40 Duty to co-operate and consult in exercising functions
(1) FSMA 2000 is amended as follows.
(2) In the italic heading before section 415B, at the end insert “and co-operation”.
(3) After section 415B (consultation) insert—
Co-operation and consultation in relation to exercise of functions
415C (1) In exercising its functions under this Act a relevant organisation (“R”) must—
(a) take such steps as R considers appropriate to co-operate with each of the other relevant organisations in relation to matters of interest to that organisation, and
(b) consult such other persons as R considers appropriate in relation to any matters that R considers to be of interest to those persons.
(2) A matter is of interest to another relevant organisation for the purposes of subsection (1) if it appears to R that it has, or is likely to have, significant implications in relation to—
(a) the exercise by that other relevant organisation of functions under this Act, or
(b) the functioning generally of relevant markets within the meaning of section 1F.
(3) The relevant organisations must prepare and publish a statement of policy with respect to compliance with the duty under subsection (1).
(4) The relevant organisations may alter or replace a statement published under subsection (3).
(5) The relevant organisations must publish a statement as altered or replaced under subsection (4).
(6) The relevant organisations—
(a) must, at least once a year, prepare and publish a report on their compliance with the duty under subsection (1), and
(b) must put in place arrangements enabling representations to be made about their compliance with that duty (whether by seeking representations in response to the report or otherwise).
(7) Except in the case of the first report to be prepared under this section, a report prepared under subsection (6)(a) must include a summary of representations received in the preceding year in accordance with arrangements made under subsection (6)(b).
(8) Publication under this section is to be made in such manner as the relevant organisations consider best designed to bring the publication to the attention of the public.
(9) In this section “relevant organisation” means—
(a) the FCA;
(b) the scheme operator of the ombudsman scheme within the meaning of section 225(2);
(c) the scheme manager of the Financial Services Compensation Scheme within the meaning of section 212.
In FSMA 2000, after section 1Q insert—
The Listing Authority Advisory Panel
1QA (1) Arrangements under section 1M must include the establishment and maintenance of a panel of persons (to be known as “the Listing Authority Advisory Panel”) to represent the interests of practitioners who are likely to be affected by the exercise by the FCA of its relevant functions.
(2) The reference in subsection (1) to the FCA’s relevant functions is to its functions relating to the listing, issue or trading of products on recognised investment exchanges and other markets the operation of which is regulated by the FCA, including in particular—
(a) the issuing of transferable securities, and
(b) the trading of transferable securities on regulated markets and multilateral trading facilities.
(3) The FCA must appoint one of the members of the Listing Authority Advisory Panel to be the chair of the Panel.
(4) The Treasury’s approval is required for the appointment or dismissal of the chair.
(5) The FCA must appoint to the Listing Authority Advisory Panel such persons to represent the interests of issuers and investors as it considers appropriate.
(6) The FCA may appoint to the Listing Authority Advisory Panel such other persons as it considers appropriate.
(7) Subsections (5) and (6) are subject to section 1MA.
(8) In this section—
“multilateral trading facility”, “recognised investment exchange” and “regulated markets” have the same meaning as in Part 18 (see section 313(1));
“transferable securities” has the meaning given by section 102A(3).
In FSMA 2000, after section 2M insert—
The Insurance Practitioner Panel
2MA (1) Arrangements under section 2L must include the establishment and maintenance of a panel of persons (to be known as “the Insurance Practitioner Panel”) to represent the interests of practitioners involved in the carrying on of the activity of effecting or carrying out of contracts of insurance.
(2) The PRA must appoint one of the members of the Insurance Practitioner Panel to be the chair of the Panel.
(3) The Treasury’s approval is required for the appointment or dismissal of the chair.
(4) The PRA must appoint to the Insurance Practitioner Panel at least one person representing PRA-authorised persons engaged in the activity of effecting or carrying out of contracts of insurance.
(5) The PRA may appoint to the Insurance Practitioner Panel such other persons as it considers appropriate.
(6) Subsections (4) and (5) are subject to section 2LA.
(1) FSMA 2000 is amended as follows.
(2) After section 138I insert—
FCA Cost Benefit Analysis Panel
138IA (1) The FCA must establish and maintain a panel of persons (to be known as the “FCA Cost Benefit Analysis Panel”) to provide advice in relation to cost benefit analyses for the purposes of section 138I.
(2) Except as provided by subsection (3), the FCA must consult the FCA Cost Benefit Analysis Panel about the following matters—
(a) the preparation of a cost benefit analysis under section 138I(2)(a) or (5)(a);
(b) the preparation of its statement of policy under section 138IB.
(3) The requirement to consult under subsection (2)(a) does not apply in such cases as may be set out in the statement of policy maintained under section 138IB.
(4) Arrangements made by the FCA under subsection (1) for the establishment and maintenance of the FCA Cost Benefit Analysis Panel must include arrangements for the Panel to—
(a) keep under review how the FCA is performing generally in carrying out its duties under section 138I(2)(a) and (5)(a), and
(b) provide to the FCA whatever recommendations the Panel thinks appropriate as a result of such review.
(5) The FCA must appoint one of the members of the FCA Cost Benefit Analysis Panel to be the chair of the Panel.
(6) The Treasury’s approval is required for the appointment or dismissal of the chair.
(7) The FCA must appoint to the FCA Cost Benefit Analysis Panel such persons with knowledge or experience of the preparation of cost benefit analyses as it considers appropriate.
(8) The FCA must appoint to the FCA Cost Benefit Analysis Panel at least two individuals who are employed by persons authorised for the purposes of this Act by the FCA, with each one being employed by a different person.
(9) The FCA may appoint to the FCA Cost Benefit Analysis Panel such other persons as it considers appropriate.
(10) Subsections (7) to (9) are subject to section 1MA.
(11) The FCA must consider representations that are made to it by the FCA Cost Benefit Analysis Panel.
(12) The FCA must from time to time publish in such manner as it thinks fit responses to the representations.
(3) After section 138J insert—
PRA Cost Benefit Analysis Panel
138JA (1) The PRA must establish and maintain a panel of persons (to be known as the “PRA Cost Benefit Analysis Panel”) to provide advice in relation to cost benefit analyses for the purposes of section 138J.
(2) Except as provided by subsection (3), the PRA must consult the PRA Cost Benefit Analysis Panel about the following matters—
(a) the preparation of a cost benefit analysis under section 138J(2)(a) or (5)(a);
(b) the preparation of its statement of policy under section 138JB.
(3) The requirement to consult under subsection (2)(a) does not apply in such cases as may be set out in the statement of policy maintained under section 138JB.
(4) Arrangements made by the PRA under subsection (1) for the establishment and maintenance of the PRA Cost Benefit Analysis Panel must include arrangements for the Panel to—
(a) keep under review how the PRA is performing generally in carrying out its duties under section 138J(2)(a) and (5)(a), and
(b) provide to the PRA whatever recommendations the Panel thinks appropriate as a result of such review.
(5) The PRA must appoint one of the members of the PRA Cost Benefit Analysis Panel to be the chair of the Panel.
(6) The Treasury’s approval is required for the appointment or dismissal of the chair.
(7) The PRA must appoint to the PRA Cost Benefit Analysis Panel such persons with knowledge or experience of the preparation of cost benefit analyses as it considers appropriate.
(8) The PRA must appoint to the PRA Cost Benefit Analysis Panel at least two individuals who are employed by PRA-authorised persons, with each one being employed by a different person.
(9) The PRA may appoint to the PRA Cost Benefit Analysis Panel such other persons as it considers appropriate.
(10) Subsections (7) to (9) are subject to section 2LA.
(11) The PRA must consider representations that are made to it by the PRA Cost Benefit Analysis Panel.
(12) The PRA must from time to time publish in such manner as it thinks fit responses to the representations.
(13) The reference in subsection (1) to section 138J includes a reference to that section as applied in relation to the Bank of England by paragraphs 10(1) and 10A of Schedule 17A.
(1) FSMA 2000 is amended as follows.
(2) After section 138IA (inserted by section 43) insert—
Statement of policy in relation to cost benefit analyses
138IB (1) The FCA must prepare and publish a statement of policy in relation to the preparation of cost benefit analyses for the purposes of section 138I.
(2) The statement must provide information about—
(a) the methodology adopted in preparing cost benefit analyses;
(b) matters to which the FCA has regard in determining whether section 138I(8) applies;
(c) matters to which the FCA has regard in determining whether an exemption under section 138L applies in relation to the preparation of a cost benefit analysis;
(d) arrangements to ensure that representations in connection with a cost benefit analysis that are made in accordance with section 138I(2)(e) are considered;
(e) cases in which the requirement to consult the FCA Cost Benefit Analysis Panel in relation to the preparation of a cost benefit analysis does not apply;
(f) arrangements to ensure that any recommendations in connection with cost benefit analyses that are made following a review carried out under section 138IA(4) are considered.
