is engaged in, in the United Kingdom, or

(b) the false or misleading impression is created there.

(7) See section 137Q(3) of FSMA 2000 regarding the power of the FCA to make rules for the purposes of subsection (4)(c).

Penalties

92

(1) A person guilty of an offence under this Part is liable—

(a) on summary conviction, to imprisonment for a term not exceeding the applicable maximum term or a fine not exceeding the statutory maximum, or both;

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

(2) For the purpose of subsection (1)(a) “the applicable maximum term” is—

(a) in England and Wales, the general limit in a magistrates’ court (or 6 months, if the offence was committed before 2 May 2022);

(b) in Scotland, 12 months;

Interpretation of Part 7

93

(1) This section has effect for the interpretation of this Part.

(2) “Investment” includes any asset, right or interest.

(3) “Relevant agreement” means an agreement—

(a) the entering into or performance of which by either party constitutes an activity of a kind specified in an order made by the Treasury, and

(b) which relates to a relevant investment.

(4) “Relevant benchmark” means a benchmark of a kind specified in an order made by the Treasury.

(5) “Relevant investment” means an investment of a kind specified in an order made by the Treasury.

(6) Schedule 2 to FSMA 2000 (except paragraphs 25 and 26) applies for the purposes of subsections (3) and (5) with references to section 22 of that Act being read as references to each of those subsections.

(7) Nothing in Schedule 2 to FSMA 2000, as applied by subsection (6), limits the power conferred by subsection (3) or (5).

(8) “Price stabilising rules” and “control of information rules” have the same meaning as in FSMA 2000.

(8A) “Market abuse regulation” means Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC.

(8B) References to Article 5 of the market abuse regulation include—

(a) any EU regulation, originally made under that Article, which is assimilated direct legislation, and

(b) any subordinate legislation (within the meaning of the Interpretation Act 1978) made under that Article on or after IP completion day.

(9) In this section “benchmark” has the meaning given in section 22(6) of FSMA 2000.

Affirmative procedure for certain orders

94

(1) This section applies to the first order made under section 93.

(2) This section also applies to any subsequent order made under that section which contains a statement by the Treasury that the effect of the proposed order would include one or more of the following—

(a) that an activity which is not specified for the purposes of subsection (3)(a) of that section would become one so specified,

(b) that an investment which is not a relevant investment would become a relevant investment;

(3) A statutory instrument containing (alone or with other provisions) an order to which this section applies may not be made unless a draft of the instrument has been laid before Parliament and approved by a resolution of each House.

Consequential repeal

95

Section 397 of FSMA 2000 (which relates to misleading statements and practices and is superseded by the provisions of this Part) is repealed.

PART 8 — Amendments of Banking Act 2009

Special resolution regime and bank administration

Objectives and conditions

96

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

(2) In section 3 (interpretation: other expressions), after “this Part—” insert—

“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),

(3) In section 4 (special resolution objectives), after subsection (8) insert—

(8A) Objective 6, which applies in any case in which client assets may be affected, is to protect those assets. (8B) Objective 7 is to minimise adverse effects on institutions (such as investment exchanges and clearing houses) that support the operation of financial markets.

(4) In section 8(2) (Condition A: private sector purchaser and bridge bank)—

(a) in paragraph (b) for “the banking systems of the United Kingdom, or” substitute “ those systems, ”, and

(b) after paragraph (c) insert

, or (d) the protection of any client assets that may be affected.

(5) In section 47 (restriction of partial transfers), for subsection (3) substitute—

(3) Provision under subsection (2) may, in particular, refer to— (a) particular classes of deposit; (b) particular classes of client assets.

(6) In the Table in section 261 (index of defined terms), after the entry relating to “central counterparty clearing services”, insert—

Client assets (Part 1)	3

Private sector purchasers

97

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

(2) After section 26 insert—

(26A) (1) This section applies where the Bank of England has made a share transfer instrument in accordance with section 11(2) (“the original instrument”) providing for the transfer of securities issued by a bank to a person (“the original transferee”). (2) The Bank of England may make one or more private sector reverse share transfer instruments in respect of securities issued by the bank and held by the original transferee. (3) A private sector reverse share transfer instrument is a share transfer instrument which— (a) provides for transfer to the transferor under the original instrument; (b) makes other provision for the purposes of, or in connection with, the transfer of securities which are, could be or could have been transferred under paragraph (a). (4) The Bank of England must not make a private sector reverse share transfer instrument without the written consent of the original transferee. (5) Sections 7, 8 and 50 do not apply to a private sector reverse share transfer instrument (but it is to be treated in the same way as any other share transfer instrument for all other purposes including for the purposes of the application of a power under this Part). (6) Before making a private sector reverse share transfer instrument the Bank of England must consult— (a) the PRA, (b) the FCA, and (c) the Treasury. (7) Section 26 applies where the Bank of England has made a private sector reverse share transfer instrument.

(3) In section 29 (reverse share transfer)—

(a) in subsection (3) for the words from “securities”, in the second place, to the end substitute “ securities issued by the bank and held by a transferee under the onward share transfer order (“the onward transferee”). ”, and

(b) after subsection (4) insert—

(4A) The Treasury must not make a reverse share transfer order under subsection (3) unless— (a) the onward transferee is— (i) a company wholly owned by the Bank of England, (ii) a company wholly owned by the Treasury, or (iii) a nominee of the Treasury, or (b) the reverse share transfer order is made with the written consent of the onward transferee.

(4) In section 31 (bridge bank: reverse share transfer)—

(a) in subsection (1) omit the words from “providing for” to the end,

(b) in subsection (2) for “person within subsection (1)(a) to (c)” substitute “ transferee under the original instrument ”,

(3A) The Bank of England must not make a bridge bank reverse share transfer instrument unless— (a) the transferee under the original instrument is— (i) a company wholly owned by the Bank of England, (ii) a company wholly owned by the Treasury, or (iii) a nominee of the Treasury, or (b) the bridge bank reverse share transfer instrument is made with the written consent of the transferee under the original instrument.

(5) After section 42 insert—

(42A) (1) This section applies where the Bank of England has made a property transfer instrument in accordance with section 11(2) (“the original instrument”) providing for the transfer of property, rights or liabilities of a bank to a person (“the original transferee”). (2) The Bank of England may make one or more private sector reverse property transfer instruments in respect of property, rights or liabilities of the original transferee. (3) A private sector reverse property transfer instrument is a property transfer instrument which— (a) provides for transfer to the transferor under the original instrument; (b) makes other provision for the purposes of, or in connection with, the transfer of property, rights or liabilities that are, could be or could have been transferred under paragraph (a) (whether the transfer has been or is to be effected by that instrument or otherwise). (4) The Bank of England must not make a private sector reverse property transfer instrument without the written consent of the original transferee. (5) Sections 7, 8 and 50 do not apply to a private sector reverse property transfer instrument (but it is to be treated in the same way as any other property transfer instrument for all other purposes including for the purposes of the application of a power under this Part). (6) Before making a private sector reverse property transfer instrument the Bank of England must consult— (a) the PRA, (b) the FCA, and (c) the Treasury. (7) Section 42 applies where the Bank of England has made a private sector reverse property transfer instrument.

