138IB Statement of policy in relation to cost benefit analyses
(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.
(1) Before making any rules, the PRA must—
(a) consult the FCA, and
(b) after doing so, publish a draft of the proposed rules in the way appearing to the PRA to be best calculated to bring them to the attention of the public.
(2) The draft must be accompanied by—
(a) a cost benefit analysis,
(b) an explanation of the purpose of the proposed rules,
(ba) an explanation of the ways in which having regard to specified matters under section 138EA(2) has affected the proposed rules,
(c) any statement prepared under section 138K(2),
(d) an explanation of the PRA's reasons for believing that making the proposed rules is compatible with its duties under—
(i) section 2B(1) or, as the case requires, section 2C(1) or 2D(3), and
(ii) section 2H, and
(e) notice that representations about the proposals may be made to the PRA within a specified time.
(3) Before making the proposed rules, the PRA must have regard to any representations made to it in accordance with subsection (2)(e).
(4) If the PRA makes the proposed rules, it must publish an account, in general terms, of—
(a) the representations made to it in accordance with subsection (2)(e), and
(b) its response to them.
(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.
(5) If the rules differ from the draft published under subsection (1)(b) in a way which is, in the opinion of the PRA, significant the PRA must publish—
(a) details of the difference (in addition to complying with subsection (4)) together with a cost benefit analysis, and
(b) any statement prepared under section 138K(4).
(6) The requirements to carry out a cost benefit analysis under this section do not apply in relation to rules made under—
(a) section 136(2);
(b) subsection (1) of section 213 as a result of subsection (4) of that section;
(c) section 234;
(d) paragraph 31 of Schedule 1ZB;
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7) “Cost benefit analysis” means—
(a) an analysis of the costs together with an analysis of the benefits that will arise—
(i) if the proposed rules are made, or
(ii) if subsection (5) applies, from the rules that have been made, and
(b) subject to subsection (8), an estimate of those costs and of those benefits.
(8) If, in the opinion of the PRA—
(a) the costs or benefits referred to in subsection (7) cannot reasonably be estimated, or
(b) it is not reasonably practicable to produce an estimate,
the cost benefit analysis need not estimate them, but must include a statement of the PRA's opinion and an explanation of it.
(8A) The requirement to provide the explanation referred to in subsection (2)(ba) does not apply in relation to any rules if—
(a) the PRA considers that the delay involved in complying with that requirement would—
(i) be prejudicial to the safety and soundness of PRA-authorised persons, or
(ii) in a case where section 2C applies, be prejudicial to securing the appropriate degree of protection for policyholders, or
(b) the rules change existing rules and the changes consist of, or include, changes which, in the PRA’s opinion, are not material.
(8B) Where an explanation is not provided by virtue of subsection (8A)(b), the draft of the rules must be accompanied by a statement of the PRA’s opinion.
(9) The PRA may charge a reasonable fee for providing a person with a copy of a draft published under subsection (1)(b).
(10) This section is subject to sections 138L and 144E(3).
(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.
138JB Statement of policy in relation to cost benefit analyses
(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) Subsection (2) applies where a regulator proposes to make a rule (“the proposed rule”) which would apply both to—
(a) authorised persons which are mutual societies, and
(b) other authorised persons.
(2) The regulator must prepare a statement setting out—
(a) its opinion whether or not the impact of the proposed rule on persons within subsection (1)(a) will be significantly different from its impact on persons within subsection (1)(b), and
(b) if so, details of the difference.
(3) Subsection (4) applies where a regulator makes a rule which—
(a) applies both to—
(i) authorised persons which are mutual societies, and
(ii) other authorised persons, and
(b) differs from the draft of the proposed rule published under section 138I(1)(b) or section 138J(1)(b) (as the case may be).
(4) The regulator must prepare a statement setting out—
(a) its opinion whether or not the impact of the rule is significantly different from the impact of the proposed rule on—
(i) the persons within subsection (3)(a)(i), and
(ii) those persons as compared with persons within subsection (3)(a)(ii), and
(b) if so, details of the difference.
(5) A “mutual society” is—
(a) a building society within the meaning of the Building Societies Act 1986;
(b) a friendly society within the meaning of the Friendly Societies Act 1992;
(c) a registered society within the meaning of the Co-operative and Community Benefit Societies Act 2014;
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7) This section is subject to section 144E(3).
(1) Sections 138I(1)(b) and (2) to (5) and 138K do not apply in relation to rules made by the FCA if the FCA considers that the delay involved in complying with them would be prejudicial to the interests of consumers, as defined in section 425A.
(2) Sections 138J(1)(b) and (2) to (5) and 138K do not apply in relation to rules made by the PRA if the PRA considers that the delay involved in complying with them would—
(a) be prejudicial to the safety and soundness of PRA-authorised persons, or
(b) in a case where section 2C applies, be prejudicial to securing the appropriate degree of protection for policyholders.
(3) The provisions listed in subsection (4) do not apply if the regulator concerned considers that, making the appropriate comparison—
(a) there will be no increase in costs, or
(b) there will be an increase in costs but that increase will be of minimal significance.
(4) Those provisions are—
(a) subsections (2)(a) and (5)(a) of section 138I;
(b) subsections (2)(a) and (5)(a) of section 138J.
