(1) A bank administrator may do anything necessary or expedient for the pursuit of the Objectives in section 137.
(2) The following provisions of this section provide for—
(a) general powers and duties of bank administrators (by application of provisions about administrators), and
(b) the general process and effects of bank administration (by application of provisions about administration).
(3) The provisions set out in the Tables apply in relation to bank administration as in relation to administration, with—
(a) the modifications set out in subsection (4),
(b) any other modification specified in the Tables, and
(c) any other necessary modification.
(4) The modifications are that—
(a) a reference to the administrator is a reference to the bank administrator,
(b) a reference to administration is a reference to bank administration,
(c) a reference to an administration order is a reference to a bank administration order,
(d) except where otherwise specified in Table 2, a reference to a company is a reference to the bank,
(e) a reference to the purpose of administration is a reference to the Objectives in section 137, and
(f) in relation to provisions of the Insolvency Act 1986 other than Schedule B1 and section 246ZB, the modifications in section 103 above apply (but converting references into references to bank administration or administrators rather than to bank insolvency or liquidators).
(5) Powers conferred by this Act, by the Insolvency Act 1986 (as applied) and the Companies Acts are in addition to, and not in restriction of, any existing powers of instituting proceedings against a contributory or debtor of a bank, or the estate of any contributory or debtor, for the recovery of any call or other sum.
(6) A reference in an enactment or other document to anything done under a provision applied by this Part includes a reference to the provision as applied.
(7) In the Tables “Schedule 9 to the 2015 Act” means Schedule 9 to the Small Business, Enterprise and Employment Act 2015 (further amendments relating to the abolition of requirements to hold meetings: company insolvency).
TABLE 1 OF APPLIED PROVISIONS SCHEDULE B1 TO THE INSOLVENCY ACT 1986
Provision of Schedule B1 | Subject | Modification or comment
Para. 40(1)(a) | Dismissal of pending winding-up petition
Para. 41 | Dismissal of administrative or other receiver
Para. 42 | Moratorium on insolvency proceedings | Ignore sub-paras. (4) and (5).
Para. 43 | Moratorium on other legal process | (a) In the case of bank administration following transfer to a resolution company, unless the Bank of England has given an Objective 1 Achievement Notice consent of the bank administrator may not be given for the purposes of para. 43 without the approval of the Bank of England. (b) In the case of bank administration following transfer to a resolution company, unless the Bank of England has given an Objective 1 Achievement Notice, in considering whether to give permission under sub-para. (6) to a winding-up the court must have regard to the Objectives in section 137. (c) In considering whether to give permission for the purposes of para. 43 the court must have regard to the Objectives in section 137.
Para. 44(1)(a) and (5) | Interim moratorium
Para. 46 | Announcement of appointment | Ignore sub-para. (6)(b) and (c).
Paras. 47 & 48 | Statement of affairs
Para. 49 | Administrator's proposals | (a) Para. 49 does not apply unless the Bank of England has given an Objective 1 Achievement Notice; for bank administrator's proposals before the Bank of England has given an Objective 1 Achievement Notice, see section 147. (b) Treat the reference in sub-para. (1) to the purpose of administration as a reference to Objective 2. (c) Before making proposals under sub-para. (1) in the case of bank administration following transfer to a resolution company, the bank administrator must consult the Bank of England about the chances of a payment to the residual bank from a scheme established by resolution fund order under section 49(3). (d) Treat the reference in sub-para. (2)(b) to the objective mentioned in para. 3(1)(a) or (b) as a reference to Objective 2(a). (e) Ignore sub-para.(3)(b). (ea) Ignore the amendment made by paragraph 10(2) of Schedule 9 to the 2015 Act. (f) Treat references in sub-para. (5) to the company's entering administration as references to satisfaction of the condition in para. (a) above.
Paras. 50–58 | Creditors' meeting | (za) Ignore the repeal of Paras 50 and 58 by paragraph 10(3) and (22) of Schedule 9 to the 2015 Act. (zb) Ignore the amendments of Paras 51 to 57 made by paragraph 10(4) to (21) of Schedule 9 to the 2015 Act. (a) Treat references in para. 51(2) to the company's entering administration as references to the giving of an Objective 1 Achievement Notice. (b) The bank administrator may comply with a request under para. 56(1)(a) only if satisfied that it will not prejudice pursuit of Objective 1 in section 137. (c) A creditors' meeting may not establish a creditors' committee in reliance on para. 57 until the Bank of England has given an Objective 1 Achievement Notice. (d) Until that time the Bank of England shall have the functions of the creditors' committee.
Para. 59 | General powers | A bank administrator may not rely on para. 59 (or subsection (1) above) for the purpose of recovering property transferred by property transfer instrument.
Para. 60 and Schedule 1 | General powers | (a) The exercise of powers under Schedule 1 is subject to section 137(2). (b) In the case of bank administration following transfer to a resolution company, until the Bank of England has given an Objective 1 Achievement Notice powers under the following paragraphs of Schedule 1 may be exercised only with the Bank of England's consent: 2, 3, 11, 14, 15, 16, 17, 18 and 21.
