214B Contribution to costs of special resolution regime
(1) This section applies if—
(a) a stabilisation power under Part 1 of the Banking Act 2009 has been exercised in respect of a bank, building society , credit union or investment firm within the meaning of that Part (“the institution”); and
(b) the Treasury think that the institution was or was likely to have been, or but for the exercise of the power would have become, unable to satisfy claims against it.
(2) The Treasury may require the scheme manager to make payments (to the Treasury or any other person) in respect of expenses of a prescribed description incurred (by the Treasury or that person) in connection with the exercise of the power.
(3) Subsection (2) is subject to section 214C (limit on amount of special resolution regime payments).
(4) In subsection (2) “expenses” includes interest at a specified rate on the difference, at any time, between—
(a) the total amount of expenses (including interest) incurred at or before that time; and
(b) the total amount recovered, or received from the scheme manager, in respect of the institution, at or before that time, by—
(i) the Treasury; and
(ii) any other person who has incurred expenses in connection with the exercise of the power that are of a description prescribed under subsection (2).
(5) Any payment made by the scheme manager under subsection (2) is to be treated for the purposes of this Part as an expense under the compensation scheme.
(6) In this section and section 214C “specified rate” means a rate specified by the Treasury.
(7) Different rates may be specified under different provisions or for different periods.
(8) A rate may be specified by reference to a rate set (from time to time) by any person.
214C Limit on amount of special resolution regime payments
(1) The total amount of special resolution regime payments required to be made in respect of a person (“the institution”) may not exceed—
(a) notional net expenditure (see subsection (3)), minus
(b) actual net expenditure (see subsection (4)).
(2) A “special resolution regime payment” is—
(a) a payment under section 214B(2); or
(b) a payment required to be made by the scheme manager by virtue of section 61 of the Banking Act 2009 (special resolution regime: compensation).
(3) Notional net expenditure is—
(a) the total amount of expenses that would have been incurred under the compensation scheme in respect of the institution if the stabilisation power had not been exercised and the institution had been unable to satisfy claims against it, minus
(b) the total amount that would have been likely, at the time when the power was exercised, to be recovered by the scheme manager in respect of the institution in those circumstances.
(4) Actual net expenditure is—
(a) the total amount of expenses (other than special resolution regime payments) actually incurred by the scheme manager in respect of the institution, minus
(b) the total amount actually recovered by the scheme manager in respect of the institution.
(5) In subsection (3)(a) “expenses” includes interest at a specified rate on the difference, at any time, between—
(a) the total amount of expenses (including interest) that would have been incurred as mentioned in subsection (3)(a) at or before that time; and
(b) the total amount that would have been likely to have been recovered as mentioned in subsection (3)(b) at or before that time.
(6) In subsection (4)(a) “expenses” includes interest at a specified rate on the difference, at any time, between—
(a) the total amount of expenses (including special resolution regime payments and interest) actually incurred by the scheme manager in respect of the institution at or before that time; and
(b) the total amount actually recovered by the scheme manager in respect of the institution at or before that time.
(7) In paragraph (b) of subsections (3) to (6) references to amounts recovered (or likely to have been recovered) by the scheme manager do not include any levy received (or likely to have been received) by it.
214D Contributions under section 214B: supplementary
(1) This section supplements sections 214B and 214C.
(2) The scheme manager must determine—
(a) the amounts of expenses (other than interest) that would have been incurred as mentioned in section 214C(3)(a); and
(b) the time or times at which those amounts would have been likely to have been incurred.
(3) The Treasury, or a person designated by the Treasury, must in accordance with regulations appoint a person (“the valuer”) to determine—
(a) the amounts that would have been likely, at the time when the stabilisation power was exercised, to be recovered as mentioned in section 214C(3)(b); and
(b) the time or times at which those amounts would have been likely to be recovered.
The person appointed under this subsection may be the person appointed as valuer under section 54 of the Banking Act 2009 in respect of the exercise of the stabilisation power.
(4) Regulations may enable the Treasury to specify principles to be applied by—
(a) the scheme manager when exercising functions under subsection (2); or
(b) the valuer when exercising functions under subsection (3).
(5) The regulations may in particular enable the Treasury to require the scheme manager or valuer—
(a) to use, or not to use, specified methods;
(b) to take specified matters into account in a specified manner; or
(c) not to take specified matters into account.
(6) Regulations—
(a) must provide for independent verification of expenses within section 214B(2);
(b) may provide for the independent verification of other matters; and
(c) may contain provision about the appointment and payment of an auditor.
(7) Regulations—
(a) must contain provision enabling the valuer to reconsider a decision;
(b) must provide a right of appeal to a court or tribunal against any decision of the valuer;
(c) may provide for payment of the valuer; and
(d) may apply (with or without modifications) or make provision corresponding to—
(i) any provision of sections 54 to 56 of the Banking Act 2009; or
(ii) any provision made, or that could be made, by virtue of any of those sections.
(8) Regulations may make provision for payments under section 214B(2) to be made—
(a) before any verification required by the regulations is undertaken, and
(b) before the limit imposed by section 214C is calculated,
subject to any necessary later adjustment.
(9) If they do so they must provide that the amount of any payment required by virtue of subsection (8) must not be such as to give rise to an expectation that an amount will be required to be repaid to the scheme manager (once any necessary verification has been undertaken and the limit imposed by section 214C has been calculated).
(10) Regulations may—
(a) make provision supplementing section 214B or 214C or this section;
(b) make further provision about the method by which amounts to be paid under section 214B(2) are to be determined;
(c) make provision about timing;
(d) make provision about procedures to be followed;
(e) provide for discretionary functions to be exercised by a specified body or by persons of a specified class; and
(f) make provision about the resolution of disputes (which may include provision conferring jurisdiction on a court or tribunal).
