Financial Services and Markets Act 2023

(131M) This Part— (a) requires the Treasury to publish a statement of policy concerning cash deposit and withdrawal services, (b) enables the Treasury to designate persons involved in the provision of such services, and (c) gives the FCA functions in relation to designated persons. (131N) (1) This section defines “cash”, “cash access service”, “free cash access service” and “cash access coordination arrangements” for the purposes of this Part. (2) “Cash” means— (a) banknotes issued by the Bank of England, or an authorised bank in its capacity as an issuer of banknotes in Scotland or Northern Ireland (see Part 6 of the Banking Act 2009), or (b) coins made by the Mint, within the meaning of the Coinage Act 1971 (see section 11 of that Act). (3) A “cash access service” is— (a) a service which enables cash to be placed on a relevant current account (a “cash deposit service”), or (b) a service which enables cash to be withdrawn from a relevant current account (a “cash withdrawal service”). (4) A “free cash access service” is a cash access service that is— (a) a free of charge service which enables cash to be placed on a relevant personal current account, or (b) a free of charge service which enables cash to be withdrawn from a relevant personal current account. (5) “Cash access coordination arrangements” are arrangements— (a) which are designed to coordinate the provision of cash access services by two or more providers of such services, but (b) which do not directly provide cash access services to any person. (6) In relation to cash access coordination arrangements— (a) a reference to the “operator” of such arrangements is to any person with responsibility under the arrangements for managing or operating them; (b) a reference to the operation of such arrangements includes their management. (7) In this section, “relevant current account” has the meaning given by section 131O. (131O) (1) This section defines “current account”, “relevant current account”, “relevant personal current account” and “relevant current account provider” for the purposes of this Part. (2) “Current account” means an account by means of which one or more named persons are able to— (a) place cash, (b) withdraw cash, and (c) execute and receive payment transactions to and from third parties, including the execution of credit transfers. (3) For the purposes of subsection (2)(c), “payment transaction” means an act initiated by the payer or payee, or on behalf of the payer, of placing, transferring or withdrawing funds, irrespective of any underlying obligations between the payer and payee. (4) A “relevant personal current account” means a relevant current account held by one or more individuals for purposes outside any business, trade, craft or profession of that individual or those individuals. (5) “Relevant current account provider” means a person— (a) who has a Part 4A permission to accept deposits, and (b) who provides current accounts in reliance on that permission (“relevant current accounts”). (6) But the following are not relevant current account providers— (a) credit unions, within the meaning given by section 31(1) of the Credit Unions Act 1979 or Article 2(2) of the Credit Unions (Northern Ireland) Order 1985 (S.I. 1985/1205)(N.I.12); (b) a society that is registered within the meaning of the Friendly Societies Act 1974 (see section 111(1) of that Act) or incorporated under the Friendly Societies Act 1992. (7) The Treasury may by regulations— (a) amend a definition in this section; (b) amend any other provision of this Part in consequence of provision made under paragraph (a). (131P) (1) The Treasury must prepare a cash access policy statement. (2) A “cash access policy statement” is a statement of the policies of His Majesty’s Government concerning cash access services in the United Kingdom, or a part of the United Kingdom. (3) The reference to cash access services in subsection (2) includes free cash access services. (4) Policies may be stated in relation to, among other things— (a) cash deposit services and cash withdrawal services; (b) services provided in relation to current accounts of different descriptions; (c) services provided in predominantly urban areas and services provided in predominantly rural areas. (5) In preparing a cash access policy statement, the Treasury must— (a) consult the FCA, and (b) have regard to any report provided under section 131Q. (6) The Treasury must publish a cash access policy statement in such manner as they consider appropriate. (7) The Treasury— (a) must keep the cash access policy statement under review; (b) may prepare a revised statement (and subsections (5) and (6) apply in relation to any revised statement). (131Q) (1) The FCA must, on a request from the Treasury, prepare and send to the Treasury a report on a matter specified in the request. (2) The Treasury may only make a request under this section for a report that they reasonably require in connection with— (a) the preparation of a cash access policy statement (see section 131P), or (b) a decision whether or not to designate a person for the purposes of this Part (see section 131R). (3) A request for a report under this section— (a) must be made in writing, and (b) may require the FCA to send the report to the Treasury within such reasonable period as may be specified in the request (or such other period as may be agreed). (4) Nothing in section 348, or in regulations made under section 349, is to be taken as preventing or restricting the ability of the FCA to disclose information to the Treasury for the purposes of this section. (5) Subsection (4) does not apply in relation to information provided to the FCA by a regulatory authority outside the United Kingdom. (131R) (1) The Treasury may designate a person for the purposes of this Part if the person is— (a) a relevant current account provider, or (b) an operator of cash access coordination arrangements, and at least one of the participants in the arrangements is a relevant current account provider designated under this section. (2) A person is designated by giving the person (the “designated person”) a notice