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In force since 2026-01-19, as the publisher states.
Copy read on 2026-11-08. The page it was read from
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.
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(1) A deposit is “protected” so far as it is covered by the FSCS. (4) In subsection (1) and section 48B(8)(a), “deposit” has the meaning given by article 5(2) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544), but ignoring the exclusions in article 6.
Propose a change(1) In section 48B— “client assets” means assets which the bank has undertaken to hold on trust for, or on behalf of, a client; “contract” includes any instrument; “credit institution” means any credit institution as defined in Article 4.1(1) of Regulation (EU) No 575/2013 of the European Parliament and of the Council, other than an entity mentioned in Article 2.5(2), (3) or (24) of Directive 2013/36/EU of the European Parliament and of the Council; “designated settlement system” means a system which is designated in accordance with the Financial Markets and Insolvency (Settlement Finality) Regulations 1999 (S.I. 1999/2979); ... “employee” includes the holder of an office; ... ... “pension scheme” includes any arrangement for the payment of pensions, allowances and gratuities; “recognised central counterparty” has the meaning given in section 285 of the Financial Services and Markets Act 2000; “secured” means secured against property or rights, or otherwise covered by collateral arrangements; “third country central counterparty” has the meaning given in section 285 of the Financial Services and Markets Act 2000. (2) In subsection (1)— “assets” has the same meaning as in section 232(4) (ignoring for these purposes section 232(5A)(b)); “collateral arrangements” includes arrangements which are title transfer collateral arrangements for the purposes of section 48. (2A) The definition of “investment firm” in section 258A applies for the purposes of section 48B but for these purposes— (a) any exclusions made under the power conferred by subsection (2)(b) of section 258A are to be ignored; and (b) an institution is to be treated as falling within the definition only if it has permission to carry on the investment services and activities in point 3 or 6 of Part 3 of Schedule 2 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001. (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Propose a change(1) This section applies where the Bank of England makes a resolution instrument containing special bail-in provision (see section 48B). (2) The Bank of England must report to the Chancellor of the Exchequer stating the reasons why that provision has been made in the case of the liabilities concerned. (3) If the provision departs from the insolvency treatment principles, the report must state the reasons why it does so. (4) The insolvency treatment principles are that where an instrument includes special bail-in provision— (a) the provision made by the instrument must be consistent with treating all the liabilities of the bank in accordance with the priority they would enjoy on a liquidation, and (b) any creditors who would have equal priority on a liquidation are to bear losses on an equal footing with each other. (5) A report must comply with any other requirements as to content that may be specified by the Treasury. (6) A report must be made as soon as reasonably practicable after the making of the resolution instrument to which it relates. (7) The Chancellor of the Exchequer must lay a copy of each report under subsection (2) before Parliament.
Propose a change(1) The Treasury may by order amend section 48B(8) by— (a) adding to the list of excluded liabilities; (b) amending or omitting any paragraph of that subsection, other than paragraphs (a) to (c). (2) The Treasury may by order amend section 48C or 48D. (3) The powers conferred by subsections (1) and (2) include power to make consequential and transitional provision. (4) An order under this section— (a) is 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. (5) The Treasury must consult before laying a draft order under this section before Parliament.
Propose a change(1) The Treasury may, for the purpose of ensuring that the treatment of liabilities in any instrument that contains special bail-in provision is aligned to an appropriate degree with the treatment of liabilities on an insolvency, by order specify matters or principles to which the Bank of England is to be required to have regard in making any such instrument. (2) An order may, for example, specify the insolvency treatment principles (as defined in section 48E(4)) or alternative principles. (3) An order may specify the meaning of “insolvency” for one or more purposes of the order. (4) An order may amend sections 44C(4) and 48E(4). (5) An order— (a) is 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.
Propose a change(1) A resolution instrument may require a resolution administrator, or one or more directors of the bank, to— (a) draw up a business reorganisation plan with respect to the bank, ... (b) submit it to the Bank of England within the period allowed by (or under) the instrument ; and (c) submit to the Bank of England progress reports on the implementation of the plan at such intervals as the instrument may require. (2) “Business reorganisation plan” means a plan that includes— (a) an assessment of the factors that caused Condition 1 in section 7 to be met in the case of the bank, (b) a description of the measures to be adopted with a view to restoring the viability of the bank, and (c) a timetable for the implementation of those measures. (3) Where a person has submitted a business reorganisation plan to the Bank of England under subsection (1) (or has re-submitted a plan under subsection (4)), the Bank of England— (a) must approve the plan if satisfied that the plan is appropriately designed for meeting the objective mentioned in subsection (2)(b); (b) must otherwise require the person to amend the plan in a specified manner. (4) Where the Bank of England has required a person to amend a business re-organisation plan, the person must re-submit the amended plan within the period allowed by (or under) the resolution instrument. (5) Before deciding what action to take under subsection (3) the Bank of England must (for each submission or re-submission of a plan) consult— (a) the PRA, and (b) the FCA. (6) A business reorganisation plan may include recommendations by the person submitting the plan as to the exercise by the Bank of England of any of its powers under this Part in relation to the bank. (7) Where a resolution instrument contains provision under subsection (1), the instrument may— (a) specify further matters (in addition to those mentioned in subsection (2)) that must be dealt with in the business reorganisation plan; (b) make provision about the timing of actions to be taken in connection with the making and approval of the plan; (c) enable any provision that the Bank of England has power under paragraph (a) or (b) to make in the instrument to be made instead in an agreement between the Bank of England and the person required to draw up the business reorganisation plan. (7A) The Bank of England may make technical standards which— (a) require progress reports mentioned in subsection (1)(c) to include such matters as are specified in the technical standards; or (b) otherwise relate to the content of those progress reports, so far as dealing with matters so specified. (8) For the purposes of subsection (2)(b) the viability of a bank is to be assessed by reference to whether the bank satisfies, and (if so) for how long it may be expected to continue to satisfy, the threshold conditions (as defined in section 55B of the Financial Services and Markets Act 2000).