(6) In section 44 (reverse property transfer)—

(a) in subsection (3) for “of a transferee” to the end substitute “ of a transferee under the onward property transfer instrument (“the onward transferee”). ”,

(b) after subsection (4) insert—

(4A) The Bank of England must not make a reverse property transfer instrument unless— (a) the onward transferee is— (i) a company wholly owned by the Bank of England, (ii) a company wholly owned by the Treasury, or (iii) a company wholly owned by a nominee of the Treasury, or (b) the reverse property transfer instrument is made with the written consent of the onward transferee.

(7) In section 46 (temporary public ownership: reverse property transfer)—

(a) in subsection (1) omit from “providing for” to the end, and

(b) after subsection (3) insert—

(3A) The Treasury must not make a reverse property transfer order unless— (a) the transferee under the original order is— (i) a company wholly owned by the Bank of England, (ii) a company wholly owned by the Treasury, or (iii) a nominee of the Treasury, or (b) the reverse property transfer order is made with the written consent of the transferee under the original order.

(8) In section 48A (creation of liabilities), in subsection (1) after “42(3)(b),” insert “ 42A(3)(b), ”.

(9) In section 53 (onward and reverse transfers: compensation), in subsection (1)—

(a) before paragraph (a) insert—

(za) the Bank of England makes a private sector reverse share transfer instrument under section 26A,

, and

(b) after paragraph (d) insert—

(da) the Bank of England makes a private sector reverse property transfer instrument under section 42A,

(10) In section 83 (supplemental), in subsection (2)(d)—

(a) at the end of sub-paragraph (iii) insert “ and ”, and

(b) for sub-paragraphs (iv) and (v) substitute—

(iv) is not subject to the restriction in section 29(3) that the securities issued by the bank were transferred under the original order (as defined in section 29(1)).

(11) In the Table in section 261 (index of defined terms), after the entry relating to “partial property transfer”, insert—

Private sector reverse property transfer instrument	42A
Private sector reverse share transfer instrument	26A

Property transfer instruments: property held on trust

98

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

(2) In section 34(7) (effect of property transfer instruments: provision in respect of property held on trust), in paragraph (a) omit “(which provision may remove or alter the terms of the trust)”.

(3) At the end of section 34 insert—

(8) Provision under subsection (7)(a) may remove or alter the terms of the trust on which the property is held only to the extent that the Bank of England thinks it necessary or expedient for the purpose of transferring— (a) the legal or beneficial interest of the transferor in the property; (b) any powers, rights or obligations of the transferor in respect of the property. (9) In subsection (8) references to the transferor are references to the transferor under the property transfer instrument.

(4) In section 45 (temporary public ownership: property transfer orders) after subsection (5) insert—

(5A) In the application of section 34(8) by virtue of subsection (5)(b) above, the reference to the Bank of England is to be treated as a reference to the Treasury.

(5) In section 46 (temporary public ownership: reverse property transfer orders) after subsection (5) insert—

(5A) In the application of section 34(8) by virtue of subsection (5)(b) above, the reference to the Bank of England is to be treated as a reference to the Treasury.

Reports following exercise of a stabilisation power

99

(1) After section 79 of the Banking Act 2009 insert—

(79A) (1) This section applies where the Bank of England sells all or part of a bank's business to a commercial purchaser. (2) The Bank must report to the Chancellor of the Exchequer about the exercise of the power to make share transfer instruments and property transfer instruments under section 11(2). (3) The report must comply with any requirements as to content specified by the Treasury. (4) The report must be made as soon as is reasonably practicable after the end of one year beginning with the date of the first transfer instrument made under section 11(2).

(2) After section 81 of that Act insert—

(81A) (1) A report under section 80(1) or 81 must include accounting information in respect of the bank or bridge bank that is the subject of the report. (2) In this section “accounting information” means— (a) a balance sheet that, in the opinion of the person making the report, gives a true and fair view of the state of affairs of the bank or bridge bank as at the reporting date, and (b) a profit and loss account that, in the opinion of the person making the report, gives a true and fair view of the profit or loss of the bank or bridge bank for the reporting period. (3) In this section— (a) “reporting period” means the period to which the report relates, and (b) “reporting date” means the last day of the reporting period.

(3) In section 1(6) of that Act (table describing provisions of Part 1), in the entry relating to sections 76 to 81, for “81” substitute “ 81A ”.

Groups

100

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

(2) In section 1 (overview), for the entry in the Table relating to sections 82 and 83 substitute—

Sections 81B to 83	Groups

(3) In section 20 (directors), after subsection (1) insert—

(1A) Subsection (1) also applies to a director of any undertaking which is a banking group company in respect of a specified bank.

(4) After section 36 insert—

(36A) (1) A property transfer instrument may enable the Bank of England— (a) to remove a director of a specified bank; (b) to vary the service contract of a director of a specified bank; (c) to terminate the service contract of a director of a specified bank; (d) to appoint a director of a specified bank. (2) Subsection (1) also applies to a director of any undertaking which is a banking group company in respect of a specified bank. (3) Appointments under subsection (1)(d) are to be on terms and conditions agreed with the Bank of England.

(5) For the italic heading before section 82 substitute “ Groups ”, and after that heading insert—