(11) “Regulations” means regulations made by the Treasury.
(12) Any payment made by the Treasury by virtue of this section is to be met out of money provided by Parliament.
(13) The compensation scheme may make provision about payments under section 214B(2) and levies in connection with such payments (except provision inconsistent with any provision made by or under section 214B or 214C or this section).
(1) The Bank of England may require the scheme manager to make a recapitalisation payment to the Bank or another person where the Bank has exercised or decided to exercise a stabilisation power under Part 1 of the Banking Act 2009 in respect of a financial institution so as to achieve—
(a) a sale of the institution to a private sector purchaser (see section 11 of that Act), or
(b) a transfer of the institution to a bridge bank (see section 12 of that Act).
(2) A recapitalisation payment is a payment in respect of the Bank’s estimate of—
(a) the costs likely to be required for the recapitalisation of the financial institution, and
(b) any other expenses that the Bank or a relevant person has incurred or might incur in connection with the recapitalisation of the institution or the exercise of the stabilisation power.
(3) Before exercising the power in subsection (1), the Bank must consult the scheme manager.
(4) A recapitalisation payment made by the scheme manager under subsection (1) is to be treated for the purposes of this Part as an expense under the compensation scheme.
(5) In subsection (2)(b), “relevant person” means—
(a) the Treasury,
(b) a bridge bank, or
(c) an asset management vehicle.
(6) In this section, “bridge bank” and “asset management vehicle” have the meanings given by sections 12 and 12ZA, respectively, of the Banking Act 2009.
(7) In this section and in section 214H, “financial institution” means a bank, building society or investment firm (within the meanings of Part 1 of the Banking Act 2009).
(1) This section applies where the Bank of England requires the scheme manager to make a recapitalisation payment under section 214E.
(2) The Bank must report to the Chancellor of the Exchequer about—
(a) the exercise of the power to require a recapitalisation payment to be made, and
(b) the stabilisation power and the stabilisation option to which the payment relates.
(3) The report (“the final report”) must—
(a) comply with such requirements as to content, and
(b) be provided within such period or at such time,
as the Treasury may specify.
(4) The Bank must provide an interim report if—
(a) the period specified under subsection (3)(b) is a period of more than 3 months beginning with the day on which the Bank requires the recapitalisation payment in question (“the first 3 months”), or the time specified under subsection (3)(b) is after the first 3 months, and
(b) the Bank does not provide the final report within the first 3 months.
(5) An interim report must—
(a) comply with such requirements as to content as the Treasury may specify, and
(b) be provided within the first 3 months.
(6) Subject to subsection (7), the Chancellor of the Exchequer must lay each report, and any interim report, before Parliament.
(7) The Chancellor of the Exchequer may omit from the report, and any interim report, any information which the Chancellor of the Exchequer considers it would not be in the public interest to publish.
(1) Where the Bank of England requires the scheme manager to make a recapitalisation payment under section 214E, the Bank must, as soon as reasonably practicable, notify in writing the chair of each relevant Parliamentary Committee that it has done so.
(2) The relevant Parliamentary Committees are—
(a) the Treasury Committee of the House of Commons, and
(b) the Financial Services Regulation Committee of the House of Lords.
(3) A reference to a committee in subsection (2)—
(a) if the name of that committee is changed, is to be treated as a reference to that committee by its new name, and
(b) if the functions of that committee (or substantially corresponding functions) become functions of a different committee, is to be treated as a reference to the committee by which those functions are exercisable.
(4) Any question arising under subsection (3) is to be determined by—
(a) the Speaker of the House of Commons, in relation to committees of the House of Commons, and
(b) the Chairman of Committees of the House of Lords, in relation to committees of the House of Lords.
214H Reimbursement in respect of a recapitalisation payment
(1) The Bank must reimburse the scheme manager for any recapitalisation payment, or any part of a recapitalisation payment, relating to a financial institution, which is not needed to cover the costs and expenses mentioned in section 214E(2)(a) and (b) because—
(a) those costs and expenses were lower than the Bank expected, or
(b) the Bank recovers an amount in relation to the financial institution which it can use to defray those costs and expenses.
(2) For the purposes of subsection (1)—
(a) the reference to the Bank recovering an amount in relation to the financial institution includes recovering an amount as a result of the sale of the institution or the institution being wound up or otherwise;
(b) where more than one recapitalisation payment is required in relation to a financial institution, references to a recapitalisation payment are to be read as references to the sum of those payments;
(c) the reference to the sale of a financial institution in paragraph (a) is to the sale of all or part of the business of the financial institution as part of, or as a result of, the achievement of a stabilisation option.
(1) The compensation scheme may make provision—
(a) about the effect of a payment of compensation under the scheme on rights or obligations arising out of matters in connection with which the compensation was paid;
(b) giving the scheme manager a right of recovery in respect of those rights or obligations.
(2) Such a right of recovery conferred by the scheme does not, in the event of a person's insolvency, exceed such right (if any) as the claimant would have had in that event.
(2ZA) The compensation scheme may also make provision in relation to a relevant person, or to a successor of a description falling within section 213(1)(b), who enters into or carries out funeral plan contracts and is unable, or likely to be unable, to satisfy claims made against them—
(a) about rights or obligations in connection with any trust or contract of insurance relating to the funeral plan contracts entered into or carried out by such a person or successor;
(b) about the effect of a payment of compensation, or of a payment in connection with securing continuity of funeral plan contracts under the scheme, on rights and obligations arising out of matters in connection with which the payment was made;
(c) giving the scheme manager a right of recovery in respect of the rights or obligations referred to in paragraphs (a) and (b).