in accordance with this Part (a “designation notice”). (3) A designation notice must specify whether the person is designated in relation to— (a) the United Kingdom, (b) Great Britain only, or (c) Northern Ireland only. (4) A designation notice given to the operator of cash access coordination arrangements must specify the arrangements in as much detail as is reasonably practicable. (5) Before giving a designation notice to a person the Treasury must— (a) consult the FCA, (b) notify the person, and (c) consider any representations made. (6) A designated person must— (a) comply with rules made by the FCA under section 131V; (b) comply with directions given by the FCA to the designated person under section 131W. (131S) (1) The Treasury may designate a person for the purposes of this Part, in relation to the United Kingdom, Great Britain only, or Northern Ireland only (as the case may be), only if satisfied that doing so is likely to further the purpose mentioned in section 131U(1). (2) In considering whether to designate a relevant current account provider, the Treasury must have regard to— (a) the distribution of cash access services operated by the provider in the United Kingdom, Great Britain or Northern Ireland (as the case may be); (b) the distribution in the United Kingdom, Great Britain or Northern Ireland (as the case may be) of persons holding current accounts provided by the provider; (c) the provider’s share of the current account market in the United Kingdom, Great Britain or Northern Ireland (as the case may be); (d) the total value of the deposits held in current accounts provided by the provider in the United Kingdom, Great Britain or Northern Ireland (as the case may be). (3) If a relevant current account provider is part of a group which includes one or more other relevant current account providers, references in subsection (2) to the provider are to be read as references to— (a) the provider, and (b) each of those other relevant current account providers. (4) For the purposes of subsection (3), section 421 (meaning of “group”) applies with the omission of subsection (1)(g) of that section. (131T) (1) If a designation notice has been given to a person the Treasury may, by further notice, cancel the designation notice. (2) If a designation notice has been given to a person (including a designation notice as varied by a notice under this subsection), the Treasury may by further notice, vary the earlier notice. (3) If a further notice under subsection (2) would designate a person in relation to a part of the United Kingdom in relation to which the person was not designated by the earlier notice, sections 131R(3) and (5) and 131S apply in relation to the further notice. (131U) (1) The FCA must exercise its functions under this Part for the purpose of seeking to ensure reasonable provision of cash access services in the United Kingdom, or a part of the United Kingdom. (2) In this section references to cash access services include references to free cash access services. (3) “Reasonable provision” of cash access services is provision of such nature and extent as the FCA may determine, having regard to— (a) the cash access policy statement currently in effect (see section 131P), and (b) such other matters as it considers appropriate. (4) In making a determination for the purposes of subsection (3) the FCA must, in particular, have regard to any local deficiencies in provision of cash access services— (a) which the FCA is aware of, and (b) the impacts of which the FCA considers to be significant. (5) A local deficiency in provision of cash access services is a circumstance which limits the ability of persons in any locality in a part of the United Kingdom to— (a) withdraw cash from a relevant current account, or (b) place cash on a relevant current account. (6) In determining whether there are local deficiencies in the provision of cash access services, and the significance of the impacts of such deficiencies, the FCA must have regard to— (a) the cash access policy statement currently in effect, and (b) such other matters as it considers appropriate. (7) Those other matters may include (but are not limited to)— (a) the number of persons likely to be affected by the deficiency; (b) the characteristics of the persons likely to be affected by the deficiency; (c) the likely impact on the persons likely to be affected. (131V) (1) The FCA may make such rules applying to designated persons as appear to the FCA to be necessary or expedient for the purpose mentioned in section 131U(1). (2) Rules under this section must not require a designated person to do (or refrain from doing) any thing in relation to a part of the United Kingdom in relation to which the person is not designated. (3) Section 137T (general supplementary powers for rules made by a regulator) applies in relation to rules made by the FCA under this section as if, in paragraph (a), the reference to descriptions of authorised persons, activity or investment were to descriptions of designated persons and activities carried on by such persons. (4) Section 138A (modification or waiver of rules) applies in relation to rules made by the FCA under this section as if subsection (4)(b) were omitted. (5) Section 138I (consultation by FCA before making rules) applies to rules under this section as if, in subsection (2)(d), the reference to the FCA’s duties under section 1B(1) and (5)(a) were to the purpose for which the FCA must exercise its functions under this Part. (131W) (1) The FCA may give a direction under this section to a designated person if it considers that it is desirable to give the direction for the purpose mentioned in section 131U(1). (2) A direction under this section must not require a designated person to do (or refrain from doing) any thing in relation to a part of the United Kingdom in relation to which the person is not designated. (3) A direction under this section may require the person to— (a) take specified action; (b) refrain from taking specified action; (c) review, or take remedial action in respect of, past conduct. (4) A requirement imposed by a direction under this section may be expressed to