(3) The statement may include whatever other information in relation to cost benefit analyses that the FCA considers appropriate.
(4) The FCA may alter or replace a statement published under this section.
(5) The FCA must publish a statement as altered or replaced under subsection (4).
(6) Publication under this section is to be made in such manner as the FCA considers best designed to bring the statement to the attention of the public.
(3) After section 138JA (inserted by section 43) insert—
Statement of policy in relation to cost benefit analyses
138JB (1) The PRA must prepare and publish a statement of policy in relation to the preparation of cost benefit analyses for the purposes of section 138J.
(2) The statement must provide information about—
(a) the methodology adopted in preparing cost benefit analyses;
(b) matters to which the PRA has regard in determining whether section 138J(8) applies;
(c) matters to which the PRA has regard in determining whether an exemption under section 138L applies in relation to the preparation of a cost benefit analysis;
(d) arrangements to ensure that representations in connection with a cost benefit analysis that are made in accordance with section 138J(2)(e) are considered;
(e) cases in which the requirement to consult the PRA Cost Benefit Analysis Panel in relation to the preparation of a cost benefit analysis does not apply;
(f) arrangements to ensure that any recommendations in connection with cost benefit analyses that are made following a review carried out under section 138JA(4) are considered.
(3) The statement may include whatever other information in relation to cost benefit analyses that the PRA considers appropriate.
(4) The PRA may alter or replace a statement published under this section.
(5) The PRA must publish a statement as altered or replaced under subsection (4).
(6) Publication under this section is to be made in such manner as the PRA considers best designed to bring the statement to the attention of the public.
(1) FSMA 2000 is amended as follows.
(2) After section 1R insert—
Statement of policy on panel appointments
1RA (1) The FCA must prepare and publish a statement of policy in relation to the appointment of members of its statutory panels.
(2) The statement must provide information about—
(a) the process adopted for making appointments;
(b) matters considered in determining who is appointed.
(3) The statement may provide whatever other information in relation to the making of appointments that the FCA considers appropriate.
(4) The FCA may alter or replace a statement published under this section.
(5) The FCA must publish a statement as altered or replaced under subsection (4).
(6) Before publishing a statement under this section the FCA must—
(a) consult the Treasury about the proposed statement, and
(b) have regard to any representations the Treasury make in response to the consultation.
(7) Publication under this section is to be made in such manner as the FCA considers best designed to bring the statement to the attention of the public.
(8) In this section “statutory panel” means a panel established under section 1N, 1O, 1P, 1Q, 1QA or 138IA.
(3) After section 2N insert—
Statement of policy on panel appointments
2NA (1) The PRA must prepare and publish a statement of policy in relation to the appointment of members of its statutory panels.
(2) The statement must provide information about—
(a) the process adopted for making appointments;
(b) matters considered in determining who is appointed.
(3) The statement may provide whatever other information in relation to the making of appointments that the PRA considers appropriate.
(4) The PRA may alter or replace a statement published under this section.
(5) The PRA must publish a statement as altered or replaced under subsection (4).
(6) Before publishing a statement under this section the PRA must—
(a) consult the Treasury about the proposed statement, and
(b) have regard to any representations the Treasury make in response to the consultation.
(7) Publication under this section is to be made in such manner as the PRA considers best designed to bring the statement to the attention of the public.
(8) In this section “statutory panel” means a panel established under section 2M, 2MA or 138JA.
(1) FSMA 2000 is amended in accordance with subsections (2) to (8).
(2) After section 1M (FCA’s general duty to consult) insert—
Composition of Panels
1MA (1) A person who receives remuneration from the FCA, the PRA, the Payment Systems Regulator, the Bank of England or the Treasury is disqualified from being appointed as a member of a panel established under any of sections 1N to 1QA or 138IA.
(2) Subsection (1) does not apply in respect of a panel mentioned in that subsection if regulations made by the Treasury provide for it not to apply to that panel.
(3) Regulations under subsection (2) may make provision in respect of a panel—
(a) generally, or
(b) only in relation to such descriptions of persons or cases as the regulations may specify (but the power to make such regulations may not be exercised so as to specify persons by name).
(3) In section 1N (FCA Practitioner Panel), after subsection (5) insert—
(6) Subsections (4) and (5) are subject to section 1MA.
(4) In section 1O (Smaller Business Practitioner Panel), after subsection (6) insert—
(6A) Subsections (5) and (6) are subject to section 1MA.
(5) In section 1P (Markets Practitioner Panel), after subsection (6) insert—
(7) Subsections (4) to (6) are subject to section 1MA.
(6) In section 1Q (Consumer Panel), after subsection (4) insert—
(4A) Subsection (4) is subject to section 1MA.
(7) After section 2L (PRA’s general duty to consult) insert—
Composition of Panels
2LA (1) A person who receives remuneration from the FCA, the PRA, the Payment Systems Regulator, the Bank of England or the Treasury is disqualified from being appointed as a member of a panel established under any of sections 2M, 2MA or 138JA.
(2) Subsection (1) does not apply in respect of a panel mentioned in that subsection if regulations made by the Treasury provide for it not to apply to that panel.
(3) Regulations under subsection (2) may make provision in respect of a panel—
(a) generally, or
(b) only in relation to such descriptions of persons or cases as the regulations may specify (but the power to make such regulations may not be exercised so as to specify persons by name).
(8) In section 2M (the PRA Practitioner Panel), after subsection (5) insert—
(6) Subsections (4) and (5) are subject to section 2LA.
(9) In section 103 of the Financial Services (Banking Reform) Act 2013 (regulator’s general duty to consult) after subsection (5) insert—
(5A) A person who receives remuneration from the FCA, the PRA, the Payment Systems Regulator, the Bank of England or the Treasury is disqualified from being appointed as a member of a panel established under subsection (3).
(5B) Subsection (5A) does not apply in respect of a panel mentioned in that subsection if regulations made by the Treasury provide for it not to apply to that panel.
(5C) Regulations under subsection (5B) may make provision in respect of a panel—
(a) generally, or
(b) only in relation to such descriptions of persons or cases as the regulations may specify (but the power to make such regulations may not be exercised so as to specify persons by name).
(1) The Treasury may by regulations require specified statutory panels of the regulator to produce an annual report on their work and provide that report to the Treasury.
(2) Regulations under subsection (1) may make provision about the content of the annual report.
(3) The Treasury must lay a copy of each report prepared by virtue of this section before Parliament.
(4) Each specified statutory panel of the regulator must publish its reports prepared by virtue of this section in such manner as it thinks fit.
(5) In this section—
(a) “statutory panels of the regulator” means—
(i) in relation to the FCA, the panels mentioned in section 1RA(8) of FSMA 2000,
(ii) in relation to the PRA, the panels mentioned in section 2NA(8) of FSMA 2000, and
(iii) in relation to the Payment Systems Regulator, a panel established under section 103(3) of the Financial Services (Banking Reform) Act 2013;
(b) “specified” means specified in regulations under this section.
(6) Regulations under this section are subject to the negative procedure.
After section 30C of the Bank of England Act 1998 insert—
PART 3B Central counterparties and central securities depositories
Exercise of functions relating to CCPs and CSDs
30D (1) In exercising its FMI functions in a way that advances the Financial Stability Objective (and subject to that), the Bank must have regard to—
(a) the regulatory principles in section 30E;
(b) the effects generally that the exercise of FMI functions will or may have on the financial stability of countries or territories (other than the United Kingdom) in which FMI entities are established or provide services;
(c) the desirability of exercising FMI functions in a manner that is not determined by whether the persons to whom FMI services are provided are located in the United Kingdom or elsewhere.
(2) In exercising its FMI functions in a way that advances the Financial Stability Objective the Bank must, so far as reasonably possible, act in a way which, as a secondary objective, facilitates innovation in the provision of FMI services (including in the infrastructure used for that purpose) with a view to improving the quality, efficiency and economy of the services.
(3) For the purposes of this Part the Bank’s “FMI functions” are the following functions so far as exercisable in relation to FMI entities—
(a) its function of making rules under FSMA 2000 (considered as a whole);
(b) its function of making technical standards in accordance with Chapter 2A of Part 9A of FSMA 2000;
(c) its function of preparing and issuing codes under FSMA 2000 (considered as a whole);
(d) its function of determining the general policy and principles by reference to which it performs particular functions under FSMA 2000.
(4) In this Part—
“FMI entities” means—
a recognised central counterparty within the meaning of Part 18 of FSMA 2000 (see section 285(1)(b)(i) of that Act),
a recognised CSD as defined by section 285(1)(e) of FSMA 2000,
a third country central counterparty as defined by section 285(1)(d) of FSMA 2000, and
a third country CSD as defined by section 285(1)(g) of FSMA 2000;
“FMI services” means services provided by FMI entities as part of their business as FMI entities;
“FSMA 2000” means the Financial Services and Markets Act 2000.