(5) The “appropriate comparison” means—
(a) in relation to section 138I(2)(a) or 138J(2)(a), a comparison between the overall position if the rules are made and the overall position if the rules are not made;
(b) in relation to section 138I(5)(a) or 138J(5)(a), a comparison between the overall position after the making of the rules and the overall position before they were made.
138M Consultation: exemptions for temporary product intervention rules
(1) Sections 138I(1)(b) and (2) to (5) and 138K do not apply in relation to product intervention rules made by the FCA if it considers that it is necessary or expedient not to comply with them for the purpose of advancing—
(a) the consumer protection objective or the competition objective, or
(b) if an order under section 137D(1)(b) is in force, the integrity objective.
(2) Any rules made as a result of subsection (1) (“temporary product intervention rules”) are to cease to have effect at the end of the period specified in the rules.
(3) The longest period that may be specified is the period of 12 months beginning with the day on which the rules come into force.
(4) Nothing in subsection (2) prevents the FCA from revoking temporary product intervention rules before the end of the period mentioned there.
(5) If the FCA has made temporary product intervention rules (“the initial rules”), it may not make further temporary product intervention rules containing the same, or substantially the same, provision as that contained in the initial rules until the prohibited period has ended.
(6) “The prohibited period” means the period of 12 months beginning with the day on which the period mentioned in subsection (2) ends (whether or not the initial rules have been revoked before the end of the period mentioned there).
138N Temporary product intervention rules: statement of policy
(1) The FCA must prepare and issue a statement of its policy with respect to the making of temporary product intervention rules.
(2) The FCA may at any time alter or replace a statement issued under this section.
(3) If a statement issued under this section is altered or replaced, the FCA must issue the altered or replacement statement.
(4) The FCA must, without delay, give the Treasury a copy of any statement which it publishes under this section.
(5) A statement issued under this section must be published by the FCA in the way appearing to the FCA to be best calculated to bring it to the attention of the public.
(6) The FCA may charge a reasonable fee for providing a person with a copy of the statement.
138O Statement of policy under section 138N: procedure
(1) Before issuing a statement under section 138N, the FCA must publish a draft of the proposed statement in the way appearing to the FCA to be best calculated to bring it to the attention of the public.
(2) The draft must be accompanied by notice that representations about the proposal may be made to the FCA within a specified time.
(3) Before issuing the proposed statement, the FCA must have regard to any representations made to it in accordance with subsection (2).
(4) If the FCA issues the proposed statement it must publish an account, in general terms, of—
(a) the representations made to it in accordance with subsection (2), and
(b) its response to them.
(5) If the statement differs from the draft published under subsection (1) in a way which is, in the opinion of the FCA, significant, the FCA must (in addition to complying with subsection (4)) publish details of the difference.
(6) The FCA may charge a reasonable fee for providing a person with a copy of a draft published under subsection (1).
(7) This section also applies to a proposal to alter or replace a statement.
(1) This Chapter applies where a power for the FCA, the PRA, the Bank of England, or any combination of them to make technical standards is substituted for the power of an EU entity to make EU tertiary legislation (“the original EU power”) by regulations made under section 8 of the European Union (Withdrawal) Act 2018.
(2) The power to make technical standards includes power to modify, amend or revoke—
(a) any technical standards made by the regulator under that power;
(b) any EU tertiary legislation made by an EU entity under the original EU power which forms part of assimilated law.
(3) Where power to make a technical standard for the same purposes (as set out in the provision creating the power) and applying to the same persons or class of persons has been given to more than one regulator, no regulator may exercise the power without the consent of the other regulator or regulators.
(4) Before a regulator makes a technical standard in which another regulator has an interest, it must consult the other regulator.
(5) For the purposes of subsection (4)—
(a) the PRA has an interest in a technical standard which—
(i) applies to PRA-authorised persons or other persons connected to them, or
(ii) may affect the exercise of the PRA’s functions under or by virtue of this Act or under assimilated law;
(b) the FCA has an interest in all technical standards which a regulator or the Payment Systems Regulator has power to amend;
(c) the Bank of England has an interest in technical standards which—
(i) apply to central counterparties, to financial counterparties or non-financial counterparties within the meaning of the EMIR regulation or to central securities depositories, or
(ii) may affect the exercise of the Bank’s functions under or by virtue of this Act, the Banking Act 2009 or assimilated law.
(6) For the purposes of this Chapter—
(a) “EU tertiary legislation” has the meaning given in section 20 of the European Union (Withdrawal) Act 2018;
(b) “regulator” means the FCA, the PRA or the Bank of England;
(c) a person is connected with another person in the circumstances set out in section 165(11).
(d) “the EMIR regulation” has the meaning given in section 313.
(1) The power to make technical standards is to be exercised by the regulator by making an instrument under this section (a “standards instrument”).
(2) A standards instrument must specify the provision under which the instrument is being made.
(3) To the extent that a standards instrument does not comply with subsection (2), it is void.
(4) A standards instrument must be published by the regulator making the instrument in the way appearing to the regulator to be best calculated to bring it to the attention of the public.
(5) The Treasury must lay before Parliament a copy of each standards instrument made under this section.
(6) The regulator making the instrument may charge a reasonable fee for providing a person with a copy of a standards instrument.
(1) A standards instrument may be made only if it has been approved by the Treasury.