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Propose a change(1) A resolution instrument may— (a) cancel or modify any securities to which this subsection applies; (b) convert any such securities from one form or class into another. (2) Subsection (1) applies to securities issued by the bank that fall within Class 1 in section 14. (3) A resolution instrument may— (a) make provision with respect to rights attaching to securities issued by the bank; (b) provide for the listing of securities issued by the bank to be discontinued or suspended. (c) provide for the listing or admission to trading on a regulated market of securities in class 1 (and related class 3 securities) created in accordance with that or any other resolution instrument; (d) provide for the listing or admission to trading on a regulated market of existing securities in class 2 modified by that or any other resolution instrument .... (4) The reference in subsection (1)(b) to converting securities from one form or class into another includes creating a new security in connection with the modification of an existing security. (4A) In subsection (2) any reference to a class of securities is to be construed in accordance with section 14. (5) The provision that may be made under subsection (3)(a) includes, for example— (a) provision that specified rights attaching to securities are to be treated as having been exercised; (b) provision that the Bank of England, or a resolution administrator, is to be treated as authorised to exercise specified rights attaching to securities; (c) provision that specified rights attaching to securities may not be exercised for a period specified in the instrument. (6) In subsection (3)— (a) the reference to “listing” is to listing under section 74 of the Financial Services and Markets Act 2000, and (b) “regulated market” has the meaning given in section 103(1) of the Financial Services and Markets Act 2000. (6A) Where the listing of securities is suspended in accordance with a resolution instrument, those securities are to be treated for the purposes of section 96 of, and paragraph 23(6) of Schedule 1ZA to, the Financial Services and Markets Act 2000 as still being listed. (7) The provision that may be made under this section in relation to any securities is in addition to any provision that the Bank of England may have power to make in relation to them under section 48B.
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Propose a change(1) A resolution instrument may enable the Bank of England— (a) to remove a director or senior manager of a specified bank; (b) to vary the service contract of a director or senior manager of a specified bank; (c) to terminate the service contract of a director or senior manager of a specified bank; (d) to appoint a director or senior manager of a specified bank. (2) Subsection (1) also applies to a director or senior manager of any undertaking which is a banking group company in respect of a specified bank. (3) Appointments under subsection (1)(d) are to be on terms and conditions agreed with the Bank of England. (4) In this section “senior manager” means a person who— (a) exercises executive functions within a specified bank or banking group company, and (b) is responsible, and directly accountable to the directors, for the day to day management of that bank or banking group company.
Propose a change(1) A resolution instrument may— (a) require one or more directors of the bank to comply with any general or specific directions that may be set out in the instrument; (b) enable the Bank of England to give written directions (whether general or specific) to one or more directors of the bank. (2) A director— (a) is not to be regarded as failing to comply with any duty owed to any person (for example, a shareholder, creditor or employee of the bank) by virtue of any action or inaction in compliance with a direction given under subsection (1)(a) or (b); (b) is to be immune from liability in damages in respect of action or inaction in accordance with a direction. (3) A director must comply with a direction within the period of time specified in the direction, or if no period of time is specified, as soon as reasonably practicable. (4) A direction under subsection (1)(a) or (b) is enforceable on an application made by the Bank of England, by injunction or, in Scotland, by an order for specific performance under section 45 of the Court of Session Act 1988. (5) See also section 83ZR for further provision about enforcement of a direction under this section.