Regulatory principles
30E (1) These are the regulatory principles referred to in section 30D(1)(a)—
(a) the need to use the resources of the Bank in the most efficient and economic way;
(b) the principle that a burden or restriction which is imposed on a person, or on the carrying on of an activity, should be proportionate to the benefits, considered in general terms, which are expected to result from the imposition of that burden or restriction;
(c) the desirability of sustainable growth in the economy of the United Kingdom in the medium or long term, including in a way consistent with contributing towards achieving compliance by the Secretary of State with section 1 of the Climate Change Act 2008 (UK net zero emissions target) and section 5 of the Environment Act 2021 (environmental targets) where the Bank considers the exercise of its FMI functions to be relevant to the making of such a contribution;
(d) the general principle that consumers should take responsibility for their decisions;
(e) the responsibilities of the senior management of FMI entities subject to requirements imposed by or under FSMA 2000, including those affecting consumers, in relation to compliance with those requirements;
(f) the desirability where appropriate of the Bank exercising its FMI functions in a way that recognises differences in the nature of, and objectives of, businesses carried on by different persons;
(g) the desirability in appropriate cases of the Bank publishing information relating to persons on whom requirements are imposed as a result of the exercise of the Bank’s FMI functions, or requiring such persons to publish information, as a means of contributing to the advancement by the Bank of its Financial Stability Objective and its objective under section 30D(2);
(h) the principle that the Bank should exercise its FMI functions as transparently as possible;
(i) the desirability of facilitating fair and reasonable access to FMI services.
(2) For the purposes of subsection (1) “consumer” has the same meaning as in section 3B of FSMA 2000 (and for these purposes includes in particular persons who receive FMI services).
Financial Market Infrastructure Committee
30F (1) There is to be a committee of the Bank known as the Financial Market Infrastructure Committee (the “FMI Committee”).
(2) The FMI Committee is to consist of—
(a) a chair appointed by the Bank;
(b) at least three independent members appointed by the Bank;
(c) such other members as may be appointed from time to time by the Bank.
(3) The person appointed as chair under subsection (2)(a) must be the Governor, or a Deputy Governor, of the Bank.
(4) A person is an independent member for the purposes of subsection (2)(b) if the person is an officer, employee or agent of the Bank—
(a) as a result only of their membership of one or more of the Bank’s committees, or
(b) is appointed as an independent member to the FMI Committee with the consent of the Treasury.
(5) For the purposes of subsection (4)(a)—
(a) the Bank’s committees are—
(i) the FMI Committee,
(ii) the Financial Policy Committee,
(iii) the Monetary Policy Committee, and
(iv) the Prudential Regulation Committee;
(b) the reference to a person who is an officer, employee or agent of the Bank as result of their membership of one or more of those committees includes a reference to a person who becomes such an officer, employee or agent as a result of their appointment to the FMI Committee under this section.
(6) Before appointing a person under subsection (2)(b) the Bank must—
(a) be satisfied that the person has knowledge or experience which is likely to be relevant to the FMI Committee’s functions, and
(b) consider whether the person has any financial or other interests that could substantially affect the functions as member that it would be proper for the person to discharge.
Functions of the Financial Market Infrastructure Committee
30G (1) The following functions of the Bank are to be exercised by the Bank acting through the FMI Committee (and, except as authorised by this section, are not to be exercised in any other way)—
(a) its FMI functions;
(b) such other functions of the Bank as the court of directors may specify as functions that are to be discharged by the FMI Committee.
(2) The FMI Committee may arrange for such of its functions as it thinks fit to be carried out only by, or after consultation with, the Governor of the Bank.
(3) Except as provided by subsection (4), the FMI Committee may delegate such of its functions as it thinks fit to—
(a) a member of the FMI Committee;
(b) a sub-committee of the FMI Committee consisting of members of the FMI Committee or one or more such members and one or more officers, employees or agents of the Bank;
(c) an officer, employee or agent of the Bank;
(d) a committee consisting of officers, employees or agents of the Bank.
(4) The FMI Committee may not delegate under subsection (3) its FMI functions under FSMA 2000 of making rules or technical standards (but this does not prevent arrangements under subsection (2) being made in respect of such functions).
Information
30H (1) The Bank must publish a statement setting out the following matters in respect of the FMI Committee—
(a) the number of members and whether each such member is a Bank member or an independent member;
(b) if the Committee includes any Bank members, the role of each such member within the Bank;
(c) arrangements for meetings and how proceedings at meetings are conducted;
(d) arrangements for the taking of decisions otherwise than at meetings;
(e) arrangements for any functions to be carried out by, or after consultation with, the Governor of the Bank (including details of the functions to which such arrangements relate);
(f) arrangements for the delegation of functions.
(2) If there is a material change in any of the matters contained in the statement the Bank must publish an updated statement.
(3) Publication under this section is to be made in such manner as the Bank considers best designed to bring the statement to the attention of the public.
(4) For the purposes of subsection (1)—
(a) a person is an independent member if they are appointed in accordance with section 30F(2)(b) and (4);
(b) a person is a Bank member if they are an officer or employee of the Bank who is not appointed as mentioned in paragraph (a).
Recommendations by Treasury
30I (1) The Treasury may at any time by notice in writing to the FMI Committee make recommendations about aspects of the economic policy of His Majesty’s Government to which the Bank should have regard—
(a) when considering how to advance the Financial Stability Objective and the objective under section 30D(2), and
(b) when considering the application of the regulatory principles set out in section 30E.
(2) The Treasury must make recommendations under subsection (1) at least once in each Parliament.
(3) The Treasury must—
(a) publish in such manner as they think fit any notice given under subsection (1), and
(b) lay a copy of it before Parliament.
(4) The FMI Committee must respond to each recommendation made under subsection (1) by notifying the Treasury in writing of—
(a) action that the Bank has taken or intends to take in accordance with the recommendation, or
(b) the reasons why the Bank has not acted or does not intend to act in accordance with the recommendation.
(5) The notice under subsection (4) must be given before the end of 12 months beginning with the date the notice containing the recommendation was given under subsection (1).
(6) Where the FMI Committee has given notice under subsection (4) in relation to a recommendation, it must by notice in writing update the Treasury on the matters mentioned in subsection (4)(a) and (b) before the end of each subsequent period of 12 months.
(7) Subsection (6) does not apply if the Treasury have notified the FMI Committee in writing that no update (or further update) is required.
(8) The FMI Committee is not required under subsection (4) or (6) to provide any information whose publication would in the opinion of the Committee be against the public interest.
(1) FSMA 2000 is amended as follows.
(2) After section 300H (inserted by section 11) insert—
Bank of England rules
Duty of Bank of England to review rules
300I (1) The Bank of England must keep under review generally any rules made by the Bank under this Act.
(2) Subsection (1) does not apply to rules made for the purpose of complying with a recommendation of the Financial Policy Committee of the Bank of England under section 9O of the Bank of England Act 1998 (making of recommendations within the Bank).
Statement of policy relating to review of rules
300J (1) The Bank of England must prepare and publish a statement of policy with respect to its review of rules under section 300I.
(2) The statement must provide information about—
(a) how representations (including by a statutory panel) can be made to the Bank with respect to its review of rules under section 300I, and
(b) the arrangements to ensure that those representations are considered.
(3) In this section “statutory panel” has the meaning given by section 1RB(5).
(4) If a statement published under this section is altered or replaced, the Bank must publish the altered or replaced statement.
(5) A statement prepared under this section must be published by the Bank in the way appearing to the Bank to be best designed to bring it to the attention of the public.
Requirement to review specified rules
300K (1) The Treasury may by direction require the Bank of England to carry out a review of specified rules made by the Bank under this Act if—
(a) the rules have been in force for at least 12 months,
(b) the Treasury consider that it is in the public interest that the rules are reviewed, and
(c) it does not appear to the Treasury that—
(i) the Bank is carrying out, or plans to carry out, a review of those rules, or
(ii) if the Bank proposes to carry out a review, the proposals are appropriate for the purposes of carrying out an effective review.
(2) Subsection (1) only applies to rules falling within section 300I(1).
(3) The Treasury must consult the Bank before giving a direction under subsection (1).
(4) In exercising the power under this section, the Treasury must have regard to the desirability of minimising any adverse effect that the carrying out of the review may have on the exercise by the Bank of any of its other functions.
(5) A direction under subsection (1) may—
(a) specify the period within which a review must be carried out;
(b) determine the scope and conduct of a review;
(c) require the provision of interim reports during the carrying out of a review.
