(1) Section 68 of the Financial Services Act 2012 (cases in which Treasury may arrange independent inquiries) is amended as follows.
(2) In subsection (1), for “two” substitute “ three ”.
(3) After subsection (3) insert—
(3A) The third case is where it appears to the Treasury that—
(a) events have occurred in relation to a regulated payment system which caused or risked causing significant damage to business or other interests throughout the United Kingdom, and
(b) those events might not have occurred, or the threat or damage might have been reduced, but for a serious failure in—
(i) the system established by Part 5 of the Financial Services (Banking Reform) Act 2013 for the regulation of payment systems, or
(ii) the operation of that system.
(4) In section 83(1) (interpretation), after the definition of “regulated activity” insert—
“regulated payment system” has the same meaning as in Part 5 of the Financial Services (Banking Reform) Act 2013 (see section 110 of that Act);
.
(1) Part 5 of the Financial Services Act 2012 (inquiries and investigations) is amended as follows.
(2) After section 76 insert—
Duty of Payment Systems Regulator to investigate and report on possible regulatory failure
76A (1) Subsection (3) applies where it appears to the Payment Systems Regulator that—
(a) events have occurred in relation to a regulated payment system which had or could have had a significant adverse effect on effective competition in the interests of—
(i) participants in the payment system, or
(ii) those who use, or are likely to use, the services provided by the payment system, and
(b) those events might not have occurred, or the adverse effect might have been reduced, but for a serious failure in—
(i) the system established by Part 5 of the Financial Services (Banking Reform) Act 2013 for the regulation of payment systems, or
(ii) the operation of that system.
(2) Subsection (3) also applies where the Treasury direct the Payment Systems Regulator that it appears to the Treasury that the conditions in subsection (1) are met in relation to specified events.
(3) The Payment Systems Regulator must carry out an investigation into the events and the circumstances surrounding them and report to the Treasury on the result of the investigation.
(4) Subsection (3) does not apply by virtue of subsection (1) if the Treasury direct the Payment Systems Regulator that it is not required to carry out an investigation into the events concerned.
(5) In this section “participant”, in relation to a regulated payment system, has the same meaning as in Part 5 of the Financial Services (Banking Reform) Act 2013 (see section 42 of that Act).
(3) In section 77 (power of Treasury to require FCA or PRA to undertake investigation)—
(a) in subsection (1)(a), for “either regulator” substitute “ a regulator ”;
(b) in subsection (3), omit the “or” at the end of paragraph (b) and after paragraph (c) insert
, or
(d) a regulated payment system.
;
(c) the heading of that section becomes “ Power of Treasury to require regulator to undertake investigation ”.
(4) In section 78 (conduct of investigation), in subsection (1), for “or 74” substitute “ , 74 or 76A ”.
(5) In section 79 (conclusion of investigation), for “or 74” substitute “ , 74 or 76A ”.
(6) In section 80 (statements of policy), in subsection (1)(a), for “or 74” substitute “ , 74 or 76A ”.
(7) In section 81 (publication of directions), in subsection (1), after paragraph (b) insert—
(ba) section 76A(4);
.
(8) In section 83(1) (interpretation)—
(a) after the definition of “listed securities” insert—
“the Payment Systems Regulator” means the body established under section 40 of the Financial Services (Banking Reform) Act 2013;
;
(b) in the definition of “regulator”, for “or the PRA” substitute “ , the PRA or the Payment Systems Regulator ”.
(1) Chapter 4 of Part 9A of FSMA 2000 (competition scrutiny) applies to the Payment Systems Regulator's practices and regulating provisions in relation to payment systems as it applies to the FCA's practices and regulating provisions within the meaning of that Chapter.
(2) In subsection (1)—
(a) the reference to the Payment Systems Regulator's practices in relation to payment systems is a reference to practices adopted by it in the exercise of functions under this Part, and
(b) the reference to the Payment Systems Regulator's regulating provisions in relation to payment systems is a reference to the following—
(i) any general directions given under section 54;
(ii) any generally-imposed requirements under section 55;
(iii) any guidance given under section 96.
(1) This section applies where it appears to the Payment Systems Regulator that there is a material risk that a relevant action it proposes to take would be incompatible with an international trade obligation.
(2) The Payment Systems Regulator must give written notice to the Treasury of the proposed action before proceeding to take it.
(3) Subsection (2) applies only if a duty to consult applies in respect of the taking of the relevant action.
(4) For the purposes of subsection (1) the Payment Systems Regulator proposes to take a “relevant action” if it—
(a) proposes to impose a generally applicable requirement, or
(b) proposes to make changes to its general policies and practices.
(5) For the purposes of subsection (3) a duty to consult applies in respect of a relevant action if—
(a) the duty imposed by section 104 to publish a draft of a proposed requirement applies in respect of the action, or
(b) any other duty (whether or not imposed by a provision of this Act) to publish the proposal to take the action in question applies.
(6) The requirement imposed by subsection (2) must be carried out before the duty to consult in respect of the relevant action is carried out.
(7) Subsection (8) applies in a case where a notice under subsection (2) is not given because of subsection (3).
(8) The Payment Systems Regulator must give written notice to the Treasury of the relevant action it has taken as soon as reasonably practicable after taking it if it appears to the Regulator that there is a material risk that the action is incompatible with an international trade obligation.
(9) In this section “international trade obligation” means an obligation of the United Kingdom that relates to financial services or markets under—
(a) a free trade agreement, as defined by section 5(1) of the Trade Act 2021, or
(b) the agreement establishing the World Trade Organisation signed at Marrakesh on 15 April 1994.