(81B) (1) The Bank of England may exercise a stabilisation power in respect of a banking group company in accordance with section 11(2) or 12(2) if the following conditions are met. (2) Condition 1 is that the PRA is satisfied that the general conditions for the exercise of a stabilisation power set out in section 7 are met in respect of a bank in the same group. (3) Condition 2 (which does not apply in a financial assistance case) is that the Bank of England is satisfied that the exercise of the power in respect of the banking group company is necessary, having regard to the public interest in— (a) the stability of the financial systems of the United Kingdom, (b) the maintenance of public confidence in the stability of those systems, (c) the protection of depositors, or (d) the protection of any client assets that may be affected. (4) Condition 3 (which applies only in a financial assistance case) is that— (a) the Treasury have recommended the Bank of England to exercise a stabilisation power on the grounds that it is necessary to protect the public interest, and (b) in the Bank's opinion, exercise of the power in respect of the banking group company is an appropriate way to provide that protection. (5) Condition 4 is that the banking group company is an undertaking incorporated in, or formed under the law of any part of, the United Kingdom. (6) Before determining whether Condition 2 or 3 (as appropriate) is met, the Bank of England must consult— (a) the Treasury, (b) the PRA, and (c) the FCA. (7) In exercising a stabilisation power in reliance on this section the Bank of England must have regard to the need to minimise the effect of the exercise of the power on other undertakings in the same group. (8) In this section “financial assistance case” means a case in which the Treasury notify the Bank of England that they have provided financial assistance in respect of a bank in the same group for the purpose of resolving or reducing a serious threat to the stability of the financial systems of the United Kingdom. (81C) (1) In the following provisions references to banks include references to banking group companies— (a) section 10(1), and (b) section 75(5)(a). (2) Where the Bank of England exercises a stabilisation power in respect of a banking group company in reliance on section 81B, the provisions relating to the stabilisation powers and the bank administration procedure contained in this Act (except sections 7 and 8) and any other enactment apply (with any necessary modifications) as if the banking group company were a bank. (3) For the purposes of the application of section 143 (grounds for applying for bank administration order), the reference in subsection (2) to the Bank of England exercising a stabilisation power includes a case where the Bank of England intends to exercise such a power. (81D) (1) In this Part “banking group company” means an undertaking— (a) which is (or, but for the exercise of a stabilisation power, would be) in the same group as a bank, and (b) in respect of which any conditions specified in an order made by the Treasury are met. (2) An order may require the Bank of England to consult specified persons before determining whether the conditions are met. (3) An order— (a) is to 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. (4) If an order contains a statement that the Treasury are of the opinion that, by reason of urgency, it is necessary to make the order without complying with subsection (3)(b)— (a) the order may be made, and (b) the order lapses unless approved by resolution of each House of Parliament during the period of 28 days (ignoring periods of dissolution, prorogation or adjournment of either House for more than 4 days) beginning with the day on which the order is made. (5) The lapse of an order under subsection (4)(b)— (a) does not invalidate anything done under or in reliance on the order before the lapse and at a time when neither House has declined to approve the order, and (b) does not prevent the making of a new order (in new terms). (6) Undertakings are in the same group for the purposes of sections 81B, 81C and this section if they are group undertakings in respect of each other. (7) Expressions defined in the Companies Act 2006 have the same meaning in section 81B and this section as in that Act.

(6) In the Table in section 259 (statutory instruments), in Part 1 after the entry relating to section 78 insert—

81D	Meaning of “banking group company”	Draft affirmative resolution (except for urgent cases)

(7) In the Table in section 261 (index of defined terms), after the entry relating to “bank insolvency order” insert—

Banking group company	81D

Application to investment firms

101

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

(2) In section 1 (overview), after the entry in the Table relating to sections 84 to 89 insert—

Section 89A	Investment firms

(3) In section 2 (interpretation: “bank”), at the end insert—

(8) Section 89A applies this Part to investment firms with modifications.

(4) In section 75(5) (power to change law: application to other institutions), omit the “or” following paragraph (c) and after that paragraph insert—

(ca) to investment firms,

(5) After section 89 (and in Part 1) insert—

(89A) (1) This Part applies to investment firms as it applies to banks, subject to the modifications in subsection (2). (2) Ignore sections 1(2)(b), 4(2)(b) and (6), 5(1)(b), 7(7), 8(2)(c) and 14(5).

(6) After section 159 insert—

(159A) This Part applies to investment firms as it applies to banks.

(7) After section 258 insert—

(258A) (1) In this Act “investment firm” means a UK institution which is (or, but for the exercise of a stabilisation power, would be) an investment firm for the purposes of Directive 2006/49/EC on the capital adequacy of investment firms and credit institutions. (2) But “investment firm” does not include— (a) an institution which is also— (i) a bank (within the meaning of Part 1), (ii) a building society (within the meaning of section 119 of the Building Societies Act 1986), or (iii) a credit union (within the meaning of section 31 of the Credit Unions Act 1979 or Article 2(2) of the Credit Unions (Northern Ireland) Order 1985), or (b) an institution which is of a class or description specified in an order made by the Treasury. (3) An order— (a) is to 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. (4) If an order contains a statement that the Treasury are of the opinion that, by reason of urgency, it is necessary to make the order without complying with subsection (3)(b)— (a) the order may be made, and (b) the order lapses unless approved by resolution of each House of Parliament during the period of 28 days (ignoring periods of dissolution, prorogation or adjournment of either House for more than 4 days) beginning with the day on which the order is made. (5) The lapse of an order under subsection (4)(b)— (a) does not invalidate anything done under or in reliance on the order before the lapse and at a time when neither House has declined to approve the order, and (b) does not prevent the making of a new order (in new terms). (6) In subsection (1) “UK institution” means an institution which is incorporated in, or formed under the law of any part of, the United Kingdom.

(8) In the Table in section 259 (statutory instruments), in Part 7 after the entry relating to section 257 insert—

258A	Meaning of “investment firm”	Draft affirmative resolution (except for urgent cases)

(9) In the Table in section 261 (index of defined terms), after the entry relating to “inter-bank payment system”, insert—

Investment firm	258A

(10) In section 214B(1)(a) of FSMA 2000 (contribution to costs of special resolution regime) for “or credit union” substitute “ , credit union or investment firm ”.

Application to UK clearing houses

102

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

State aid

103

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

Inter-bank payment systems

104

(1) Part 5 of the Banking Act 2009 (inter-bank payment systems) is amended as follows.

(2) After section 186 insert—

(186A) (1) The Treasury may amend a recognition order. (2) Before amending a recognition order the Treasury must— (a) consult the Bank of England, (b) notify the operator of the recognised inter-bank payment system, and (c) consider any representations made. (3) In addition, the Treasury— (a) must consult the FCA before amending a recognition order in respect of a payment system the operator of which— (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 has, or has applied for, a Part 4A permission for the carrying on of a PRA-regulated activity, must also consult the PRA. (4) The Treasury must consider any request by the operator of a recognised inter-bank payment system for the amendment of its recognition order.

(3) For section 191 substitute—

(191) (1) The Bank of England may give directions in writing to the operator of a recognised inter-bank system. (2) A direction may— (a) require or prohibit the taking of specified action in the operation of the system; (b) set standards to be met in the operation of the system. (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 (including its 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 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.

(4) In section 186 (procedure)—

(a) for subsection (2) substitute—

(2) In addition, the Treasury— (a) must consult the FCA before making a recognition order in respect of a payment system the operator of which— (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 has, or has applied for, a Part 4A permission for the carrying on of a PRA-regulated activity, must also consult the PRA.

, and

(b) in subsection (3), for “or the FSA” substitute “ , the FCA or the PRA ”.

(5) In section 187 (de-recognition), for subsection (4) substitute—

(4) In addition, the Treasury— (a) must consult the FCA before revoking a recognition order in respect of a payment system the operator of which— (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 has, or has applied for, a Part 4A permission for the carrying on of a PRA-regulated activity, must also consult the PRA.

(6) In section 192 (role of FSA)—

(a) in subsection (1), for “the FSA” substitute “ the FCA or the PRA ”,

(b) for subsection (2) substitute—

(2) The Bank of England— (a) must consult the FCA before taking action under this Part in respect of a recognised inter-bank payment system the operator of which satisfies section 186(2)(a), and (b) must consult the PRA before taking action under this Part in respect of a recognised inter-bank payment system the operator of which satisfies section 186(2)(b).