Para. 61 | Directors
Para. 62 | Power to call meetings of creditors | Ignore the amendment made by paragraph 10(23) of Schedule 9 to the 2015 Act.
Para. 63 | Application to court for directions | (a) Before the Bank of England has given an Objective 1 Achievement Notice, the bank administrator may apply for directions if unsure whether a proposed action would prejudice the pursuit of Objective 1; and before making an application in reliance on this paragraph the bank administrator must give notice to the Bank of England, which shall be entitled to participate in the proceedings. (b) In making directions the court must have regard to the Objectives in section 137.
Para. 64. | Management powers.
Para. 65 | Distribution to creditors | (a) In the case of bank administration following transfer to a resolution company, until the Bank of England has given an Objective 1 Achievement Notice a bank administrator may make a distribution only with the Bank of England's consent. (b) Where paragraph (a) applies, ignore sub-para (3).
Para. 66 | Payments
Para. 67 | Taking custody of property
Para. 68 | Management | Before the approval of proposals under para. 53 a bank administrator shall manage the bank's affairs, business and property in accordance with principles agreed between the bank administrator and the Bank of England.
Para. 69 | Agency
Para. 70 | Floating charges | The bank administrator may take action only if satisfied that it will not prejudice pursuit of Objective 1 in section 137.
Para. 71 | Fixed charges | The court may make an order only if satisfied that it will not prejudice pursuit of Objective 1 in section 137.
Para. 72 | Hire-purchase property | In the case of administration following transfer to a resolution company, until the Bank of England has given an Objective 1 Achievement Notice an application may be made only with the Bank of England's consent.
Para. 73 | Protection for secured and preferential creditors | (a) Treat a reference to proposals as including a reference to the principles specified in the modification of para. 68 set out above. (b) Para. 73(1)(a) does not apply until the Bank of England has given an Objective 1 Achievement Notice.
Para. 74 | Challenge to administrator's conduct | (za) Ignore the amendment made by paragraph 10(24) of Schedule 9 to the 2015 Act. (a) The Bank of England may make an application to the court, on any grounds, including grounds of insufficient pursuit of Objective 1 in section 137 (in addition to applications that may anyway be made under para. 74). (b) Until the Bank of England has given an Objective 1 Achievement Notice, an order may be made on the application of a creditor only if the court is satisfied that it would not prejudice pursuit of Objective 1 in section 137.
Para. 75 | Misfeasance | In addition to applications that may anyway be made under para. 75, an application may be made by the bank administrator or the Bank of England.
Para. 79 | Termination: successful rescue | (a) Ignore sub-para. (2). (b) See section 153.
Para. 84 | Termination: no more assets for distribution | See section 154.
Para. 85 | Discharge of administration order
Para. 86 | Notice to Companies Registrar of end of administration | See section 153.
Para. 87 | Resignation | A bank administrator may resign only by notice in writing— to the court, copied to the Bank of England, or in the case of a bank administrator appointed by the creditors' committee under para. 90, to the creditors' committee.
Para. 88 | Removal | Until the Bank of England has given an Objective 1 Achievement Notice, an application for an order may be made only with the Bank of England's consent.
Para. 89 | Disqualification | The notice under sub-para. (2) must be given to the Bank of England.
Paras. 90 & 91 | Replacement | (a) Until an Objective 1 Notice has been given, the Bank of England, and nobody else, may make an application under para. 91(1). (b) After that, either the Bank of England or a creditors' committee may apply. (c) Ignore para. 91(1)(b) to (e) and (2).
Para. 96 | Substitution of floating charge-holder | Para. 96 applies to a bank administrator, but— only after an Objective 1 Achievement Notice has been given, and ignoring references to priority of charges.
Para. 98 | Discharge | Ignore the amendments made by paragraph 10(36) to (38) of Schedule 9 to the 2015 Act. Discharge takes effect— where the person ceases to be bank administrator before an Objective 1 Achievement Notice has been given, at a time determined by the Bank of England, and otherwise, at a time determined by resolution of the creditors' committee (for which purpose ignore sub-para. (3)).
Para. 99 | Vacation of office: charges and liabilities | In the application of sub-para. (3), payments may be made only— in accordance with directions of the Bank of England, and if the Bank is satisfied that they will not prejudice Objective 1 in section 137.
Paras. 100-103 | Joint administrators | Until an Objective 1 Achievement Notice has been given, an application under para. 103 may be made only by the Bank of England.
Para. 104 | Validity
Para. 106 (and section 430 and Schedule 10) | Fines | Ignore the amendments made by paragraph 11 of Schedule 9 to the 2015 Act.