108 Relationship with Part 8 of the Payment Services Regulations 2017
(1) The Payment Systems Regulator may not exercise any power under sections 54 to 58 for the purposes of enabling a person to obtain or maintain access to, or participation in, a payment system in circumstances in which regulation 103 (prohibition on restrictive rules on access to payment systems) or 104 (indirect access to designated payment systems) of the Payment Services Regulations 2017 applies in relation to access to, or participation in, the payment system by the person.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
109 Exemption from liability in damages for FCA and PRA
(1) In paragraph 25 of Schedule 1ZA to FSMA 2000 (FCA's exemption from liability in damages), after sub-paragraph (1) insert—
(1A) In sub-paragraph (1) the reference to the FCA's functions includes its functions under Part 5 of the Financial Services (Banking Reform) Act 2013 (regulation of payment systems).
(2) In paragraph 33 of Schedule 1ZB to FSMA 2000 (PRA's exemption from liability in damages), after sub-paragraph (1) insert—
(1A) In sub-paragraph (1) the reference to the PRA's functions includes its functions under Part 5 of the Financial Services (Banking Reform) Act 2013 (regulation of payment systems).
(3) For provision conferring immunity from liability in damages on the Bank of England in respect of its functions, see section 244 of the Banking Act 2009.
(1) In this Part—
“CAT-appealable decision” has the meaning given by section 76(4);
“CMA-appealable decision” has the meaning given by section 76(7);
“compliance failure” has the meaning given by section 71;
“designation order” has the meaning given by section 43;
“digital settlement asset” has the meaning given by section 41(2A);
“digital settlement asset exchange provider” has the meaning given by section 182(5B) of the Banking Act 2009;
“direct access”, in relation to a payment system, is to be read in accordance with section 42(6);
“document” includes information recorded in any form and, in relation to information recorded otherwise than in legible form, references to its production include references to producing a copy of the information in legible form or in a form from which it can readily be produced in visible and legible form;
“general direction” has the meaning given by section 54(5);
“general guidance” has the meaning given by section 96(3);
“generally applicable requirement” has the meaning given by section 104(1);
“generally-imposed requirement” has the meaning given by section 55(3);
“infrastructure provider”, in relation to a payment system, has the meaning given by section 42(4);
“operator”, in relation to a payment system, has the meaning given by section 42(3);
“participant”, in relation to a payment system, has the meaning given by section 42 (and references to participation in a payment system are to be read in accordance with that section);
“payment service provider”, in relation to a payment system, has the meaning given by section 42(5);
“payment system” has the meaning given by section 41;
“recognised ... payment system” means a payment system (within the meaning of Part 5 of the Banking Act 2009) specified as a recognised system for the purposes of that Part;
“regulated payment system” means a payment system designated as a regulated payment system by a designation order;
“the UK financial system” has the meaning given by section 1I of FSMA 2000.
(2) References in this Part to the Payment Systems Regulator's payment systems objectives are to be read in accordance with section 49(2).
(3) References in this Part to the Bank of England's capacity as a monetary authority are to be read in accordance with section 244 of the Banking Act 2009.
111 Financial market and cash infrastructure administration
This Part—
(a) provides for a procedure to be known as FMI administration, ...
(b) restricts the powers of persons other than the Bank of England in relation to the insolvency of infrastructure companies, and
(c) confers power on the Bank of England to participate in proceedings under Part 26A of the Companies Act 2006 (arrangements and reconstructions: companies in financial difficulty).
(1) In this Part “infrastructure company” has the meaning given by this section.
(2) “Infrastructure company” means a company which is—
(a) the operator of a recognised ... payment system, other than an operator excluded by subsection (3),
(aa) a recognised DSA service provider,
(b) a recognised CSD ..., ...
(ba) a person recognised for the purposes of Part 5A of the Banking Act 2009 (wholesale cash distribution) as having systemic significance, or
(c) a company designated by the Treasury under subsection (4).
(3) But a company is not an infrastructure company if it is a recognised central counterparty, as defined by section 285 of FSMA 2000.
(4) The Treasury may by order designate a company for the purposes of subsection (2)(c) if—
(a) the company provides services to a person falling within subsection (2)(a), (b) or (ba), and
(b) the Treasury are satisfied that an interruption in the provision of those services would have a serious adverse effect on the effective operation of the recognised ... payment system or securities settlement system in question or, in the case of a person falling within subsection (2)(ba), a relevant function.
(5) An order under subsection (4) must specify the recognised ... payment system or securities settlement system in connection with which the company is designated.
(6) Before designating a company under subsection (4), the Treasury must consult—
(a) the company to be designated,
(b) the person within subsection (2)(a), (b) or (ba) to whom the company provides services,
(c) the Bank of England,
(d) if the company is a PRA-authorised person, the PRA and the FCA, and
(e) if the company is an authorised person other than a PRA-authorised person, the FCA.
(7) In subsection (4)(b), “relevant function” means a function performed by the person in relation to wholesale cash distribution.
(1) In this Part—
“company” means a company registered under the Companies Act 2006;
“operator”, in relation to a recognised ... payment system, is to be read in accordance with section 183 of the Banking Act 2009;
“recognised CSD” has the meaning given by section 285 of FSMA 2000;
“recognised DSA service provider” means a DSA service provider, as defined by section 182(5A) of the Banking Act 2009, in respect of which a recognition order under section 184A of that Act is in force;
“recognised ... payment system” means a payment system, as defined by section 182 of the Banking Act 2009, in respect of which a recognition order under section 184 of that Act is in force;
“the relevant system” means—
in relation to an infrastructure company falling within subsection (2)(a) of section 112, the recognised ... payment system,
in relation to an infrastructure company falling within subsection (2)(b) of that section, the securities settlement system,
in relation to an infrastructure company falling within subsection (2)(ba) of that section, any system used by the company to facilitate or control wholesale cash distribution,
in relation to a company designated under subsection (4) of that section, the recognised ... payment system or securities settlement system falling within paragraph (b) of that subsection;
“securities settlement system” means a computer-based system, and procedures, which enable title to units of a security to be evidenced and transferred without a written instrument, and which facilitate supplementary and incidental matters.