(2ZB) The amount required to be paid to the scheme manager under such a right of recovery conferred by the scheme may not exceed the amount paid or (in the opinion of the scheme manager) to be paid out by the scheme manager in connection with those funeral plan contracts.
(2ZC) For the purposes of subsection (2ZA)(a), the provision that may be made includes—
(a) provision in respect of rights or obligations that came into existence before or after the date on which that subsection comes into force;
(b) provision to vary existing rights or obligations;
(c) provision to create new rights in favour of, or obligations to, the scheme manager which override existing rights or obligations.
(2A) Any payment made by the scheme manager under section 214B(2) in connection with the exercise of a stabilisation power in respect of a bank, building society or credit union is to be treated as a debt due to the scheme manager from that bank, building society or (as the case may be) credit union.
(2B) In subsection (2A)—
“bank” has the meaning given in section 2 of the Banking Act 2009;
“building society” has the meaning given in the Building Societies Act 1986;
“credit union” means a credit union within the meaning of—
the Credit Unions Act 1979; or
article 2 of the Credit Unions (Northern Ireland) Order 1985.
(3) If a person other than the scheme manager makes an administration application under Schedule B1 to the 1986 Act or Schedule B1 to the 1989 Order in relation to —
(a) a company or partnership which is a relevant person; or
(b) a body corporate or unincorporated association which is a relevant exchange;
the scheme manager has the same rights as are conferred on the regulators by section 362.
(3A) In subsection (3) the reference to making an administration application includes a reference to—
(a) appointing an administrator under paragraph 14 or 22 of Schedule B1 to the 1986 Act or paragraph 15 or 23 of Schedule B1 to the 1989 Order, or
(b) filing with the court a copy of notice of intention to appoint an administrator under any of those paragraphs.
(4) If a person other than the scheme manager presents a petition for the winding up of a body which is a relevant person or relevant exchange , the scheme manager has the same rights as are conferred on the regulators by section 371.
(5) If a person other than the scheme manager presents a bankruptcy petition to the court in relation to an individual who, or an entity which, is a relevant person, the scheme manager has the same rights as are conferred on the regulators by section 374.
(6) Insolvency rules may be made for the purpose of integrating any procedure for which provision is made as a result of subsection (1) into the general procedure on the administration of a company or partnership or on a winding-up, bankruptcy or sequestration.
(7) “Bankruptcy petition” means a petition to the court—
(a) under section 264 of the 1986 Act or Article 238 of the 1989 Order for a bankruptcy order to be made against an individual;
(b) under section 2 or 5 of the 2016 Act for the sequestration of the estate of an individual; or
(c) under section 6 of the 2016 Act for the sequestration of the estate belonging to or held for or jointly by the members of an entity mentioned in subsection (1) of that section.
(8) “Insolvency rules” are—
(a) for England and Wales, rules made under sections 411 and 412 of the 1986 Act;
(b) for Scotland, rules made by order by the Treasury, after consultation with the Scottish Ministers, for the purposes of this section; and
(c) for Northern Ireland, rules made under Article 359 of the 1989 Order and section 55 of the Judicature (Northern Ireland) Act 1978.
(9) ... “the 1986 Act”, “the 1989 Order” , “the 2016 Act” and “court” have the same meaning as in Part XXIV.
(1) The compensation scheme may, in particular, include provision requiring or enabling the scheme manager to make arrangements for securing continuity of cover for—
(a) plan holders;
(b) plan holders of a specified class;
(c) plan holders of funeral plan contracts of a specified class.
(2) In this section—
“plan holder” means—
a person who has a funeral plan contract with a relevant funeral plan provider, or
a person whose funeral is to be provided or secured under a funeral plan contract with a relevant funeral plan provider;
“relevant funeral plan provider” means a relevant person who—
has permission to enter into or carry out a funeral plan contract as provider, and
is unable, or likely to be unable, to satisfy claims made against them.
(3) The scheme may provide for the scheme manager to take such measures as appear to it to be appropriate—
(a) for securing or facilitating the transfer of a relevant funeral plan provider’s business so far as it consists of the carrying out of funeral plan contracts, or of any part of that business, to another authorised person;
(b) for securing the issue by another authorised person to the plan holders concerned of funeral plan contracts in substitution for their existing contracts.
(4) The scheme may also provide for the scheme manager to make, or secure the making of, payments to a plan holder or to any other person in connection with the provision of a funeral—
(a) during any period while the scheme manager is seeking to make arrangements mentioned in subsection (1);
(b) if it appears to the scheme manager that it is not reasonably practicable to make such arrangements.
(5) The scheme may also provide, in relation to the administration or winding up of a relevant funeral plan provider, for the scheme manager to make payments—
(a) in specified circumstances,
(b) but only if the scheme manager is satisfied that such payments are made in respect of any reasonable fees, costs, charges or other expenses reasonably and exclusively incurred for the purposes of complying with a request of the scheme manager under section 215B,
to, or on behalf of, the relevant funeral plan provider or to the administrator or liquidator of the funeral plan provider.
(6) A provision of the scheme made by virtue of section 213(3)(b) may include the power to impose levies for the purpose of meeting expenses of the scheme manager incurred in—
(a) taking measures as a result of any provision of the scheme made by virtue of subsection (3);
(b) making, or securing the making of, payments as a result of any provision of the scheme made by virtue of subsection (4) or (5).
215B Scheme manager’s power to require assistance from liquidator etc. in relation to funeral plan contracts
(1) This section applies in relation to the administration or winding up of a relevant funeral plan provider.