(2) The Treasury may refuse to approve a standards instrument if subsection (3) or (5) applies.
(3) This subsection applies if it appears to the Treasury that the instrument would—
(a) have implications for public funds (within the meaning of section 78(2) of the Banking Act 2009); or
(b) prejudice any current or proposed negotiations for an international agreement between the United Kingdom and one or more other countries, international organisations or institutions.
(4) For the purposes of subsection (3), “international organisations” includes the European Union.
(5) This subsection applies if it appears to the Treasury that they may direct the regulator not to make the standards instrument under section 410 (international obligations).
(6) The Treasury must notify the regulator in writing whether or not they approve a standards instrument within four weeks after the day on which that instrument is submitted to the Treasury for approval (“the relevant period”).
(7) Provision of a draft standards instrument to the Treasury for consultation does not amount to submission of the instrument for approval.
(8) If the Treasury do not approve the instrument, they must—
(a) set out in the notice given under subsection (6) the Treasury’s reasons for not approving the instrument;
(b) lay before Parliament—
(i) a copy of that notice;
(ii) a copy of any statement made by the regulator as to its reasons for wishing to make the instrument.
(9) If the Treasury do not give notice under subsection (6) before the end of the relevant period, the Treasury is deemed to have approved the standards instrument.
(1) The sections listed in subsection (2) apply, subject to the modifications specified in that subsection, to—
(a) technical standards made by the FCA or the PRA as they apply to rules made by the FCA or the PRA;
(b) technical standards made by the Bank of England, as they apply to rules made by the Bank under this Act in accordance with paragraph 10(1), (3) and (4) of Schedule 17A to this Act.
(2) The sections referred to in subsection (1) are—
(a) section 137T (general supplementary powers), as if—
(i) the reference in paragraph (a) to authorised persons were a reference to persons,
(ii) the reference in paragraph (b) to rules included a reference to technical standards;
(b) section 138C (evidential provisions);
(c) section 138E (limit on effect of contravening rules);
(d) section 138F (notification of rules);
(e) section 138H (verification of rules), treating the reference in subsection (2)(c) to section 138G(4) of the Act as a reference to section 138Q(4);
(f) section 138I (consultation by the FCA), as if—
(i) subsection (1)(a) were omitted, and
(ii) references to making rules were references to submitting a standards instrument to the Treasury for approval;
(g) section 138J (consultation by the PRA), as if—
(i) subsection (1)(a) were omitted, and
(ii) references to making rules were references to submitting a standards instrument to the Treasury for approval;
(h) section 138K (consultation: mutual societies);
(i) section 138L (consultation: general exemptions), as if—
(i) in subsection (1), for “425A” there were substituted “1G”;
(ii) references to making rules were references to submitting a standards instrument to the Treasury for approval.
(1) The FCA may give guidance consisting of such information and advice as it considers appropriate—
(a) with respect to the operation of specified parts of this Act and of any rules made by the FCA;
(b) with respect to any other matter relating to functions of the FCA;
(c) with respect to any other matters about which it appears to the FCA to be desirable to give information or advice.
(1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) The FCA may give financial or other assistance to persons giving information or advice of a kind which the FCA could give under this section.
(3) Subsection (5) applies where the FCA proposes to give guidance to FCA-regulated persons generally, or to a class of FCA-regulated persons, in relation to rules to which those persons are subject.
(4) Subsection (5) also applies in relation to guidance which the FCA proposes to give to persons generally, or to a class of person, in relation to its functions under the Short Selling Regulations 2025 or the market abuse regulation , any assimilated direct legislation originally made under the market abuse regulation or any subordinate legislation (within the meaning of the Interpretation Act 1978) made on or after IP completion day under the market abuse regulation.
(5) Where this subsection applies, subsections (1), (2)(e) and (3) of section 138I (consultation) apply to the proposed guidance as they apply to proposed rules, unless the FCA considers that the delay in complying with those provisions would be prejudicial to the interests of consumers.
(6) The FCA may—
(a) publish its guidance,
(b) offer copies of its published guidance for sale at a reasonable price, and
(c) if it gives guidance in response to a request made by any person, make a reasonable charge for that guidance.
(7) In this Chapter, references to guidance given by the FCA include references to any recommendations made by the FCA to FCA-regulated persons generally, or to any class of FCA-regulated person.
(8) “Consumers” has the meaning given in section 1G.
(9) “FCA-regulated person” means—
(a) an authorised person, or
(b) any person who is otherwise subject to rules made by the FCA.
(1) On giving any general guidance, the FCA must give written notice to the Treasury without delay.
(2) If the FCA alters any of its guidance, it must give written notice to the Treasury without delay.
(3) The notice under subsection (2) must include details of the alteration.
(4) If the FCA revokes any of its general guidance, it must give written notice to the Treasury without delay.
(5) “General guidance” means guidance given by the FCA under section 139A which is—
(a) given to persons generally, to FCA-regulated persons generally or to a class of FCA-regulated person,
(b) intended to have continuing effect, and
(c) given in writing or other legible form.
(6) “FCA-regulated person” has the same meaning as in section 139A.
(1) In this Chapter—
“the CMA” means the Competition and Markets Authority.