Paras. 107–109 | Extension of time limits | (a) Until an Objective 1 Achievement Notice has been given, an application under para. 107 may be made only with the Bank of England's consent. (b) In considering an application under para. 107 the court must have regard to Objective 1 in section 137. (ba) Ignore the amendments of Para 108 made by paragraph 10(39) to (43) of Schedule 9 to the 2015 Act. (c) In para. 108(1) “consent” means consent of the Bank of England.
Para. 110 | Amendment of provisions about time | An order under para. 110 may amend a provision of the Schedule as it applies by virtue of this section (whether or not in the same way as it amends the provision as it applies otherwise).
Para. 111 | Interpretation | Ignore the amendment made by paragraph 10(44) of Schedule 9 to the 2015 Act.
Paras 112 to 114 | Scotland:miscellaneous
Para 115 | Scotland: floating charges | (a) In Scotland, on the giving by the Bank of England of consent as provided for in Para 65 (as applied by this section), any floating charge granted by the bank attaches to the property which is subject to the charge, unless it has already so attached, but only if the distribution concerned is to be made to creditors of the residual bank who are neither secured creditors nor preferential creditors and otherwise than by virtue of section 176A(2)(a) (as applied by this section). (b) Where paragraph (a) applies, ignore sub-paras (1A) and (1B).
Para 116 | Scotland: payment to holder of floating charge subject to rights
TABLE 2 OF APPLIED PROVISIONS OTHER PROVISIONS OF THE INSOLVENCY ACT 1986
Section | Subject | Modification or comment
Section 135 | Provisional appointment | (a) Treat the reference to the presentation of a winding-up petition as a reference to the making of an application for a bank administration order. (b) Subsection (2) applies in relation to England and Wales and Scotland (and subsection (3) does not apply). (c) Ignore the reference to the official receiver. (d) Only a person who is qualified to act as an insolvency practitioner in relation to the bank and who consents to act may be appointed. (e) The court may only confer on a provisional bank administrator functions in connection with the pursuance of Objective 1; and section 138(2)(a) does not apply before a bank administration order is made. (f) A provisional bank administrator may not pursue Objective 2. (g) The appointment of a provisional bank administrator lapses on the appointment of a bank administrator. (h) Section 172(1), (2) and (5) apply to a provisional bank administrator.
Section 168(4) (and para. 13 of Schedule 4) | Discretion in managing and distributing assets | In the case of bank administration following transfer to a resolution company, until the Bank of England has given an Objective 1 Achievement Notice distribution may be made only— with the Bank of England's consent, or out of assets which have been designated as realisable by agreement between the bank administrator and the Bank of England.
Section 176ZB | Application of proceeds of office-holder claims
Section 176A | Unsecured creditors | In the case of bank administration following transfer to a resolution company, until the Bank of England has given an Objective 1 Achievement Notice distribution may be made in reliance on s. 176A only— with the Bank of England's consent, or out of assets which have been designated as realisable by agreement between the bank administrator and the Bank of England.
Section 178 | Disclaimer of onerous property | In the case of bank administration following transfer to a resolution company, until the Bank of England has given an Objective 1 Achievement Notice notice of disclaimer may be given only with the Bank of England's consent.
Section 179 | Disclaimer of leaseholds
Section 180 | Land subject to rentcharge
Section 181 | Disclaimer: powers of court
Section 182 | Leaseholds
Section 188 | Publicity
. . . | . . .
. . . | . . . | . . .
Section 233 | Utilities
Section 233A | Further protection of utilities
Section 234 | Getting in company's property
Section 235 | Co-operation with liquidator
Section 236 | Inquiry into company's dealings
Section 237 | Section 236: enforcement by court
Section 238 | Transactions at undervalue (England and Wales)
Section 239 | Preferences (England and Wales)
Section 240 | Ss. 238 & 239: relevant time
Section 241 | Orders under ss. 238 & 239 | (a) In considering making an order in reliance on section 241 the court must have regard to Objective 1 of section 137. (b) Ignore subsections (2A)(a) and (3) to (3C).
Section 242 | Gratuitous alienations (Scotland)
Section 243 | Unfair preferences (Scotland) | In considering the grant of a decree under subsection (5) the court must have regard to Objective 1 of section 137.
Section 244 | Extortionate credit transactions
Section 245 | Avoidance of floating charges
Section 246 | Unenforceability of liens
Section 246ZA | Fraudulent trading: administration
Section 246ZB | Wrongful trading: administration | (a) Treat the reference in subsection (2)(b) to going into insolvent liquidation as a reference to entering bank insolvency under Part 2 of this Act at a time when the bank’s assets are insufficient for the payment of its debts and other liabilities and the expenses of the bank insolvency. (b) Ignore subsection (6)(b).
Section 246ZC | Proceedings under section 246ZA or 246ZB
Section 246ZD | Power to assign certain causes of action
Sections 386 & 387, and Schedule 6 (and Schedule 4 to the Pension Schemes Act 1993) | Preferential debts
Section 389 | Offence of acting without being qualified | Treat references to acting as an insolvency practitioner as references to acting as a bank administrator.