(2) The administrator or liquidator of the relevant funeral plan provider must, at the request of the scheme manager, provide any assistance identified by the scheme manager as being necessary—
(a) to enable the scheme manager to administer the compensation scheme in relation to funeral plan contracts, and
(b) to enable the scheme manager to secure continuity of cover in relation to funeral plan contracts.
(3) “Relevant funeral plan provider” has the meaning given in section 215A.
(1) The compensation scheme may, in particular, include provision requiring the scheme manager to make arrangements for securing continuity of insurance for policyholders, or policyholders of a specified class, of relevant long-term insurers.
(2) “Relevant long-term insurers” means relevant persons who—
(a) have permission to effect or carry out contracts of long-term insurance; and
(b) are unable, or likely to be unable, to satisfy claims made against them.
(3) The scheme may provide for the scheme manager to take such measures as appear to him to be appropriate—
(a) for securing or facilitating the transfer of a relevant long-term insurer’s business so far as it consists of the carrying out of contracts of long-term insurance, or of any part of that business, to another authorised person;
(b) for securing the issue by another authorised person to the policyholders concerned of policies in substitution for their existing policies.
(4) The scheme may also provide for the scheme manager to make payments to the policyholders concerned—
(a) during any period while he is seeking to make arrangements mentioned in subsection (1);
(b) if it appears to him that it is not reasonably practicable to make such arrangements.
(5) A provision of the scheme made by virtue of section 213(3)(b) may include power to impose levies for the purpose of meeting expenses of the scheme manager incurred in—
(a) taking measures as a result of any provision of the scheme made by virtue of subsection (3);
(b) making payments as a result of any such provision made by virtue of subsection (4).
(1) The compensation scheme may, in particular, include provision for the scheme manager to have power to take measures for safeguarding policyholders, or policyholders of a specified class, of relevant insurers.
(2) “Relevant insurers” means relevant persons who—
(a) have permission to effect or carry out contracts of insurance; and
(b) are in financial difficulties.
(3) The measures may include such measures as the scheme manager considers appropriate for—
(a) securing or facilitating the transfer of a relevant insurer’s business so far as it consists of the carrying out of contracts of insurance, or of any part of that business, to another authorised person;
(b) giving assistance to the relevant insurer to enable it to continue to effect or carry out contracts of insurance.
(4) The scheme may provide—
(a) that if measures of a kind mentioned in subsection (3)(a) are to be taken, they should be on terms appearing to the scheme manager to be appropriate, including terms reducing, or deferring payment of, any of the things to which any of those who are eligible policyholders in relation to the relevant insurer are entitled in their capacity as such;
(b) that if measures of a kind mentioned in subsection (3)(b) are to be taken, they should be conditional on the reduction of, or the deferment of the payment of, the things to which any of those who are eligible policyholders in relation to the relevant insurer are entitled in their capacity as such;
(c) for ensuring that measures of a kind mentioned in subsection (3)(b) do not benefit to any material extent persons who were members of a relevant insurer when it began to be in financial difficulties or who had any responsibility for, or who may have profited from, the circumstances giving rise to its financial difficulties, except in specified circumstances;
(d) for requiring the scheme manager to be satisfied that any measures he proposes to take are likely to cost less than it would cost to pay compensation under the scheme if the relevant insurer became unable, or likely to be unable, to satisfy claims made against him.
(5) The scheme may provide for the either regulator or both regulators to have power—
(a) to give such assistance to the scheme manager as it considers appropriate for assisting the scheme manager to determine what measures are practicable or desirable in the case of a particular relevant insurer;
(b) to impose constraints on the taking of measures by the scheme manager in the case of a particular relevant insurer;
(c) to require the scheme manager to provide it with information about any particular measures which the scheme manager is proposing to take.
(6) The scheme may include provision for the scheme manager to have power—
(a) to make interim payments in respect of eligible policyholders of a relevant insurer;
(b) to indemnify any person making payments to eligible policyholders of a relevant insurer.
(7) A provision of the scheme made by virtue of section 213(3)(b) may include power to impose levies for the purpose of meeting expenses of the scheme manager incurred in—
(a) taking measures as a result of any provision of the scheme made by virtue of subsection (1);
(b) making payments or giving indemnities as a result of any such provision made by virtue of subsection (6).
(8) “Financial difficulties” and “eligible policyholders” have such meanings as may be specified.
(1) The compensation scheme must include provision requiring the scheme manager to take specified measures for safeguarding policyholders affected by write-down orders.
(2) A person (“P”) is a policyholder affected by a write-down order if—
(a) P is a policyholder of an insurer in respect of whom a write-down order has effect, and
(b) the value of any thing to which P is (or may become) entitled, in P’s capacity as a policyholder of the insurer, is reduced under the write-down order.
(3) Measures specified by virtue of subsection (1) must, in particular, require financial assistance to be given to insurers subject to write-down orders for the purpose mentioned in subsection (4).
(4) The purpose is to enable payments to be made to affected policyholders in respect of the reduction in value of their entitlements (or contingent entitlements), as mentioned in subsection (2)(b).
(5) Financial assistance given under this section—
(a) must not be used for any purpose other than the purpose mentioned in subsection (4);
(b) is not to be taken into account, to any extent, in valuing the assets of the insurer for any purpose.
(6) Measures taken by the scheme manager by virtue of this section are in addition to any measures the scheme manager may take under powers provided by virtue of section 217(1).
(7) In this section and section 217ZB—
“insurer” means a relevant person who has permission to carry out contracts of insurance;
“write-down order” means an order under section 377A (as it has effect in accordance with section 377H).