“market in the United Kingdom” includes—
so far as it operates in the United Kingdom or a part of the United Kingdom, any market which operates there and in another country or territory or in a part of another country or territory, and
any market which operates only in a part of the United Kingdom;
...
“practices”, in relation to each regulator, means practices adopted by that regulator in the exercise of functions under this Act;
“regulating provisions” means—
in relation to the FCA, any—
rules of the FCA;
general guidance (as defined by section 139B(5) ...);
...
...
...
...
in relation to the PRA, any—
rules of the PRA;
...
...
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) For the purposes of this Chapter, any reference to a feature of a market in the United Kingdom for goods or services is to be read as a reference to—
(a) the structure of the market concerned or any aspect of that structure,
(b) any conduct (whether or not in the market concerned) of one or more than one person who supplies or acquires goods or services in the market concerned, or
(c) any conduct relating to the market concerned of customers of any person who supplies or acquires goods or services.
(4) In subsection (3) “conduct” includes any failure to act (whether or not intentional) and any other unintentional conduct.
140B Advice about effect of regulating provision or practice
(1) In this Chapter, any reference to the giving of “section 140B advice” to a regulator is to be read in accordance with this section.
(2) The CMA gives “section 140B advice” to a regulator if—
(a) it gives advice to the regulator under section 7 of the Enterprise Act 2002 (provision of competition advice to Ministers etc) and the advice states that in the opinion of the CMA one or more of the things mentioned in subsection (4) may cause, or contribute to, the effect mentioned in subsection (5), or might be expected to do so in the future;
(b) a report published by it under section 136 of the Enterprise Act 2002 (investigations and reports on market investigation reference) contains—
(i) a decision that one or more of the things mentioned in subsection (4) may cause, or contribute to, the effect mentioned in subsection (5), and
(ii) a recommendation that any action should be taken by that regulator.
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) Those things are—
(a) a regulating provision or practice of the regulator,
(b) two or more regulating provisions or practices (of that regulator or of both regulators) taken together,
(c) a particular combination of regulating provision or practices (of that regulator or of both regulators), or
(d) a feature, or combination of features, of a one or more markets in the United Kingdom that could be dealt with by regulating provision or practices (of that regulator or of both regulators).
(5) That effect is the prevention, restriction or distortion of competition in connection with the supply or acquisition of any goods or services in the United Kingdom or a part of the United Kingdom.
(1) Where the CMA is deciding whether to exercise its power under section 7 of the Enterprise Act 2002 to give advice which, if given, would be section 140B advice, section 174 of that Act has effect as if—
(a) for subsection (1) there were substituted—
(1) For the purposes of this section, a permitted purpose is assisting the CMA in deciding whether to exercise its power under section 7 to give advice which for the purposes of Chapter 4 of Part 9A of the Financial Services and Markets Act 2000 would be section 140B advice.
, and
(b) subsection (9A) were omitted.
(2) Where the CMA has exercised any of its powers under section 174 of the Enterprise Act 2002, as applied by subsection (1), section 174B of that Act has effect as if, after subsection (9), there were inserted—
(10) Where the section 174 power is exercised for the purpose of assisting the CMA in deciding whether to exercise its power under section 7 to give advice which for the purposes of Chapter 4 of Part 9A of the Financial Services and Markets Act 2000 would be section 140B advice, the relevant day is the day when the CMA publishes that advice.
Where the giving of advice under section 7 of the Enterprise Act 2002 to either regulator constitutes the giving of section 140B advice, the CMA must publish that advice in such manner as it thinks fit.
(1) Where the publication of a report of the CMA under section 142 of the Enterprise Act 2002 constitutes the giving of section 140B advice to either regulator, the CMA must give a copy of the report to that regulator.
(2) The day on which the copy is given is the day on which the regulator is to be taken to receive the section 140B advice.
(1) A regulator must, within 90 days after the day on which it receives section 140B advice, publish a response stating how it proposes to deal with the advice and in particular—
(a) whether it has decided to take any action, or to take no action, in response to the advice,
(b) if it has decided to take action, what action it proposes to take, and
(c) its reasons for its proposals.
(2) Publication is to be in such manner as the regulator thinks fit.
(1) This section applies where—
(a) the CMA has given section 140B advice and the regulator has published a response under section 140G, and
(b) the CMA remains of the opinion that one or more of the things mentioned in section 140B(4) may cause or contribute to, the effect mentioned in section 140B(5).
(2) The CMA may refer the section 140B advice to the Treasury by sending the Treasury—
(a) a copy of the section 140B advice and of the response, and
(b) a request to consider the advice and the response.
(3) In referring the section 140B advice, the CMA may give advice to the Treasury as to what action, if any, ought to be taken by the regulator.
(4) If section 140B advice is referred to them, the Treasury may give a direction to the regulator to which the advice was given requiring the regulator to take such action as may be specified in the direction.
(5) In considering whether to give a direction and, if so, what action to specify, the Treasury must have regard to—
(a) any advice the CMA has given under subsection (3),
(b) any action which the section 140B advice suggests that the regulator should take, and
(c) the response of the regulator to the section 140B advice.
(6) The direction may not require the regulator to do anything that it has no power to do, but the existence of the direction is relevant to the exercise of any discretion conferred on the regulator.
(7) Before giving a direction under this section, the Treasury must consult the regulator to which it is to be given.