(6) Provision made in a direction under subsection (5)(b) may include a requirement—
(a) for a review to be carried out by a person appointed by the Bank who is independent of the Bank;
(b) for any such appointment to be made only with the approval of the Treasury.
(7) As soon as practicable after giving a direction under subsection (1) the Treasury must—
(a) lay before Parliament a copy of the direction, and
(b) publish the direction in such manner as the Treasury think fit.
(8) Subsection (7) does not apply where the Treasury consider that publication of the direction would be against the public interest.
(9) A direction under subsection (1) may be varied or revoked by the giving of a further direction.
Report on certain reviews
300L (1) This section applies where the Treasury have given a direction to the Bank of England under section 300K to carry out a review.
(2) The Bank must make a written report to the Treasury as to the opinion of the Bank in relation to the following matters—
(a) whether the rules under review advance—
(i) the Bank’s Financial Stability Objective, and
(ii) the Bank’s secondary innovation objective (see section 30D(2) of the Bank of England Act 1998);
(b) whether and to what extent the rules are functioning effectively and achieving their intended purpose;
(c) whether any amendments need to be made to the rules and, if so, what those amendments should be;
(d) whether any rules should be revoked (with or without replacement);
(e) whether any other action should be taken and, if so, what that action should be.
(3) As soon as practicable after receiving the report the Treasury must—
(a) lay before Parliament a copy of the report, and
(b) publish the report in such manner as the Treasury think fit.
(4) When complying with subsection (3) the Treasury may withhold material from the report if the Treasury consider that publication of the material would be against the public interest.
Power of Treasury to require making of rules by regulations
300M (1) The Treasury may by regulations require the Bank of England to exercise a power under this Act to make rules in relation to a specified activity or a specified description of person.
(2) Regulations under this section may—
(a) specify matters that the rules must cover;
(b) specify a period within which the rules must be made.
(3) But except so far as permitted by subsection (2), regulations under this section may not require rules to be made—
(a) in a specified form or with specified content, or
(b) to achieve or advance a specified outcome.
(4) If no period is specified under subsection (2)(b) the rules must be made as soon as reasonably practicable after the coming into force of the regulations.
(3) In section 429 (Parliamentary control of statutory instruments), in subsection (2), in the list of sections beginning with “90B” insert at the appropriate place “300M,”.
(1) FSMA 2000 is amended as follows.
(2) In section 285A (powers exercisable in relation to recognised bodies)—
(a) in the title at the end insert “etc”;
(b) in subsection (3), at the end of paragraph (b) insert “or as a consequence of conferring other FMI functions on the Bank”.
(3) In section 313(1) (interpretation of Part 18), insert at the appropriate place—
“FMI functions”, in relation to the Bank of England, has the meaning given by section 30D(3) of the Bank of England Act 1998;
.
(4) Schedule 17A to FSMA 2000 (further provision in relation to exercise of Bank of England functions under Part 18 of that Act) is amended as follows.
(5) In the title to the Schedule, after “functions” insert “, or other FMI functions,”.
(6) After paragraph 9 insert—
Public consultations
9A (1) Section 1RB (requirements in connection with public consultations) applies in relation to the Bank but as if, in subsection (4), after “proposals” there were inserted “in connection with the carrying on by the Bank of its FMI functions.
(2) For this purpose, paragraph 9(2)(a) does not apply so far as relating to the following references in section 1RB—
(a) in subsection (2), the reference after “statutory panels of” to the FCA and the PRA;
(b) in subsection (5)(a), the reference to the FCA;
(c) in subsection (5)(b), the reference to the PRA.
(7) In paragraph 10—
(a) in sub-paragraph (1)(b), for the words from “subsection (4)(b)” to the end substitute “subsection (5) of section 138A, subsection (4) of section 138B, and, apart from in relation to rules made under section 300F, subsection (4)(b) of section 138A;”;
(b) after sub-paragraph (1)(b) insert—
(ba) section 138BA (disapplication or modification of rules in individual cases);
;
(c) in sub-paragraph (1)(d) for “subsection (2)” substitute “subsections (2) and (3), and any references to those subsections”;
(d) after sub-paragraph (1)(e) insert—
(ea) section 138EA (matters to consider when making rules);
;
(e) at the end of sub-paragraph (1)(f) insert “but with the omission of subsections (1A) and (2)”;
(f) at the end of sub-paragraph (1)(i) omit “and”;
(g) after sub-paragraph (1)(i) insert—
(ia) section 138JA(2), (3) (4), (10) and (11) (duties in relation to PRA Cost Benefit Analysis Panel);
(ib) section 138JB (statement of policy in relation to cost benefit analyses);
;
(h) after sub-paragraph (1)(j) insert—
(k) section 141A (power to make consequential amendments of references to rules);
(l) section 141B (power to consequentially amend enactments).
;
(i) in sub-paragraph (2) at the end insert “or other persons in respect of whom FMI functions are exercised”;
(j) after sub-paragraph (2) insert—
(2A) Section 137T has effect as if, in paragraph (b), for “the other regulator” there were substituted “the FCA or the PRA”.
(2B) Section 138A has effect as if the reference in subsection (4)(b) to any of the regulator’s objectives were a reference to the Bank’s Financial Stability Objective.
(2C) Section 138BA has effect as if subsection (3)(b) and (c) were omitted.
(2D) Section 138EA(5) has effect as if, for paragraphs (a) and (b), there were substituted “complying with a recommendation of the Financial Policy Committee of the Bank of England under section 9O of the Bank of England Act 1998 (making of recommendations within the Bank).
;
(k) after sub-paragraph (3) insert—
(3A) Section 138J(8A) has effect as if, in paragraph (a), for sub-paragraphs (i) and (ii) there were substituted “be prejudicial to advancing the Financial Stability Objective, or
.
(8) After paragraph 12 insert—
12A —
(1) Section 166A applies in relation to rules made by the Bank under section 300F.
(2) For this purpose any reference in section 166A to an authorised person is to be read as a reference to a relevant FMI entity (as defined by paragraph 9B(2)).
(9) In paragraph 14(2)—
(a) in paragraph (a) omit “an offence under section 398(1) or”;
(b) for paragraph (g) substitute—
(g) a person may be guilty of an offence under section 398(1), as applied by paragraph 30 of this Schedule;
.
(10) In paragraph 29 before “192L,” insert “55X(2) or (4),”.
(11) After paragraph 31 insert—
International obligations
31A (1) The following provisions of Part 28 of this Act apply in relation to the exercise by the Bank of its FMI functions with the modifications in sub-paragraphs (2) and (3)—
(a) section 409A (consultation in relation to deference decisions), and
(b) section 409B (notification in relation to international trade obligations).
(2) Section 409A applies as if—
(a) in subsection (4), in paragraph (b), for the words after “proposes to” to the end there were substituted “exercise any of its other FMI functions”;
(b) in subsection (6)(a), the reference to the duty imposed by section 138J were a reference to that duty as it applies in relation to the Bank under paragraph 10(1) of this Schedule;
(c) in subsection (9), for paragraphs (a) to (f) there were substituted “in order to comply with a recommendation of the Financial Policy Committee of the Bank of England under section 9O of the Bank of England Act 1998 (making of recommendations within the Bank).”;
(d) subsections (7) and (10) were omitted.
(3) Section 409B applies as if—
(a) in subsection (4), in paragraph (b), for the words after “proposes to” to the end there were substituted “exercise any of its other FMI functions”;
(b) in subsection (5)(a), the reference to the duty imposed by section 138J were a reference to that duty as it applies in relation to the Bank under paragraph 10(1) of this Schedule;
(c) in subsection (8), for paragraphs (a) to (c) there were substituted “in order to comply with a recommendation of the Financial Policy Committee of the Bank of England under section 9O of the Bank of England Act 1998 (making of recommendations within the Bank).”;
(d) subsections (6) and (9) were omitted.
(12) In paragraph 33(a), for “(f)” substitute “(fb)” and in the substituted paragraph (b)—
(a) for “financial stability objective has been met” substitute “Financial Stability Objective and its objective under section 30D(2) of the Bank of England Act 1998 have been advanced”;
(b) after “been met,” insert—
(c) the efforts it has made to engage with persons (other than those mentioned in paragraph (a)) appearing to the Bank to have an interest in the discharge of those functions, and
(d) the results of that engagement,
.
(13) In paragraph 33(b), for “sub-paragraph (3)” substitute “sub-paragraphs (1A), (1B), (3) and (6)”.
(14) After paragraph 33 insert—
Other reports
33A Paragraph 21A of Schedule 1ZB (other reports by PRA) applies in relation to the Bank, but as if—
(a) the reference in sub-paragraph (1)(a) to paragraphs (a) to (f) of paragraph 19(1) were a reference to those paragraphs as substituted in relation to the Bank under paragraph 33 of this Schedule;
(b) the reference in sub-paragraph (1)(b) to such other matters were a references to such other matters so far as relating to the exercise of the Bank’s FMI functions;
(c) the reference in sub-paragraph (5)(b) to section 348 were a reference to that section as it applies in relation to the Bank under paragraph 23 of this Schedule.
