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Financial Services Act 2012

Type Public General Act

Publication 2012-12-19

Last updated 2025-01-14

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

(312E) (1) If the appropriate regulator considers that a recognised body has contravened a relevant requirement imposed on the body, it may publish a statement to that effect. (2) Where the FCA is the appropriate regulator, a requirement is a “relevant requirement” for the purposes of this Chapter if it is— (a) a requirement that is imposed by or under any provision of this Part that relates to a recognised investment exchange, (b) a requirement that is imposed under any other provision of this Act by the FCA that relates to a recognised investment exchange, (c) a requirement that is imposed by a qualifying EU provision specified, or of a description specified, for the purposes of this subsection by the Treasury by order, or (d) a requirement that is imposed by this Act and whose contravention constitutes an offence that the FCA has power to prosecute under this Act (see section 401). (3) Where the Bank of England is the appropriate regulator, a requirement is a “relevant requirement” for the purposes of this Chapter if it is— (a) a requirement that is imposed by or under any provision of this Part that relates to a recognised clearing house, (b) a requirement that is imposed under any other provision of this Act by the Bank, (c) a requirement that is imposed by a qualifying EU provision specified, or of a description specified, for the purposes of this subsection by the Treasury by order, or (d) a requirement that is imposed by this Act and whose contravention constitutes an offence that the Bank has power to prosecute under this Act (see section 401, as applied by paragraph 31 of Schedule 17A). (312F) If the appropriate regulator considers that a recognised body has contravened a relevant requirement imposed on the body, it may impose on the body a penalty, in respect of the contravention, of such amount as it considers appropriate. (312G) (1) If the appropriate regulator proposes— (a) to publish a statement in respect of a recognised body under section 312E, or (b) to impose a penalty on a recognised body under section 312F, it must give the body a warning notice. (2) A warning notice about a proposal to publish a statement must set out the terms of the statement. (3) A warning notice about a proposal to impose a penalty must state the amount of the penalty. (312H) (1) If the appropriate regulator decides— (a) to publish a statement in respect of a recognised body under section 312E (whether or not in the terms proposed), or (b) to impose a penalty on a recognised body under section 312F (whether or not of the amount proposed), it must give the body a decision notice. (2) In the case of a statement, the decision notice must set out the terms of the statement. (3) In the case of a penalty, the decision notice must state the amount of the penalty. (4) If the appropriate regulator decides— (a) to publish a statement in respect of a recognised body under section 312E, or (b) to impose a penalty on a recognised body under section 312F, the body may refer the matter to the Tribunal. (312I) After an appropriate regulator publishes a statement under section 312E, it must send a copy of the statement to— (a) the recognised body concerned, and (b) any person to whom a copy of the decision notice was given under section 393(4). (312J) (1) Each appropriate regulator must prepare and issue a statement of its policy with respect to— (a) the imposition of penalties under section 312F, and (b) the amount of penalties under that section. (2) An appropriate regulator's policy in determining what the amount of a penalty should be must include having regard to— (a) the seriousness of the contravention in question in relation to the nature of the requirement concerned, and (b) the extent to which that contravention was deliberate or reckless. (3) An appropriate regulator may at any time alter or replace a statement issued by it under this section. (4) If a statement issued by an appropriate regulator under this section is altered or replaced, the regulator must issue the altered or replacement statement. (5) In exercising, or deciding whether to exercise, its power under section 312F in the case of any particular contravention, an appropriate regulator must have regard to any statement of policy published by it under this section and in force at a time when the contravention in question occurred. (6) A statement issued by an appropriate regulator under this section must be published by the regulator in the way appearing to the regulator to be best calculated to bring it to the attention of the public. (7) An appropriate regulator may charge a reasonable fee for providing a person with a copy of the statement. (8) An appropriate regulator must, without delay, give the Treasury a copy of any statement which it publishes under this section. (312K) (1) Before issuing a statement under section 312J, an appropriate regulator must publish a draft of the proposed statement in the way appearing to the regulator to be best calculated to bring it to the attention of the public. (2) The draft must be accompanied by notice that representations about the proposal may be made to the regulator within a specified time. (3) Before issuing the proposed statement, the regulator must have regard to any representations made to it in accordance with subsection (2). (4) If the regulator issues the proposed statement it must publish an account, in general terms, of— (a) the representations made to it in accordance with subsection (2), and (b) its response to them. (5) If the statement differs from the draft published under subsection (1) in a way which is, in the opinion of the regulator, significant, the regulator must (in addition to complying with subsection (4)) publish details of the difference. (6) An appropriate regulator may charge a reasonable fee for providing a person with a copy of a draft published under subsection (1). (7) This section also applies to a proposal to alter or replace a statement.