(8) If the Treasury give a direction under this section they must—
(a) publish in such manner as they think fit a statement giving details of the direction and of their reasons for giving it, and
(b) lay a copy of the statement before Parliament.
141A Power to make consequential amendments of references to rules etc.
(1) This section applies if—
(a) a provision of primary or subordinate legislation (whenever passed or made) contains a reference (however expressed) to rules of either regulator or to guidance of the FCA,
(b) it appears to the Treasury or the Secretary of State that the reference requires amendment in consequence of the exercise by that regulator of its power under this Part to make, alter or revoke its rules or the exercise by the FCA of its power to make, alter or revoke its guidance.
(2) The Treasury or the Secretary of State may by order make such amendment of the legislation referred to in subsection (1)(a) as appears to them to be necessary or expedient in consequence of the exercise by the regulator of the power mentioned in subsection (1)(b).
(3) The power conferred by subsection (2) includes power—
(a) to replace a reference to the rules of one regulator with a reference to the rules of the other regulator or to the rules of both regulators;
(b) to replace a reference to the rules of both regulators with a reference to the rules of one regulator.
(4) In subsection (1)(a) “subordinate legislation” does not include rules of either regulator.
(5) A regulator's power under Part 2 of the Powers Regulations to amend its rules is treated for the purposes of this section as a power under this Part; and for this purpose “the Powers Regulations” means the Financial Regulators' Powers (Technical Standards etc.) (Amendment etc.) (EU Exit) Regulations 2018 (S.I. 2018/1115).
(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,
assimilated direct 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.
(1) In this Act “ring-fenced body” means a UK institution which carries on one or more core activities (see section 142B) in relation to which it has a Part 4A permission.
(2) But “ring-fenced body” does not include—
(a) a building society within the meaning of the Building Societies Act 1986, or
(b) a UK institution of a class exempted by order made by the Treasury.
(3) An order under subsection (2)(b) may be made in relation to a class of UK institution only if the Treasury are of the opinion that the exemption conferred by the order would not be likely to have a significant adverse effect on the continuity of the provision in the United Kingdom of core services.
(4) Subject to that, in deciding whether and, if so, how to exercise their powers under subsection (2)(b), the Treasury must have regard to the desirability of minimising any adverse effect that the ring-fencing provisions might be expected to have on competition in the market for services provided in the course of carrying on core activities, including any adverse effect on the ease with which new entrants can enter the market.
(5) In subsection (4) “the ring-fencing provisions” means ring-fencing rules and the duty imposed as a result of section 142G.
(6) An order under subsection (2)(b) may provide for the exemption to be subject to conditions.
(7) In this section “UK institution” means a body corporate incorporated in the United Kingdom.
(1) References in this Act to a “core activity” are to be read in accordance with this section.
(2) The regulated activity of accepting deposits (whether carried on in the United Kingdom or elsewhere) is a core activity unless it is carried on in circumstances specified by the Treasury by order.
(3) An order under subsection (2) may be made only if the Treasury are of the opinion that it is not necessary for either of the following purposes that the regulated activity of accepting deposits should be a core activity when carried on in the specified circumstances.
(4) Those purposes are—
(a) to secure an appropriate degree of protection for the depositors concerned, or
(b) to protect the continuity of the provision in the United Kingdom of services provided in the course of carrying on the regulated activity of accepting deposits.
(5) The Treasury may by order provide for a regulated activity other than that of accepting deposits to be a core activity, either generally or when carried on in circumstances specified in the order.
(6) An order under subsection (5) may be made only if the Treasury are of the opinion—
(a) that an interruption of the provision of services provided in the United Kingdom in the carrying on of the regulated activity concerned could adversely affect the stability of the UK financial system or of a significant part of that system, and
(b) that the continuity of the provision of those services can more effectively be protected by treating the activity as a core activity.
(1) References in this Act to “core services” are to be read in accordance with this section.
(2) The following are core services—
(a) facilities for the accepting of deposits or other payments into an account which is provided in the course of carrying on the core activity of accepting deposits;
(b) facilities for withdrawing money or making payments from such an account;
(c) overdraft facilities in connection with such an account.
(3) The Treasury may by order provide that any other specified services provided in the course of carrying on the core activity of accepting deposits are also core services.
(4) If an order under section 142B(5) provides for an activity other than that of accepting deposits to be a core activity, the Treasury must by order provide that specified services provided in the course of carrying on that activity are core services.
(5) The services specified by order under subsection (4) must be services in relation to which the Treasury are of the opinion mentioned in section 142B(6)(a).
(1) References in this Act to an “excluded activity” are to be read in accordance with this section.
(2) The regulated activity of dealing in investments as principal (whether carried on in the United Kingdom or elsewhere) is an excluded activity unless it is carried on in circumstances specified by the Treasury by order.
(3) An order under subsection (2) may be made only if the Treasury are of the opinion that allowing ring-fenced bodies to deal in investments as principal in the specified circumstances would not be likely to result in any significant adverse effect on the continuity of the provision in the United Kingdom of core services.
(4) The Treasury may by order provide for an activity other than the regulated activity of dealing in investments as principal to be an excluded activity, either generally or when carried on in circumstances specified in the order.