217ZB Recovery of financial assistance under section 217ZA
(1) The compensation scheme may make provision giving the scheme manager a right of recovery in respect of financial assistance given to an insurer by virtue of section 217ZA.
(2) Any right of recovery the scheme manager has in respect of financial assistance given to an insurer by virtue of subsection (1) must not be exercised against a policyholder of the insurer.
(3) Subsection (4) applies where, by virtue of subsection (1), the scheme manager has a right of recovery in respect of financial assistance given to an insurer.
(4) In valuing the insurer’s liabilities for the purposes of a relevant insolvency provision, no account is to be taken of any expectation that the right will be exercised.
(5) In subsection (4), “relevant insolvency provision” has the same meaning as in paragraph 9 of Schedule 19B (treatment of written-down liabilities for purposes of relevant insolvency provisions).
(1) Each regulator and the scheme manager must take such steps as they consider appropriate to co-operate with each other in the exercise of their functions under this Part and Part 15A.
(2) Each regulator and the scheme manager must prepare and maintain a memorandum describing how that regulator and the scheme manager intend to comply with subsection (1).
(3) The scheme manager must ensure that the memoranda as currently in force are published in the way appearing to it to be best calculated to bring them to the attention of the public.
(1) The scheme manager must in respect of each of its financial years prepare an annual plan.
(2) The plan must be prepared before the start of the financial year.
(3) An annual plan in respect of a financial year must make provision about the use of the resources of the scheme manager.
(4) The plan may include material relating to periods longer than the financial year in question.
(5) Before preparing an annual plan, the scheme manager must consult such persons (if any) as the scheme manager considers appropriate.
(6) The scheme manager must publish each annual plan in the way it considers appropriate.
(1) At least once a year, the scheme manager must make a report to the regulators on the discharge of its functions.
(2) The report must—
(a) include a statement setting out the value of each of the funds established by the compensation scheme; and
(b) comply with any requirements specified in rules made by the regulators.
(3) The scheme manager must publish each report in the way it considers appropriate.
(4) The Treasury may—
(a) require the scheme manager to comply with any provisions of the Companies Act 2006 about accounts and their audit which would not otherwise apply to it, or
(b) direct that any such provision of that Act is to apply to the scheme manager with such modifications as are specified in the direction.
(5) Compliance with any requirement under subsection (4)(a) or (b) is enforceable by injunction or, in Scotland, an order for specific performance under section 45 of the Court of Session Act 1988.
(6) Proceedings under subsection (5) may be brought only by the Treasury.
(1) The scheme manager must send a copy of its annual accounts to the Comptroller and Auditor General and the Treasury as soon as is reasonably practicable.
(2) The Comptroller and Auditor General must—
(a) examine, certify and report on accounts received under this section, and
(b) send a copy of the certified accounts and the report to the Treasury.
(3) The Treasury must lay the copy of the certified accounts and the report before Parliament.
(4) The scheme manager must send a copy of the certified accounts and the report to the regulators.
(5) Except as provided by section 218(4), the scheme manager is exempt from the requirements of Part 16 of the Companies Act 2006 (audit), and its balance sheet must contain a statement to that effect.
(6) In this section “annual accounts” has the meaning given by section 471 of the Companies Act 2006.
(1) Each regulator may make rules enabling that regulator to require authorised persons or recognised investment exchanges carrying on a regulated activity relating to a trading facility to—
(a) provide information to the scheme manager on the request of that regulator or the scheme manager; or
(b) provide information to that regulator, which may then be made available to the scheme manager by that regulator.
(2) A requirement may be imposed only if the regulator thinks the information is of a kind that may be of use to the scheme manager in connection with functions in respect of the scheme.
(3) A requirement under this section may apply—
(a) to authorised persons generally or only to specified persons or classes of person;
(aa) to recognised investment exchanges mentioned in subsection (1) generally or only to specified exchanges or classes of exchange;
(b) to the provision of information at specified periods, in connection with specified events or in other ways.
(4) In addition to requirements under this section, a notice under section 165 may relate to information or documents which the regulator thinks are reasonably required by the scheme manager in connection with the performance of functions in respect of the scheme; and section 165(4) is subject to this subsection.
(5) Rules under subsection (1) shall be prepared, made and treated in the same way as (and may be combined with) the regulator's general rules.
219 Scheme manager’s power to require information.
(1) The scheme manager may, by notice in writing require a person—
(a) to provide specified information or information of a specified description; or
(b) to produce specified documents or documents of a specified description.
(1A) A requirement may be imposed only—
(a) on a person (P) against whom a claim has been made under the scheme,
(b) on a person (P) who is unable or likely to be unable to satisfy claims under the scheme against P,
(ba) on a person (P) who is an insurer who has been given financial assistance under section 217ZA,
(c) on a person (“the Third Party”) whom the scheme manager thinks was knowingly involved in matters giving rise to a claim against another person (P) under the scheme, ...
(d) on a person (“the Third Party”) whom the scheme manager thinks was knowingly involved in matters giving rise to the actual or likely inability of another person (P) to satisfy claims under the scheme , or
(e) on a person (“the Third Party”) whom the scheme manager thinks is or was at any relevant time involved in any contract of insurance or in the administration of any trust arrangement relating to a funeral plan contract entered into or carried out by a person (P)—
(i) against whom a claim has been made under the scheme, or
(ii) who is unable or likely to be unable to satisfy claims under the scheme against P.
(1B) For the purposes of subsection (1A)(b) , (d) and (e)(ii) whether P is unable or likely to be unable to satisfy claims shall be determined in accordance with provision to be made by the scheme (which may, in particular—
(a) apply or replicate, with or without modifications, a provision of an enactment;
(b) confer discretion on a specified person).