Repeal of special competition regime

34

In Part 18 of FSMA 2000 (recognised investment exchanges and clearing houses)—

(a) omit Chapter 2 (competition scrutiny), and

(b) omit Chapter 3 (exclusion from the Competition Act 1998).

Sections 28 to 34: minor and consequential amendments

35

Schedule 8 contains—

(a) minor amendments of FSMA 2000 in connection with provision made by sections 28 to 34, and

(b) other amendments of that Act in consequence of that provision.

Suspension and removal of financial instruments from trading

36

In every provision of Part 18A of FSMA 2000 (suspension and removal of financial instruments from trading)—

(a) for “Authority”, in each place, substitute “ FCA ”, and

(b) for “Authority's”, in each place, substitute “FCA's”.

Discipline and enforcement

37

(1) Schedule 9 contains miscellaneous amendments of FSMA 2000 relating to discipline and enforcement.

(2) If the Treasury consider that it is in the public interest to do so, the Treasury may by order—

(a) amend section 391 of FSMA 2000 by substituting for subsections (1) to (1ZB) the following—

(1) Neither the regulator giving a warning notice nor a person to whom it is given or copied may publish the notice or any details concerning it.

, and

(b) repeal section 395(1)(d) and (2)(b) and (c) of that Act.

Financial Services Compensation Scheme

The Financial Services Compensation Scheme

38

(1) Schedule 10 contains amendments of Part 15 of FSMA 2000 (the Financial Services Compensation Scheme).

(2) In section 224F(1) of that Act (power to require FSCS manager to act in relation to other schemes: rules about the schemes), for “Authority” substitute “ regulators ”.

Financial ombudsman service

The financial ombudsman service

39

Schedule 11 contains amendments of FSMA 2000 relating to the financial ombudsman service.

Lloyd's

40

(1) Part 19 of FSMA 2000 (Lloyd's) is amended as follows.

(2) In section 314 (Authority's general duty)—

(a) for subsection (1) substitute—

(1) So far as it is appropriate to do so for the purpose of advancing one or more of its operational objectives, the FCA must keep itself informed about— (a) the way in which the Council supervises and regulates the market at Lloyd's, and (b) the way in which regulated activities are being carried on in that market. (1A) So far as it is appropriate to do so for the purpose of advancing its general objective or (if section 2C applies) its insurance objective, the PRA must keep itself informed about— (a) the way in which the Council supervises and regulates the market at Lloyd's, and (b) the way in which any PRA-regulated activities are being carried on in that market.