expire at the end of a specified period, but the imposition of a requirement that expires at the end of a specified period does not affect the power to give a further direction imposing a new requirement. (5) A direction under this section— (a) may be revoked by the FCA by written notice to the person to whom it is given, and (b) ceases to be in force if the person to whom it is given ceases to be a designated person. (131X) (1) If the FCA proposes to give a direction under section 131W, or gives such a direction with immediate effect, it must give written notice to the designated person to whom the direction is given (or to be given). (2) A direction under section 131W takes effect— (a) immediately, if the notice under subsection (1) states that is the case, (b) on such other date as may be specified in the notice, or (c) if no date is specified in the notice, when the matter to which the notice relates is no longer open to review. (3) A direction under section 131W may be expressed to take effect immediately (or on a specified date) only if the FCA reasonably considers that it is necessary for the direction to take effect immediately (or on that date). (4) The notice under subsection (1) must— (a) give details of the direction; (b) state the FCA’s reasons for the direction and for its determination as to when the direction takes effect; (c) inform the designated person that the person may make representations to the FCA within such period as may be specified in the notice (whether or not the person has referred the matter to the Tribunal); (d) inform the designated person of the person’s right to refer the matter to the Tribunal. (5) The FCA may extend the period allowed under the notice for making representations. (6) The FCA must give the designated person written notice if, having considered any representations made by the person, it decides— (a) to give the direction proposed; (b) if the direction has been given, not to revoke the direction. (7) The FCA must give the designated person written notice if, having considered any representations made by the person, it decides— (a) not to give the direction proposed; (b) to give a different direction; (c) to revoke a direction. (8) A notice given under subsection (6) must inform the notified person of the person’s right to refer the matter to the Tribunal. (9) A notice under subsection (7)(b) must comply with subsection (4). (10) If a notice informs the designated person of the person’s right to refer a matter to the Tribunal, it must give an indication of the procedure on such a reference. (11) For the purposes of subsection (2)(c), whether a matter is open to review is to be determined in accordance with section 391(8). (131Y) (1) For the purposes of this Part, Part 11 (information gathering and investigations) applies in accordance with this section. (2) Sections 165A to 165C, 169 and 169A do not apply. (3) Any reference to an authorised person includes a person designated for the purposes of this Part (whether or not the person is an authorised person). (4) In addition— (a) references to an authorised person in sections 165 and 176(3A)(a) include a person mentioned in subsection (5) (whether or not the person is an authorised person); (b) sections 175 to 177 apply in relation to section 165 as modified in accordance with paragraph (a). (5) The persons are— (a) a relevant current account provider who is not a designated person for the purposes of this Part; (b) an operator of cash access coordination arrangements who is not a designated person for the purposes of this Part; (c) the operator of, or an infrastructure provider in relation to, a payment system, who is not a designated person for the purposes of this Part; (d) a person (other than a person mentioned in paragraph (a), (b) or (c)) who provides cash access services and is not a designated person for the purposes of this Part; (e) a person who provides a relevant service to a person mentioned in paragraph (a), (b), (c) or (d) and is not a designated person for the purposes of this Part. (6) In subsection (5)(c), “payment system”, and “operator” and “infrastructure provider” in relation to a payment system, have the same meanings as in Part 5 of the Financial Services (Banking Reform) Act 2013 (see section 110 of that Act). (7) For the purposes of subsection (5)(e), a “relevant service” is a service provided in connection with the provision of cash access services. (8) In relation to a person who is not an authorised person but is treated as such for the purposes of this Part (by virtue of subsection (3) or (4)), any reference to “either regulator” is to the FCA only. (131Z) For the purposes of enforcing a requirement imposed by or under this Part, Part 14 (disciplinary measures) applies as if— (a) any reference to an authorised person includes a person designated for the purposes of this Part (whether or not that person is an authorised person), and (b) section 206A (suspending permission to carry on regulated activities etc) were omitted. (131Z1) Rules made under paragraph 23 of Schedule 1ZA, in connection with the carrying out of any of the FCA’s functions under this Part, must not provide for the payment of fees to the FCA by any person other than a designated person who is a relevant current account provider. (131Z2) (1) Where the FCA is discharging a function under this Part, section 1B (FCA’s general duties) applies as if— (a) in subsection (1)(b), the reference to one or more of the FCA’s operational objectives were to the purpose mentioned in section 131U(1); (b) subsections (4) and (4A) (promoting effective competition in the interests of consumers and advancing competitiveness and growth) do not apply. (2) In discharging its functions under this Part, the regulatory principles in section 3B(1) have effect as if, in paragraph (g), the reference to the FCA’s objectives included the purpose mentioned in section 131U(1). (3) Section 395 applies in relation to a decision of the FCA made in connection with a function under this Part as if, in subsection (3)(a), the reference to the FCA’s operational objectives included the purpose mentioned in section 131U(1).