(2) The information or documents must be provided or produced—
(a) before the end of such reasonable period as may be specified; and
(b) in the case of information, in such manner or form as may be specified.
(3) This section applies only to information and documents the provision or production of which the scheme manager considers to be necessary (or likely to be necessary) for the fair determination of claims which have been or may be made against P.
(3A) Where a stabilisation power under Part 1 of the Banking Act 2009 has been exercised in respect of a bank, building society or credit union, the scheme manager may by notice in writing require the bank, building society or credit union, or the Bank of England, to provide information that the scheme manager requires for the purpose of determining the matters mentioned in section 214D(2)(a) and (b) above.
(4) If a document is produced in response to a requirement imposed under this section, the scheme manager may—
(a) take copies or extracts from the document; or
(b) require the person producing the document to provide an explanation of the document.
(5) If a person who is required under this section to produce a document fails to do so, the scheme manager may require the person to state, to the best of his knowledge and belief, where the document is.
(6) If P is insolvent, no requirement may be imposed under this section on a person to whom section 220 or 224 applies.
(7) If a person claims a lien on a document, its production under this Part does not affect the lien.
(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9) “Specified” means specified in the notice given under subsection (1).
(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
220 Scheme manager’s power to inspect information held by liquidator etc.
(1) For the purpose of assisting the scheme manager to discharge its functions in relation to a claim made in respect of an insolvent relevant person or insolvent relevant exchange, a person to whom this section applies must permit a person authorised by the scheme manager to inspect relevant documents.
(2) A person inspecting a document under this section may take copies of, or extracts from, the document.
(3) This section applies to—
(a) the administrative receiver, administrator, liquidator , bank liquidator, building society liquidator or trustee in bankruptcy of an insolvent relevant person or insolvent relevant exchange;
(b) the trustee in the sequestration, under the Bankruptcy (Scotland) Act 2016, of the estate of an insolvent relevant person or insolvent relevant exchange.
(4) This section does not apply to a liquidator, administrator or trustee in bankruptcy who is—
(a) the Official Receiver;
(b) the Official Receiver for Northern Ireland; or
(c) the Accountant in Bankruptcy.
(5) “Relevant person” and “relevant exchange” have the same meaning as in section 224.
220A Power to inspect information held by write-down manager
(1) For the purpose of assisting the scheme manager to discharge its functions under section 217ZA or 217ZB in relation to an insurer, a person to whom this section applies must permit a person authorised by the scheme manager to inspect relevant documents.
(2) This section applies to a person appointed under section 377G to act as the manager of a write-down order which has effect in relation to the insurer.
(3) A person inspecting a document under this section may take copies of, or extracts from, the document.
(1) If a person (“the defaulter”)—
(a) fails to comply with a requirement imposed under section 219, or
(b) fails to permit documents to be inspected under section 220,
the scheme manager may certify that fact in writing to the court and the court may enquire into the case.
(2) If the court is satisfied that the defaulter failed without reasonable excuse to comply with the requirement (or to permit the documents to be inspected), it may deal with the defaulter (and, in the case of a body corporate, any director or other officer) as if he were in contempt ; and “officer”, in relation to a limited liability partnership, means a member of the limited liability partnership..
(3) “Court” means—
(a) the High Court;
(b) in Scotland, the Court of Session.
(1) The scheme manager may arrange for any of its functions to be discharged on its behalf by another person (a “scheme agent”).
(2) Before entering into arrangements the scheme manager must be satisfied that the scheme agent—
(a) is competent to discharge the function, and
(b) has been given sufficient directions to enable the agent to take any decisions required in the course of exercising the function in accordance with policy determined by the scheme manager.
(3) Arrangements may include provision for payments to be made by the scheme manager to the scheme agent (which payments are management expenses of the scheme manager except where the function in question is one under Part 15A).
(1) Neither the scheme manager nor any person who is, or is acting as, its ... officer , scheme agent or member of staff is to be liable in damages for anything done or omitted in the discharge, or purported discharge, of the scheme manager’s functions.
(2) Subsection (1) does not apply—
(a) if the act or omission is shown to have been in bad faith; or
(b) so as to prevent an award of damages made in respect of an act or omission on the ground that the act or omission was unlawful as a result of section 6(1) of the Human Rights Act 1998.
(1) The amount which the scheme manager may recover, from the sums levied under the scheme, as management expenses attributable to a particular period may not exceed such amount as may be fixed by the scheme as the limit applicable to that period.
(2) In calculating the amount of any levy to be imposed by the scheme manager, no amount may be included to reflect management expenses unless the limit mentioned in subsection (1) has been fixed by the scheme.
(3) “Management expenses” means expenses incurred, or expected to be incurred, by the scheme manager in connection with its functions under this Act other than those incurred—
(a) in paying compensation;
(b) as a result of any provision of the scheme made by virtue of section 215A(3) or (4), 216(3) or (4) or 217(1) or (6);
(c) under section 214B or 214D;
(ca) under section 214E;
(d) under Part 15A.
(1) The scheme manager may request a loan from the National Loans Fund for the purpose of funding expenses incurred or expected to be incurred under the scheme.
(2) The Treasury may arrange for money to be paid out of the National Loans Fund in pursuance of a request under subsection (1).
(3) The Treasury shall determine—
(a) the rate of interest on a loan, and
(b) other terms and conditions.
