Financial Services (Banking Reform) Act 2013 - …

1 Published by TSO (The Stationery Office) and available , Telephone, Fax & E-mailTSOPO Box 29, Norwich, NR3 1 GNTelephone orders/General enquiries: 0870 600 5522 Fax orders: 0870 600 5533E-mail: 0870 240 3701 The Houses of Parliament Shop12 Bridge Street, Parliament SquareLondon SW1A 2 JXTelephone orders/General enquiries: 020 7219 3890 Fax orders: 020 7219 3866 Email: @Blackwell and other Accredited AgentsFinancial Services ( banking reform ) Act 2013 CHAPTER 33 Services ( banking reform ) Act 2013 Financial Services ( banking reform ) Act 2013 CHAPTER 33 CONTENTSPART 1 RING-FENCINGRing-fencing1 Objectives of Prudential Regulation Authority2 Modification of objectives of Financial Conduct Authority3 Amendment of PRA power of direction4 Ring-fencing of certain activities5 PRA annual report6 Ring-fencing transfer schemes7 Building societies: power to make provision about ring-fencingReviews8 Independent review of operation of legislation relating to ring-fencing9 PRA review of proprietary trading10 Independent review of proprietary trading11 Reviews of proprietary trading: interpretation12 Right to obtain documents and informationPART 2 DEPOSITOR PREFERENCE AND THE Financial Services COMPENSATION SCHEMED epositor preference13 Preferential debts: Great BritainFinancial Services ( banking reform ) Act 2013 (c.)

2 33)iiFinancial Services Compensation Scheme14 Discharge of functions by the scheme manager15 Power to require information from scheme manager16 Scheme manager: appointment of accounting officerPART 3 BAIL-IN STABILISATION OPTION17 Bail-in stabilisation optionPART 4 CONDUCT OF PERSONS WORKING IN Financial Services SECTORA mendments of FSMA 200018 Functions for which approval is required19 Senior management functions20 Statements of responsibilities21 Vetting by relevant authorised persons of candidates for approval22 Determination of applications for approval23 Power to give approval subject to conditions or for limited period24 Changes in responsibilities of senior managers25 Duty to notify regulator of grounds for withdrawal of approval26 Variation of approval27 Statement of policy28 Extension of limitation periods for imposing sanctions29 Certification of employees by relevant authorised persons30 Rules of conduct31 Requirement to notify regulator of disciplinary action32 Definition of misconduct 33 Meaning of relevant authorised person 34

3 Recording information about senior managers35 Consequential amendments relating to Part 4 Offence36 Offence relating to a decision causing a Financial institution to fail37 Section 36: interpretation38 Institution of proceedingsPART 5 REGULATION OF PAYMENT SYSTEMSO verview39 OverviewThe Payment Systems Regulator40 The Payment Systems RegulatorFinancial Services ( banking reform ) Act 2013 (c. 33)iii Payment system etc41 Meaning of payment system 42 Participants in payment systems etcDesignation as a regulated payment system43 Designation orders44 Designation criteria45 Procedure46 Amendment of designation order47 Revocation of designation orders48 PublicationGeneral duties of Regulator49 Regulator s general duties in relation to payment systems50 The competition objective51 The innovation objective52 The service-user objective53 Regulatory principlesRegulatory and competition functions54 Directions55 System rules56 Power to require granting of access to payment systems57 Variation of agreements relating to payment systems58 Power to require disposal of interest in payment system59 The Regulator s functions under Part 4 of the Enterprise Act 200260 Restrictions on exercise of functions under Part 4 of the Enterprise Act 200261 The Regulator s functions under the Competition Act

4 199862 Duty to consider exercise of powers under Competition Act 199863 Provision of information and assistance to a CMA group64 Function of keeping markets under review65 Exclusion of general duties66 Concurrent competition powers: supplementary provision67 Amendments relating to Regulator s competition powersComplaints68 Complaints by representative bodies69 Response by Regulator70 Complaints: guidanceEnforcement and appeals71 Meaning of compliance failure 72 Publication of compliance failures etc73 Penalties74 Warning notices75 Injunctions76 Appeals: general77 Appeals to Competition Appeal Tribunal78 Appeals in relation to penaltiesFinancial Services ( banking reform ) Act 2013 (c. 33)iv79 Appeals to Competition and Markets Authority80 Enforcement of requirement to dispose of interest in payment systemInformation and investigation powers81 Power to obtain information or documents82 Reports by skilled persons83 Appointment of persons to conduct investigations84 Investigations: general85 Powers of persons appointed under section 8386 Information and documents.

5 Supplemental provisions87 Admissibility of statements made to investigators88 Entry of premises under warrant89 Retention of documents taken under section 8890 Enforcement of information and investigation powersDisclosure of information91 Restrictions on disclosure of confidential information92 Exemptions from section 9193 Offences relating to disclosure of confidential information94 Information received from Bank of England95 Disclosure of information by Bank to RegulatorGuidance96 GuidanceReports97 ReportsRelationship with other regulators98 Duty of regulators to ensure co-ordinated exercise of functions99 Memorandum of understanding100 Power of Bank to require Regulator to refrain from specified action101 Power of FCA to require Regulator to refrain from specified action102 Power of PRA to require Regulator to refrain from specified actionConsultation, accountability and oversight103 Regulator s general duty to consult104 Consultation in relation to generally applicable requirements105 Independent inquiries106 Investigations into regulatory failure107 Competition scrutinyMiscellaneous and supplemental108 Relationship with Part 8 of the Payment Services regulations 2009109 Exemption from liability in damages for FCA and PRA110 Interpretation of PartFinancial Services ( banking reform ) Act 2013 (c.)