“wholesale cash distribution” and “wholesale cash distribution activities” have the meanings given by section 206E of the Banking Act 2009.
(2) Expressions used in the definition of “securities settlement system” in subsection (1) are to be read in accordance with section 783 of the Companies Act 2006.
(1) In this Part “FMI administration order” means an order which—
(a) is made by the court in relation to an infrastructure company, and
(b) directs that, while the order is in force, the affairs, business and property of the company are to be managed by a person appointed by the court.
(2) A person appointed as mentioned in subsection (1)(b) is referred to in this Part as an FMI administrator.
(3) The FMI administrator of a company must manage its affairs, business and property, and exercise and perform the FMI administrator's functions, so as to achieve the objective in section 115.
(1) Where an FMI administrator is appointed in relation to the operator of a recognised ... payment system , or a recognised DSA service provider, ..., the objective of the FMI administration is—
(a) to ensure that the system or provider is and continues to be maintained and operated as an efficient and effective system or provider,
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , and
(c) to ensure by one or both of the specified means that it becomes unnecessary for the FMI administration order to remain in force for that purpose ....
(1A) Where an FMI administrator is appointed in relation to a recognised CSD ..., the objective of the FMI administration is—
(a) to ensure that the system is and continues to be maintained and operated as an efficient and effective system,
(b) to ensure that the protected activities continue to be carried on, and
(c) to ensure by one or both of the specified means that it becomes unnecessary for the FMI administration order to remain in force for that purpose or those purposes.
(1B) Where an FMI administrator is appointed in relation to a company that is a person recognised for the purposes of Part 5A of the Banking Act 2009, the objective of the FMI administration is—
(a) to ensure that the functions performed by the person in relation to wholesale cash distribution are and continue to be performed efficiently and effectively, and
(b) to ensure by one or both of the specified means that it becomes unnecessary for the FMI administration order to remain in force for that purpose or those purposes.
(2) Where an FMI administrator is appointed in relation to a company designated under subsection (4) of section 112, the objective of the FMI administration is—
(a) to ensure that services falling within that subsection continue to be provided, and
(b) to ensure by one or both of the specified means that it becomes unnecessary for the FMI administration order to remain in force for that purpose.
(3) The protected activities referred to in subsection (1A)(b) are such activities as the Bank of England may from time to time direct, which must be—
(a) regulated activities falling within section 285(3D) of FSMA 2000, or
(b) related activities which are necessary for the efficient carrying on of any of those regulated activities.
(4) The specified means are—
(a) the rescue as a going concern of the company subject to the FMI administration order, and
(b) transfers falling within subsection (5).
(5) A transfer falls within this subsection if it is a transfer as a going concern—
(a) to another company, or
(b) as respects different parts of the undertaking of the company subject to the FMI administration order, to two or more different companies,
of so much of that undertaking as it is appropriate to transfer for the purpose of achieving the objective of the FMI administration.
(6) The means by which transfers falling within subsection (5) may be effected include, in particular—
(a) a transfer of the undertaking of the company subject to the FMI administration order, or of part of its undertaking, to a wholly-owned subsidiary of that company, and
(b) the transfer to a company of securities of a wholly-owned subsidiary to which there has been a transfer falling within paragraph (a).
(7) The objective of the FMI administration may be achieved by transfers falling within subsection (5) only to the extent that—
(a) the rescue as a going concern of the company subject to the FMI administration order is not reasonably practicable or is not reasonably practicable without such transfers,
(b) the rescue of that company as a going concern will not achieve that objective or will not do so without such transfers, or
(c) such transfers would produce a result for the company's creditors as a whole that is better than the result that would be produced without them.
(1) An application for an FMI administration order may be made to the court by the Bank of England.
(2) An application must nominate a person to be appointed as the FMI administrator.
(3) The infrastructure company must be given notice of an application, in accordance with rules under section 411 of the 1986 Act (as applied in relation to FMI administration).
(1) The court may make an FMI administration order in relation to an infrastructure company if satisfied—
(a) that the company is unable to pay its debts,
(b) that the company is likely to be unable to pay its debts, or
(c) that, on a petition presented by the Secretary of State under section 124A of the 1986 Act (petition for winding up on grounds of public interest), it would be just and equitable (disregarding the objective of the FMI administration) to wind up the company.
(2) The court may not make an FMI administration order on the ground set out in subsection (1)(c) unless the Secretary of State has certified to the court that the case is one in which the Secretary of State considers (disregarding the objective of the FMI administration) that it would be appropriate to petition under section 124A of the 1986 Act.
(3) On an application for an FMI administration order, the court may—
(a) grant the application;
(b) dismiss the application;
(c) adjourn the application (generally or to a specified date);
(d) make an interim order;
(e) treat the application as a winding-up petition and make any order which the court could make under section 125 of the 1986 Act;
(f) make any other order which the court thinks appropriate.
(4) An interim order under subsection (3)(d) may, in particular—
(a) restrict the exercise of a power of the company or of its directors;
(b) make provision conferring a discretion on the court or on a person qualified to act as an insolvency practitioner in relation to the company.
(5) For the purposes of this section a company is unable to pay its debts if it is treated as being so unable under section 123 of the 1986 Act (definition of inability to pay debts).