Engagement with Parliamentary Committees
33B (1) Paragraph 36 of Schedule 1ZB (PRA engagement with Parliamentary Committees) applies in relation to the Bank, but as if—
(a) in sub-paragraph (2)(a), the reference to section 138J were a reference to that section as it applies in relation to the Bank under paragraph 10(1) of this Schedule;
(b) in sub-paragraph (2)(b), the reference to a proposal were to a proposal so far as relating to the exercise of the Bank’s FMI functions;
(c) in sub-paragraph (2)(c), the reference to general functions were a reference to the Bank’s FMI functions;
(d) in sub-paragraph (4)(a), the reference to the PRA’s objectives were a reference to the Financial Stability Objective and the Bank’s secondary innovation objective (see section 30D(2) of the Bank of England Act 1998);
(e) in sub-paragraph (4)(b), the reference to section 3B were a reference to section 30E of the Bank of England Act 1998;
(f) in sub-paragraph (4)(c), the reference to section 138EA were a reference to that section as it applies in relation to the Bank under paragraph 10(1) of this Schedule;
(g) in sub-paragraph (5A)(b)(ii) and (c)(ii), the references to the PRA being notified were references to the Bank being notified.
(2) Paragraph 37 of Schedule 1ZB applies in relation to the Bank, but as if, in sub-paragraph (2), after “the draft of any proposals” there were inserted “so far as relating to the exercise by the Bank of its FMI functions”.
Schedule 7 makes provision corresponding or similar to provision made by preceding provisions of this Chapter relating to the accountability of the Payment Systems Regulator.
52 Chair of the Payment Systems Regulator as member of FCA Board
(1) FSMA 2000 is amended as follows.
(2) In section 417(1) (definitions), at the appropriate place insert—
“the Payment Systems Regulator” means the body established under section 40(1) of the Financial Services (Banking Reform) Act 2013;
.
(3) Schedule 1ZA (FCA: constitution etc) is amended as follows.
(4) In paragraph 2—
(a) in sub-paragraph (2), after paragraph (c) insert—
(ca) the Chair of the Payment Systems Regulator,
;
(b) in sub-paragraph (3), after “(c)” insert “, (ca)”.
(5) In paragraph 3—
(a) in sub-paragraph (6) after “PRA” insert “or of the Payment Systems Regulator”;
(b) in sub-paragraph (7) for “the Bank’s Deputy Governor for prudential regulation” substitute “a person holding an office mentioned in paragraph 2(2)(c) or (ca)”.
(6) In paragraph 5(a) for “or (c)” substitute “, (c) or (ca)”.
(7) After paragraph 6 insert—
6A (1) The Chair of the Payment Systems Regulator must not take part in any discussion by or decision of the FCA which relates to—
(a) the exercise of the FCA’s functions in relation to a particular person, or
(b) a decision not to exercise those functions.
(2) Sub-paragraph (1) does not apply at any time when the person who is the Chair of the Payment Systems Regulator also holds the office mentioned in paragraph 2(2)(a).
(1) In section 138I of FSMA 2000 (consultation by the FCA), after subsection (4) insert—
(4A) The FCA must include, in the account mentioned in subsection (4), a list of the respondents who made the representations, where those respondents have consented to the publication of their names.
(4B) The duty in subsection (4A) is not to be read as authorising or requiring such processing of personal data as would contravene the data protection legislation (but the duty is to be taken into account in determining whether particular processing of data would contravene that legislation).
(4C) For the purposes of this section, the exemption relating to functions conferred on the FCA mentioned in paragraph 11 of Schedule 2 to the Data Protection Act 2018 (exemption from application of listed GDPR provisions) does not apply.
(4D) Where representations are made to the FCA by a Committee of the House of Commons or the House of Lords or a Joint Committee of both Houses in accordance with subsection (2)(e), the FCA’s account mentioned in subsection (4) must also describe how the FCA has considered the representations made by that Committee in making the proposed rules.
(2) In section 138J of FSMA 2000 (consultation by the PRA), after subsection (4) insert—
(4A) The PRA must include, in the account mentioned in subsection (4), a list of the respondents who made the representations, where those respondents have consented to the publication of their names.
(4B) The duty in subsection (4A) is not to be read as authorising or requiring such processing of personal data as would contravene the data protection legislation (but the duty is to be taken into account in determining whether particular processing of data would contravene that legislation).
(4C) For the purposes of this section, the exemption relating to functions conferred on the PRA mentioned in paragraph 9 of Schedule 2 to the Data Protection Act 2018 (exemption from application of listed GDPR provisions) does not apply.
(4D) Where representations are made to the PRA by a Committee of the House of Commons or the House of Lords or a Joint Committee of both Houses in accordance with subsection (2)(e), the PRA’s account mentioned in subsection (4) must also describe how the PRA has considered the representations made by that Committee in making the proposed rules.
(3) In section 104 of the Financial Services (Banking Reform) Act 2013 (consultation requirements), after subsection (5) insert—
(5A) The Payment Systems Regulator must include, in the account mentioned in subsection (5), a list of the respondents who made the representations, where those respondents have consented to the publication of their names.
(5B) The duty in subsection (5A) is not to be read as authorising or requiring such processing of personal data as would contravene the data protection legislation (but the duty is to be taken into account in determining whether particular processing of data would contravene that legislation).
(5C) In this section “data protection legislation” has the same meaning as in the Data Protection Act 2018 (see section 3 of that Act).
(5D) Where representations are made to the Payment Systems Regulator by a Committee of the House of Commons or the House of Lords or a Joint Committee of both Houses in accordance with subsection (3)(d), the Payment Systems Regulator’s account mentioned in subsection (5) must also describe how the Payment Systems Regulator has considered the representations made by that Committee in making the proposed requirement.
56 Recognised bodies: senior managers and certification
Schedule 10 amends FSMA 2000 to make provision about the performance, by senior managers and others, of functions in relation to activities carried on by recognised bodies (within the meaning of Part 18 of that Act) of types specified by the Treasury.
57 Central counterparties in financial difficulties
Schedule 11 makes provision for a special resolution regime for central counterparties where all or part of its business has encountered, or is likely to encounter, financial difficulties.
(1) Schedule 12 makes provision about the powers of the court in relation to liabilities of an insurer that is, or is likely to become, unable to pay its debts (an order made in exercise of these powers is a “write-down order”).
(2) Schedule 13 makes provision about the enforcement of contracts to which an insurer is a party, where the insurer is subject to a write-down order or to certain insolvency proceedings.
59 Application of provisions to regulatory functions under this Act
(1) FSMA 2000 is amended as follows.
(2) In section 1A (the FCA), in subsection (6) after paragraph (czb) insert—
(czc) the Financial Services and Markets Act 2023,
.
(3) In section 2AB (functions of the PRA), in subsection (3) after paragraph (c) insert—
(ca) the Financial Services and Markets Act 2023,
.
(1) FSMA 2000 is amended as follows.
(2) In section 404C after “(which” insert “, subject to section 415AA(1),”.
(3) After section 415A insert—
Application of powers to formerly authorised persons
415AA (1) A power in the following provisions may be exercised in relation to persons who were at any time authorised persons (in addition to persons who are authorised persons at the time when the power is exercised)—
(a) section 168 (appointment of investigators in certain cases);
(b) section 205 (public censure);
(c) section 206 (financial penalties);
(d) section 384 (power to require restitution).
(2) Accordingly, references in the provisions listed in subsection (1), and in sections 207 to 209, to an authorised person are (so far as appropriate) to be read as including a person who was at any time an authorised person but who has ceased to be an authorised person.
(4) The amendments made by this section have effect only in relation to persons who cease to be authorised persons on or after 20 July 2022.
In Part 12 of FSMA 2000 (control over authorised persons), in section 187 (approval with conditions), in subsection (2)—
(a) at the end of paragraph (a) omit “or”, and
(b) after that paragraph insert—
(aa) it appears to that regulator that it is desirable to impose those conditions in order to advance any of that regulator’s objectives (subject to section 185(2)(c)), or
.
(1) FSMA 2000 is amended as set out in subsections (2) and (3).
(2) In section 212 (the scheme manager), in subsection (3)(aa) omit the words “(who is to be the accounting officer)”.
(3) Omit section 218B (Treasury’s power to receive information).
(4) Omit section 15 of the Financial Services (Banking Reform) Act 2013 (which inserted section 218B of FSMA 2000).
(1) FSMA 2000 is amended as follows.