Sections 390 to 391T | Authorisation and regulation of insolvency practitioners | (a) In section 390 treat references to acting as an insolvency practitioner as references to acting as a bank administrator. (b) Read subsection (2) of that section (as so modified) as if after “authorised” there were inserted “to act as an insolvency practitioner”. (c) An order under section 391 has effect in relation to any provision applied for the purposes of bank administration. (d) In sections 390A, 390B(1) and (3), 391O(1)(b) and 391R(3)(b), in a reference to authorisation or permission to act as an insolvency practitioner in relation to (or only in relation to) companies the reference to companies has effect without the modification in subsection (4)(d) of this section. (e) In sections 391Q(2)(b) and 391S(3)(e) the reference to a company has effect without the modification in subsection (4)(d) of this section.
Sections 423–425 | Transactions defrauding creditors | (a) In considering granting leave under section 424(1) the court must have regard to Objective 1 of section 137. (b) In considering making an order in reliance on section 425 the court must have regard to Objective 1 of section 137.
Sections 430–432 & Schedule 10 | Offences
Section 433 | Statements: admissibility | For section 433(1)(a) and (b) substitute a reference to a statement prepared for the purposes of a provision of this Part.
(1) This section applies before the giving of an Objective 1 Achievement Notice (at which point paragraph 49 of Schedule B1 to the Insolvency Act 1986 applies in accordance with section 145).
(2) The bank administrator must as soon as is reasonably practicable after appointment make a statement setting out proposals for achieving the Objectives in section 137.
(3) The statement must say whether the bank administrator proposes to pursue Objective 2(a) or 2(b) in section 140.
(4) The statement must have been agreed with the Bank of England.
(5) But a bank administrator who is unable to agree a statement with the Bank of England may apply to the court for directions under paragraph 63 of Schedule B1 to the Insolvency Act 1986 (as applied by section 145); and the court may make any order, including dispensing with the need for the Bank of England's agreement.
(6) The bank administrator must send the statement to the PRA and a copy of it to the FCA.
(7) The bank administrator may revise the statement (and subsections (4) to (6) apply to a revised statement as to the original).
(8) The statement shall be treated in the same way (subject to this section) as a statement under paragraph 49 of Schedule B1 to the Insolvency Act 1986.
(1) This section applies to bank administration following transfer to a resolution company.
(2) Within the period of 5 days beginning with the day on which the bank administrator is appointed, the Bank of England must give the bank administrator information about the financial positions of the residual bank and the resolution company.
(3) While the residual bank is in bank administration the resolution company must give the bank administrator on request information about the financial position of the resolution company that the bank administrator requires for the purposes of pursuing Objective 1 in section 137.
(4) Until the Bank of England has given an Objective 1 Achievement Notice, the bank administrator must—
(a) give the Bank of England information on request,
(b) allow the Bank of England access to records on request,
(c) give the resolution company information on request,
(d) allow the resolution company access to records on request,
(e) keep the Bank of England informed about, and allow the Bank to participate in, any discussions between the bank administrator and another person which relate to, or are likely to affect, pursuit of Objective 1 in section 137, and
(f) keep the resolution company informed about, and allow the resolution company to participate in, any discussions between the bank administrator and another person which relate to, or are likely to affect, pursuit of Objective 1 in section 137.
(5) The Treasury shall by regulations prescribe—
(a) the classes of information that must be provided under subsections (2) to (4), and
(b) the classes of record to which access must be allowed under subsection (4).
(6) Regulations under subsection (5)—
(a) shall be made by statutory instrument, and
(b) shall be subject to annulment in pursuance of a resolution of either House of Parliament.
(1) This section applies where more than one property transfer instrument is made in respect of a bank.
(2) For that purpose “property transfer instrument” includes—
(a) supplemental instruments under section 42,
(b) onward property transfer instruments under section 43, ...
(ba) bridge bank supplemental property transfer instruments under section 44D, and
(c) property transfer orders under section 45.
(3) This Part applies to the bank with any modifications specified by the Treasury in regulations.
(4) The regulations—
(a) shall be made by statutory instrument, and
(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.
(1) This section applies where the Bank of England gives a bank administrator —
(a) an Objective 1 Achievement Notice in respect of a resolution company, and
(b) notice that Objective 1 is still required to be pursued in respect of a commercial purchaser who has acquired all or part of the business of the resolution company.
(2) An Objective 1 Achievement Notice accompanied by a notice under subsection (1)(b) is referred to in this Part as an Objective 1 Interim Achievement Notice.
(3) Where an Objective 1 Interim Achievement Notice is given, Objective 1 continues to apply—
(a) in accordance with section 138(3), and
(b) with the commercial purchaser being treated as the “private sector purchaser”.
(4) An Objective 1 Interim Achievement Notice in respect of the resolution company—
(a) has effect as between the bank administrator and the resolution company, but
(b) has no other effect for the purposes of provisions of this Part which refer to the giving of an Objective 1 Achievement Notice.