(5) An activity to which an order under subsection (4) relates—
(a) need not be a regulated activity, and
(b) may be an activity carried on in the United Kingdom or elsewhere.
(6) In deciding whether to make an order under subsection (4) in relation to any activity, the Treasury must—
(a) have regard to the risks to which a ring-fenced body would be exposed if it carried on the activity concerned, and
(b) consider whether the carrying on of that activity by a ring-fenced body would make it more likely that the failure of the body would have an adverse effect on the continuity of the provision in the United Kingdom of core services.
(7) An order under subsection (4) may be made only if the Treasury are of the opinion that the making of the order is necessary or expedient for the purpose of protecting the continuity of the provision in the United Kingdom of core services.
(1) The Treasury may by order prohibit ring-fenced bodies from—
(a) entering into transactions of a specified kind or with persons falling within a specified class;
(b) establishing or maintaining a branch in a specified country or territory;
(c) holding in specified circumstances shares or voting power in companies of a specified description.
(2) In deciding whether to make an order under this section imposing a prohibition, the Treasury must—
(a) have regard to the risks to which a ring-fenced body would be exposed if it did the thing to which the prohibition relates, and
(b) consider whether the doing of that thing by a ring-fenced body would make it more likely that the failure of the body would have an adverse effect on the continuity of the provision in the United Kingdom of core services.
(3) An order under this section may be made only if the Treasury are of the opinion that the making of the order is necessary or expedient for the purpose of protecting the continuity of the provision in the United Kingdom of core services.
(4) An order under this section may in particular—
(a) provide for any prohibition to be subject to exemptions specified in the order;
(b) provide for any exemption to be subject to conditions specified in the order.
142F Orders under section 142A, 142B, 142D or 142E
(1) An order made under section 142A, 142B, 142D or 142E may—
(a) authorise or require the making of rules by a regulator for the purposes of, or for purposes connected with, any provision of the order;
(b) authorise the making of other instruments by a regulator for the purposes of, or for purposes connected with, any provision of the order;
(c) refer to a publication issued by a regulator, another body in the United Kingdom or an international organisation, as the publication has effect from time to time.
(2) If the order confers powers on a regulator or authorises or requires the making of rules or other instruments by a regulator, the order may also—
(a) impose conditions on the exercise of any power conferred on the regulator;
(b) impose consultation requirements on the regulator;
(c) make the exercise of a power by the regulator subject to the consent of the Treasury.
142G Ring-fenced bodies not to carry on excluded activities or contravene prohibitions
(1) A ring-fenced body which—
(a) carries on an excluded activity or purports to do so, or
(b) contravenes any provision of an order under section 142E,
is to be taken to have contravened a requirement imposed on the body by the appropriate regulator under this Act.
(2) The contravention does not—
(a) make a person guilty of an offence;
(b) make a transaction void or unenforceable;
(c) (subject to subsection (3)) give rise to any right of action for breach of statutory duty.
(3) In such cases as the Treasury may specify by order, the contravention is actionable at the suit of a person who suffers loss as a result of the contravention, subject to the defences and other incidents applying to actions for breach of statutory duty.
(4) In this section “the appropriate regulator” means—
(a) in relation to a ring-fenced body which is a PRA-authorised person, the PRA;
(b) in relation to any other ring-fenced body, the FCA.
(1) In the exercise of its power to make general rules, the appropriate regulator must in particular make rules—
(a) requiring a ring-fenced body to make arrangements to ensure the effective provision to the ring-fenced body of services and facilities that it requires in relation to the carrying on of a core activity, and
(b) making provision for the group ring-fencing purposes applying to ring-fenced bodies and to authorised persons who are members of a ring-fenced body's group.
(2) Section 142E(1)(c) does not affect the power of the appropriate regulator to make general rules imposing restrictions on the extent of the shares or voting power that a ring-fenced body may hold in another company, except where a restriction on the extent of the shares or voting power that the ring-fenced body may hold in the company is imposed by order under section 142E(1)(c).
(3) General rules that are required by this section or make provision falling within subsection (2) are in this Act referred to as “ring-fencing rules”.
(4) The “group ring-fencing purposes” are—
(a) ensuring as far as reasonably practicable that the carrying on of core activities by a ring-fenced body is not adversely affected by the acts or omissions of other members of its group;
(b) ensuring as far as reasonably practicable that in carrying on its business a ring-fenced body—
(i) is able to take decisions independently of other members of its group, and
(ii) does not depend on resources which are provided by a member of its group and which would cease to be available to the ring-fenced body in the event of the insolvency of the other member;
(c) ensuring as far as reasonably practicable that the ring-fenced body would be able to continue to carry on core activities in the event of the insolvency of one or more other members of its group.
(5) Ring-fencing rules made for the group ring-fencing purposes must include—
(a) provision restricting the power of a ring-fenced body to enter into contracts with other members of its group otherwise than on arm's length terms;
(b) provision restricting the payments that a ring-fenced body may make (by way of dividend or otherwise) to other members of its group;
(c) provision requiring the disclosure to the appropriate regulator of information relating to transactions between a ring-fenced body and other members of its group;
(d) provision requiring a ring-fenced body to ensure that its board of directors (or if there is no such board, the equivalent management body) includes to a specified extent—
(i) members who are treated by the rules as being independent of other members of the ring-fenced body's group,
(ii) members who are treated by the rules as being independent of the ring-fenced body itself, and
(iii) non-executive members;
(e) provision requiring a ring-fenced body to act in accordance with a remuneration policy meeting specified requirements;
(f) provision requiring a ring-fenced body to act in accordance with a human resources policy meeting specified requirements;
(g) provision requiring arrangements made by the ring-fenced body for the identification, monitoring and management of risk to meet specified requirements;
(h) such other provision as the appropriate regulator considers necessary or expedient for any of the purposes in subsection (4).