Propose a change(1) In this section “protected arrangements” means security interests, title transfer collateral arrangements, set-off arrangements and netting arrangements. (2) In subsection (1)— “netting arrangements” means arrangements under which a number of claims or obligations can be converted into a net claim or obligation, and includes, in particular, “close-out” netting arrangements, under which actual or theoretical debts are calculated during the course of a contract for the purpose of enabling them to be set off against each other or to be converted into a net debt; “security interests” means arrangements under which one person acquires, by way of security, an actual or contingent interest in the property of another; “set-off arrangements” means arrangements under which two or more debts, claims or obligations can be set off against each other; “title transfer collateral arrangements” means arrangements under which Person 1 transfers assets to Person 2 on terms providing for Person 2 to transfer assets if specified obligations are discharged. (3) The Treasury may by order— (a) restrict the exercise of any power within the scope of this paragraph in cases that involve, or where the exercise of the power might affect, protected arrangements; (b) impose conditions on the exercise of any power within the scope of this paragraph in cases that involve, or where the exercise of the power might affect, protected arrangements; (c) require any instrument that makes special bail-in provision to include specified provision, or provision to a specified effect, in respect of or for purposes connected with protected arrangements; (d) provide for an instrument to be void or voidable, or for other consequences to arise, if or in so far as the instrument is made or purported to be made in contravention of a provision of the order (or of another order under this section); (e) specify principles to which the Bank of England is to be required to have regard in exercising specified powers— (i) that involve protected arrangements, or (ii) where the exercise of the powers might affect protected arrangements. (4) References to exercising a power within the scope of paragraph (a) or (b) of subsection (3) are to making an instrument containing provision made in reliance on section 12A(3)(a) or 44B (special bail-in provision). (5) An order may apply to protected arrangements generally or only to arrangements— (a) of a specified kind, or (b) made or applying in specified circumstances. (6) An order may include provision for determining which arrangements are to be, or not to be, treated as protected arrangements; in particular, an order may provide for arrangements to be classified not according to their description by the parties but according to one or more indications of how they are treated, or are intended to be treated, in commercial practice. (7) In this section “arrangements” includes arrangements which— (a) are formed wholly or partly by one or more contracts or trusts; (b) arise under or are wholly or partly governed by the law of a country or territory outside the United Kingdom; (c) wholly or partly arise automatically as a matter of law; (d) involve any number of parties; (e) operate partly by reference to other arrangements between parties. (8) An order— (a) is 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.
Propose a change(1) A resolution instrument may provide for anything (including legal proceedings) that relates to anything affected by the instrument and is in the process of being done immediately before the instrument takes effect to be continued from the time the instrument takes effect. (2) A resolution instrument may modify references (express or implied) in an instrument or document. (3) A resolution instrument may require or permit any person to provide information and assistance to the Bank of England or another person, for the purposes of or in connection with provision made or to be made in that or another resolution instrument.
Propose a change(1) A resolution instrument may permit or require the execution, issue or delivery of an instrument. (2) A resolution instrument may provide for any provision in the instrument to have effect irrespective of— (a) whether an instrument has been produced, delivered, transferred or otherwise dealt with; (b) registration. (3) A resolution instrument may provide for the effect of an instrument executed, issued or delivered in accordance with the resolution instrument. (4) A resolution instrument may— (a) entitle a person to be registered in respect of a security; (b) require a person to effect registration.
Propose a change(1) Provision made in a resolution instrument takes effect despite any restriction arising by virtue of contract or legislation or in any other way. (2) A resolution instrument may include incidental, consequential or transitional provision. (3) In relying on subsection (2) a resolution instrument— (a) may make provision generally or only for specified purposes, cases or circumstances, and (b) may make different provision for different purposes, cases or circumstances.
Propose a change(1) As soon as is reasonably practicable after making a resolution instrument in respect of a bank the Bank of England must send a copy to— (a) the bank, (b) the Treasury, (c) the PRA, (d) the FCA, and (e) any other person specified in the code of practice under section 5. (2) As soon as is reasonably practicable after making a resolution instrument the Bank of England must publish a copy— (a) on the Bank's internet website, ... (b) in two newspapers, chosen by the Bank of England to maximise the likelihood of the instrument coming to the attention of persons likely to be affected, and (c) if securities issued by the bank have been admitted to trading on a regulated market (within the meaning of section 103(1) of the Financial Services and Markets Act 2000), by means of a regulatory information service (within the meaning of section 313D of that Act)), and arrange for the publication of a copy on the internet website of the bank in respect of which the instrument was made. (3) Where the Treasury receive a copy of a resolution instrument under subsection (1) they must lay a copy before Parliament.
Propose a change(1) This section applies where the Bank of England has made a resolution instrument (“the original instrument”) with respect to a bank. (2) The Bank of England may make, with respect to the bank, one or more resolution instruments designated by the Bank of England as supplemental resolution instruments. (3) Section 7 does not apply to a supplemental resolution instrument (but it is to be treated in the same way as a resolution instrument for all other purposes, including for the purposes of the application of a power under this Part). (4) Before making a supplemental resolution instrument the Bank of England must consult— (a) the PRA, (b) the FCA, and (c) the Treasury. (5) The possibility of making a supplemental resolution instrument in reliance on subsection (2) is without prejudice to the possibility of making a new instrument in accordance with section 12A(2) (and not in reliance on subsection (2) above).
Propose a change(1) This section applies where the Bank of England has made a resolution instrument (“the original instrument”) providing for securities issued by a specified bank to be transferred to any person. (2) The Bank of England may make one or more onward transfer resolution instruments. (3) An onward transfer resolution instrument is a resolution instrument which— (a) provides for the transfer of— (i) securities which were issued by the bank before the original instrument and have been transferred by the original instrument or a supplemental resolution instrument, or (ii) securities which were issued by the bank after the original instrument; (b) makes other provision for the purposes of, or in connection with, the transfer of securities issued by the bank (whether the transfer has been or is to be effected by that instrument, by another instrument or otherwise). (4) An onward transfer resolution instrument may not transfer securities to the transferor under the original instrument. (5) Section 7 does not apply to an onward transfer resolution instrument (but it is to be treated in the same way as any other resolution instrument for all other purposes, including for the purposes of the application of a power under this Part). (6) Before making an onward transfer resolution instrument the Bank of England must consult— (a) the PRA, (b) the FCA, and (c) the Treasury. (7) Section 48U applies where the Bank of England has made an onward transfer resolution instrument.