PART 2 — Consequential amendments to FSMA 2000

2

FSMA 2000 is amended as follows.

3

In section 3D (duty of FCA and PRA to ensure co-ordinated exercise of functions), in subsection (4), after “operational objectives”, insert “, or the purpose for which the FCA must exercise its functions under Part 8B (see section 131U(1))”.

4

In section 55H (variation by FCA at request of authorised person), in subsection (4), after “objectives” insert “, or the purpose for which the FCA must exercise its functions under Part 8B (see section 131U(1))”.

5

In section 55L (imposition of requirements by FCA), in subsection (6), after “objectives” insert “, or the purpose for which the FCA must exercise its functions under Part 8B (see section 131U(1))”.

6

In section 55T (persons whose interests are protected), after “operational objectives,” insert “the purpose for which the FCA must exercise its functions under Part 8B,”.

7

In section 232A (ombudsman scheme operator’s duty to provide information to FCA), after “objectives,” insert “, or the purpose for which the FCA must exercise its functions under Part 8B (see section 131U(1)),”.

8

In section 395 (the FCA’s and PRA’s procedures), in subsection (13), after paragraph (bbzb) insert—

(bbzc) 131W;

9

In section 429 (Parliamentary control of statutory instruments), in subsection (2), in the list of sections beginning with “90B” insert at the appropriate place “131O(7),”.