(4) The Treasury may make regulations—
(a) about the amounts that may be borrowed under this section;
(b) permitting the scheme manager to impose levies under section 213 for the purpose of meeting expenses in connection with loans under this section (and the regulations may have effect despite any provision of this Act);
(c) about the classes of person on whom those levies may be imposed;
(d) about the amounts and timing of those levies.
(5) The compensation scheme may include provision about borrowing under this section provided that it is not inconsistent with regulations under this section.
(1) Payments made by the scheme manager in error may be provided for in setting a levy by virtue of section 213, 214A, 214B , 214E or 223B.
(2) This section does not apply to payments made in bad faith.
224 Scheme manager’s power to inspect documents held by Official Receiver etc.
(1) If, as a result of the insolvency or bankruptcy of a relevant person or relevant exchange, or a successor falling within section 213(1)(b), any documents have come into the possession of a person to whom this section applies, he must permit any person authorised by the scheme manager to inspect the documents for the purpose of establishing—
(a) the identity of persons to whom the scheme manager may be liable to make a payment in accordance with the compensation scheme; or
(b) the amount of any payment which the scheme manager may be liable to make.
(2) A person inspecting a document under this section may take copies or extracts from the document.
(3) In this section “relevant person” means a person who was—
(a) an authorised person at the time the act or omission which may give rise to the liability mentioned in subsection (1)(a) took place; or
(b) an appointed representative at that time.
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4ZA) But a person is not to be regarded as a relevant person in relation to a regulated activity if, at that time, the person—
(a) was a Gibraltar-based person with a Schedule 2A permission to carry on the activity, and
(b) fell within a prescribed category, either generally or in relation to the activity.
(4ZB) Regulations prescribing a category of person for the purposes of subsection (4ZA) may, among other things, make provision by reference to—
(a) whether the activity is carried on through a branch in the United Kingdom;
(b) the level of protection provided by the compensation scheme and by any comparable scheme operating in Gibraltar.
(4A) In this section “relevant exchange” means a body corporate or unincorporated association carrying on a regulated activity relating to a trading facility at the time the act or omission which may give rise to the liability mentioned in subsection (1)(a) took place.
(5) This section applies to—
(a) the Official Receiver;
(b) the Official Receiver for Northern Ireland; and
(c) the Accountant in Bankruptcy.
(1) In discharging its functions the scheme manager must have regard to—
(a) the need to ensure efficiency and effectiveness in the discharge of those functions, and
(b) the need to minimise public expenditure attributable to loans made or other financial assistance given to the scheme manager for the purposes of the scheme.
(2) In subsection (1)(b) “financial assistance” includes the giving of guarantees and indemnities and any other kind of financial assistance (actual or contingent).
(1) A reference in this Part to functions of the scheme manager (including a reference to functions conferred by or under this Part) includes a reference to functions conferred by or under the Banking Act 2009.
(2) Any payment required to be made by the scheme manager by virtue of section 61 of that Act (special resolution regime: compensation) is to be treated for the purposes of this Part as an expense under the compensation scheme.
(1) The following provisions apply for the purposes of this Part.
(2) “Relevant scheme” means a scheme or arrangement (other than the FSCS) for the payment of compensation (in certain cases) to customers of persons who provide financial services or carry on a business connected with the provision of such services.
(3) References to the manager of a relevant scheme are to the person who administers it or (if there is no such person) the person responsible for making payments under it.
(4) “The FSCS” means the Financial Services Compensation Scheme (see section 213(2)).
(5) “The FSCS manager” means the scheme manager as defined by section 212(1).
(6) “Expense” includes anything that, if incurred in relation to the FSCS, would amount to an expense for the purposes of the FSCS.
(7) “Notice” means a notice in writing.
(8) In subsection (2)—
(a) “customers” includes customers outside the United Kingdom;
(b) “persons” includes persons outside the United Kingdom;
(c) references to the provision of financial services include the provision outside the United Kingdom of such services.
(9) This Part applies to cases where the manager of the relevant scheme is the Treasury or any other Minister of the Crown as it applies to cases where that manager is any other person.
224C Power to require FSCS manager to act on behalf of manager of relevant scheme
(1) This section applies if compensation is payable under a relevant scheme.
(2) The Treasury may by notice require the FSCS manager to exercise (on behalf of the manager of the relevant scheme) specified functions in respect of specified claims for compensation under the relevant scheme.
(3) A notice may be given only with the consent of the manager of the relevant scheme.
(4) In subsection (2) “specified” means specified, or of a description specified, in the notice.
(5) Claims or descriptions of claims may be specified by reference to the persons or description of persons whose claims they are.
(1) This section applies where a notice under section 224C(2) (a “section 224C notice”) has been given in respect of a relevant scheme.
(2) The FSCS manager is not under a duty to comply with the section 224C notice if, as soon as reasonably practicable after receiving it, the FSCS manager gives a notice to the Treasury stating that a ground set out in section 224E applies.
(3) Where a notice under subsection (2) is given, the FSCS manager may recover from the manager of the relevant scheme an amount equal to the total expenses incurred by the FSCS manager in connection with the relevant scheme in the period—
(a) beginning with the giving of the section 224C notice; and
(b) ending with the giving of the notice under subsection (2).
(4) The duty to comply with the section 224C notice ceases if, after starting to comply with it, the FSCS manager gives a notice to the Treasury and the manager of the relevant scheme stating that a ground set out in section 224E applies.
(5) Where a notice under subsection (4) is given, the FSCS manager must give the Treasury such information connected with the FSCS manager's exercise of functions in relation to the relevant scheme as the Treasury may reasonably require.
(6) Any notice under this section—
(a) may be given only if, before giving it, the FSCS manager has taken reasonable steps to deal with anything that is causing the ground or grounds in question to apply; and
(b) must contain details of those steps.