Propose a change(1) This section applies where the Bank of England has made an instrument (“the original instrument”) that is either— (a) a resolution instrument providing for the transfer of securities issued by a bank to a person (“the transferee”), or (b) an onward transfer resolution instrument (see section 48V) providing for the transfer of securities issued by a bank to a person (“the onward transferee”). (2) In a case falling within subsection (1)(a) the Bank of England may make one or more reverse transfer resolution instruments in respect of securities issued by the bank and held by the transferee (whether or not they were transferred by the original instrument). (3) In a case falling within subsection (1)(b), the Bank of England may make one or more reverse transfer resolution instruments in respect of securities issued by the bank and held by the onward transferee. (4) A reverse transfer resolution instrument is a resolution instrument which— (a) provides for transfer to the transferor under the original instrument; (b) makes other provision for the purposes of, or in connection with, the transfer of securities which are, or could be or could have been, transferred under paragraph (a). (5) Except where subsection (6) applies, the Bank of England may make a reverse transfer resolution instrument under subsection (2) only with the written consent of the transferee. (6) This subsection applies where the transferee is— (a) a resolution administrator, or (b) a person who is not to be authorised to exercise any rights attaching to the securities except on the Bank of England's instructions. (7) The Bank of England may make a reverse transfer resolution instrument under subsection (3) only with the written consent of the onward transferee. (8) Section 7 does not apply to a reverse transfer resolution instrument (but it is to be treated in the same way as any other resolution instrument for all other purposes including for the purposes of an application of a power under this Part). (9) Before making a reverse transfer resolution instrument the Bank of England must consult— (a) the PRA, (b) the FCA, and (c) the Treasury. (10) Section 48U applies where the Bank of England has made a reverse transfer resolution instrument.
Propose a change(1) The Bank of England may, in relation to the exercise of the bail-in option, direct a relevant bank to pay the Bank of England a fee to cover expenses reasonably incurred by the Bank in connection with exercising that option. (2) The Treasury may direct a relevant bank to pay the Treasury a fee to cover expenses reasonably incurred by the Treasury in connection with the exercise by the Bank of England of the bail-in option in relation to the relevant bank. (3) For the purposes of this section— (a) a “relevant bank” is a bank in relation to which the Bank of England has made— (i) a resolution instrument under section 12A(2), (ii) a supplemental resolution instrument under section 48U(2), or (iii) an instrument containing special bail-in provision under section 48B, (b) the exercise of the bail-in option includes making any instrument containing special bail-in provision under section 48B.
Propose a change(1) Where the Bank of England has carried out a provisional valuation under section 6E(3) before making a mandatory reduction instrument or exercising a stabilisation power, the Bank must arrange for the appointment of an independent valuer in accordance with section 62A to carry out a full valuation in accordance with this section as soon as reasonably practicable. (2) The purpose of the valuation carried out under subsection (1) is to— (a) ensure the full extent of any losses on the assets of the bank is recognised in the accounting records of the bank, and (b) inform a decision by the Bank as to whether— (i) additional consideration should be paid by a bridge bank or asset management vehicle for any property, rights or liabilities transferred by a property transfer instrument, or securities transferred by a share transfer instrument, or (ii) the Bank should exercise the power under section 48Y(1) to increase or reinstate any liability which has been reduced or cancelled by a resolution instrument. (3) A valuation carried out under subsection (1) must comply with subsections (5) and (6) of section 6E, and be accompanied by the information required in subsection (7) of that section.
Propose a change(1) Where the independent valuation carried out under section 48X(1) produces a higher valuation of the net asset value of the bank than a provisional valuation carried out under section 6E(3), the Bank of England may— (a) modify any liability of the bank which has been reduced, deferred or cancelled by a mandatory reduction instrument or a resolution instrument so as to increase or reinstate that liability; or (b) instruct a resolution company to pay additional consideration— (i) to the bank for any property, rights or liabilities transferred to the resolution company by a property transfer instrument, or (ii) to the previous holders of securities issued by the bank for any securities transferred to the resolution company by a share transfer instrument. (2) The power in subsection (1)(a)— (a) may not be exercised so as to increase the value of the liability beyond the value it would have had if the resolution instrument which reduced, cancelled or deferred it had not been made, and (b) must be exercised by a mandatory reduction instrument or supplemental resolution instrument (whether or not that instrument contains any other provision authorised by this Part).