6 33)vPART 6 SPECIAL ADMINISTRATION FOR OPERATORS OF CERTAIN INFRASTRUCTURE SYSTEMSI ntroductory111 Financial market infrastructure administration112 Interpretation: infrastructure companies113 Interpretation: other expressionsFMI administration orders114 FMI administration orders115 Objective of FMI administration116 Application for FMI administration order117 Powers of court118 FMI administrators119 Continuity of supply120 Power to direct FMI administrator121 Conduct of administration, transfer schemes on other insolvency procedures122 Restriction on winding-up orders and voluntary winding up123 Restriction on making of ordinary administration orders124 Restriction on enforcement of securityFinancial support for companies in FMI administration125 Loans126 IndemnitiesInterpretation127 Interpretation of PartApplication of Part to Northern Ireland128 Northern IrelandPART 7 MISCELLANEOUSC ompetition129 Functions of FCA under competition legislation130 Competition as a secondary objective of the PRAC onsumers131 Duty of FCA to make rules restricting charges for high-cost short-term credit132 Role of FCA Consumer Panel in relation to PRAF inancial Services ( banking reform ) Act 2013 (c.

7 33)viParent undertakings133 Power of FCA and PRA to make rules applying to parent undertakingsMeetings with auditors134 Duty to meet auditors of certain institutionsFees to meet Treasury expenditure135 Fees to meet Treasury expenditure relating to international organisationsParliamentary control of statutory instruments under FSMA 2000136 Amendments of section 429 of FSMA 2000 Bank of England137 Accounts of Bank of England and its wholly-owned subsidiariesBuilding societies138 Building societiesClaims management services139 Power to impose penalties on persons providing claims management services140 Recovery of expenditure incurred by Office for Legal ComplaintsMinor amendments141 Minor amendmentsPART 8 FINAL PROVISIONS142 Orders and regulations : general143 Orders and regulations : Parliamentary control144 Interpretation145 Power to make further consequential amendments146 Transitional provisions and savings147 Extent148 Commencement and short titleSchedule 1 Ring-fencing transfer schemesSchedule 2 Bail-in stabilisation optionPart 1 Amendments of banking Act 2009 Part 2 Modification of Investment Bank Special AdministrationRegulations 2011 Schedule 3 Consequential amendments relating to Part 4 Financial Services ( banking reform ) Act 2013 (c.

8 33)viiSchedule 4 The Payment Systems RegulatorSchedule 5 Procedure for appeals to the CMAS chedule 6 Conduct of FMI administrationSchedule 7 Financial market infrastructure transfer schemesSchedule 8 Functions of FCA under competition legislationPart 1 Amendments of Financial Services and Markets Act 2000 Part 2 Amendments of other legislationSchedule 9 Building societiesSchedule 10 Minor amendmentsELIZABETH IIc. 33 Financial Services ( banking reform ) Act 20132013 CHAPTER 33An Act to make further provision about banking and other Financial Services ,including provision about the Financial Services Compensation Scheme; tomake provision for the amounts owed in respect of certain deposits to betreated as a preferential debt on insolvency; to make further provision aboutpayment systems and securities settlement systems; to make provision aboutthe accounts of the Bank of England and its wholly owned subsidiaries; tomake provision in relation to persons providing claims management Services ;and for connected purposes.

9 [18th December 2013]E IT ENACTED by the Queen s most Excellent Majesty, by and with the advice andconsent of the Lords Spiritual and Temporal, and Commons, in this presentParliament assembled, and by the authority of the same, as follows: PART 1 RING-FENCINGRing-fencing1 Objectives of Prudential Regulation Authority(1)Section 2B of FSMA 2000 (the PRA s general objective) is amended as follows.(2)In subsection (3) (a)at the end of paragraph (a), omit and , and(b)after paragraph (b) insert , and(c)discharging its general functions in relation to thematters mentioned in subsection (4A) in a way thatseeks to BFinancial Services ( banking reform ) Act 2013 (c. 33)Part 1 Ring-fencing2(i)ensure that the business of ring-fenced bodies iscarried on in a way that avoids any adverseeffect on the continuity of the provision in theUnited Kingdom of core Services ,(ii)ensure that the business of ring-fenced bodies isprotected from risks (arising in the UnitedKingdom or elsewhere) that could adverselyaffect the continuity of the provision in theUnited Kingdom of core Services , and(iii)minimise the risk that the failure of a ring-fencedbody or of a member of a ring-fenced body sgroup could affect the continuity of theprovision in the United Kingdom of coreservices.

10 (3)In subsection (4), for subsection (3) substitute subsection (3)(a) and (b) .(4)After subsection (4) insert (4A)The matters referred to in subsection (3)(c) are (a)Part 9B (ring-fencing);(b)ring-fenced bodies (see section 142A);(c)any body corporate incorporated in the United Kingdom thathas a ring-fenced body as a member of its group;(d)applications under Part 4A which, if granted, would result, orwould be capable of resulting, in a person becoming a ring-fenced body. (5)In section 2J of FSMA 2000 (interpretation of Chapter 2 of Part 1) (a)in subsection (3), for a PRA-authorised substitute an authorised ,(b)after that subsection insert (3A)For the purposes of this Chapter, the cases in which a person( P ) other than an authorised person is to be regarded as failinginclude any case where P enters insolvency. , and(c)in subsection (4), for subsection (3)(a) substitute subsections (3)(a)and (3A).