(5) When the Bank of England gives the bank administrator an Objective 1 Achievement Notice in respect of the commercial purchaser, section 139 and other provisions of this Part which refer to the giving of an Objective 1 Achievement Notice shall have effect.
(1) This section applies where the Bank of England —
(a) transfers all or part of the business of a bank (“the original bank”) to a resolution company (“the original resolution company”) by making a property transfer instrument in accordance with section 12(2) or 12ZA(3), and
(b) later makes or proposes to make an onward property transfer instrument under section 43(2) from the resolution company to a transferee (“the onward transferee”).
(2) If the onward transferee is a company which is wholly owned by the Bank of England—
(a) the onward transferee is treated as a resolution company for the purposes of this Part, and
(b) the original resolution company is treated as a residual bank for the purposes of this Part.
(3) In any other case, the Bank of England may determine that the original resolution company is to be treated as a residual bank for the purposes of this Part.
(4) Where the original resolution company is put into bank administration in reliance on subsection (2)(b), Objective 1 shall apply in accordance with section 138(4) in relation to both—
(a) services provided by the original bank to the original resolution company, and
(b) services provided by the original resolution company to the onward transferee.
(5) Where the original resolution company is put into bank administration in reliance on a determination under subsection (3), Objective 1 shall apply in accordance with—
(a) section 138(3) in relation to services provided by the original resolution company to the onward transferee, and
(b) section 138(4) in relation to services provided by the original bank to the original resolution company .
(6) But the Bank may determine—
(a) that subsection (5) does not apply, and
(b) that section 150 shall apply as if the Bank had given—
(i) an Objective 1 Interim Achievement Notice in respect of the original resolution company, and
(ii) a notice under section 150(1)(b) in respect of the onward transferee.
152 Property transfer from temporary public ownership
(1) This section applies where the Treasury—
(a) make a share transfer order, in respect of securities issued by a bank (or a bank's holding company), in accordance with section 13(2), and
(b) later make a property transfer order from the bank (or from another bank which is or was in the same group as the bank) under section 45(2).
(2) This Part applies to the transferor under the property transfer order as to the transferor under a property transfer instrument.
(3) For that purpose this Part applies with any modifications specified by the Treasury in regulations; and the regulations—
(a) shall be made by statutory instrument, and
(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.
152A Property transfer from transferred institution
(1) This section applies where the Bank of England—
(a) makes a resolution instrument that transfers securities issued by a bank (or a bank's parent undertaking), in accordance with section 12A(2), and
(b) later makes a property transfer instrument from the bank or from another bank which is or was in the same group as the bank, in accordance with section 41A(2).
(1A) This section also applies where the Bank of England—
(a) makes a share transfer instrument that transfers securities issued by a bank (or a bank's parent undertaking), in accordance with section 12(2), and
(b) later makes a property transfer instrument from the bank in accordance with section 44D.
(2) This Part applies to the transferor under the property transfer instrument made in accordance with section 41A(2) or 44D(2) as to the transferor under a property transfer instrument made in accordance with section 12(2).
(3) For that purpose this Part applies with any modifications specified by the Treasury in regulations; and any regulations—
(a) are to be made by statutory instrument, and
(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.
(1) This section applies if—
(a) the Bank of England has given an Objective 1 Achievement Notice, and
(b) the bank administrator has pursued Objective 2(a) in section 140 and believes that it has been achieved.
(2) The bank administrator shall make an application under paragraph 79 of Schedule B1 to the Insolvency Act 1986 (court ending administration on achievement of objectives).
(3) A bank administrator who makes an application in accordance with subsection (2) must send a copy to the PRA and the FCA.
(4) Failure without reasonable excuse to comply with subsection (3) is an offence.
(1) This section applies if—
(a) the Bank of England has given an Objective 1 Achievement Notice, and
(b) the bank administrator pursues Objective 2(b) in section 140.
(2) The bank administrator may—
(a) give a notice under paragraph 84 of Schedule B1 to the Insolvency Act 1986 (no more assets for distribution), or
(b) make a proposal in accordance with section 1 of that Act (company voluntary arrangement).
(2A) For the purpose of subsection (2)(a), paragraph 84 of Schedule B1 has effect without the amendment made by paragraph 10(33) of Schedule 9 to the Small Business, Enterprise and Employment Act 2015 (further amendments relating to opted-out creditors).
(3) Part 1 of the Insolvency Act 1986 shall apply to a proposal made by a bank administrator, with the following modifications.
(3A) Sections 2 to 6 and 7 ... have effect without the amendments of those provisions made by paragraphs 2 to 8 of Schedule 9 to the Small Business, Enterprise and Employment Act 2015 (further amendments relating to the abolition of requirements to hold meetings).
(4) In section 3 (summoning of meetings) subsection (2) (and not (1)) applies.
(5) The action that may be taken by the court under section 5(3) (effect of approval) includes suspension of the bank administration order.