Propose a change(1) In this section— “crisis management measure” has the meaning given in Article 2.1(102) of the recovery and resolution directive, and accordingly in relation to the United Kingdom means— the exercise of a stabilisation power in relation to the bank by the Bank of England or the Treasury, the appointment of a resolution administrator under section 62B, the recognition by the Bank of England of third-country resolution action (or part of such action) in accordance with Chapter 5 of this Part, or the exercise by the Bank of a stabilisation power by virtue of section 89I(3) (exercise of powers in support of third-country resolution action); “crisis prevention measure” ... means— the imposition by the PRA or the FCA under the Bank Recovery and Resolution (No 2) Order 2014 (SI 2014/3348) of a requirement to take relevant measures as described in article 15, 16, or 23 of that Order,, the imposition by the Bank of England of a requirement to take measures to remove impediments to resolvability under section 3A, the taking by the FCA or the PRA of a measure for early intervention under article 111 of the Bank Recovery and Resolution (No. 2) Order 2014, the making of a mandatory reduction instrument by the Bank of England under section 6B , or the appointment by the PRA or the FCA of a person to act as a temporary manager under section 71C of the Financial Services and Markets Act 2000 ; “default event provision” means a Type 1 or Type 2 default event provision (see subsections (2) and (3)); “group” has the meaning given by section 474 of the Companies Act 2006; “Part 1 instrument” means— a mandatory reduction instrument, a share transfer instrument, a property transfer instrument, or a resolution instrument. “recognised third-country resolution action” means third-country resolution action, or a part of such action, recognised by the Bank of England in an instrument under section 89H(2); “third-country institution” means an institution established in a country or territory other than the United Kingdom that would, if it were established within the United Kingdom, be regarded as a bank, building society, credit union or investment firm; “third-country parent financial holding company” means a parent financial holding company (within the meaning of Article 4.1(30) of the capital requirements regulation) established or formed under the law of a country or territory outside the United Kingdom; “third-country parent institution” means a parent institution (within the meaning of Article 4.1(28) of the capital requirements regulation) established or formed under the law of a country or territory outside the United Kingdom; “third-country parent mixed financial holding company” means a parent mixed financial holding company (within the meaning of Article 4.1(32) of the capital requirements regulation) established or formed under the law of a country or territory outside the United Kingdom; “third-country parent undertaking” means a third-country parent institution, a third-country parent financial holding company or a third-country parent mixed financial holding company. (2) A Type 1 default event provision is a provision of a contract or other agreement that has the effect that if a specified event occurs or situation arises— (a) the agreement is terminated, modified or replaced, (b) rights or duties under the agreement are terminated, modified or replaced, (c) a right accrues to terminate, modify or replace the agreement, (d) a right accrues to terminate, modify or replace rights or duties under the agreement, (e) a sum becomes payable or ceases to be payable, (f) delivery of anything becomes due or ceases to be due, (g) a right to claim a payment or delivery accrues, changes or lapses, (h) any other right accrues, changes or lapses, or (i) an interest is created, changes or lapses. (3) A Type 2 default event provision is a provision of a contract or other agreement that has the effect that a provision of the contract or agreement— (a) takes effect only if a specified event occurs or does not occur, (b) takes effect only if a specified situation arises or does not arise, (c) has effect only for so long as a specified event does not occur, (d) has effect only while a specified situation lasts, (e) applies differently if a specified event occurs, (f) applies differently if a specified situation arises, or (g) applies differently while a specified situation lasts. (4) For the purposes of subsections (2) and (3) it is the effect of a provision that matters, not how it is described (nor, for example, whether it is presented in a positive or a negative form). (5) Subject to subsection (6A), subsection (6) applies where a contract or other agreement— (a) is entered into by a bank, a third-country institution or a third-country parent undertaking, (b) is entered into by a subsidiary undertaking of a bank, a third-country institution or a third-country parent undertaking, whose obligations are guaranteed by a company which is a member of the same group as the bank, third-country institution or third-country parent undertaking, or (c) is entered into by an undertaking which is a member of the same group as a bank, third-country institution, or third country parent undertaking, and the substantive obligations provided for in the contract or agreement (including payment and delivery obligations and provision of collateral) continue to be performed. (6) The following are to be disregarded in determining whether a default event provision applies— (a) a crisis prevention measure, crisis management measure or recognised third-country resolution action taken in relation to the bank, third country institution or a member of the same group as the bank or third country institution, and (b) the occurrence of any event directly linked to the application of such a measure or action. (6A) A Part 1 instrument or share transfer order may provide for subsection (6)— (a) not to apply in relation to a contract or other agreement, or (b) to apply in relation to a contract or other agreement only to the extent specified by the Bank of England in the instrument or by the Treasury in the order. (6B) Provision may be made under subsection (6A) only if the Bank of England (in the case of a Part 1 instrument) or the Treasury (in the case of a share transfer order) consider that such provision would advance one or more of the special resolution objectives. (7) A Part 1 instrument or share transfer order may provide for subsection (8) or (9) to apply (but need not apply either) in circumstances where subsection (6) would not apply. (8) If this subsection applies, the Part 1 instrument or share transfer order is to be disregarded in determining whether a default event provision applies. (9) If this subsection applies, the Part 1 instrument or share transfer order is to be disregarded in determining whether a default event provision applies except so far as the instrument or order provides otherwise. (10) In subsections (7), (8) and (9) a reference to the Part 1 instrument or share transfer order is a reference to— (a) the making of the instrument or order, (b) anything that is done by the instrument or order or is to be, or may be, done under or by virtue of the instrument or order, and (c) any action or decision taken or made under this or another enactment in so far as it resulted in, or was connected to, the making of the instrument or order. (11) Provision under subsection (7) may apply subsection (8) or (9)— (a) generally or only for specified purposes, cases or circumstances, or (b) differently for different purposes, cases or circumstances. (12) A thing is not done by virtue of a Part 1 instrument or share transfer order for the purposes of subsection (10)(b) merely by virtue of being done under a contract or other agreement rights or obligations under which have been affected by the instrument or order.