(1) The FMI administrator of a company—
(a) is an officer of the court, and
(b) in exercising and performing powers and duties in relation to the company, is the company's agent.
(2) The management by the FMI administrator of a company of any of its affairs, business or property must be carried out for the purpose of achieving the objective of the FMI administration as quickly and efficiently as is reasonably practicable.
(3) The FMI administrator of a company must exercise and perform powers and duties in the way which, so far as it is consistent with the objective of the FMI administration to do so, best protects—
(a) the interests of the company's creditors as a whole, and
(b) subject to those interests, the interests of the company's members as a whole.
(1) This section applies where, before the commencement of FMI administration, the infrastructure company had entered into arrangements with a supplier for the provision of a supply to the infrastructure company.
(2) After the commencement of FMI administration, the supplier—
(a) must not terminate a supply unless—
(i) any charges in respect of the supply which relate to a supply given after the commencement of FMI administration remain unpaid for more than 28 days,
(ii) the FMI administrator consents to the termination, or
(iii) the supplier has the permission of the court, which may be given if the supplier can show that the continued provision of the supply would cause the supplier to suffer hardship,
(b) must not make it a condition of a supply that any charges in respect of the supply which relate to a supply given before the commencement of FMI administration are paid, and
(c) must not do anything which has the effect of making it a condition of the giving of a supply that any charges within paragraph (b) are paid.
(3) Where, before the commencement of FMI administration, a contractual right to terminate a supply has arisen but has not been exercised, then, for the purposes of this section, the commencement of FMI administration causes that right to lapse and the supply is only to be terminated if a ground in subsection (2)(a) applies.
(4) Any provision in a contract between the infrastructure company and the supplier that purports to terminate the agreement if any action is taken to put the infrastructure company in FMI administration is void.
(5) Any expenses incurred by the infrastructure company on the provision of a supply after the commencement of FMI administration are to be treated as necessary disbursements in the course of the FMI administration.
(6) In this section—
“commencement of FMI administration” means the making of the FMI administration order;
“supplier” means the person controlling the provision of a supply to the infrastructure company, and includes a company that is a group undertaking (as defined by section 1161(5) of the Companies Act 2006) in respect of the infrastructure company;
“supply” means a supply of any of the following—
computer hardware or software used by the infrastructure company in connection with the operation of the relevant system;
in the case of an infrastructure company that is a person recognised for the purposes of Part 5A of the Banking Act 2009, goods or services used by the person in connection with wholesale cash distribution activities;
financial data;
infrastructure permitting electronic communication services;
data processing;
access to secure data networks used by the infrastructure company in connection with the operation of the relevant system;
staff.
(1) If the Bank of England considers it necessary to do so for the purpose of achieving the objective of an FMI administration, the Bank may direct the FMI administrator to take, or refrain from taking, specified action.
(2) In deciding whether to give a direction under this section, the Bank of England must have regard to the public interest in—
(a) the protection and enhancement of the stability of the financial system of the United Kingdom, and
(b) the maintenance of public confidence in that system.
(3) A direction under this section must not be incompatible with a direction of the court that is in force under Schedule B1 to the 1986 Act.
(4) The Bank of England must, within a reasonable time of giving the direction, give the FMI administrator a statement of its reasons for giving the direction.
(5) A person listed in subsection (6) has immunity from liability in damages in respect of action or inaction in accordance with a direction under this section.
(6) Those persons are—
(a) the FMI administrator;
(b) the company in FMI administration;
(c) the officers or staff of the company.
(7) Immunity conferred by this section does not extend to action or inaction—
(a) in bad faith, or
(b) in contravention of section 6(1) of the Human Rights Act 1998.
(8) This section does not limit the powers conferred on the Bank of England by section 191 of the Banking Act 2009 (directions) in relation to a recognised ...payment system or section 206M of that Act (directions) in relation to a person recognised for the purposes of Part 5A of that Act.
121 Conduct of administration, transfer schemes etc.
(1) Schedule 6 (which applies the provisions of Schedule B1 to the 1986 Act about ordinary administration orders and certain other enactments to FMI administration orders) has effect.
(2) Schedule 7 (which makes provision for transfer schemes to achieve the objective of an FMI administration) has effect.
(3) The power to make rules conferred by section 411(1B) of the 1986 Act (rules relating to bank administration) is to apply for the purpose of giving effect to this Part as it applies for the purposes of giving effect to Part 3 of the Banking Act 2009 (and, accordingly, as if the reference in section 411(1B) to that Part included a reference to this Part).
122 Restriction on winding-up orders and voluntary winding up
(1) A petition by a person other than the Bank of England for a winding up order in respect of an infrastructure company may not be determined unless—
(a) the petitioner has notified the Bank of England that the petition has been presented, and
(b) the period of 14 days beginning with the day on which the notice is received by the Bank has ended.
(2) A resolution for the voluntary winding up of an infrastructure company may not be made unless—
(a) the infrastructure company has applied to the court under this section,
(b) the company has notified the Bank of England that the application has been made, and
(c) after the end of the period of 14 days beginning with the day on which the notice is received by the Bank, the court gives permission for the resolution to be made.
123 Restriction on making of ordinary administration orders
(1) This section applies where an ordinary administration application is made in relation to an infrastructure company by a person other than the Bank of England.
(2) The court must dismiss the application if—
(a) an FMI administration order is in force in relation to the company, or
(b) an FMI administration order has been made in relation to the company but is not yet in force.
(3) Where subsection (2) does not apply, the court, on hearing the application, must not exercise its powers under paragraph 13 of Schedule B1 to the 1986 Act (other than its power of adjournment) unless—
(a) the applicant has notified the Bank of England that the application has been made, and
(b) the period of 14 days beginning with the day on which the notice is received by the Bank has ended.