(2) In section 429 (Parliamentary control of statutory instruments), in subsection (2B) after paragraph (c) insert—
(d) provision made under paragraph 15(3) of Schedule 17.
(3) Paragraph 15 of Schedule 17 (the Ombudsman scheme: power of scheme operator to charge fees) is amended as set out in subsections (4) and (5).
(4) In sub-paragraph (1) after “respondent” insert “or other persons of a specified description”.
(5) After sub-paragraph (2) insert—
(3) The reference in sub-paragraph (1) to persons of a specified description is a reference to such descriptions of persons as may be specified in regulations made by the Treasury.
(4) The power conferred by sub-paragraph (3) to specify descriptions of persons may not be exercised so as to provide for eligible complainants to fall within a specified description of persons.
(5) The reference in sub-paragraph (4) to “eligible complainants” is a reference to complainants who are eligible in relation to the compulsory or voluntary jurisdiction of the ombudsman scheme (see section 226(6) and 227(7)).
(6) Before making regulations under sub-paragraph (3) the Treasury must consult the scheme operator.
(1) FSMA 2000 is amended as follows.
(2) In section 261E (authorised contractual schemes: holding of units)—
(a) before subsection (1) insert—
(A1) This section sets out requirements for the purposes of section 261D(1)(a) (authorisation orders).
;
(b) in subsection (1) for “a contractual” substitute “the”.
(3) After section 261Z5 insert—
CHAPTER 3B Unauthorised co-ownership AIFs
Power to make provision about unauthorised co-ownership AIFs
261Z6 (1) The Treasury may by regulations make provision about unauthorised co-ownership AIFs that corresponds or is similar to, or applies with modifications, any of sections 261M to 261O and section 261P(1) and (2) (rights and liabilities of participants in authorised co-ownership schemes).
(2) Regulations under subsection (1) may make provision about unauthorised co-ownership AIFs generally, or about unauthorised co-ownership AIFs of a description specified in the regulations.
(3) In this section “unauthorised co-ownership AIF” means a co-ownership scheme that—
(a) is an AIF, and
(b) is not authorised for the purposes of this Act by an authorisation order in force under section 261D(1).
65 Power to amend enactments in consequence of rules
(1) FSMA 2000 is amended as follows.
(2) After section 141A insert—
Power to consequentially amend enactments
141B (1) The Treasury may by regulations make provision amending an enactment that is consequential on rules.
(2) In this section—
“enactment” includes—
an enactment comprised in subordinate legislation,
retained direct EU legislation,
an enactment comprised in, or in an instrument made under, a Measure or Act of Senedd Cymru,
an enactment comprised in, or in an instrument made under, an Act of the Scottish Parliament, and
an enactment comprised in, or in an instrument made under, Northern Ireland legislation;
“subordinate legislation” has the same meaning as in the Interpretation Act 1978 (see section 21 of that Act) but does not include rules of either regulator.
(3) Omit section 144F (power to consequentially amend enactments).
(4) In section 429 (Parliamentary control of statutory instruments), in subsection (2), in the list of sections beginning with “90B”—
(a) insert at the appropriate place “141B,”;
(b) omit “144F,”.
(1) FSMA 2000 is amended as follows.
(2) In section 137T (regulator rules: general supplementary powers), after paragraph (a) insert—
(aa) may make provision for any reference in the rules to an enactment (including an enactment comprised in subordinate legislation) to be read as a reference to that enactment as it has effect from time to time,
.
(3) In section 428 (regulations and orders)—
(a) in subsection (3) before paragraph (a) insert—
(za) make provision by reference to any rules or other instruments as they have effect from time to time;
;
(b) after subsection (3) insert—
(4) In subsection (3)(za) “rules” includes rules made by the Bank of England under this Act.
67 Power to amend or repeal certain provisions of FSMA 2000
(1) The Treasury may by regulations amend or repeal the following provisions in Part 9C of FSMA 2000—
(a) section 143C (duty to make rules applying to FCA investment firms);
(b) section 143D (duty to make rules applying to parent undertakings);
(c) section 143G (matters to consider when making Part 9C rules).
(2) In consequence of provision made in regulations under subsection (1), the Treasury may by regulations amend or repeal other provisions of FSMA 2000.
(3) Regulations under this section are subject to the affirmative procedure.
68 Power under FSMA 2000 to make transitional provisions
(1) FSMA 2000 is amended as follows.
(2) In section 427 (transitional provisions)—
(a) in subsection (2)(a) to (c), for “the Authority”, in each place, substitute “a regulator”;
(b) in subsection (2)(f), for “the Authority’s” substitute “the FCA’s”;
(c) in subsection (3)(a), for “the Authority” substitute “a regulator”.
(3) In Schedule 17A, after paragraph 31A (inserted by section 50), insert—
Transitional provisions
31B Section 427 (transitional provisions), so far as it relates to an order under section 426 which makes provision in connection with this Part of this Act, applies in relation to the Bank.
(1) FSMA 2000 is amended as follows.
(2) In section 21 (restrictions on financial promotion), in subsection (14) at end insert “(including where an asset, right or interest is, or comprises or represents, a cryptoasset)”.
(3) In section 22 (regulated activities), in subsection (4) at end insert “(including where an asset, right or interest is, or comprises or represents, a cryptoasset)”.
(4) In section 417 (definitions)—
(a) in subsection (1), insert at the appropriate place—
“cryptoasset” means any cryptographically secured digital representation of value or contractual rights that—
can be transferred, stored or traded electronically, and
that uses technology supporting the recording or storage of data (which may include distributed ledger technology).
;
(b) at end insert—
(5) The Treasury may by regulations amend the definition of “cryptoasset” in subsection (1).
(5) In section 429 (Parliamentary control of statutory instruments), in subsection (2) leave out “or 333T” and insert “, 333T or 417(5)”.
(1) The Bank of England Act 1998 is amended as follows.
(2) Omit section 6 and Schedule 2 (cash ratio deposits).
(3) Before section 7 insert—
Bank of England levy
6A Schedule 2ZA makes provision for the Bank to impose a charge on financial institutions in connection with the pursuit of its financial stability and monetary policy objectives.
(4) Before Schedule 2A (financial policy committee) insert—
SCHEDULE 2ZA
Bank of England levy
Section 6A
“The levy”
1 (1) The Bank may impose a charge on eligible institutions in accordance with this Schedule.
(2) The charge is to be known as the Bank of England levy (and is referred to in this Schedule as “the levy”).
“Eligible institutions”
2 (1) For the purposes of this Schedule, an “eligible institution” is a person who, at any time during a levy year, is an authorised deposit-taker.
(2) An “authorised deposit-taker” for these purposes is a person who has permission under Part 4A of the Financial Services and Markets Act 2000 to accept deposits, other than—
(a) a credit union;
(b) a friendly society;
(c) a person who has such permission only in the course of effecting or carrying out contracts of insurance in accordance with that permission.
(3) In this paragraph—
“credit union” has the meaning given by section 31(1) of the Credit Unions Act 1979 or Article 2(2) of the Credit Unions (Northern Ireland) Order 1985;
“friendly society” means a society that is registered within the meaning of the Friendly Societies Act 1974 or incorporated under the Friendly Societies Act 1992;
“levy year” has the meaning given by paragraph 3.
(4) The Treasury may by regulations—
(a) amend the foregoing provisions of this paragraph;
(b) amend any other provision of this Schedule in consequence of provision made under paragraph (a).
“Levy year”
3 (1) For the purposes of this Schedule, a “levy year” is—
(a) the period of 12 months beginning on such day as the Bank may determine, and
(b) each subsequent period of 12 months.
(2) The day determined under sub-paragraph (1)(a) may not be before the day on which the Financial Services and Markets Act 2023 is passed.
“Anticipated levy requirement”
4 (1) The Bank must, in respect of a levy year—
(a) determine which of its policy functions it intends to fund (in whole or in part) by means of the levy;
(b) determine the total amount of the levy it reasonably considers it requires in connection with the funding of those functions (“the anticipated levy requirement”).
(2) The Bank may add to the anticipated levy requirement for a levy year such amount (if any) that—
(a) was required in connection with the funding of policy functions in the previous levy year, and
(b) was in excess of the total amount of the levy that it received in respect of that previous levy year.
(3) For the purposes of this Schedule, a function of the Bank is a “policy function” if it is exercised in pursuit of—
(a) the Financial Stability Objective (see section 2A), or
(b) its objectives in relation to monetary policy (see section 11).
(4) In making a determination in accordance with sub-paragraph (1), the Bank must take account of any other amounts which are, or are likely to be, available in the levy year to fund policy functions (for example, amounts of the levy received in respect of a previous levy year or amounts available from sources other than the levy).