Propose a change(1) This Part provides four methods of protecting the financial interests of transferors and others in connection with share transfer instruments and orders, property transfer instruments and orders and resolution instruments. (2) A “compensation scheme order” is an order — (a) establishing a scheme for determining whether transferors should be paid compensation, or providing for transferors to be paid compensation, and (b) establishing a scheme for paying any compensation. (2A) A “bail-in compensation order” is an order establishing a scheme for determining, in accordance with section 52A, whether any transferors or others should be paid compensation. (3) A “resolution fund order” is an order establishing a scheme under which transferors become entitled to the proceeds of the disposal of things transferred— (a) in specified circumstances, and (b) to a specified extent. (4) A “third party compensation order” is provision made in accordance with section 59 for compensation to be paid to persons other than transferors.
Propose a change(1) This section applies if the Bank of England makes a share transfer instrument or a property transfer instrument in accordance with section 11(2). (2) The Treasury shall make a compensation scheme order. (3) An order made by virtue of subsection (2) may include a third party compensation order. (4) In the case of a partial property transfer, an order made by virtue of subsection (2) must include a third party compensation order.
Propose a change(1) This section applies if the Treasury make a share transfer order in accordance with section 13(2). (2) The Treasury shall make either— (a) a compensation scheme order, or (b) a resolution fund order. (3) A resolution fund order made by virtue of subsection (2)(b) may include— (a) a compensation scheme order; (b) a third party compensation order (which may, in particular, make provision, in respect of specified classes of creditor, for rights in addition to any rights they may have by virtue of the resolution fund order). (4) A compensation scheme order made by virtue of subsection (2) may include a third party compensation order.
Propose a change(1) This section applies if the Bank of England makes— (a) a share transfer instrument or a property transfer instrument under section 12(2), or (b) a property transfer instrument under section 12ZA(3). (2) The Treasury shall make a resolution fund order. (3) An order made by virtue of subsection (2) may include— (a) a compensation scheme order; (b) a third party compensation order (which may, in particular, make provision, in respect of persons of a specified description, for rights in addition to any rights they may have by virtue of the resolution fund order). (4) In the case of a partial property transfer, the resolution fund order must include a third party compensation order.
Propose a change(1) Subsection (2) applies if the Bank of England makes— (a) a resolution instrument under section 12A(2), or (b) a property transfer instrument under section 41A(2). (2) The Treasury must make a bail-in compensation order (see section 49(2A)). (3) A bail-in compensation order may include provision for— (a) an independent valuer (in which case sections 54 to 56 are to apply); (b) valuation principles (in which case section 57(2) to (5) is to apply).
Propose a change(1) This section applies where— (zza) the Bank of England makes a supplemental share transfer instrument under section 26, (zzb) the Bank of England makes an onward share transfer instrument under section 26ZA, (za) the Bank of England makes a ... reverse share transfer instrument under section 26A, (zb) the Treasury makes a supplemental share transfer order under section 27, (a) the Treasury make an onward share transfer order under section 28, (b) the Treasury makes a reverse share transfer order under section 29, (c) the Bank of England makes a resolution company share transfer instrument under section 30, (d) the Bank of England makes a resolution company reverse share transfer instrument under section 31, (dza) the Bank of England makes a supplemental property transfer instrument under section 42, (da) the Bank of England makes a private sector reverse property transfer instrument under section 42A, (e) the Bank of England makes an onward property transfer instrument under section 43, (f) the Bank of England makes a reverse property transfer instrument under section 44, (fa) the Bank of England makes a reverse property transfer instrument under section 44A(2), (fb) the Bank of England makes a bridge bank supplemental property transfer instrument under section 44D, (fc) the Bank of England makes a bridge bank supplemental reverse property transfer instrument under section 44E, (g) the Treasury make a property transfer order under section 45, ... (h) the Treasury make a reverse property transfer order under section 46. (i) the Bank of England makes a supplemental resolution instrument under section 48U, (j) the Bank of England makes an onward transfer resolution instrument under section 48V(2), or (k) the Bank of England makes a reverse transfer resolution instrument under section 48W(2) or (3). (2) The Treasury may make— (a) a compensation scheme order; (b) a third party compensation order.
Propose a change(1) A compensation scheme order or bail-in compensation order may provide for the amount of any compensation payable to be determined by a person appointed in accordance with the order (the “independent valuer”); and subsections (2) to (5) apply to an order which includes provision for an independent valuer. (2) An order must provide for the independent valuer to be appointed by a person appointed by the Treasury (“the appointing person”). (3) An order may either— (a) require the Treasury to make arrangements to identify a number of possible independent valuers, one of whom is to be selected by the appointing person, or (b) require the appointing person to make arrangements to select the independent valuer, having regard to any criteria specified in the order. (4) The independent valuer may be removed only— (a) on the grounds of incapacity or serious misconduct, and (b) by a person specified by the Treasury in accordance with the compensation scheme order or bail-in compensation order. (5) An order must include provision for resignation and replacement of the independent valuer (and subsections (2) and (3) apply to replacement as to the first appointment).