(i) for “the FSA”, in the first place, substitute “ the FCA or the PRA ”,

(ii) for “the FSA”, in the second place, substitute “ it ”,

(iii) for “section 186(2)” substitute “ section 186(2)(a) or (b) ”, and

(iv) in paragraph (a), for “the FSA” substitute “ the FCA or (as the case may be) the PRA ”, and

(d) in the heading, for “FSA” substitute “ FCA and PRA ”.

(7) After section 202 insert—

(202A) (1) If, on the application of the Bank of England, the court is satisfied— (a) that there is a reasonable likelihood that there will be a compliance failure, or (b) that there has been a compliance failure and there is a reasonable likelihood that it will continue or be repeated, the court may make an order restraining the conduct constituting the failure. (2) If, on the application of the Bank of England, the court is satisfied— (a) that there has been a compliance failure by the operator of a recognised inter-bank payment system, and (b) that there are steps which could be taken for remedying the failure, the court may make an order requiring the operator, and anyone else who appears to have been knowingly concerned in the failure, to take such steps as the court may direct to remedy it. (3) If, on the application of the Bank of England, the court is satisfied— (a) that there may have been a compliance failure by the operator of a recognised inter-bank payment system, or (b) that a person may have been knowingly concerned in a compliance failure, the court may make an order restraining the operator or person from dealing with any assets which it is satisfied the operator or person is reasonably likely to deal with. (4) The jurisdiction conferred by this section is exercisable— (a) in England and Wales and Northern Ireland, by the High Court, and (b) in Scotland, by the Court of Session. (5) In this section— (a) references to an order restraining anything are, in Scotland, to be read as references to an interdict prohibiting that thing, (b) references to remedying a failure include mitigating its effect, and (c) references to dealing with assets include disposing of them.

(8) After section 203 insert—

(203A) (1) The Bank of England must maintain satisfactory arrangements for— (a) recording decisions made in the exercise of its functions under this Part, and (b) the safe-keeping of those records which it considers ought to be preserved. (2) The duty in subsection (1) does not apply to a decision to issue a notice under section 204(1). (203B) (1) At least once a year the Bank of England must make a report to the Treasury on— (a) the discharge of its functions under this Part, (b) the extent to which, in its opinion, in discharging those functions its financial stability objective has been met, and (c) such other matters as the Treasury may from time to time direct. (2) Subsection (1) does not require the inclusion in the report of any information whose publication would in the opinion of the Bank of England be against the public interest. (3) The Treasury must lay before Parliament a copy of each report received by them under this section.

(9) In section 204 (information)—

(a) after subsection (1), insert—

(1A) The Bank of England may by notice in writing require the operator of a recognised inter-bank payment system 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.

(b) in subsections (2) and (3), after “notice” insert “ under subsection (1) or (1A) ”,

(b) the FCA; (ba) the PRA;

, and

(d) in paragraph (c) of that subsection, for “or the FSA” substitute “ , the FCA or the PRA ”.

(10) In section 206A (services forming part of recognised inter-bank payment systems)—

(a) in subsection (4)(a), for “and the FSA” substitute “ , the FCA and the PRA ”, and

(b) in subsection (6), for paragraph (b) (and the “and” at the end of it) substitute—

(b) the FCA, (ba) the PRA, and

International obligations

105

In Part 5 of the Banking Act 2009, after section 206A insert—

(206B) (1) If it appears to the Treasury that any action proposed to be taken by the Bank of England in exercising its powers under this Part would be incompatible with EU obligations or any other international obligations of the United Kingdom, the Treasury may direct the Bank not to take that action. (2) If it appears to the Treasury that any action which the Bank of England has power under this Part to take is required for the purpose of implementing any such obligation, the Treasury may direct the Bank to take that action. (3) A direction under this section— (a) may include such supplemental or incidental requirements as the Treasury consider necessary or expedient, and (b) is enforceable on an application by the Treasury, by injunction or, in Scotland, by an order for specific performance under section 45 of the Court of Session Act 1988.

Further amendments

Amendments relating to new regulators

106

Schedule 17 contains amendments of the Banking Act 2009 related to the provisions of Part 2 of this Act.

PART 9 — Miscellaneous

Consumer credit

Power to make further provision about regulation of consumer credit

107

(1) Subsection (2) applies on or at any time after the making, after the passing of this Act, of an order under section 22 of FSMA 2000 which has the effect that an activity (a “transferred activity”)—

(a) ceases to be an activity in respect of which a licence under section 21 of CCA 1974 is required or would be required but for the exemption conferred by subsection (2), (3) or (4) of that section or paragraph 15(3) of Schedule 3 to FSMA 2000, and

(b) becomes a regulated activity for the purposes of FSMA 2000.

(2) The Treasury may by order do any one or more of the following—

(a) transfer to the FCA functions of the OFT under any provision of CCA 1974 that remains in force;

(b) provide that any specified provision of FSMA 2000 which relates to the powers or duties of the FCA in connection with the failure of any person to comply with a requirement imposed by or under FSMA 2000 is to apply, subject to any specified modifications, in connection with the failure of any person to comply with a requirement imposed by or under a specified provision of CCA 1974;

(c) require the FCA to issue a statement of policy in relation to the exercise of powers conferred on it by virtue of paragraph (b);

(d) in connection with provision made by virtue of paragraph (b), provide that failure to comply with a specified provision of CCA 1974 no longer constitutes an offence or that a person may not be convicted of an offence under a specified provision of CCA 1974 in respect of an act or omission in a case where the FCA has exercised specified powers in relation to that person in respect of that act or omission;

(e) provide for the transfer to the Treasury of any functions under CCA 1974 previously exercisable by the Secretary of State;

(f) provide that functions of the Secretary of State under CCA 1974 are exercisable concurrently with the Treasury;

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

(h) enable local weights and measures authorities to institute proceedings in England and Wales for a relevant offence;

(i) enable the Department of Enterprise, Trade and Investment in Northern Ireland to institute proceedings in Northern Ireland for a relevant offence;

(j) provide that references in a specified enactment to the FCA's functions under FSMA 2000 include references to its functions resulting from any order under this section.

(3) If an order under this section makes provision by virtue of subsection (2)(b) enabling the FCA to exercise any of its powers under sections 205 to 206A of FSMA 2000 (disciplinary measures) by reference to an act or omission that constitutes an offence under CCA 1974, the order must also make provision by virtue of subsection (2)(d) ensuring that a person in respect of whom the power has been exercised cannot subsequently be convicted of the offence by reference to the same act or omission.