(5) The Bank must publish a determination made in accordance with sub-paragraph (1)—
(a) at such time before or during the levy year to which the determination relates as the Bank considers appropriate, and
(b) in such manner as the Bank considers appropriate.
(6) The reference in sub-paragraph (3) to the exercise of a function includes anything done in preparation for, to facilitate, or otherwise in connection with, the exercise of the function.
Liability to pay the levy
5 (1) The amount of the levy that an eligible institution is liable to pay in respect of a levy year is to be determined by the Bank in accordance with regulations made by the Treasury.
(2) Regulations under sub-paragraph (1) may—
(a) make provision by reference to the Bank’s anticipated levy requirement in respect of the levy year (see paragraph 4);
(b) make provision by reference to specified liabilities of an eligible institution;
(c) make provision for cases in which no amount of the levy or a reduced amount of the levy is payable.
(3) Regulations made by virtue of sub-paragraph (2)(b) may include (among other things) provision—
(a) specifying types of liability that may or may not be taken into account for specified purposes;
(b) about how and when liabilities of a specified type are to be taken into account for specified purposes;
(c) about how the amount of a liability of a specified type is to be determined, including specifying times, or periods of time, by reference to which the amount is to be determined;
(d) for an amount of a liability of a specified type to be treated as reduced by the amount of assets of a specified type.
(4) Regulations under sub-paragraph (1) may include provision conferring a discretion on the Bank to determine specified matters (including matters mentioned in sub-paragraph (2)(b) or (3)).
(5) Regulations made by virtue of sub-paragraph (4) may, in particular, confer a discretion—
(a) to determine the method used to determine a matter, and
(b) to determine different methods to be used in relation to different eligible institutions.
(6) In this section, “specified” means specified in the regulations.
Payment of the levy
6 (1) The Bank must notify each eligible institution that is liable to pay the levy in respect of a levy year of the following matters—
(a) the levy year in respect of which the levy is payable;
(b) the amount of the levy the institution is liable to pay;
(c) the time by which the levy must be paid (or, if the Bank determines that the levy may be paid in instalments, the times by which each instalment must be paid);
(d) the methods by which the levy may be paid.
(2) A time notified in accordance with sub-paragraph (1)(c) (or if more than one time is notified, the earliest of them) may not be before the end of the period of 30 days beginning with the day on which the notification is given.
(3) Notification may be given in such form or in such manner as the Bank considers appropriate (and may be given in a different form or manner to different eligible institutions or eligible institutions of a different description).
Recovery of the levy
7 The levy is recoverable as a civil debt due to the Bank.
See also paragraph 8 (interest on unpaid amounts of the levy).
Interest
8 (1) This paragraph applies where an eligible person has been notified—
(a) of an amount of the levy that is payable, and
(b) the time by which the amount must be paid.
(2) Interest is payable, at the rate mentioned in sub-paragraph (3), on any part of the amount mentioned in sub-paragraph (1)(a) which remains unpaid after the time mentioned in sub-paragraph (1)(b).
(3) The rate mentioned in this sub-paragraph is the rate equivalent to an annual percentage rate of 4% above the benchmark rate.
(4) The “benchmark rate” is—
(a) the percentage rate announced from time to time by the Monetary Policy Committee of the Bank as the official dealing rate, or
(b) where an order under section 19 (Treasury reserve powers) is in force, any equivalent percentage rate determined by the Treasury under that order.
(5) The Treasury may by regulations amend this paragraph so as to change the rate of interest payable on an unpaid amount of the levy.
Power to obtain information
9 (1) The Bank may, by written notice, require an eligible institution to provide information or documents in connection with the levy.
(2) The notice must specify—
(a) the information required;
(b) the form or manner in which the information must be provided;
(c) the time at which, or period within which, the information must be provided;
(d) the period to which the information must relate.
Regulations
10 (1) Before making regulations under this Schedule the Treasury must consult—
(a) the Bank, and
(b) such other persons who appear to the Treasury to be representative of persons who are likely to be affected by the regulations.
(2) When making regulations under this Schedule the Treasury must have regard to the financial needs of the Bank.
(3) Regulations under this Schedule are to be made by statutory instrument.
(4) Regulations under this Schedule may—
(a) make different provision for different purposes;
(b) make incidental, supplemental, consequential, saving or transitional provision.
(5) A statutory instrument containing (whether alone or with other provision) regulations under paragraphs 2(4) or 5(1) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.
(6) A statutory instrument containing only regulations under paragraph 8(5) is subject to annulment in pursuance of a resolution of either House of Parliament.
(1) The Bank of England Act 1998 is amended as follows in consequence of provision made by section 70.
(2) In section 37 (restriction on disclosure of information), for “cash ratio deposit” substitute “Bank of England levy”.
(3) In section 38 (offences in relation to supplying information to the Bank), in each of subsections (1) and (3), for “paragraph 9 of Schedule 2” substitute “paragraph 9 of Schedule 2ZA”.
(4) In section 40 (orders)—
(a) in subsection (2)—
(i) after “section 17(4) or (5),” insert “or”;
(ii) omit “paragraph 1(2) or 5 of Schedule 2, or”;
(b) in subsection (3) omit “paragraph 2(2) or 8 of Schedule 2,”.
(5) Schedule 7 (restriction on disclosure of information) is amended in accordance with subsections (6) to (8).
(6) In paragraph 1(1)(a), for “paragraph 9 of Schedule 2” substitute “paragraph 9 of Schedule 2ZA”.
(7) In paragraph 2(1)(c), for “Schedule 2” substitute “Schedule 2ZA”.
(8) In paragraph 5(a), for “Schedule 2 (payment in lieu of cash ratio deposit)” substitute “Schedule 2ZA (Bank of England levy)”.
72 Liability of payment service providers for fraudulent transactions
(1) The Payment Systems Regulator must prepare and publish a draft of a relevant requirement for reimbursement in such qualifying cases of payment orders as the Regulator considers should be eligible for reimbursement.
(2) A case is a “qualifying case” for the purposes of this section if—
(a) the case relates to a payment order executed over the Faster Payments Scheme, and
(b) the payment order was executed subsequent to fraud or dishonesty.
(3) The draft of the relevant requirement must—
(a) be published in the way appearing to the Payment Systems Regulator to be best calculated to bring it to the attention of the public;
(b) be accompanied by notice that representations about the proposed relevant requirement may be made to the Payment Systems Regulator within a specified time.
(4) The duty imposed by subsection (1) must be carried out before the end of two months beginning with the day on which this section comes into force.
(5) The Payment Systems Regulator must impose a relevant requirement, in whatever way and to whatever extent it considers appropriate, for reimbursement to be made in qualifying cases of payment orders.
(6) In complying with the duty imposed by subsection (5) the Payment Systems Regulator must have regard to any representations made in accordance with subsection (3)(b).
(7) The duty imposed by subsection (5) must be carried out before the end of 6 months beginning with the day on which this section comes into force.
(8) The duty under subsections (1) to (3), and under section 104(2) of the Financial Services (Banking Reform) Act 2013 in the application of that section to a relevant requirement imposed under subsection (5) of this section, may be satisfied by things done before (as well as after) this section comes into force.
(9) Nothing in subsections (1) to (8) is to be taken as limiting the power of the Payment Systems Regulator—
(a) to vary or revoke a relevant requirement imposed under the duty imposed by subsection (5), or
(b) to impose further relevant requirements (after that duty is complied with) in connection with reimbursement of payment orders executed subsequent to fraud or dishonesty.
(10) In subsections (1) to (9)—
“the Faster Payments Scheme” means the payment system, known as the Faster Payments Scheme, designated as a regulated payment system for the purposes of Part 5 of the Financial Services (Banking Reform) Act 2013 by order made by the Treasury in exercise of the power conferred by section 43(1) of that Act;
“relevant requirement” means a requirement imposed by or under section 54 or 55 of the Financial Services (Banking Reform) Act 2013 (or by or under a combination of those sections).
(11) In regulation 90 of the Payment Services Regulations 2017 (S.I. 2017/752) (liability of payment service providers for incorrect unique identifiers), after paragraph (5) insert—
(6) Nothing in this regulation affects the liability of a payment service provider under a relevant requirement in a case where the payment order is executed subsequent to fraud or dishonesty (and the requirements imposed by this regulation are subject to any such relevant requirements).
(7) In this regulation, a “relevant requirement” means a requirement imposed by or under—
(a) a direction given under regulation 125,
(b) a direction given under section 54 of the Financial Services (Banking Reform) Act 2013,
(c) a rule made under section 55 of that Act,
(d) an order made under section 56(3) of that Act, or
(e) a variation of an agreement under section 57(2) of that Act.
(1) The Reinsurance (Acts of Terrorism) Act 1993 is amended as follows.
(2) After section 2, insert—
Directions
2A (1) A relevant person must comply with any directions given to it by the Treasury under this section.