SCHEDULE 9

PART 1 — New Part 5A of the Banking Act 2009

1

After Part 5 of the Banking Act 2009 (payment systems) insert—

(206C) (1) This Part enables the Bank of England to oversee certain persons involved in wholesale cash distribution (as defined in section 206E). (2) The Bank must exercise its powers under this Part for the purpose of managing risks to the effectiveness, resilience and sustainability of wholesale cash distribution— (a) throughout the United Kingdom, or (b) throughout any part of the United Kingdom. (206D) (1) The Bank of England— (a) must prepare a statement of its policy with respect to the exercise of its powers under this Part, (b) must from time to time review the statement, and (c) may prepare a revised statement. (2) When preparing a statement under this section, the Bank must consult such persons as appear to the Bank to be representative of persons likely to be affected by the statement. (3) After preparing a statement under this section the Bank must— (a) provide the statement to the Treasury, and (b) publish the statement. (4) The Treasury must lay a copy of each statement received under this section before Parliament. (5) No power conferred on the Bank by this Part may be exercised before a statement under this section has been published. (206E) (1) In this Part— - “wholesale cash distribution” means the arrangements (taken as a whole) by which banknotes issued by an issuing authority, or coins made by the Mint, are—made available for retail cash distribution, andremoved from circulation; - “wholesale cash distribution activities” are activities intended to facilitate or control wholesale cash distribution and include (but are not limited to)—purchasing cash from issuing authorities or the Mint;storing cash;transporting cash;undertaking authentication processes;facilitating the return of cash to issuing authorities or the Mint. (2) For these purposes— - “authorised bank” has the meaning given by section 210; - “banknote” has the meaning given by section 208; - “cash” means—banknotes issued by the Bank of England, or an authorised bank in its capacity as an issuer of banknotes in Scotland or Northern Ireland, orcoins made by the Mint, within the meaning of the Coinage Act 1971 (see section 11 of that Act); - “issue”, in relation to banknotes, has the meaning given by section 209; - “issuing authority” means—the Bank of England, oran authorised bank in its capacity as an issuer of banknotes in Scotland or Northern Ireland; - “retail cash distribution” means arrangements for the provision of cash to end users of cash. (206F) (1) In this Part— - “FCA” means the Financial Conduct Authority; - “FCA-regulated person” means—a person who has Part 4A permission,an authorised payment institution or small payment institution, within the meaning of the Payment Services Regulations 2017 (S.I. 2017/752), oran authorised electronic money institution or small electronic money institution, within the meaning of the Electronic Money Regulations 2011 (S.I. 2011/99); - “Part 4A permission” has the meaning given by section 55A of the Financial Services and Markets Act 2000; - “the Payment Systems Regulator” means the Payment Systems Regulator established under section 40 of the Financial Services (Banking Reform) Act 2013; - “PRA” means the Prudential Regulation Authority; - “PRA-regulated activity” has the meaning given by section 22A of the Financial Services and Markets Act 2000; - “the UK financial system” has the meaning given by section 1I of the Financial Services and Markets Act 2000. (2) For the purposes of this Part, a company (within the meaning of the Companies Act 2006) is wholly owned by the Crown if, and only if, every member of the company is— (a) a Minister of the Crown, government department or company wholly owned by the Crown, or (b) a person acting on behalf of a Minister of the Crown, government department or company wholly owned by the Crown. (206G) (1) The Treasury may by order (a “wholesale cash oversight order”) specify a person as a recognised person for the purposes of this Part. (2) A person may be specified only if the person— (a) performs a relevant function in relation to a wholesale cash distribution activity, and (b) is recognised as having market significance (see section 206H). (3) The following are relevant functions in relation to a wholesale cash distribution activity— (a) undertaking the activity; (b) managing the activity; (c) providing a service in relation to the activity; (d) providing financial assistance in relation to the activity. (4) A wholesale cash oversight order must specify in as much detail as is reasonably practicable— (a) each wholesale cash distribution activity in relation to which the specified person performs a relevant function, and (b) each relevant function the person performs. (5) The Treasury may not make a wholesale cash oversight order in respect of an issuing authority or the Mint. (206H) (1) A wholesale cash oversight order must specify whether the person in respect of whom the order is made is recognised— (a) as having market significance only, or (b) as also having systemic significance. (2) The Treasury may recognise a person as having market significance only if satisfied that any significant deficiency in, or disruption to, the performance of the person’s relevant functions in relation to wholesale cash distribution activities would be likely to undermine the effectiveness, resilience, or sustainability of wholesale cash distribution— (a) throughout the United Kingdom, or (b) throughout any part of the United Kingdom. (3) The Treasury may recognise a person as having systemic significance only if satisfied that any significant deficiency in, or disruption to, the performance of the person’s relevant functions in relation to wholesale cash distribution activities would be likely (in addition to the consequences mentioned in subsection (2))— (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 or any part of the United Kingdom. (4) Where a person is part of a group, the Treasury may have regard to functions performed by other members of the group when determining matters mentioned in subsection (2) or (3). (5) In subsection (4), “group” has the meaning given by section 421 of the Financial Services and Markets Act 2000. (6) The Treasury must not recognise a company wholly owned by the Crown as having systemic significance. (206I) (1) Before making a wholesale cash oversight order in respect of a person the Treasury must— (a) consult the Bank of England, (b) notify the person, and (c) consider any representations made. (2) In addition, the Treasury must— (a) consult the FCA before making a wholesale cash oversight order in respect of a person who is, or has applied to be, an FCA-regulated person; (b) consult the PRA before making a wholesale cash oversight order in respect of a person who has, or has applied for, Part 4A permission for the carrying on of a PRA-regulated activity; (c) consult the Payment Systems Regulator before making a wholesale cash oversight order in respect of a person who is a participant in a regulated payment system. (3) In subsection (2)(c), “participant” and “regulated payment system” have the same meanings as in Part 5 of the Financial Services (Banking Reform) Act 2013 (see section 110 of that Act). (4) In considering whether to make the order, the Treasury may rely on information provided by— (a) the Bank of England; (b) the FCA; (c) the PRA; (d) the Payment Systems Regulator. (206J) (1) The Treasury may amend or revoke a wholesale cash oversight order. (2) The Treasury must revoke a wholesale cash oversight order if no longer satisfied that the person specified in the order— (a) performs a relevant function in relation to a wholesale cash distribution activity, and (b) has market significance. (3) If a person is specified in a wholesale cash oversight order as having systemic significance, the Treasury must amend the order (so that the person is specified as having market significance only) if— (a) satisfied