Propose a change(1) An independent valuer may do anything necessary or desirable for the purposes of or in connection with the performance of the functions of the office. (2) The Treasury may by order confer specific functions on independent valuers; in particular, the order may— (a) enable an independent valuer to apply to a court or tribunal for an order requiring the provision of information or the giving of oral or written evidence; (b) enable or require independent valuers to publish, disclose or withhold information. (3) Provision under subsection (2) may— (a) confer a discretion on independent valuers; (b) confer jurisdiction on a court or tribunal; (c) make provision about oaths, expenses and other procedural matters relating to the giving of evidence or the provision of information; (d) create a criminal offence; (e) make other provision about enforcement. (4) An independent valuer may appoint staff. (5) The Treasury may by order make provision about the procedure to be followed by independent valuers. (6) The Treasury shall by order make provision for— (a) reconsideration of a decision of an independent valuer, and (b) appeal to a court or tribunal against a decision of an independent valuer. (7) Independent valuers (and their staff) are neither servants nor agents of the Crown (and, in particular, are not civil servants). (8) Records of an independent valuer are public records for the purposes of the Public Records Act 1958. (9) An order under this section— (a) shall be made by statutory instrument, and (b) shall be subject to annulment in pursuance of a resolution of either House of Parliament. (10) But subsection (9)(b) does not apply if the order is contained in a statutory instrument that contains an order to which section 62 applies.
Propose a change(1) The Treasury may by order provide for the payment by the Treasury of remuneration and allowances to— (a) independent valuers, (b) staff of independent valuers, (c) appointing persons, (ca) persons mentioned in section 54(4)(b), and (d) monitors. (2) An order— (a) must provide for the appointment by the Treasury of a person to monitor the operation of the arrangements for remuneration and allowances for independent valuers; (b) may require, or enable a compensation scheme order, third party compensation order or bail-in compensation order to require, the monitor's approval before specified things may be done in the course of those arrangements; (c) may include provision about records and accounts; (d) may make provision about numbers of staff and the terms and conditions of their appointment (which may include provision requiring the approval of the Treasury or the monitor). (3) In subsection (1) a reference to the payment of allowances to a person includes a reference to the payment to or in respect of the person of sums by way of or in respect of pension. (4) Independent valuers (and their staff) are not liable for damages in respect of anything done in good faith for the purposes of or in connection with the functions of the office (subject to section 8 of the Human Rights Act 1998). (5) An order under this section— (a) shall be made by statutory instrument, and (b) shall be subject to annulment in pursuance of a resolution of either House of Parliament. (6) But subsection (5)(b) does not apply if the order is contained in a statutory instrument that contains an order to which section 62 applies.
Propose a change(1) A compensation scheme order or bail-in compensation order may specify principles (“valuation principles”) to be applied in determining the amount of compensation. (2) Valuation principles may, in particular, require an independent valuer— (a) to apply, or not to apply, specified methods of valuation; (b) to assess values or average values at specified dates or over specified periods; (c) to take specified matters into account in a specified manner; (d) not to take specified matters into account. (3) In determining an amount of compensation (whether or not in accordance with valuation principles) an independent valuer must disregard actual or potential financial assistance provided by the Bank of England or the Treasury (disregarding ordinary market assistance offered by the Bank on its usual terms). (3A) In subsection (3), “financial assistance” includes any amount in respect of which the Bank of England may require a recapitalisation payment under section 214E of the Financial Services and Markets Act 2000. (4) Valuation principles may require or permit an independent valuer to make assumptions; such as, for example, that the bank— (a) has had a permission under Part 4A of the Financial Services and Markets Act 2000 (regulated activities) varied or cancelled, (b) is unable to continue as a going concern, (c) is in administration, or (d) is being wound up. (5) There is nothing to prevent the application of the valuation principles in an order from resulting in no compensation being payable to a transferor.
Propose a change(1) A resolution fund order must include provision for determining— (a) who will be entitled to a share of the proceeds on disposal of things transferred, (b) the way in which the proceeds will be calculated, and (c) the way in which shares will be calculated. (2) Provision under subsection (1)(b) may, in particular, provide for proceeds to be calculated net of— (a) amounts required for the repayment of loans from public funds or for other payments in respect of public financial assistance; (b) some or all of the administrative or other expenses incurred in connection with the provisions of this Part. (2A) In subsection (2), “public financial assistance” includes any amount in respect of which the Bank of England may require a recapitalisation payment under section 214E of the Financial Services and Markets Act 2000. (3) A resolution fund order may include provision for— (a) an independent valuer to make a determination under the order (in which case sections 54(2) to (5), 55 and 56 shall apply); (b) valuation principles to be applied in making a determination (in which case section 57(2) shall apply). (4) A resolution fund order may confer a discretionary function on— (a) a Minister of the Crown, (b) the Treasury, (c) the Bank of England, or (d) any other specified person. (5) A resolution fund order may include provision for the determination of disputes about the application of its provisions (whether by conferring jurisdiction on a court or tribunal or otherwise). (6) A resolution fund order may require the Bank of England in managing a resolution company to aim to maximise the proceeds available for distribution in accordance with the order; and an order which includes a requirement must— (a) specify its extent, and (b) include provision about how the Bank is to comply with it. (7) A resolution fund order may require the Treasury to ensure that a bank in temporary public ownership in accordance with section 13(2) is managed with the aim of maximising the proceeds available for distribution in accordance with the order; and an order which includes a requirement must— (a) specify its extent, and (b) include provision about how the Treasury is to comply with it. (8) A requirement under subsection (6) or (7) is to be complied with only in so far as is compatible with— (a) pursuit of the special resolution objectives, and (b) compliance with the code of practice under section 5.