(6) The reference in subsection (5)(e) to a remuneration policy is a reference to a policy about the remuneration of officers, employees and other persons who (in each case) are of a specified description.
(7) The reference in subsection (5)(f) to a human resources policy is a reference to a policy about the appointment and management of officers, employees and other persons who (in each case) are of a specified description.
(8) In this section—
“the appropriate regulator” means—
in relation to a PRA-authorised person, the PRA;
in relation to any other authorised person, the FCA;
“shares” has the meaning given in section 422;
“specified” means specified in the rules;
“voting power” has the meaning given in section 422.
142I Powers of Treasury in relation to ring-fencing rules
(1) The Treasury may by order require the appropriate regulator, as defined in section 142H(8), to include (or not to include) in ring-fencing rules specified provision relating to—
(a) any of the matters mentioned in section 142H(5)(a) to (g), or
(b) any other specified matter.
(2) The power to make an order under this section is exercisable only if the Treasury consider it necessary or expedient to do so—
(a) for any of the group ring-fencing purposes as defined in section 142H(4), or
(b) otherwise for securing the independence of ring-fenced bodies from other members of their groups.
(3) “Specified” means specified in the order.
(1) The PRA must carry out reviews of its ring-fencing rules and of any rules made by it under section 192JA (rules applying to parent undertakings of ring-fenced bodies).
(2) The first review must be completed before the end of the period of 5 years beginning with the day on which the first ring-fencing rules come into force.
(3) Subsequent reviews must be completed before the end of the period of 5 years beginning with the day on which the previous review was completed.
(4) The PRA must give the Treasury a report of each review.
(5) The Treasury must lay a copy of the report before Parliament.
(6) The PRA must publish the report in such manner as it thinks fit.
(7) If (because any ring-fenced body is not a PRA-authorised person) section 142H has the effect of requiring the FCA to make ring-fencing rules, subsections (1) to (6) apply to the FCA as they apply to the PRA.
142K Cases in which group restructuring powers become exercisable
(1) The appropriate regulator may exercise the group restructuring powers only if it is satisfied that one or more of Conditions A to D is met in relation to a ring-fenced body that is a member of a group.
(2) Condition A is that the carrying on of core activities by the ring-fenced body is being adversely affected by the acts or omissions of other members of its group.
(3) Condition B is that in carrying on its business the ring-fenced body—
(a) is unable to take decisions independently of other members of its group, or
(b) depends on resources which are provided by a member of its group and which would cease to be available in the event of the insolvency of the other member.
(4) Condition C is that in the event of the insolvency of one or more other members of its group the ring-fenced body would be unable to continue to carry on the core activities carried on by it.
(5) Condition D is that the ring-fenced body or another member of its group has engaged, or is engaged, in conduct which is having, or would apart from this section be likely to have, an adverse effect on the advancement by the appropriate regulator—
(a) in the case of the PRA, of the objective in section 2B(3)(c), or
(b) in the case of the FCA, of the continuity objective.
(6) The appropriate regulator may not exercise the group restructuring powers in relation to any person if—
(a) either regulator has previously exercised the group restructuring powers in relation to that person, and
(b) the decision notice in relation to the current exercise is given before the second anniversary of the day on which the decision notice in relation to the previous exercise was given.
(7) In this section and sections 142L to 142Q “the appropriate regulator” means—
(a) where the ring-fenced body is a PRA-authorised person, the PRA;
(b) where it is not, the FCA.
(1) In this Part “the group restructuring powers” means one or more of the powers conferred by this section.
(2) Where the appropriate regulator is the PRA, the powers conferred by this section are as follows—
(a) in relation to the ring-fenced body, power to impose a requirement on the ring-fenced body requiring it to take any of the steps mentioned in subsection (5),
(b) in relation to any member of the ring-fenced body's group which is a PRA-authorised person, power to impose a requirement on the PRA-authorised person requiring it to take any of the steps mentioned in subsection (6),
(c) in relation to any member of the ring-fenced body's group which is an authorised person but not a PRA-authorised person, power to direct the FCA to impose a requirement on the authorised person requiring it to take any of the steps mentioned in subsection (6), and
(d) in relation to a qualifying parent undertaking, power to give a direction under this paragraph to the parent undertaking requiring it to take any of the steps mentioned in subsection (6).
(3) Where the appropriate regulator is the FCA, the powers conferred by this section are as follows—
(a) in relation to the ring-fenced body, power to impose a requirement on the ring-fenced body requiring it to take any of the steps mentioned in subsection (5),
(b) in relation to any member of the ring-fenced body's group which is an authorised person but not a PRA-authorised person, power to impose a requirement on the authorised person requiring it to take any of the steps mentioned in subsection (6),
(c) in relation to any member of the ring-fenced body's group which is a PRA-authorised person, power to direct the PRA to impose a requirement on the authorised person requiring it to take any of the steps mentioned in subsection (6), and
(d) in relation to a qualifying parent undertaking, power to give a direction under this paragraph to the parent undertaking requiring it to take any of the steps mentioned in subsection (6).