that the person continues to have market significance, but (b) no longer satisfied that the person has systemic significance. (4) Subject to subsections (2) and (3), the Treasury must consider any request by a person specified in a wholesale cash oversight order for the amendment or revocation of the order. (5) Section 206I (procedure) applies to the amendment or revocation of a wholesale cash oversight order as it applies to the making of the order. (206K) (1) The Bank of England may publish principles to which recognised persons must have regard in performing relevant functions in relation to wholesale cash distribution activities. (2) Different principles may be published in relation to— (a) different wholesale cash distribution activities; (b) different relevant functions; (c) persons recognised as having market significance only and persons recognised as also having systemic significance. (3) Before publishing such principles, the Bank must— (a) consult such persons as appear to the Bank to be representative of persons likely to be affected by the principles, and (b) obtain the approval of the Treasury. (206L) (1) The Bank of England may publish codes of practice about the performance by recognised persons of relevant functions in relation to wholesale cash distribution activities. (2) Different codes of practice may be published in relation to— (a) different wholesale cash distribution activities; (b) different relevant functions; (c) persons recognised as having market significance only and persons recognised as also having systemic significance. (3) Before publishing a code of practice, the Bank of England must consult such persons as appear to the Bank to be representative of persons likely to be affected by the code. (206M) (1) The Bank of England may give directions in writing to a recognised person. (2) A direction may— (a) require or prohibit the taking of specified action in relation to the performance of a specified relevant function in relation to a specified wholesale cash distribution activity; (b) set standards to be met in the performance of a specified relevant function in relation to a specified wholesale cash distribution activity. (3) Subsection (4) applies if a direction is given to a recognised person for the purpose of resolving or reducing a threat to the stability of the UK financial system. (4) The recognised person (including the recognised person’s officers and staff) has immunity from liability in damages in respect of action or inaction in accordance with the direction. (5) 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 recognised person of the effect of subsection (4). (6) The Treasury may by regulations confer immunity on any person from liability in damages in respect of action or inaction in accordance with a direction under this section (including a direction given for the purpose mentioned in subsection (3)). (7) Regulations under subsection (6)— (a) are to be made by statutory instrument, and (b) are subject to annulment in pursuance of a resolution of either House of Parliament. (8) 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. (9) In this section, “specified” means specified in the direction. (206N) (1) In exercising powers under this Part, the Bank of England must have regard to any action that the FCA, PRA or Payment Systems Regulator has taken or could take. (2) The Bank of England must— (a) consult the FCA before taking action under this Part in respect of a person who is, or has applied to be, an FCA-regulated person; (b) consult the PRA before taking action under this Part in respect of a person who has, or has applied for, Part 4A permission for the carrying on of a PRA-regulated activity; (c) consult the Payment Systems Regulator before taking action under this Part in respect of a participant in a regulated payment system. (3) In subsection (2)(c), “participant” and “regulated payment system” have the same meanings as in Part 5 of the Financial Services (Banking Reform) Act 2013 (see section 110 of that Act). (4) If the FCA, PRA or Payment Systems Regulator gives the Bank of England notice that it is considering taking action in respect of a person mentioned in subsection (2), the Bank may not take action under this Part in respect of the person unless— (a) the FCA, PRA or Payment Systems Regulator (as the case may be) consents, or (b) the notice is withdrawn. (206O) (1) The Bank of England may appoint one or more persons to inspect the performance by a recognised person of a relevant function in relation to a wholesale cash distribution activity. (2) A recognised person who performs a relevant function in relation to a wholesale cash distribution activity must— (a) grant an inspector access, on request and at any reasonable time, to premises on or from which any part of the function is performed, and (b) otherwise co-operate with an inspector. (206P) (1) A justice of the peace may, on the application of an inspector appointed under section 206O, issue a warrant entitling an inspector or a constable to enter premises if— (a) there is performed on the premises any part of a relevant function in relation to a wholesale cash distribution activity, and (b) any of the following conditions is satisfied. (2) Condition 1 is that— (a) a requirement under section 206Z3 (information) in relation to the relevant function 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 206Z3 were imposed in relation to the relevant function 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 (c) permits a constable to use reasonable force. (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. (206Q) (1) The Bank of England may require a recognised person who performs a relevant function in relation to a wholesale cash distribution activity to appoint an expert to report on the performance of the function. (2) The Bank may impose a requirement only if it thinks— (a) the person is not having sufficient regard to principles published by the Bank under section 206K, (b) the person is failing to comply with a code of practice under section 206L, or (c) the report is likely for any other reason to assist the Bank in the performance of its functions under this Part. (3) The Bank may impose requirements about— (a) the nature of the expert to be appointed; (b) the content of the report; (c) treatment of the report (including disclosure and publication); (d) timing. (206R) In this Part “compliance failure” means a failure by a recognised person to— (a) comply with a code of practice under section 206L, (b) comply with a direction under section 206M, or (c) ensure compliance with a requirement under section 206Q (independent reports). (206S) The Bank of England may publish details of— (a) a compliance failure by a recognised person; (b) a sanction imposed under sections 206T to 206V. (206T) (1) The Bank of England may require a recognised person to pay a penalty in respect of a compliance failure. (2) A penalty— (a) must be paid to the Bank, and (b) may be enforced by the Bank as a civil debt owed to the Bank. (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 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. (206U) (1) This section applies if the Bank of England thinks that a compliance failure by a person recognised for the purposes of this Part as having systemic significance— (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 person an order (a “closure order”) to stop performing specified relevant functions in relation to specified wholesale cash distribution activities— (a) for a specified period, (b) until further notice, or (c) permanently. (3) Before giving a closure order to a recognised person, the Bank must have regard to the public interest in the continued performance by the person of relevant functions (whether or not specified) in relation to wholesale cash distribution activities (whether or not specified). (4) A recognised person who fails to comply with a closure order commits an offence. (5) A person who commits an offence under this section is liable— (a) on