(4) On the making of an FMI administration order in relation to an infrastructure company, the court must dismiss any ordinary administration application made in relation to the company which is outstanding.
(5) “Ordinary administration application” means an application under paragraph 12 of Schedule B1 to the 1986 Act.
A person may not take any step to enforce a security over property of an infrastructure company unless—
(a) notice of the intention to do so has been given to the Bank of England, and
(b) the period of 14 days beginning with the day on which the notice was received by the Bank has ended.
124A Powers of Bank to participate in Part 26A proceedings
(1) This section applies where Part 26A of the Companies Act 2006 (“the 2006 Act”) (arrangements and reconstructions: companies in financial difficulty) applies in relation to an infrastructure company.
(2) A relevant applicant must give notice to the Bank of England of—
(a) any application which the relevant applicant intends to make under section 901C(1) of the 2006 Act, and
(b) any application which the relevant applicant believes a creditor or member of the company has made, or intends to make, under section 901C(1) of that Act in relation to the company.
(3) A relevant applicant may not make an application under section 901C(1) of the 2006 Act in relation to the company without the consent of the Bank of England.
(4) In this section “relevant applicant”, in relation to a company, means—
(a) the company;
(b) if the company is being wound up, the liquidator;
(c) if the company is in administration, the administrator.
(5) The Bank of England is entitled to be heard at any hearing of an application made under section 901C or 901F of the 2006 Act in relation to the company.
(6) Any notice or other document required to be sent to a creditor of the company must also be sent to the Bank of England.
(7) A person appointed for the purpose by the Bank of England is entitled—
(a) to attend any meeting of creditors of the company summoned under section 901C of the 2006 Act;
(b) to make representations as to any matter for decision at such a meeting.
(8) Sections 197, 198 and 202A of the Banking Act 2009, and sections 201 and 202 of that Act, so far as relating to those sections, apply in relation to a failure by an infrastructure company to comply with subsection (2) or (3) above as they apply in relation to a compliance failure within the meaning of Part 5 of that Act.
(1) This section applies where an FMI administration order has been made in relation to an infrastructure company.
(2) The Treasury may, out of money provided by Parliament, make loans to the company for achieving the objective in section 115.
(3) A loan under this section may be made on such terms as the Treasury think fit.
(4) The Treasury must pay into the Consolidated Fund sums received by them as a result of this section.
(1) This section applies where an FMI administration order has been made in relation to an infrastructure company.
(2) The Treasury may agree to indemnify persons in respect of one or both of the following—
(a) liabilities incurred in connection with the exercise of powers and duties by the FMI administrator;
(b) loss or damage sustained in that connection.
(3) The agreement may be made in whatever manner, and on whatever terms, the Treasury think fit.
(4) As soon as practicable after agreeing to indemnify persons under this section, the Treasury must lay before Parliament a statement of the agreement.
(5) If sums are paid by the Treasury in consequence of an indemnity agreed to under this section, the infrastructure company must pay the Treasury—
(a) such amounts in or towards the repayment to them of those sums as the Treasury may direct, and
(b) interest, at such rates as they may direct, on amounts outstanding under this subsection.
(6) Subsection (5) does not apply in the case of a sum paid by the Treasury for indemnifying a person in respect of a liability to the infrastructure company.
(7) Where a sum has been paid out by the Treasury in consequence of an indemnity agreed to under this section, the Treasury must lay a statement relating to that sum before Parliament—
(a) as soon as practicable after the end of the financial year in which that sum is paid out, and
(b) (except where subsection (5) does not apply in the case of the sum) as soon as practicable after the end of each subsequent relevant financial year.
(8) In relation to a sum paid out in consequence of an indemnity, a financial year is a relevant financial year for the purposes of subsection (7) unless—
(a) before the beginning of that year, the whole of that sum has been repaid to the Treasury under subsection (5), and
(b) the infrastructure company is not at any time during that year subject to liability to pay interest on amounts that became due under that subsection in respect of that sum.
(9) The power of the Treasury to agree to indemnify persons—
(a) is confined to a power to agree to indemnify persons in respect of liabilities, loss and damage incurred or sustained by them as relevant persons, but
(b) includes power to agree to indemnify persons (whether or not they are identified or identifiable at the time of the agreement) who subsequently become relevant persons.
(10) For the purposes of this section each of the following is a relevant person—
(a) the FMI administrator;
(b) an employee of the FMI administrator;
(c) a member or employee of a firm of which the FMI administrator is a member;
(d) a member or employee of a firm of which the FMI administrator is an employee;
(e) a member or employee of a firm of which the FMI administrator was an employee or member at a time when the order was in force;
(f) a body corporate which is the employer of the FMI administrator;
(g) an officer, employee or member of such a body corporate.
(11) For the purposes of subsection (10)—
(a) the references to the FMI administrator are to be read, where two or more persons are appointed to act as the FMI administrator, as references to any one or more of them, and
(b) the references to a firm of which a person was a member or employee at a particular time include references to a firm which holds itself out to be the successor of a firm of which the person was a member or employee at that time.
(12) The Treasury must pay into the Consolidated Fund sums received by them as a result of subsection (5).
(1) In this Part—
“the 1986 Act” means the Insolvency Act 1986;
“business”, “member”, “property” and “security” have the same meaning as in the 1986 Act;
“company” has the meaning given by section 113;
“the court” means—
in England and Wales and Northern Ireland, the High Court;
in Scotland, the Court of Session;
“FMI administration order” and “FMI administrator” are to be read in accordance with section 114;
“infrastructure company” has the meaning given by section 112;
“operator”, in relation to a recognised ... payment system, has the meaning given by section 113;
“recognised ... payment system” has the meaning given by section 113;
“regulated activity” has the same meaning as in FSMA 2000;
“the relevant system” has the meaning given by section 113;
“securities settlement system” has the meaning given by section 113.