(2) For the purposes of this section, a “relevant person” means—
(a) a person who—
(i) has entered into arrangements to which this Act applies (see section 2(1)) (whether before or after the passing of this Act), and
(ii) has been classified as a public sector body by the Office for National Statistics (whether before or after the passing of this Act), or
(b) a group undertaking of a person falling within paragraph (a) (within the meaning of section 1161 of the Companies Act 2006).
(3) The Treasury may direct a relevant person to appoint a person to perform the functions of an accounting officer.
(4) The Treasury may give a direction to a relevant person under this subsection if the Treasury consider it necessary for the purpose of ensuring compliance with any requirements associated with the classification, as mentioned in subsection (2)(a)(ii), of a person falling within subsection (2)(a).
(5) Directions under subsection (4) may include provision about compliance with requirements relating to—
(a) auditing;
(b) accounting;
(c) budgeting;
(d) arm’s length bodies;
(e) public sector bodies.
(6) Before giving a direction under this section the Treasury must consult the relevant person to whom the Treasury intend to give a direction.
(7) A direction under this section must be accompanied by a notice that—
(a) states when the direction takes effect (see subsection (8)), and
(b) gives the Treasury’s reasons for giving the direction.
(8) A direction may, if the Treasury reasonably consider it necessary, take effect—
(a) immediately it is given to the relevant person, or
(b) on a later date specified in the direction.
(9) A direction may be given so as to have effect—
(a) for a specified period, or
(b) until the occurrence of a specified event.
(10) A direction under this section must be given in writing.
(11) A direction under this section must—
(a) be published in whatever manner the Treasury consider appropriate, and
(b) be laid before Parliament.
(12) A direction under this section may be varied or revoked by another direction under this section.
Compliance
2B (1) Compliance with a direction given under section 2A is enforceable—
(a) by injunction, or
(b) in Scotland, by interdict or by an order for specific performance under section 45 of the Court of Session Act 1988.
(2) Proceedings under subsection (1) may be brought only by the Treasury.
(1) The Banking Act 2009 is amended as follows.
(2) In section 7A (effect on other group members, financial stability in UK etc)—
(a) in subsection (1), for “(4)(b)(ii)” substitute “(4), (4B)(b),”;
(b) after subsection (1) insert—
(1A) Subsection (1) does not apply in relation to a requirement under section 3A(4) for a person to maintain (but not issue) a particular kind of bail-in liability.
(3) In section 83ZD (appointment of person to carry out investigations in particular cases), in subsection (3)(a), for “83ZN” substitute “83ZR”.
(4) In section 89H (recognition of third-country resolution actions), in subsection (7), in the definition of “third-country resolution action”—
(a) in the words before paragraph (a), for “, third country parent undertaking or a bank, building society, credit union or investment firm” substitute “or third-country parent undertaking”;
(b) in paragraph (a), omit “or a bank, building society, credit union or investment firm”.
(5) In section 182 (interpretation: “payment system”)—
(a) in subsection (1), after “arrangements” insert “, or proposed arrangements,”;
(b) in subsection (5), after “operates” insert “, or is intended to operate,”.
(6) In section 244 (immunity), in subsection (2)(c) after “2000,” insert “of its functions under, or as a result of regulations made under, the Financial Services and Markets Act 2023,”.
76 Arrangements for the investigation of complaints
(1) The Financial Services Act 2012 is amended in accordance with subsections (2) and (3).
(2) In section 84 (arrangements for the investigation of complaints)—
(a) omit the “and” at the end of subsection (1)(a);
(b) omit subsection (1)(b);
(c) after subsection (1) insert—
(1A) The Treasury must appoint an independent person (“the investigator”) to be responsible for the conduct of investigations in accordance with the complaints scheme.
;
(d) omit subsection (4);
(e) in subsection (5), in the opening words, for “regulators” substitute “Treasury”.
(3) In section 87 (investigation of complaints)—
(a) in subsection (9A), after paragraph (b) insert—
(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;
;
(b) in subsection (9B), after paragraph (e) insert—
(f) such other matters as the Treasury may from time to time direct.
;
(c) after subsection (9B) insert—
(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.
77 Politically exposed persons: money laundering and terrorist financing
(1) The Treasury must exercise the power conferred by section 49 of the Sanctions and Anti-Money Laundering Act 2018 (power of appropriate Minister to make regulations about money laundering etc) for the purpose mentioned in subsection (2).
(2) The purpose is to make provision amending Part 3 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (S.I. 2017/692) (“the 2017 Regulations”) (customer due diligence) so as to secure the result required by subsection (3).
(3) The result required by this subsection is that, where a customer is a domestic PEP, or a family member or a known close associate of a domestic PEP—
(a) the starting point for the relevant person’s assessment under regulation 35(3) of the 2017 Regulations is that the customer presents a lower level of risk than a non-domestic PEP, and
(b) if no enhanced risk factors are present, the extent of enhanced customer due diligence measures to be applied in relation to that customer is less than the extent to be applied in the case of a non-domestic PEP.
(4) In this section—
(a) “customer” includes a potential customer;
(b) “domestic PEP” means a politically exposed person entrusted with prominent public functions by the United Kingdom;
(c) “enhanced risk factors”, in relation to a customer who is a domestic PEP or a family member or a known close associate of that domestic PEP, mean risk factors other than the customer’s position as a domestic PEP or as a family member or known close associate of that domestic PEP;
(d) “non-domestic PEP” means a politically exposed person who is not a domestic PEP;
(e) the following terms have the same meaning as in regulation 35(12) of the 2017 Regulations—
“politically exposed person” or “PEP”;
“family member”;
“known close associate”.
(5) Section 55 of the Sanctions and Anti-Money Laundering Act 2018 (Parliamentary procedure for regulations) does not apply to regulations made in compliance with the duty imposed by subsection (1).
(6) Regulations made in compliance with the duty imposed by subsection (1)—
(a) are subject to the negative procedure, and
(b) must be laid before Parliament in accordance with paragraph (a) before the end of 12 months starting with the day on which this section comes into force.
(7) The Treasury must, before the end of 6 months starting with the day on which this section comes into force, lay before Parliament a statement setting out what progress has been made towards making the regulations in compliance with the duty imposed by subsection (1).
(8) The duty in subsection (7) does not apply where the regulations have been laid before Parliament in accordance with subsection (6)(a) before the end of 6 months starting with the day on which this section comes into force.
78 Politically exposed persons: review of guidance
(1) The FCA must review its guidance on politically exposed persons (“PEPs”) given under section 139A of FSMA 2000 and in compliance with the requirements under regulation 48 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (S.I. 2017/692) (“the 2017 Regulations”).
(2) The review required under subsection (1) must include—
(a) an assessment of the extent to which the guidance is followed by those persons to whom it is given under regulation 48 of the 2017 Regulations, and
(b) in the light of that assessment, consideration as to whether the guidance remains appropriate or whether it should be revised.
(3) The FCA must—
(a) before the end of 3 months beginning with the day on which this section comes into force, publish an update on the FCA’s plan for the review required under subsection (1), and
(b) before the end of 12 months beginning with the day on which this section comes into force—
(i) publish the conclusions of the review, and
(ii) where the FCA concludes that the guidance should be revised, publish draft revised guidance for consultation.
(4) Publication as required by subsection (3) must be in the way appearing to the FCA to be best calculated to bring the publication to the attention of persons likely to be affected by it.
(5) The FCA is not required under this section to publish any information whose publication would be against the public interest.
(6) In this section—
(a) “domestic PEP” means a politically exposed person entrusted with prominent public functions by the United Kingdom;
(b) the following terms have the same meaning as in regulation 35(12) of the 2017 Regulations—
“politically exposed person” or “PEP”;
“family member”;
“known close associate”.
(1) The Treasury must carry out a review to assess the extent to which regulation of the UK financial system is adequate for the purpose of eliminating the financing of the use of prohibited forest risk commodities.
(2) In subsection (1) the reference to “prohibited” forest risk commodities is a reference to forest risk commodities, or products derived from forest risk commodities, the use of which is prohibited by paragraph 2 of Schedule 17 to the Environment Act 2021.
(3) Having carried out a review the Treasury must lay before Parliament, and publish, a report stating—
(a) the conclusions of the review, and
(b) the steps the Treasury consider it appropriate to take to improve the effectiveness of the regulation of the UK financial system for the purpose stated in subsection (1).
(4) Subsection (3) must be complied with before the end of 9 months beginning with the day on which the first regulations under paragraph 1 of Schedule 17 to the Environment Act 2021 are made.
(5) In this section—
“forest risk commodities” has the same meaning as in Schedule 17 to the Environment Act 2021;
“UK financial system” has the same meaning as in FSMA 2000 (see section 1I of that Act).