summary conviction in England and Wales, to a fine; (b) on summary conviction in Scotland, to a fine not exceeding the statutory maximum; (c) on summary conviction in Northern Ireland, to a fine not exceeding the statutory maximum; (d) on conviction on indictment, to a fine. (6) In this section, “specified” means specified in the closure order. (206V) (1) The Bank of England may by order prohibit a specified person from holding an office or position involving responsibility for taking decisions about the management of a recognised person— (a) for a specified period, (b) until further notice, or (c) permanently. (2) A person who breaches a prohibition under subsection (1) commits an offence. (3) A person who commits an offence under this section is liable— (a) on summary conviction in England and Wales, to a fine; (b) on summary conviction in Scotland, to a fine not exceeding the statutory maximum; (c) on summary conviction in Northern Ireland, to a fine not exceeding the statutory maximum; (d) on conviction on indictment, to a fine. (4) In this section, “specified” means specified in the order. (206W) (1) Before imposing a sanction on a person the Bank of England must— (a) give the person a notice (“a warning notice”), (b) give the person at least 21 days from the date of the notice to make representations, (c) consider any representations made, and (d) as soon as reasonably practicable, give the person a notice stating whether the Bank intends to impose the sanction. (2) In subsection (1), “imposing a sanction” means— (a) publishing details under section 206S; (b) requiring the payment of a penalty under section 206T; (c) giving a closure order under section 206U; (d) making an order under section 206V. (3) Despite subsection (1), if satisfied that it is necessary, the Bank may without notice— (a) give a closure order under section 206U, or (b) make an order under section 206V. (206X) (1) Where the Bank of England notifies a person under section 206W(1) that it intends to impose a sanction, the person may appeal to the Upper Tribunal. (2) Where the Bank imposes a sanction on a person without notice in reliance on section 206W(3), the person 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. (206Y) (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 a recognised person, and (b) that there are steps which could be taken for remedying the failure, the court may make an order requiring the recognised person, and any other person 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 a recognised person, or (b) that any other person may have been knowingly concerned in a compliance failure, the court may make an order restraining the person from dealing with any assets which it is satisfied the 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; (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 an order requiring steps to be taken are, in Scotland, to be read as references to an order for specific performance under section 45 of the Court of Session Act 1988; (c) references to remedying a failure include mitigating its effect; (d) references to dealing with assets include disposing of them. (206Z) (1) The Bank of England may require a recognised person 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) are to be made by statutory instrument, and (b) are 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 civil debt owed to the Bank. (206Z1) The Bank of England must maintain satisfactory arrangements for— (a) recording decisions made in the exercise of functions under this Part, and (b) the safe-keeping of those records which it considers ought to be preserved. (206Z2) (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, and (b) such other matters as the Treasury may from time to time direct. (2) A report on the discharge of the Bank’s functions under this Part must, in particular, include the Bank’s opinion as to— (a) the extent to which risks to the effectiveness, resilience and sustainability of wholesale cash distribution throughout the United Kingdom, or throughout any part of the United Kingdom, have been managed, and (b) the extent to which, in relation to the exercise of functions in relation to persons recognised as having systemic significance, risks to the stability of the UK financial system have been managed. (3) This section does not require the inclusion in a report of any information the publication of which would, in the opinion of the Bank, be against the public interest. (4) The Treasury must lay before Parliament a copy of each report received under this section. (206Z3) (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 wholesale cash oversight order, or (b) which the Bank otherwise requires in connection with its functions under this Part. (2) The Bank of England may by notice in writing require a person who performs a relevant function in relation to wholesale cash distribution activity to provide information which the Bank requires in connection with the exercise of its functions (whether under this Part or otherwise) in pursuance of— (a) the purpose mentioned in section 206C(2), or (b) the Bank’s Financial Stability Objective (see section 2A of the Bank of England Act 1998). (3) In particular, a notice under subsection (1) or (2) may require the person to notify the Bank if events of a specified kind occur. (4) A notice under subsection (1) or (2) may require information to be provided— (a) in a specified form or manner; (b) at, or by, a specified time; (c) in respect of a specified period. (5) 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. (6) A person who commits an offence under this section is liable— (a) on summary conviction in England and Wales, to a fine; (b) on summary conviction in Scotland, to a fine not exceeding the statutory maximum; (c) on summary conviction in Northern Ireland, to a fine not exceeding the statutory maximum; (d) on conviction on indictment, to a fine. (7) In this section, “specified” means specified in the notice. (206Z4) (1) The Bank of England may disclose information obtained by virtue of section 206Z3 to— (a) the Treasury; (b) the FCA; (c) the PRA; (d) the Mint. (2) Subsection (1)— (a) overrides a contractual or other requirement to keep information in confidence, and (b) is without prejudice to any other power to disclose information. (3) The Treasury may by regulations— (a) permit the disclosure by the Bank of information obtained by virtue of section 206Z3 to specified persons; (b) permit the publication of specified information and make provision about the manner and extent of publication. (4) In subsection (3), “specified” means specified in the regulations. (5) Regulations under subsection (3)— (a) are to be made by statutory instrument, and (b) are subject to annulment in pursuance of a resolution of either House of Parliament. (206Z5) Nothing in this Part prevents the Bank of England— (1) from having dealings with persons who are not recognised persons for the purposes of this Part; (a) from having dealings with recognised persons other than through the provisions of this Part. (206Z6) (1) The Treasury may by regulations provide for any provision of sections 206K to 206Z4 not to apply (insofar as it would otherwise do so), or to apply with modifications, in relation to recognised persons that are companies wholly owned by the Crown. (2) Regulations under subsection (1) may modify legislation (including any provision of, or made under, this Act). (3) In subsection (2)— - “legislation” means primary legislation, subordinate legislation (within the meaning of the Interpretation Act 1978) and retained direct EU legislation, but does not include rules or other instruments made by any regulator; - “modify” includes amend, repeal or revoke. (4) Before making regulations under this section, the Treasury must consult the Bank of England. (5) Regulations under subsection (1)— (a) are to be made by statutory instrument, and (b) may not be made unless a draft has been laid before, and approved by a resolution of, each House of Parliament.