“wholesale cash distribution” and “wholesale cash distribution activities” have the meanings given by section 113.
(2) In this Part references to the FMI administrator of a company include a person appointed under paragraph 91 or 103 of Schedule B1 to the 1986 Act, as applied by Schedule 6 to this Act, to be the FMI administrator of a company.
(3) In this Part references to a person qualified to act as an insolvency practitioner in relation to a company are to be read in accordance with Part 13 of the 1986 Act, but as if references in that Part to a company included a company registered under the Companies Act 2006 in Northern Ireland.
130 Competition as a secondary objective of the PRA
(1) For section 2H of FSMA 2000 substitute—
Secondary competition objective and duty to have regard to regulatory principles
2H (1) When discharging its general functions in a way that advances its objectives (see section 2F), the PRA must so far as is reasonably possible act in a way which, as a secondary objective, facilitates effective competition in the markets for services provided by PRA-authorised persons in carrying on regulated activities.
(2) In discharging its general functions, the PRA must also have regard to the regulatory principles in section 3B.
(2) In section 3B (regulatory principles to be applied by both regulators), in subsection (1), for “2H(1)(a)” substitute “ 2H(2) ”.
(3) In Schedule 1ZB to FSMA 2000 (the Prudential Regulation Authority)—
(a) in paragraph 19 (annual report), in sub-paragraph (1)—
(i) after paragraph (b) insert—
(ba) how it has complied with section 2H(1),
, and
(ii) in paragraph (c), omit the words from “and of” onwards, and
(b) in paragraph 20 (consultation about annual report), in sub-paragraph (1)(c), for the words from “and the PRA” onwards substitute “ and the PRA has facilitated effective competition in accordance with section 2H and has considered the regulatory principles in section 3B ”.
131 Duty of FCA to make rules restricting charges for high-cost short-term credit
(1) In section 137C of FSMA 2000 (FCA general rules: cost of credit and duration of credit agreements), after subsection (1) insert—
(1A) The FCA must make rules by virtue of subsection (1)(a)(ii) and (b) in relation to one or more specified descriptions of regulated credit agreement appearing to the FCA to involve the provision of high-cost short-term credit, with a view to securing an appropriate degree of protection for borrowers against excessive charges.
(1B) Before the FCA publishes a draft of any rules to be made by virtue of subsection (1)(a)(ii) or (b), it must consult the Treasury.
(2) In Schedule 1ZA to FSMA 2000, in paragraph 11 (FCA's annual report), in sub-paragraph (1), after paragraph (h) insert—
(ha) any rules that it has made as a result of section 137C during the period to which the report relates and the kinds of regulated credit agreement (within the meaning of that section) to which the rules apply,
.
(3) The FCA must ensure any rules that it is required to make as a result of the amendment made by subsection (1) are made not later than 2 January 2015 and apply (at least) to agreements entered into on or after that date.
In section 1Q of FSMA 2000 (the Consumer Panel), after subsection (5) insert—
(5A) If it appears to the Consumer Panel that any matter being considered by it is relevant to the extent to which the general policies and practices of the PRA are consistent with the PRA's general duties under sections 2B to 2H, it may communicate to the PRA any views relating to that matter.
(5B) The PRA may arrange to meet any of the FCA's expenditure on the Consumer Panel which is attributable to the Panel's functions under subsection (5A).
133 Power of FCA and PRA to make rules applying to parent undertakings
(1) After section 192J of FSMA 2000 insert—
Rules applying to parent undertakings of ring-fenced bodies
Rules applying to parent undertakings of ring-fenced bodies
192JA (1) The appropriate regulator may make such rules applying to bodies corporate falling within subsection (2) as appear to the regulator to be necessary or expedient for the group ring-fencing purposes.
(2) A body corporate falls within this subsection if—
(a) it is incorporated in the United Kingdom or has a place of business in the United Kingdom,
(b) it is a parent undertaking of a ring-fenced body, and
(c) it is not itself an authorised person.
(3) The “group ring-fencing purposes” are the purposes set out in section 142H(4).
(4) “The appropriate regulator” means—
(a) in relation to the parent undertaking of a ring-fenced body that is a PRA-authorised person, the PRA;
(b) in any other case, the FCA.
Rules requiring parent undertakings to facilitate resolution
Rules requiring parent undertakings to facilitate resolution
192JB (1) The appropriate regulator may make rules requiring a qualifying parent undertaking to make arrangements that would in the opinion of the regulator allow or facilitate the exercise of the resolution powers in relation to the qualifying parent undertaking or any of its subsidiary undertakings in the event of a situation arising where all or part of the business of the parent undertaking or the subsidiary undertaking encounters or is likely to encounter financial difficulties.
(2) The “resolution powers” are—
(a) the powers conferred on the Treasury and the Bank of England by or under Parts 1 to 3 of the Banking Act 2009, and
(b) any similar powers exercisable by an authority outside the United Kingdom.
(3) The arrangements that may be required include arrangements relating to—
(a) the issue of debt instruments by the parent undertaking;
(b) the provision to a subsidiary undertaking (“S”) or a transferee by the parent undertaking, or by any other subsidiary undertaking of the parent undertaking, of such services and facilities as would be required to enable S or the transferee to operate the business, or part of the business, effectively.
(4) In subsection (3)(b) “transferee” means a person to whom all or part of the business of the parent undertaking or the subsidiary undertaking could be transferred as a result of the exercise of the resolution powers.
(5) “Debt instrument” has the same meaning as in section 142Y.