(6) On the termination of a company voluntary arrangement the bank administrator may apply to the court to lift the suspension of the bank administration order.
(7) The bank administrator may not act under subsection (2) above unless satisfied that the bank has received any funds it is likely to receive from any scheme under a resolution fund order under section 52.
(1) In this section “the Disqualification Act” means the Company Directors Disqualification Act 1986.
(2) In the Disqualification Act—
(a) a reference to liquidation includes a reference to bank administration,
(b) a reference to winding up includes a reference to making or being subject to a bank administration order,
(c) a reference to becoming insolvent includes a reference to becoming subject to a bank administration order, and
(d) a reference to a liquidator includes a reference to a bank administrator.
(3) For the purposes of the application of section 7A of the Disqualification Act (office-holder’s report on conduct of directors) to a bank which is subject to a bank administration order—
(a) the “office-holder” is the bank administrator;
(b) the “insolvency date” means the date on which the bank administration order is made; and
(c) subsections (9) to (11) are omitted.
(4) After section 21A of the Disqualification Act (bank insolvency–inserted by section 121 above) insert—
Bank administration
21B Section 155 of the Banking Act 2009 provides for this Act to apply in relation to bank administration as it applies in relation to liquidation.
(1) The Secretary of State and the Treasury may by order made jointly—
(a) provide for an enactment about insolvency or administration to apply to bank administration (with or without specified modifications);
(b) amend, or modify the application of, an enactment about insolvency or administration in consequence of this Part.
(2) An order under subsection (1)—
(a) shall be made by statutory instrument, and
(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.
(1) Before the PRA or the FCA exercises an insolvency power in respect of a residual bank, whichever of them is exercising the power must give notice to the Bank of England, which may participate in any proceedings arising out of the exercise of the power.
(2) In subsection (1)—
(a) “residual bank” means a bank all or part of whose business has been transferred to a commercial purchaser in accordance with section 11 or to a resolution company in accordance with section 12 or 12ZA, and
(b) “insolvency power” means—
(i) section 359 of the Financial Services and Markets Act 2000 (application for administration order), and
(ii) section 367 of that Act (winding-up petition).
(1) In the application of this Part to an FCA-regulated bank the modifications specified in the Table apply.
(2) In this section “FCA-regulated bank” means a bank which does not carry on any activity which is a PRA-regulated activity for the purposes of the Financial Services and Markets Act 2000.
TABLE OF MODIFICATIONS
Provision | Modification
Section 147 | The bank administrator must send the statement to the FCA (and need not send a copy of it to the PRA).
Section 153 | Ignore the reference to the PRA in subsection (3).
Section 157 | Ignore the reference to the PRA in subsection (1).
(1) The Treasury may by order provide for this Part to apply to building societies (within the meaning of section 119 of the Building Societies Act 1986) as it applies to banks, subject to modifications set out in the order.
(2) An order may—
(a) amend the Building Societies Act 1986 or any other enactment which relates, or in so far as it relates, to building societies;
(b) amend an enactment amended by this Part;
(c) replicate, with or without modifications, a provision of this Part;
(d) apply a provision made under or by virtue of this Part, with or without modifications, to this Part as it applies to building societies.
(3) An order—
(a) shall be made by statutory instrument, and
(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.
(4) Provision made under or by virtue of this Part may make special provision in relation to the application of this Part to building societies.
(1) The Treasury may by order provide for this Part to apply to credit unions (within the meaning of section 31 of the Credit Unions Act 1979) as it applies to banks, subject to modifications set out in the order.
(2) An order may—
(a) amend the Credit Union Act 1979, the Industrial and Providential Societies Act 1965 or any other enactment which relates, or in so far as it relates, to credit unions;
(b) amend an enactment amended by this Part;
(c) replicate, with or without modifications, a provision of this Part;
(d) apply a provision made under or by virtue of this Part, with or without modifications, to this Part as it applies to credit unions.
(3) An order—
(a) shall be made by statutory instrument, and
(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.
(4) Provision made under or by virtue of this Part may make special provision in relation to the application of this Part to credit unions.
(1) Section 411 of the Insolvency Act 1986 (company insolvency rules) is amended as follows.
(2) After subsection (1A) (inserted by section 125 above) insert—
(1B) Rules may also be made for the purpose of giving effect to Part 3 of the Banking Act 2009 (bank administration); and rules for that purpose shall be made—
(a) in relation to England and Wales, by the Lord Chancellor with the concurrence of—
(i) the Treasury, and
(ii) in the case of rules that affect court procedure, the Lord Chief Justice, or
(b) in relation to Scotland, by the Treasury.
(3) In subsection (2), after “(1A)” (inserted by section 125 above) insert “ or (1B) ”.
(4) After subsection (2C) (inserted by section 125 above) insert—
(2D) For the purposes of subsection (2), a reference in Schedule 8 to this Act to doing anything under or for the purposes of a provision of this Act includes a reference to doing anything under or for the purposes of Part 3 of the Banking Act 2009.