(4) A parent undertaking of a ring-fenced body by reference to which the group restructuring powers are exercisable is for the purposes of this Part a “qualifying parent undertaking” if—
(a) it is a body corporate which is incorporated in the United Kingdom and has a place of business in the United Kingdom, and
(b) it is not itself an authorised person.
(5) The steps that the ring-fenced body may be required to take are—
(a) to dispose of specified property or rights to an outside person;
(b) to apply to the court under Part 7 for an order sanctioning a ring-fencing transfer scheme relating to the transfer of the whole or part of the business of the ring-fenced body to an outside person;
(c) otherwise to make arrangements discharging the ring-fenced body from specified liabilities.
(6) The steps that another authorised person or a qualifying parent undertaking may be required to take are—
(a) to dispose of any shares in, or securities of, the ring-fenced body to an outside person;
(b) to dispose of any interest in any other body corporate that is a member of the ring-fenced body's group to an outside person;
(c) to dispose of other specified property or rights to an outside person;
(d) to apply to the court under Part 7 for an order sanctioning a ring-fencing transfer scheme relating to the transfer of the whole or part of the business of the authorised person or qualifying parent undertaking to an outside person.
(7) In subsections (5) and (6) “outside person” means a person who, after the implementation of the disposal or scheme in question, will not be a member of the group of the ring-fenced body by reference to which the powers are exercised (whether or not that body is to remain a ring-fenced body after the implementation of the disposal or scheme in question).
(8) It is immaterial whether a requirement to be imposed on an authorised person by the appropriate regulator, or by the other regulator at the direction of the appropriate regulator, is one that the regulator imposing it could impose under section 55L or 55M.
(1) If the appropriate regulator proposes to exercise the group restructuring powers in relation to any authorised person or qualifying parent undertaking (“the person concerned”), the regulator must give each of the relevant persons a notice (a “preliminary notice”).
(2) The preliminary notice must—
(a) state that it is a preliminary notice,
(b) state that the regulator proposes to exercise the group restructuring powers,
(c) state the action which the regulator proposes to take in the exercise of those powers,
(d) be in writing, and
(e) give reasons for the proposed action (which must include the regulator's reasons for being satisfied as to the matters mentioned in section 142K(1)).
(3) The appropriate regulator must give a copy of the preliminary notice to the Treasury.
(4) The preliminary notice must specify a reasonable period (which may not be less than 14 days) within which any of the relevant persons may make representations to the regulator.
(5) The relevant persons are—
(a) the person concerned,
(b) the ring-fenced body, if not the person concerned, and
(c) any other authorised person who will, in the opinion of the appropriate regulator, be significantly affected by the exercise of the group restructuring powers.
142N Procedure: warning notice and decision notice
(1) If the appropriate regulator has given a preliminary notice under section 142M, it must either—
(a) if, having considered any representations made by any of the relevant persons, it still proposes to exercise the group restructuring powers, give each of the relevant persons a warning notice during the warning notice period, or
(b) before the end of the warning notice period, give each of them a written notice stating that it has decided not to exercise the powers and give a copy of that notice to the Treasury.
(2) The “warning notice period” is the period—
(a) beginning 3 months after the end of the period specified under section 142M(4) as that within which any representations must be made, and
(b) ending 6 months after the end of that period.
(3) Before giving a warning notice under subsection (1)(a), the appropriate regulator must—
(a) give the Treasury a draft of the notice,
(b) provide the Treasury with any information that the Treasury may require in order to decide whether to give their consent, and
(c) obtain the consent of the Treasury.
(4) The action specified in the warning notice may be different from that specified in the preliminary notice if—
(a) the appropriate regulator considers that different action is appropriate as a result of any change in circumstances since the preliminary notice was given, or
(b) the person concerned consents to the change.
(5) The regulator must, in particular, have regard to anything that—
(a) has been done by the person concerned since the giving of the preliminary notice, and
(b) represents action that would have been required in pursuance of the proposals in that notice.
(6) If the regulator decides to exercise the group restructuring powers it must give each of the relevant persons a decision notice.
(7) The decision notice must specify the date or dates by which each of the following must be completed—
(a) any disposal of shares, securities or other property that is required by the notice;
(b) any transfer of liabilities for which the notice requires arrangements to be made.
(8) The giving of consent for the purpose of subsection (4)(b) does not affect any right to refer to the Tribunal the matter to which any decision notice resulting from the warning notice relates.
(9) “The relevant persons” has the same meaning as in section 142M.
(1) A notified person who is aggrieved by—
(a) the imposition by either regulator of a requirement as a result of section 142L(2)(a) or (b) or (3)(a) or (b),
(b) a requirement to be imposed as a result of the giving by one regulator to the other of a direction under section 142L(2)(c) or (3)(c), or
(c) the giving by either regulator of a direction under section 142L(2)(d) or (3)(d),
may refer the matter to the Tribunal.
(2) “Notified person” means a person to whom a decision notice under section 142N(6) was given or ought to have been given.