(4) In subsection (2)(h) and (i)—

(a) “relevant regulated activity” means an activity that is a regulated activity for the purposes of FSMA 2000 by virtue of—

(i) an order made under section 22(1) of that Act in relation to an investment of a kind falling within paragraph 23 or 23B of Schedule 2 to that Act, or

(ii) an order made under section 22(1A)(a) of that Act;

(b) “relevant offence” means an offence under FSMA 2000 committed in relation to such an activity.

(5) The Treasury may make provision by virtue of subsection (2)(i) only with the consent of the Department of Enterprise, Trade and Investment in Northern Ireland.

(6) On or at any time after the making of an order under section 22 of FSMA 2000 of the kind mentioned in subsection (1), the Treasury may by order—

(a) exclude the application of any provision of CCA 1974 in relation to a transferred activity, or

(b) repeal any provision of CCA 1974 which relates to a transferred activity.

(7) In exercising their powers under this section, the Treasury must have regard to—

(a) the importance of securing an appropriate degree of protection for consumers, and

(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.

(8) The additional powers conferred by section 115(2) on a person making an order under this Act include power for the Treasury, when making an order under this section—

(a) to make such consequential provision as the Treasury consider appropriate;

(b) to amend any enactment, including any provision of, or made under, this Act.

(9) The provisions of this section do not limit—

(a) the powers conferred by section 118 or by section 22 of FSMA 2000, or

(b) the powers exercisable under Schedule 21 in connection with the transfer of functions from the OFT.

(10) In this section—

“CCA 1974” means the Consumer Credit Act 1974;

“consumers” has the meaning given in section 1G of FSMA 2000;

“the OFT” means the Office of Fair Trading.

Suspension of licences under Part 3 of Consumer Credit Act 1974

108

(1) The Consumer Credit Act 1974 is amended as follows.

(2) In section 32 (suspension or revocation)—

(a) in subsection (1), omit “or suspended”,

(b) in subsection (2)—

(i) in paragraph (a), omit “, as the case may be,” and “, or suspend it until a specified date or indefinitely,”, and

(ii) in paragraph (b), omit “or suspension” and “or suspend”,

(i) in paragraph (a), omit “, as the case may be,” and “, or suspend it until a specified date or indefinitely,”, and

(ii) in paragraph (b), omit “or suspension”,

(d) in subsection (4)—

(i) in paragraph (a), omit “, as the case may be,” and “, or suspend it until a specified date or indefinitely,”, and

(ii) in paragraph (b), omit “or suspension”,

(e) in subsections (6) and (7), omit “or suspension”,

(f) omit subsection (8),

(g) in subsection (9), omit “or to suspend”, and

(h) in the heading, omit “Suspension and”.

(3) After section 32 insert—

(32A) (1) If during the currency of a licence it appears to the OFT to be urgently necessary for the protection of consumers that the licence should cease to have effect immediately or on a specified date, the OFT is to proceed as follows. (2) In the case of a standard licence the OFT must, by notice— (a) inform the licensee that the OFT is suspending the licence from the date of the notice or from a later date specified in the notice, (b) state the OFT's reasons for the suspension, (c) state either— (i) that the suspension is to end on a specified date, which must be no later than the last day of the 12 months beginning with the day on which the suspension takes effect, or (ii) that the duration of the suspension is to be as provided by section 32B, (d) specify any provision to be made under section 34A, and (e) invite the licensee to submit to the OFT in accordance with section 34ZA representations— (i) as to the suspension, and (ii) about the provision (if any) that is or should be made under section 34A. (3) In the case of a group licence the OFT must— (a) give general notice that the OFT is suspending the licence from the date of the notice or from a later date specified in the notice, (b) state in the notice the OFT's reasons for the suspension, (c) state in the notice either— (i) that the suspension is to end on a specified date, which must be no later than the last day of the 12 months beginning with the day on which the suspension takes effect, or (ii) that the duration of the suspension is to be as provided by section 32B, (d) specify in the notice any provision to be made under section 34A, and (e) in the notice invite any licensee to submit to the OFT in accordance with section 34ZA representations as to the suspension. (4) In the case of a group licence issued on application the OFT must also— (a) inform the original applicant of the matters specified under subsection (3)(a) to (d) in the general notice, and (b) invite the original applicant to submit to the OFT in accordance with section 34ZA representations as to the suspension. (5) Except for the purposes of sections 29 to 32 and section 33A, a licensee under a suspended licence is to be treated, in respect of the period of suspension, as if the licence had not been issued. (6) The suspension may, if the OFT thinks fit, be ended by notice given by it to the licensee or, in the case of a group licence, by general notice. (7) In this section “consumers”, in relation to a licence, means individuals who have been or may be affected by the carrying on of the business to which the licence relates, other than individuals who are themselves licensees. (32B) (1) This section applies where a notice under section 32A provides for the duration of a suspension under that section to be as provided by this section. (2) The suspension ends at the end of the period of 12 months beginning with the day on which it takes effect, but this is subject to— (a) subsections (3) and (4) (where those subsections give a later time), and (b) the powers of the OFT under section 32A(6) and section 33. (3) Subsection (4) applies where— (a) the OFT gives notice under section 32 that it is minded to revoke the licence, and (b) it gives that notice— (i) on or before giving the notice under section 32A, or (ii) after giving that notice but before the end of the period of 12 months mentioned in subsection (2). (4) The period of suspension is to continue until— (a) the time of any determination by the OFT not to revoke the licence in pursuance of the notice under section 32, or (b) where the OFT determines to revoke the licence in pursuance of the notice, the end of the appeal period.

(4) In section 33 (application to end suspension), for subsection (1) substitute—

(1) On an application made by a licensee the OFT may, if it thinks fit, by notice to the licensee end the suspension of a licence under section 32A, whether the suspension was for a fixed period or for a period determined in accordance with section 32B.

(5) In section 33A (power of OFT to impose requirements on licensees) after subsection (6) insert—

(6A) A requirement imposed under this section during a period of suspension cannot take effect before the end of the suspension.

(6) After section 34 insert—

(34ZA) (1) Where this section applies to an invitation by the OFT to any person (“P”) to submit representations, the OFT must invite P, within 21 days after the notice containing the invitation is given to P or published, or such longer period as the OFT may allow— (a) to submit P's representations in writing to the OFT, and (b) to give notice to the OFT, if P thinks fit, that P wishes to make representations orally, and where notice is given under paragraph (b) the OFT must arrange for the oral representations to be heard. (2) The OFT must reconsider its determination under section 32A and determine whether to confirm it (with or without variation) or revoke it and in doing so must take into account any representations submitted or made under this section. (3) The OFT must give notice of its determination under this section to the persons who were required to be invited to submit representations about the original determination under section 32A or, where the invitation to submit representations was required to be given by general notice, must give general notice of the confirmation or revocation.