(5) In subsection (3)—
(a) after “bank liquidator” (inserted by section 125 above) insert “ or administrator ”, and
(b) after “Part 2” (inserted by section 125 above) insert “ or 3 ”.
(6) Section 413(2) of the Insolvency Act 1986 (rules: duty to consult Insolvency Rules Committee) shall not apply to the first set of rules which is made in reliance on this section.
After section 414(8A) of the Insolvency Act 1986 (fees orders–inserted by section 126 above) insert—
(8B) This section applies in relation to Part 3 of the Banking Act 2009 (bank administration) as in relation to Parts I to VII of this Act.
In section 433(1) of the Insolvency Act 1986 (admissibility of statements of affairs) after paragraph (aa) (inserted by section 128 above) insert (before the “and”)—
(ab) a statement made in pursuance of a requirement imposed by or under Part 3 of that Act (bank administration),
.
(1) The Lord Chancellor may, by order made with the concurrence of the Secretary of State and the Lord Chief Justice, modify provisions of this Part in their application to partnerships.
(2) For procedural purposes an order under subsection (1) shall be treated in the same way as an order under section 420 of the Insolvency Act 1986 (partnerships).
(3) This section does not apply in relation to partnerships constituted under the law of Scotland.
(1) The Secretary of State may by order modify provisions of this Part in their application to partnerships constituted under the law of Scotland.
(2) An order—
(a) shall be made by statutory instrument, and
(b) shall be subject to annulment in pursuance of a resolution of either House of Parliament.
(1) Provisions of or by virtue of this Part are “insolvency law” for the purposes of section 426 of the Insolvency Act 1986 (co-operation between courts).
(2) At the end of that section (after the subsection added by section 129) add—
(14) Section 165 of the Banking Act 2009 provides for provisions of that Act about bank administration to be “insolvency law” for the purposes of this section.
(1) In this Part “the court” means—
(a) in England and Wales, the High Court,
(b) in Scotland, the Court of Session, and
(c) in Northern Ireland, the High Court.
(2) In this Part—
“the FCA” means the Financial Conduct Authority, and
“the PRA” means the Prudential Regulation Authority.
(3) For the purposes of a reference in this Part to inability to pay debts—
(a) a bank that is in default on an obligation to pay a sum due and payable under an agreement, is to be treated as unable to pay its debts, and
(b) section 123 of the Insolvency Act 1986 (inability to pay debts) also applies; and
for the purposes of paragraph (a) “agreement” means an agreement the making or performance of which constitutes or is part of a regulated activity carried on by the bank.
(4) Expressions used in this Part and in the Insolvency Act 1986 have the same meaning as in that Act.
(5) Expressions used in this Part and in the Companies Act 2006 have the same meaning as in that Act.
(6) A reference in this Part to action includes a reference to inaction.
In the application of this Part to Northern Ireland—
(a) a reference to an enactment is to be treated as a reference to the equivalent enactment having effect in relation to Northern Ireland,
(b) where this Part amends an enactment an equivalent amendment (incorporating any necessary modification) is made to the equivalent enactment having effect in relation to Northern Ireland,
(c) the reference in section 159 to section 31 of the Credit Unions Act 1979 is to be treated as a reference to Article 2 of the Credit Unions (Northern Ireland) Order 1985, and
(d) in section 163—
(i) the reference to the Secretary of State is to be treated as a reference to the Department for Enterprise, Trade and Investment, and
(ii) the reference to the Lord Chief Justice is a reference to the Lord Chief Justice in Northern Ireland.
(1) The Treasury may by order make provision in consequence of this Part.
(2) An order may, in particular, amend or modify the effect of an enactment (including a fiscal enactment) passed before the commencement of this Part.
(3) An order—
(a) shall be made by statutory instrument, and
(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.
This Part makes a number of amendments in connection with the Financial Services Compensation Scheme provided for by Part 15 of the Financial Services and Markets Act 2000.
After section 223A of the Financial Services and Markets Act 2000 (investing in National Loans Fund–inserted by section 172 above) insert—
Borrowing from National Loans Fund
223B (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) After section 214(1) of the Financial Services and Markets Act 2000 (the compensation scheme: powers) insert—
(1A) Rules by virtue of subsection (1)(h) may, in particular, allow the scheme manager to treat persons who are or may be entitled to claim under the scheme as if they had done so.
(1B) A reference in any enactment or instrument to a claim or claimant under this Part includes a reference to a deemed claim or claimant in accordance with subsection (1A).
(1C) Rules by virtue of subsection (1)(j) may, in particular, allow, or be subject to rules which allow, the scheme manager to settle a class of claim by payment of sums fixed without reference to, or by modification of, the normal rules for calculation of maximum entitlement for individual claims.
(2) In section 417(1) (definitions) at the appropriate place insert—
“claim”, in relation to the Financial Services Compensation Scheme under Part XV, is to be construed in accordance with section 214(1B);
.