(1) This section sets out the grounds referred to in section 224D(2) and (4).
(2) The first ground is that the FSCS manager is not satisfied that it will be able to obtain any information required in order to comply with the section 224C notice.
(3) The second ground is that the FSCS manager is not satisfied that it will be able to obtain any advice or other assistance from the manager of the relevant scheme that is required in order to comply with the section 224C notice.
(4) The third ground is—
(a) that the FSCS manager has not received an amount at least equal to the total expenses it expects to incur in connection with its relevant scheme functions; and
(b) either—
(i) that there are no arrangements for the provision of funds to the FSCS manager to enable it to exercise those functions and meet those expenses; or
(ii) that the FSCS manager considers that any such arrangements are unsatisfactory.
(5) The fourth ground is that the FSCS manager considers that complying with the section 224C notice would detrimentally affect the exercise of its functions under the FSCS.
(6) The fifth ground is—
(a) that there is no undertaking from the manager of the relevant scheme not to bring proceedings against the FSCS manager; or
(b) that the FSCS manager considers that the terms of any such undertaking are unsatisfactory.
(7) The sixth ground is—
(a) that there are no arrangements for the reimbursement of any expenses incurred by the FSCS manager in connection with any proceedings brought against it in respect of its relevant scheme functions (including expenses incurred in meeting any award of damages made against it); or
(b) that the FSCS manager considers that any such arrangements are unsatisfactory.
(8) In subsection (6) references to an undertaking of the kind mentioned there are to an undertaking not to bring proceedings in respect of the FSCS manager's relevant scheme functions except proceedings in respect of an act or omission of the FSCS manager that is alleged to have been in bad faith.
(9) In this section “proceedings” includes proceedings outside the United Kingdom.
(1) The regulators may by rules make provision in connection with the exercise by the FSCS manager of functions in respect of relevant schemes.
(2) The provision that may be made by the rules includes any provision corresponding to provision that could be contained in the FSCS; but this is subject to subsections (3) and (4).
(3) The rules may confer on the FSCS manager a power to impose levies on authorised persons (or any class of authorised persons) for the purpose of meeting its management expenses incurred in connection with its functions in respect of relevant schemes.
(4) But if the rules confer such a power they must provide that the power may be exercised in relation to expenses incurred in connection with a relevant scheme only if the FSCS manager has tried its best to obtain reimbursement of the expenses from the manager of the relevant scheme.
(5) The rules may apply any provision of the FSCS, with or without modifications.
(6) An amount payable to the FSCS manager as a result of any provision of the rules made by virtue of subsection (3) may be recovered as a debt due to the FSCS manager.
(7) References to the FSCS manager's “management expenses” are to its expenses incurred otherwise than in paying compensation.
(1) This Part provides for a scheme under which certain disputes may be resolved quickly and with minimum formality by an independent person.
(2) The scheme is to be administered by a body corporate (“the scheme operator”).
(3) The scheme is to be operated under a name chosen by the scheme operator but is referred to in this Act as “the ombudsman scheme”.
(4) Schedule 17 makes provision in connection with the ombudsman scheme and the scheme operator.
(1) A complaint which relates to an act or omission of a person (“the respondent”) in carrying on an activity to which compulsory jurisdiction rules apply is to be dealt with under the ombudsman scheme if the conditions mentioned in subsection (2) are satisfied.
(2) The conditions are that—
(a) the complainant is eligible and wishes to have the complaint dealt with under the scheme;
(b) the respondent was an authorised person or an electronic money issuer within the meaning of the Electronic Money Regulations 2011 , or a payment service provider within the meaning of the Payment Services Regulations 2017, at the time of the act or omission to which the complaint relates; and
(c) the act or omission to which the complaint relates occurred at a time when compulsory jurisdiction rules were in force in relation to the activity in question.
(3) “Compulsory jurisdiction rules” means rules—
(a) made by the FCA for the purposes of this section; and
(b) specifying the activities to which they apply.
(4) Only activities which are regulated activities, or which could be made regulated activities by an order under section 22, may be specified.
(5) Activities may be specified by reference to specified categories (however described).
(5A) If the FCA specifies activities which are account information services provided by authorised payment institutions or EEA authorised payment institutions, the FCA must specify to the same extent account information services provided by registered account information service providers or, as the case may be, EEA registered account information service providers.
(5B) Expressions used in subsection (5A) and in the Payments Services Regulations 2017 have the same meaning in that subsection as they do in those Regulations.
(6) A complainant is eligible, in relation to the compulsory jurisdiction of the ombudsman scheme, if he falls within a class of person specified in the rules as eligible.
(7) The rules—
(a) may include provision for persons other than individuals to be eligible; but
(b) may not provide for authorised persons to be eligible except in specified circumstances or in relation to complaints of a specified kind.
(7A) The rules must provide that a person within subsection (7B) is eligible in relation to a complaint to which subsection (7C) applies.
(7B) A person is within this subsection if he or she has been identified by a respondent, in carrying on an activity to which the rules apply, as—
(a) a politically exposed person;
(b) a family member of a politically exposed person; or
(c) a known close associate of a politically exposed person.
(7C) This subsection applies to a complaint—
(a) that the complainant has been incorrectly identified as a person within subsection (7B); or
(b) relating to an act or omission of the respondent in consequence of the identification of the complainant as a person within subsection (7B).
(7D) In subsection (7B), “politically exposed person”, “family member” and “known close associate” have the meanings given in regulation 35(12) of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
(8) The jurisdiction of the scheme which results from this section is referred to in this Act as the “compulsory jurisdiction”.