(7) In section 34A (winding-up of standard licensee's business), in subsection (2)—

(a) in paragraph (c), omit “suspend or”, and

(b) after paragraph (c) insert—

(d) a determination to suspend such a licence under section 32A (including a determination made under section 34ZA on reconsidering a previous determination under section 32A);

(8) In section 41 (appeals) after subsection (1) insert—

(1ZA) References in the table to a determination as to the suspension of a standard licence or group licence are to be read as references to a determination under section 34ZA to confirm a determination to suspend a standard licence or group licence.

(9) Nothing in this section affects the powers conferred by section 22 of FSMA 2000 or section 107 of this Act.

Penalties received by Financial Services Authority or Bank of England

Payment to Treasury of penalties received by Financial Services Authority

109

(1) The Financial Services Authority (“the FSA”) must in respect of its financial year beginning with 1 April 2012 and each subsequent financial year pay to the Treasury its penalty receipts after deducting its enforcement costs.

(2) The FSA's “penalty receipts” in respect of a financial year are any amounts received by it during the year by way of penalties imposed under FSMA 2000.

(3) The FSA's “enforcement costs” in respect of a financial year are the expenses incurred by it during the year in connection with—

(a) the exercise, or consideration of the possible exercise, of any of its enforcement powers in particular cases, or

(b) the recovery of penalties imposed under FSMA 2000.

(4) For this purpose the FSA's enforcement powers are—

(a) its powers under any of the provisions mentioned in subsection (5),

(b) its powers under any other enactment specified by the Treasury by order,

(d) its powers in England and Wales or Northern Ireland in relation to the prosecution of relevant offences.

(5) The provisions referred to in subsection (4)(a) are the following provisions of FSMA 2000—

(a) section 56 (prohibition orders),

(b) section 63A (penalties relating to performance of controlled functions without approval),

(d) section 87M (public censure of issuer),

(e) section 89 (public censure of sponsor),

(f) section 89K (public censure of issuer),

(g) section 91 (penalties for breach of Part 6 rules),

(h) section 123 (penalties in case of market abuse),

(i) section 131G (short selling etc: power to impose penalty or issue censure),

(j) sections 205, 206 and 206A (disciplinary measures),

(k) section 249 (disqualification of auditor for breach of trust scheme rules),

(l) section 345 (disqualification of auditor or actuary), and

(m) Part 25 (injunctions and restitution).

(6) “Relevant offences” are—

(a) offences under FSMA 2000,

(b) offences under subordinate legislation made under that Act,

(d) any other offences specified by the Treasury by order.

(7) The Treasury may give directions to the FSA as to how the FSA is to comply with its duty under subsection (1).

(8) The directions may in particular—

(a) specify descriptions of expenditure that are, or are not, to be regarded as incurred in connection with either of the matters mentioned in subsection (3),

(b) relate to the calculation and timing of the deduction in respect of the FSA's enforcement costs, and

(9) The directions may also require the FSA to provide the Treasury at specified times with information relating to—

(a) penalties that the FSA has imposed under FSMA 2000, or

(b) the FSA's enforcement costs.

(10) The Treasury must pay into the Consolidated Fund any sums received by them under this section.

(11) The scheme operated by the FSA under paragraph 16 of Schedule 1 to FSMA 2000 is, in the case of penalties received by the FSA on or after 1 April 2012, to apply only in relation to sums retained by the FSA as a result of the deduction for which subsection (1) provides.

(12) When section 6(2) is fully in force, the Treasury may by order repeal this section.

Payment to Treasury of penalties received by Bank of England

110

(1) The Bank of England (“the Bank”) must in respect of each of its financial years pay to the Treasury its penalty receipts after deducting its enforcement costs.

(2) The Bank's “penalty receipts” in respect of a financial year are any amounts received by the Bank during the year by way of penalties imposed under any of the following provisions—

(a) sections 192K , 309U, 309Z2 and 312F of FSMA 2000, and

(b) sections 198 and 206T of the Banking Act 2009.

(3) The Bank's “enforcement costs” in respect of a financial year are the expenses incurred by it during the year in connection with—

(a) the exercise, or consideration of the possible exercise, of any of its enforcement powers in particular cases, or

(b) the recovery of penalties imposed under any of the provisions mentioned in subsection (2).

(4) For this purpose the Bank's enforcement powers are—

(a) its powers under any of the provisions mentioned in subsection (5),

(b) its powers under any other enactment specified by the Treasury by order,

(c) its powers in relation to the investigation of offences under FSMA 2000 or of any other offences specified by the Treasury by order, and

(d) its powers in England and Wales or Northern Ireland in relation to the prosecution of offences under FSMA 2000 or of any other offences specified by the Treasury by order.

(5) The provisions referred to in subsection (4)(a) are as follows—

(a) sections 192K to 192N of FSMA 2000 (parent undertakings), as applied to the Bank by Schedule 17A to that Act,

(aa) sections 309B, 309U and 309Z2 of that Act (Part 18 prohibition orders),

(b) sections 312E , 312F and 312FA of that Act (disciplinary measures in relation to clearing houses and central securities depositories ),

(c) sections 380, 382 and 384 of that Act (injunctions and restitution), as applied to the Bank by Schedule 17A to that Act, ...

(d) sections 197 to 200 and 202A of the Banking Act 2009 (... payment systems) , and

(e) sections 206S to 206V and 206Y of that Act (wholesale cash distribution).

(6) The Treasury may give directions to the Bank as to how the Bank is to comply with its duty under subsection (1).

(7) The directions may in particular—

(a) specify descriptions of expenditure that are, or are not, to be regarded as incurred in connection with either of the matters mentioned in subsection (3),

(b) relate to the calculation and timing of the deduction in respect of the Bank's enforcement costs, and

(8) The directions may also require the Bank to provide the Treasury at specified times with specified information relating to—

(a) penalties that the Bank has imposed under the provisions mentioned in subsection (2), or

(b) the Bank's enforcement costs.

(9) The Treasury must pay into the Consolidated Fund any sums received by them under this section.

Amendments of Companies Act 1989

111

(1) Section 166 of the Companies Act 1989 (power of Secretary of State to give directions to recognised investment exchange or recognised clearing house) is amended as follows.

(2) In subsection (2)(a)—

(a) for “Authority”, in the first place, substitute “ appropriate regulator ”, and

(b) for “Authority”, in the second place, substitute “ regulator ”.

(3) In subsection (2)(b)—

(a) for “Authority”, in the first place, substitute “ appropriate regulator ”, and

(b) for “Authority”, in the second place, substitute “ regulator ”.

(4) In subsection (3)—

(a) for “Authority” substitute “ appropriate regulator ”,

(b) omit the “or” following paragraph (a), and

(c) in either case, that the direction is necessary having regard to the public interest in the stability of the financial system of the United Kingdom, or (d) in either case, that the direction is necessary— (i) to facilitate a proposed or possible use of a power under Part 1 of the Banking Act 2009 (special resolution regime), or (ii) in connection with a particular exercise of a power under that Part.