(6) “The appropriate regulator” means—
(a) where the subsidiary undertakings of the qualifying parent undertaking include a ring-fenced body that is a PRA-authorised person, the PRA;
(b) where the subsidiary undertakings of the qualifying parent undertaking include one or more PRA-authorised persons but do not include any authorised person that is not a PRA-authorised person, the PRA;
(c) where the subsidiary undertakings of the qualifying parent undertaking do not include any PRA-authorised person, the FCA;
(d) in any other case, the PRA or the FCA.
(2) In section 192K of FSMA 2000 (power to impose penalty or issue censure)—
(a) in subsection (1), after “section 192J” insert “ or 192JB ”, and
(b) after that subsection insert—
(1A) This section also applies if a regulator is satisfied that a person (“P”) who is or has been a parent undertaking of a ring-fenced body has contravened a provision of rules made by that regulator under section 192JA.
(1) Part 22 of FSMA 2000 (auditors and actuaries) is amended as follows.
(2) After section 339A insert—
Duty to meet auditors of certain institutions
339B (1) The FCA must make arrangements for meetings to take place at least once a year between—
(a) the FCA, and
(b) the auditor of any PRA-authorised person to which section 339C applies.
(2) The PRA must make arrangements for meetings to take place at least once a year between—
(a) the PRA, and
(b) the auditor of any PRA-authorised person to which section 339C applies.
(3) The annual report of each regulator must include the number of meetings that have taken place during the period to which the report relates between the regulator and auditors of PRA-authorised persons to which section 339C applies.
(4) In subsection (3) “the annual report” means—
(a) in relation to the FCA, every report which it is required by paragraph 11 of Schedule 1ZA to make to the Treasury, and
(b) in relation to the PRA, every report which it is required by paragraph 19 of Schedule 1ZB to make to the Treasury.
(5) In this section “auditor” means an auditor appointed under or as a result of a statutory provision.
PRA-authorised persons to which this section applies
339C (1) This section applies to a PRA-authorised person which—
(a) is a UK institution,
(b) meets condition A or B,
(c) is not an insurer or a credit union, and
(d) is, in the opinion of the PRA, important to the stability of the UK financial system.
(2) Condition A is that the person has permission under Part 4A to carry on the regulated activity of accepting deposits.
(3) Condition B is that—
(a) the person is an investment firm that has permission under Part 4A to carry on the regulated activity of dealing in investments as principal, and
(b) when carried on by the person, that activity is a PRA-regulated activity.
(4) In this section—
(a) “UK institution” means an institution which is incorporated in, or formed under the law of any part of, the United Kingdom;
(b) “insurer” means an institution which is authorised under this Act to carry on the regulated activity of effecting or carrying out contracts of insurance as principal;
(c) “credit union” means a credit union as defined by section 31 of the Credit Unions Act 1979 or a credit union as defined by Article 2(2) of the Credit Unions (Northern Ireland) Order 1985.
(5) Subsections (2), (3) and (4)(b) are to be read in accordance with Schedule 2, taken together with any order under section 22.
(3) The italic cross-heading before section 339A becomes “ General duties of regulator ”.
135 Fees to meet Treasury expenditure relating to international organisations
(1) After section 410 of FSMA 2000 insert—
Fees to meet Treasury expenses
Fees to meet certain expenses of the Treasury
410A (1) The Treasury may by regulations—
(a) enable the Treasury from time to time by direction to require the FCA, the PRA or the Bank of England (each a “regulator”) to require the payment of fees by relevant persons, or such class of relevant person as may be specified in, or determined by the regulator in accordance with, the direction, for the purpose of meeting relevant expenses incurred by the Treasury;
(b) make provision about how the regulator to which a direction is given is to comply with the direction;
(c) require the regulator to pay to the Treasury, by such time or times as may be specified in the direction, the amount of any fees received by the regulator.
(2) “Relevant expenses” are expenses (including any expenses of a capital nature) which are attributable to United Kingdom membership of, or Treasury participation in, a prescribed international organisation so far as those expenses—
(a) represent a contribution (by way of subscription or otherwise) to the resources of the international organisation, and
(b) are in the opinion of the Treasury attributable to functions of the organisation which relate to financial stability or financial services.
(3) The regulations must provide for the charging of fees in pursuance of a direction given under the regulations to the FCA or the PRA to be by rules made by that regulator.
(4) The provisions of Chapter 2 of Part 9A apply to rules of the FCA or the PRA providing for the charging of fees in pursuance of a direction given under the regulations—
(a) in the case of the FCA, as they apply to rules relating to the payment of fees under paragraph 23 of Schedule 1ZA;
(b) in the case of the PRA, as they apply to rules relating to the payment of fees under paragraph 31 of Schedule 1ZB.
(5) Paragraph 36(1) of Schedule 17A applies to the charging of fees by the Bank of England in pursuance of a direction given to the Bank under the regulations.
(6) The regulations may in particular—
(a) make provision about what is, or is not, to be regarded as an expense;
(b) specify requirements that the Treasury must comply with before giving a direction;
(c) enable a direction to be varied or revoked by a subsequent direction;
(d) confer functions on a regulator.
(7) An amount payable to a regulator as a result of—
(a) any provision of rules made by the FCA or the PRA as a result of the regulations, or
(b) the imposition of fees by the Bank of England as a result of a direction given under the regulations to the Bank,
may be recovered as a debt due to the regulator.
(8) “Relevant persons” means—
(a) in the case of a direction given to the PRA, PRA-authorised persons;
(b) in the case of a direction given to the FCA, authorised persons and recognised investment exchanges who (in either case) are not PRA-authorised persons;
(c) in the case of a direction given to the Bank of England, recognised clearing houses, other than those falling within paragraph (a) or (b).