PART 2 — Amendments to Part 6 of the Financial Services (Banking Reform) Act 2013

2

Part 6 of the Financial Services (Banking Reform) Act 2013 (special administration for operators of certain infrastructure systems) is amended as follows.

3

In section 111 (financial market infrastructure administration), in the heading, after “market” insert “and cash”.

4

• (1) Section 112 (interpretation: infrastructure companies) is amended as follows.

• (2) In subsection (2), omit the “or” at the end of paragraph (b) and insert—

(ba) a person recognised for the purposes of Part 5A of the Banking Act 2009 (wholesale cash distribution) as having systemic significance, or

.

• (3) In subsection (4)—

• (a) in paragraph (a), for “(2)(a) or (b)” substitute “(2)(a), (b) or (ba)”;

• (b) in paragraph (b), after “question” insert “or, in the case of a person falling within subsection (2)(ba), a relevant function”.

• (4) In subsection (6), in paragraph (b), for “(2)(a) or (b)” substitute “(2)(a), (b) or (ba)”.

• (5) After subsection (6) insert—

(7) In subsection (4)(b), “relevant function” means a function performed by the person in relation to wholesale cash distribution.

5

In section 113 (interpretation: other expressions), in subsection (1)—

• (a) in the definition of “the relevant system”, after paragraph (b) insert—

1. in relation to an infrastructure company falling within subsection (2)(ba) of that section, any system used by the company to facilitate or control wholesale cash distribution,

;

• (b) at the end insert—

• “wholesale cash distribution” and “wholesale cash distribution activities” have the meanings given by section 206E of the Banking Act 2009.

6

In section 115 (objective of FMI administration), after subsection (1A) insert—

(1B) Where an FMI administrator is appointed in relation to a company that is a person recognised for the purposes of Part 5A of the Banking Act 2009, the objective of the FMI administration is— (a) to ensure that the functions performed by the person in relation to wholesale cash distribution are and continue to be performed efficiently and effectively, and (b) to ensure by one or both of the specified means that it becomes unnecessary for the FMI administration order to remain in force for that purpose or those purposes.

7

In section 119 (continuity of supply), in subsection (6), in the definition of “supply”, after paragraph (a) insert—

(aa) in the case of an infrastructure company that is a person recognised for the purposes of Part 5A of the Banking Act 2009, goods or services used by the person in connection with wholesale cash distribution activities;

.

8

In section 120 (power to direct FMI administrator), in subsection (8), at the end insert “or section 206M of that Act (directions) in relation to a person recognised for the purposes of Part 5A of that Act”.

9

In section 127 (interpretation of Part), in subsection (1), at the end insert—

• “wholesale cash distribution” and “wholesale cash distribution activities” have the meanings given by section 113.

PART 3 — Consequential amendments

Banking Act 2009

10

The Banking Act 2009 is amended as follows.

11

In section 259 (statutory instruments), in subsection (3), in the Table, after the entry for section 206A (services forming part of recognised payment systems) insert—

12

In section 261 (index of defined terms)—

• (a) in the entry for “FCA”, in the second column, for “& 183” substitute “, 183 & 206F”;

• (b) in the entry for “Payment Systems Regulator”, in the second column, after “183” insert “& 206F”;

• (c) in the entry for “PRA”, in the second column, for “& 183” substitute “, 183 & 206F”.

Financial Services Act 2012

13

The Financial Services Act 2012 is amended as follows.

14

• (1) Section 85 (relevant functions in relation to complaints scheme) is amended as follows.

• (2) In subsection (3)(a), after “(payment systems)” insert “or Part 5A of that Act (wholesale cash distribution)”.

• (3) In subsection (7)—

• (a) in the words before paragraph (a), for “Part 5” substitute “Parts 5 and 5A”;

• (b) in paragraph (a), for “and 189” substitute “,189, 206K and 206L”;

• (c) in paragraph (b), at the end insert “and 206T(3)”.

15

• (1) Section 110 (payment to Treasury of penalties received by Bank of England) is amended as follows.

• (2) In subsection (2), in paragraph (b), for “section 198” substitute “sections 198 and 206T”.

• (3) In subsection (5)—

• (a) omit the “and” at the end of paragraph (c);

• (b) at the end of paragraph (d) insert

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

Financial Services (Banking Reform) Act 2013

16

In section 98 of the Financial Services (Banking Reform) Act 2013 (duty of regulators to ensure co-ordinated exercise of functions), in subsection (5)(b), at the end insert “or Part 5A of that Act (wholesale cash distribution)”.

SCHEDULE 10

PART 1 — New Chapter 2A of Part 18 of FSMA 2000

1

In Part 18 of FSMA 2000 (recognised investment exchanges, clearing houses and CSDs), before Chapter 3B insert—