(5) In subsection (7)—

(a) for “Authority”, in the first place, substitute “ appropriate regulator ”, and,

(b) omit the words from “The Authority shall not” to the end.

(6) After that subsection insert—

(7A) Where the exchange or clearing house is acting in accordance with a direction under subsection (2)(a) that was given only by virtue of paragraph (a) of subsection (3), the appropriate regulator shall not give a direction under subsection (7) unless it is satisfied that the direction under that subsection will not impede or frustrate the proper and efficient conduct of the default proceedings. (7B) Where the exchange or clearing house has taken action under its default rules without being directed to do so, the appropriate regulator shall not give a direction under subsection (7) unless— (a) it is satisfied that the direction under that subsection will not impede or frustrate the proper and efficient conduct of the default proceedings, or (b) it is satisfied that the direction is necessary— (i) having regard to the public interest in the stability of the financial system of the United Kingdom, (ii) to facilitate a proposed or possible use of a power under Part 1 of the Banking Act 2009 (special resolution regime), or (iii) in connection with a particular exercise of a power under that Part.

(7) In subsection (8), for “Authority” substitute “ regulator which gave the direction ”.

(8) At the end insert—

(9) The appropriate regulator”— (a) in relation to a recognised UK investment exchange, means the FCA, and (b) in relation to a recognised UK clearing house, means the Bank of England.

(9) In the heading, omit “of Secretary of State”.

Settlement systems

Evidencing and transfer of title to securities without written instrument

112

In section 785 of the Companies Act 2006 (provision enabling procedures for evidencing and transferring title), at the end insert—

(7) The regulations may confer functions on any person, including— (a) the function of giving guidance or issuing a code of practice in relation to any provision made by the regulations, and (b) the function of making rules for the purposes of any provision made by the regulations. (8) The regulations may, in prescribed cases, confer immunity from liability in damages.

Director of Savings

Provision of services by Director of Savings

113

(1) The Director of Savings (“the Director”) may enter into arrangements with a public body for the provision by the Director, or persons authorised by the Director, of services to the body.

(2) Arrangements are to be on such terms, including terms as to payment, as may be agreed.

(3) “Public body” means a person or body whose functions are of a public nature.

PART 10 — General

Further amendments and repeals

Further minor and consequential amendments and repeals

114

(1) Schedule 18 contains further amendments of FSMA 2000 and other enactments.

(2) Schedule 19 contains further consequential repeals.

Orders

Orders: general

115

(1) Any power of the Treasury or the Secretary of State to make an order under this Act is exercisable by statutory instrument.

(2) Any order made by the Treasury or the Secretary of State under this Act may—

(a) contain such incidental or transitional provision as the Treasury consider appropriate, and

(b) make different provision for different cases.

Orders: Parliamentary control

116

(1) A statutory instrument containing (alone or with other provision) an order to which subsection (2) applies may not be made unless a draft of the instrument has been laid before Parliament and approved by a resolution of each House.

(2) This subsection applies to—

(a) an order under section 37(2) (power to amend sections 391 and 395 of FSMA 2000);

(b) an order under Part 3 (mutual societies);

(d) an order under section 118 (power to make further consequential amendments) that amends or repeals primary legislation.

(3) A statutory instrument containing an order under this Act, other than an instrument to which section 94 or subsection (1) applies or an instrument containing only provision made under section 122 (commencement), is subject to annulment in pursuance of a resolution of either House of Parliament.

(4) In this section “primary legislation” means—

(a) an Act of Parliament,

(b) an Act of the Scottish Parliament,

(d) Northern Ireland legislation.

Interpretation

117

(1) In this Act “FSMA 2000” means the Financial Services and Markets Act 2000.

(2) In this Act—

“the FCA” means the Financial Conduct Authority;

“the PRA” means the Prudential Regulation Authority (and see section 2A of the Financial Services and Markets Act 2000 for the interpretation of references to the Prudential Regulation Authority) ;

“the UK financial system” means the financial system of the United Kingdom.

(2A) In this Act references to the Bank of England do not include the Bank acting in its capacity as the PRA.

(3) In this Act “enactment” includes—

(a) an enactment contained in subordinate legislation within the meaning of the Interpretation Act 1978;

(b) an enactment contained in, or in an instrument made under, an Act of the Scottish Parliament;

(d) an enactment contained in, or in an instrument made under, Northern Ireland legislation.

Consequential and transitional provisions

Power to make further consequential amendments etc

118

(1) The Treasury or the Secretary of State may by order make such provision amending, repealing, revoking or applying with modifications any enactment to which this section applies as they consider necessary or expedient in consequence of any provision made by or under this Act.

(2) This section applies to—

(a) any enactment passed or made before the passing of this Act, and

(b) any enactment passed or made on or before the last day of the Session in which this Act is passed.

(3) Amendments and repeals made under this section are additional to those made by or under any other provision of this Act.

Transitional provisions and savings

119

(1) Schedule 20 contains transitional provisions.

(2) Schedule 21 contains provision about the transfer of property, rights and liabilities.

(3) The Treasury may by order make such provision as they consider necessary or expedient for transitory, transitional or saving purposes in connection with the commencement of any provision made by or under this Act.

(4) An order under subsection (3) may, in particular—

(a) make provision enabling any person by whom any powers will become exercisable, on a date set by or under this Act, by virtue of any provision made by or under this Act to take before that date any steps which are necessary as a preliminary to the exercise of those powers;

(b) make provision treating any relevant instrument which was made, issued or given by the Financial Services Authority under any enactment before section 6 is fully in force and is designated by the FCA, the PRA or the Bank of England (or any two or more of them) in accordance with the order—

(i) as having been made, issued or given by the designating body or bodies;

(ii) as having been made, issued or given (or also made, issued or given) under a corresponding provision of this Act or of an enactment as amended by or under this Act;

(c) make provision enabling a body which makes a designation by virtue of paragraph (b) to modify the instrument being designated;

(d) make provision treating anything done before section 6 is fully in force by persons appointed by the Financial Services Authority with the approval of the Treasury as having been done by the FCA;

(e) make provision treating anything done before section 6 is fully in force by persons appointed by the Prudential Regulation Authority Limited with the approval of the Treasury and the Bank of England as having been done by the PRA;

(f) make provision treating any permission given or other thing done by the Financial Services Authority before commencement under an enactment amended by this Act—

(i) as having been made, given or done under a corresponding provision of the enactment as so amended;

(ii) as having been made, given or done (or also made, given or done) by the PRA or the Bank of England;

(g) make provision for the continuation of proceedings begun before commencement, including provision about the decisions available to bodies before which such proceedings take place and the effect of their decisions;

(h) make provision for making savings, or additional savings, from the effect of any repeal or revocation made by or under this Act.

(5) An order under subsection (3) may—

(a) confer functions on the Treasury, the FCA or the PRA, or on the Bank of England or its Financial Policy Committee;

(b) modify, exclude or apply (with or without modifications) any enactment (including any provision of, or made under, this Act).