(1) This section amends section 215 of the Financial Services and Markets Act 2000 (rights of scheme following insolvency).
(2) For section 215(1) substitute—
(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.
(3) In section 215(2) for “the relevant person's insolvency” substitute “ a person's insolvency ”.
(4) The heading of section 215 becomes “”. “ Rights of the scheme in insolvency ”
(1) Before section 219 of the Financial Services and Markets Act 2000 (scheme manager's power to require information) insert—
Authority's power to require information
218A (1) The Authority may make rules enabling the Authority to require authorised persons to provide information, which may then be made available to the scheme manager by the Authority.
(2) A requirement may be imposed only if the Authority 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;
(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 Authority 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 Authority's general rules.
(2) Section 219 is amended as follows.
(3) In subsection (1) for “given to the relevant person in respect of whom a claim is made under the scheme or to a person otherwise involved, require that person” substitute “ require a person ”.
(4) After subsection (1) insert—
(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,
(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, or
(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.
(1B) For the purposes of subsection (1A)(b) and (d) 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).
(5) In subsection (3) for paragraphs (a) and (b) substitute “ to be necessary (or likely to be necessary) for the fair determination of claims which have been or may be made against P ”.
(6) After subsection (3) insert—
(3A) Where a stabilisation power under Part 1 of the Banking Act 2009 has been exercised in respect of a bank, the scheme manager may by notice in writing require the bank or the Bank of England to provide information that the scheme manager requires for the purpose of applying regulations under section 214B(3) above.
(7) In subsection (6) for “the relevant person” substitute “ P ”.
(8) Omit subsection (8).
(9) Omit subsection (10).
After section 223B of the Financial Services and Markets Act 2000 (borrowing from National Loans Fund–inserted by section 173 above) insert—
Payments in error
223C (1) Payments made by the scheme manager in error may be provided for in setting a levy by virtue of section 213, 214A, 214B or 223B.
(2) This section does not apply to payments made in bad faith.
In section 429(2) of the Financial Services and Markets Act 2000 (parliamentary control of subordinate legislation: affirmative resolution) after “90B” insert “ , 214A, 214B ”.
(1) Before section 222 of the Financial Services and Markets Act 2000 (scheme manager: statutory immunity) insert—
Delegation of functions
221A (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).
(2) In section 222(1) of that Act after “officer” insert “ , scheme agent ”.
At the end of Part 15 of the Financial Services and Markets Act 2000 add—
Functions under the Banking Act 2009
224A 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.
This Part enables the Bank of England to oversee certain systems for transferring money and certain persons who provide services , including in relation to such systems.
(1) In this Part “... payment system” means arrangements , or proposed arrangements, designed to facilitate or control the transfer of money or digital settlement assets ....
(1A) But “payment system” does not include any arrangements for the physical movement of cash.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) In subsection (1) “money” includes credit.
(4A) In subsection (1) “digital settlement asset” means a digital representation of value or rights, whether or not cryptographically secured, that—
(a) can be used for the settlement of payment obligations,
(b) can be transferred, stored or traded electronically, and
(c) uses technology supporting the recording or storage of data (which may include distributed ledger technology).
(4B) In this section, “digital settlement asset” includes a right to, or an interest in, a digital settlement asset.
(5) A system is ... payment system for the purposes of this Part whether or not it operates , or is intended to operate, wholly or partly in relation to persons or places outside the United Kingdom.
(5A) In this Part, a “DSA service provider” is a person who provides one or more services in relation to a payment system that includes arrangements using digital settlement assets where—
(a) the person creates or issues the digital settlement assets involved in the payment system,
(b) the person provides services to safeguard, or to safeguard and administer, digital settlement assets including their private cryptographic keys (or means of access),
(c) the person is directly involved in any of the activities mentioned in paragraphs (a) or (b),
(d) the person is a digital settlement asset exchange provider,
(e) the person sets rules, standards, or conditions of access or participation in relation to the payment system, or
(f) the person provides any service that facilitates, or supports, a transfer of money or digital settlement assets to be made using the payment system, including any infrastructure provider in relation to the system.
(5B) In this Part “digital settlement asset exchange provider” means a person who provides one or more of the following services, including as creator or issuer of any of the digital settlement assets, by—
(a) exchanging, or arranging the exchange of—
(i) digital settlement assets for money,
(ii) money for digital settlement assets,
(iii) digital settlement assets and money for digital settlement assets, or
(iv) digital settlement assets and money for money,
(b) exchanging, or arranging the exchange of, one digital settlement asset for another, or
(c) operating an automated process to carry out any of the activities mentioned in paragraphs (a) and (b).
(5C) The Treasury may by regulations amend—
(a) the definition of “digital settlement asset” in subsection (4A);
(b) the definition of “DSA service provider” in subsection (5A);
(c) the definition in section 206AA of a person who provides services connected with a recognised payment system that uses digital settlement assets.