(9) This section is subject to section 410B.
Directions in pursuance of section 410A
410B (1) In this section “a fees direction” means a direction given by the Treasury as a result of regulations under section 410A.
(2) Before giving a fees direction to the FCA, the PRA or the Bank of England (each a “regulator”), the Treasury must consult the regulator concerned.
(3) A fees direction must—
(a) be in writing;
(b) except in the case of a direction that revokes a previous direction or a direction that varies a previous direction without affecting the total amount intended to be raised by the fees, specify the total amount intended to be raised by the fees to be charged by the regulator and explain how that amount is calculated;
(c) contain such other information as may be prescribed.
(4) As soon as practicable after giving a fees direction, the Treasury must lay before Parliament a copy of the direction.
(2) In section 3A of FSMA 2000 (meaning of “regulator”), in subsection (3)—
(a) omit the “or” at the end of paragraph (a), and
(b) after paragraph (b) insert
or
(c) the meaning of “regulator” in sections 410A and 410B (fees to meet certain expenses of Treasury).
(1) Section 429 of FSMA 2000 (Parliamentary control of statutory instruments) is amended as follows.
(2) In subsection (1)(a) (orders subject to affirmative procedure)—
(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) for “144(4), 192(b) or (e), 138K(6)(c)” substitute “ 138K(6)(c), 144(4), 192(b) or (e) ”.
(3) In subsection (2) (regulations subject to affirmative procedure), after “90B,” insert “ 142W, ”.
(4) After subsection (2) insert—
(2A) Regulations to which subsection (2B) applies are not to be made unless a draft of the regulations has been laid before Parliament and approved by a resolution of each House.
(2B) This subsection applies to regulations which contain provision made under section 410A, other than provision made only by virtue of subsection (2) of that section.
(5) In subsection (8), for “or 23A” substitute “ , 23A or 142Z ”.
137 Accounts of Bank of England and its wholly-owned subsidiaries
(1) The Bank of England Act 1998 is amended as follows.
(2) In section 7 (accounts), in subsection (4), for the words from “appropriate” to the end substitute “ necessary to do so having regard to the Financial Stability Objective ”.
(3) After section 7 insert—
Accounts of companies wholly owned by the Bank
7A (1) If the Bank considers it necessary to do so having regard to the Financial Stability Objective, the Bank may by direction to a qualifying company exclude the application to the qualifying company of any of the relevant Companies Act requirements.
(2) The relevant Companies Act requirements are the requirements to which the directors of the qualifying company would otherwise be subject under the Companies Act 2006 (except sections 412 and 413 (directors' benefits)) in relation to the preparation of accounts under section 394 of that Act.
(3) A direction under subsection (1) may relate to one or more specified accounting periods of the qualifying company, or to a specified accounting period and all subsequent accounting periods of the qualifying company.
(4) The Bank must consult the Treasury before giving a direction under subsection (1).
(5) The Treasury may by notice in writing to the Bank require it to publish in such manner as it thinks fit such information relating to the accounts of a qualifying company as the Treasury may specify in the notice.
(6) The information specified in a notice under subsection (5) may include information which as a result of a direction under subsection (1) was excluded from accounts prepared in accordance with the Companies Act 2006.
(7) The Treasury must consult the Bank before giving a notice under subsection (5).
(8) A direction under subsection (1) or a notice under subsection (5) may be revoked by a subsequent direction or notice (as the case may be).
(9) “Qualifying company” means any company which is wholly owned by the Bank other than—
(a) the Prudential Regulation Authority, or
(b) a company which is a bridge bank for the purposes of section 12(3) of the Banking Act 2009.
(10) For the purposes of subsection (9), a company is wholly owned by the Bank if—
(a) it is a company of which no person other than the Bank or a nominee of the Bank is a member, or
(b) it is a wholly-owned subsidiary of a company within paragraph (a).
Schedule 10 (which contains amendments of, or connected with, the Financial Services Act 2012 and amendments of provisions amended by that Act) has effect.
(1) Any power of the Treasury, the Secretary of State or the Lord Chancellor to make an order or regulations under this Act is exercisable by statutory instrument.
(2) Subsection (1) does not apply to an order under section 43 (payment systems: designation orders).
(3) An order or regulations made by the Treasury, the Secretary of State or the Lord Chancellor under this Act may—
(a) make different provision for different cases, and
(b) contain such incidental or transitional provision as the person making the order or regulations considers appropriate.
(1) A statutory instrument containing an order or regulations under this Act is subject to annulment in pursuance of a resolution of either House of Parliament, unless—
(a) the instrument contains only provision made under section 148 (commencement), or
(b) the instrument is required by subsection (3) or any other enactment to be laid in draft before, and approved by a resolution of, each House.
(2) Subsection (3) applies to a statutory instrument that contains (with or without other provisions)—
(a) regulations under section 7 (building societies: power to make provision about ring-fencing);
(aa) regulations under section 41(2C) (meaning of “digital settlement asset”);
(b) an order under section 41(4) (meaning of “payment system”);
(ba) regulations under section 102B (matters to consider when imposing generally applicable requirements);
(bb) regulations under section 104F (power to require imposition of generally applicable requirements);
(c) an order under section 145 (power to make further consequential amendments) that amends or repeals primary legislation;
(d) an order under paragraph 6 of Schedule 6 (conduct of FMI administration).
(3) A statutory instrument to which this subsection applies may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.
(4) In subsection (2)(c) “primary legislation” means—
(a) an Act of Parliament,
(b) an Act of the Scottish Parliament,
(c) a Measure or Act of the National Assembly for Wales, or
(d) Northern Ireland legislation.