(6) In subsection (4)—

(a) “commencement” means the commencement of such provisions of this Act as may be specified by the order;

(b) “relevant instrument” means rules, guidance, requirements or a code, scheme, statement or direction.

Final provisions

Financial provision

120

(1) There is to be paid out of money provided by Parliament—

(a) any expenditure incurred under or by virtue of this Act by a Minister of the Crown or government department (apart from any expenditure to be met from the National Loans Fund), and

(b) any increase attributable to this Act in the sums payable under any other Act out of money so provided.

(2) There is to be paid out of the National Loans Fund any increase attributable to this Act in the sums payable under any other Act out of that Fund.

Extent

121

This Act extends to England and Wales, Scotland and Northern Ireland.

Commencement

122

(1) The following provisions come into force on the day on which this Act is passed—

section 109;

sections 115 to 118;

section 119(3) to (6);

sections 120 and 121;

this section;

section 123.

(2) Sections 108 and 113 come into force at the end of the period of 2 months beginning with day on which this Act is passed.

(3) The remaining provisions of this Act come into force on such day as the Treasury may by order appoint.

(4) Different days may be appointed for different purposes.

Short title

123

This Act may be cited as the Financial Services Act 2012.

SCHEDULE 1

PART 1 — Schedule to be inserted as Schedule 2A to Bank of England Act 1998

This is the Schedule to be inserted in the Bank of England Act 1998 after Schedule 2—

PART 2 — Other amendments relating to Financial Policy Committee

Bank of England Act 1998 (c. 11)

1

In section 4 of the Bank of England Act 1998 (annual report by Bank), in subsection (2), for the “and” at the end of paragraph (a) substitute—

(aa) a report by the court of directors on the activities of the Financial Policy Committee of the Bank, and

2

In section 15 of the Bank of England Act 1998 (publication of minutes of meetings of Monetary Policy Committee) after subsection (4) insert—

(4A) The Bank shall exclude from minutes published under this section information which relates to proceedings of the Financial Policy Committee if the Bank considers that publication of that information would be against the public interest.

3

In section 40 of the Bank of England Act 1998 (orders), after subsection (4) insert—

(4A) Section 9N contains its own provisions about parliamentary procedure in relation to an order under section 9L.

House of Commons Disqualification Act 1975 (c. 24)

4

In Part 3 of Schedule 1 to the House of Commons Disqualification Act 1975 (other disqualifying offices), at the appropriate place insert— “ Member of the Financial Policy Committee of the Bank of England appointed under section 9B(1)(d) or (e) of the Bank of England Act 1998. ”

Northern Ireland Assembly Disqualification Act 1975 (c. 25)

5

In Part 3 of Schedule 1 to the Northern Ireland Assembly Disqualification Act 1975 (other disqualifying offices), at the appropriate place insert— “ Member of the Financial Policy Committee of the Bank of England appointed under section 9B(1)(d) or (e) of the Bank of England Act 1998. ”

SCHEDULE 2

Court of directors

1

(1) Schedule 1 to the Bank of England Act 1998 (which makes further provision about the court of directors) is amended as follows.

(2) For paragraph 1 substitute—

(1) (1) Appointment as Governor of the Bank shall be for a period of 8 years. (2) Appointment as Deputy Governor of the Bank shall be for a period of 5 years. (3) A person may not be appointed— (a) as Governor, more than once, or (b) as Deputy Governor, more than twice. (4) A person appointed as Governor or Deputy Governor of the Bank shall work exclusively for the Bank; and for this purpose work in an office that an enactment requires to be held by the Governor or a Deputy Governor is to be taken to be work for the Bank.

(3) In paragraph 2—

(a) for “director” substitute “ non-executive director ”, and

(b) for the words from “3 years” to the end substitute “ 4 years, or such shorter period as may be specified in the appointment ”.

(4) Omit paragraph 3.

(5) In paragraph 4, for “director” substitute “ non-executive director ”.

(6) In paragraph 5—

(a) in sub-paragraph (1), for “director” substitute “ non-executive director ”, and

(b) for sub-paragraph (2) substitute—

(2) An officer or employee of the Bank, other than a person holding office under section 9B(1)(e), is disqualified for appointment as non-executive director of the Bank.

(7) For paragraph 6 substitute—

(6) (1) The fact that a person has held office as Governor of the Bank does not disqualify that person from appointment as Deputy Governor or non-executive director of the Bank. (2) The fact that a person has held office as Deputy Governor or non-executive director of the Bank does not disqualify that person from re-appointment to that office or for appointment to the other office or as Governor of the Bank, but this is subject to paragraph 1(3)(b).

(8) In paragraph 7(2), for “director” substitute “ non-executive director ”.

(9) In paragraph 8—

(a) the existing provision becomes sub-paragraph (1),

(b) in that provision, for “director” substitute “ non-executive director ”, and

(2) In relation to the Deputy Governor for prudential regulation, the reference in sub-paragraph (1)(c) to inability or unfitness to discharge functions as member of the court of directors is to be read as including a reference to inability or unfitness to discharge functions as Chief Executive of the Prudential Regulation Authority.

(10) In paragraph 11—

(a) the existing provision becomes sub-paragraph (1),

(b) in sub-paragraph (1)(b), for “servant” substitute “ employee ”,

(d) after sub-paragraph (1) insert—

(2) The duties and powers that may be delegated under this paragraph do not include duties and powers that are by any enactment expressly imposed or conferred on the court of directors.

(11) After paragraph 12 insert—

(12A) (1) The Bank must publish a record of each meeting of the court— (a) before the end of the period of 6 weeks beginning with the day of the meeting, or (b) if no meeting of the court is subsequently held during that period, before the end of the period of 2 weeks beginning with the day of the next meeting. (2) The record must specify any decisions taken at the meeting (including decisions to take no action) and must set out, in relation to each decision, a summary of the court's deliberations. (3) Sub-paragraphs (1) and (2) do not require the publication of information whose publication within the time required by sub-paragraph (1) would in the opinion of the court be against the public interest. (4) Publication under this section is to be in such manner as the Bank thinks fit.

(12) In paragraph 13, after sub-paragraph (3), insert—

(3A) But a member of the court who is the Governor or a Deputy Governor of the Bank may not be designated under paragraph (a) or (b) of sub-paragraph (3).

(13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(14) In paragraph 15, for “director” substitute “ non-executive director ”.

(15) Nothing in sub-paragraphs (2) to (7) affects the term of any appointment made before the commencement of that provision.

Monetary Policy Committee

2

(1) Schedule 3 to the Bank of England Act 1998 (Monetary Policy Committee) is amended as follows.

(2) In paragraph 1, for the words from “except that” to the end substitute “ but this is subject to paragraph 2B ”.

(3) Omit paragraph 2.

(4) After paragraph 2A insert—

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