Propose a change(1) A power or duty in this Part to make a third party compensation order is a power or duty to make provision establishing a scheme for paying compensation to persons other than a transferor. (2) A third party compensation order may— (a) form part of a compensation scheme order or resolution fund order, or (b) be a separate order. (3) A third party compensation order may include provision for— (a) an independent valuer (in which case sections 54 to 56 shall apply); (b) valuation principles (in which case section 57(2) to (5) shall apply).
Propose a change(1) The Treasury may make regulations about third party compensation arrangements in the case of partial property transfers. (2) In making regulations the Treasury shall, in particular, have regard to the desirability of ensuring that if a residual bank enters insolvency after transfer, pre-transfer shareholders or creditors do not receive less favourable treatment than they would have received had it entered insolvency immediately before transfer. (3) In subsection (2)— (a) “residual bank” means a bank that is a transferor under a property transfer instrument, (b) “pre-transfer shareholder or creditor” means a person who— (i) holds securities issued by, or is a creditor of, a residual bank immediately before a property transfer instrument takes effect, and (ii) satisfies conditions specified by the regulations, and (c) the reference to insolvency includes a reference to (i) liquidation, (ii) bank insolvency, (iii) administration, (iv) bank administration, (v) receivership, (vi) a composition with creditors, and (vii) a scheme of arrangement. (4) The regulations may— (a) require a compensation scheme order or a resolution fund order to include a third party compensation order; (b) require a third party compensation order to include provision of a specified kind or to specified effect; (c) make provision which is to be treated as forming part of a third party compensation order (whether (i) generally, (ii) only if applied, (iii) unless disapplied, or (iv) subject to express modification). (5) Regulations may provide for whether compensation is to be paid, and if so what amount is to be paid, to be determined by reference to any factors or combination of factors; in particular, the regulations may provide for entitlement— (a) to depend in part upon the amounts which are or may be payable under a resolution fund order; (b) to be contingent upon the occurrence or non-occurrence of specified events; (c) to be determined wholly or partly by an independent valuer (within the meaning of sections 54 to 56) appointed in accordance with a compensation scheme order or resolution fund order. (6) Regulations may make provision about payment including, in particular, provision for payments— (a) on account subject to terms and conditions; (b) by instalment. (7) 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.
Propose a change(1) The Treasury may make regulations about compensation arrangements in the case of— (a) resolution instruments under section 12A(2) and supplemental resolution instruments under section 48U(2), and (b) instruments (made under any provision) that include special bail-in provision. (2) Regulations may— (a) require a resolution fund order, a compensation scheme order, a third party compensation order or a bail-in compensation order to include provision of a specified kind or to specified effect; (b) make provision that is to be treated as forming part of any such order (whether (i) generally, (ii) only if applied, (iii) unless disapplied, or (iv) subject to express modification). (3) Regulations may provide for whether compensation is to be paid, and if so what amount is to be paid, to be determined by reference to any factors or combination of factors; in particular, the regulations may provide for entitlement— (a) to depend in part upon the amounts which are or may be payable under a resolution fund order; (b) to be contingent upon the occurrence or non-occurrence of specified events; (c) to be determined wholly or partly by an independent valuer (within the meaning of sections 54 to 56) appointed in accordance with a compensation scheme order or bail-in compensation order. (4) Regulations may make provision about payment including, in particular, provision for payments— (a) on account subject to terms and conditions; (b) by instalment. (5) 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.
Propose a change(1) In making regulations under section 60A the Treasury must, in particular, have regard to the desirability of ensuring that pre-resolution shareholders and creditors of a bank do not receive less favourable treatment than they would have received had the bank entered insolvency immediately before the coming into effect of the initial instrument. (2) References in this section to the initial instrument are— (a) in relation to compensation arrangements in the case of property transfer instruments under section 11(2), 12(2) or 12ZA(2), to the first instrument to be made under those provisions with respect to the bank; (b) in relation to compensation arrangements in other cases, to the first resolution instrument to be made under section 12A with respect to the bank. (3) The “pre-resolution shareholders and creditors” of a bank are the persons who held securities issued by the bank, or were creditors of the bank, immediately before the coming into effect of the initial instrument. (4) References in this section to insolvency include a reference to (i) liquidation, (ii) bank insolvency, (iii) administration, (iv) bank administration, (v) receivership, (vi) composition with creditors, and (vii) a scheme of arrangement.
Propose a change