(b) in subsection (2)—

(i) for “The Authority” substitute “ Each regulator ”, and

(ii) in paragraph (b), for “section 315” substitute “ provision made by or under this Act ”, and

(3) After that section insert—

(314A) (1) This section modifies— (a) the effect of sections 2B and 2C (the PRA's general objective and insurance objective), and (b) the effect of section 3I (power of PRA to require FCA to refrain from specified action), in relation to anything done, or proposed to be done, by the PRA under or for the purposes of this Part. (2) This section applies only if PRA-authorised persons include— (a) the Society, or (b) other persons who carry on regulated activities in relation to anything done at Lloyd's. (3) Section 2B(2) and (3) have effect as if references to PRA-authorised persons (or a PRA-authorised person) were references to the Society, and the members of the Society, taken together (and sections 2G and 2J(3) are to be read accordingly). (4) Section 2C(1) has effect as if the reference to the discharge of the PRA's general functions so far as relating to the activity mentioned there were a reference to the discharge of its general functions so far as relating to the carrying on by the Society or other persons of PRA-regulated activities in relation to anything done at Lloyd's. (5) Section 3I(4)(b) has effect as if the reference to a PRA-authorised person were a reference to the Society, and the members of the Society, taken together.

(4) For section 315 substitute—

(315) (1) This section applies if an activity carried on by the Society is of a kind specified in an order made under section 22 (regulated activities). (2) The order may provide that the Society is not to be subject to any requirement of this Act concerning the registered office of a body corporate.

(5) In section 316 (direction by Authority)—

(a) in subsection (1), for “the Authority” substitute “ a regulator ”,

(b) after that subsection insert—

(1A) A direction under subsection (1)— (a) may be given by the FCA only if it considers that giving the direction is necessary or expedient for the purpose of advancing one or more of its operational objectives, and (b) may be given by the PRA only if it considers that giving the direction is necessary or expedient for the purpose of advancing its general objective or (if section 2C applies) the insurance objective. (1B) A direction under subsection (1) which applies the general prohibition to a member of the Society, or to the members of the Society taken together, may be given by a regulator only with the consent of the other regulator.

(i) for “the Authority”, in both places, substitute “ the regulator concerned ”, and

(ii) in paragraph (c), for “section 315” substitute “ provision made by or under this Act ”,

(d) in subsection (9)—

(i) after “subsection (1)” insert “ given by a regulator ”, and

(ii) for “the Authority” substitute “ the regulator ”,

(e) in subsection (10), for “The Authority” substitute “ A regulator who gives a direction under subsection (1) ”,

(f) in subsection (11)—

(i) for “The Authority” substitute “ A regulator who gives a direction under subsection (1) ”, and

(ii) for “any direction which it gives under this section” substitute “ the direction ”, and

(g) in the heading, for “Authority” substitute “ a regulator ”.

(6) In section 317 (the core provisions), in subsection (1), for “X” substitute “ 9A ”.

(7) In section 318 (exercise of powers through Council)—

(a) in subsection (1), for “The Authority” substitute “ A regulator ”,

(b) after subsection (3) insert—

(3A) A direction under subsection (1)— (a) may be given by the FCA only if it considers that giving the direction is necessary or expedient for the purpose of advancing one or more of its operational objectives, and (b) may be given by the PRA only if it considers that giving the direction is necessary or expedient for the purpose of advancing its general objective or (if section 2C applies) the insurance objective.

(d) in subsection (6)(a), for “the Authority” substitute “ a regulator ”,

(e) in subsection (7)—

(i) after “subsection (1)” insert “ given by a regulator ”, and

(ii) for “the Authority” substitute “ the regulator ”,

(f) in subsection (8), for “The Authority” substitute “ A regulator who gives a direction under subsection (1) ”, and

(g) in subsection (9)—

(i) for “The Authority” substitute “ A regulator who gives a direction under subsection (1) ”, and

(ii) for “any direction which it gives under this section” substitute “ the direction ”.

(8) In section 319 (consultation)—

(a) for subsection (1) substitute—

(1) Before a regulator gives a direction under section 316 or 318, it must— (a) in a case where section 316(1B) requires the regulator to obtain the consent of the other regulator, obtain that consent, (b) in any other case, consult the other regulator, and (c) after complying with paragraph (a) or (b), publish a draft of the proposed direction.

(b) in subsection (2)(b), for “the Authority” substitute “ the regulator ”,

(3) Before a regulator gives the proposed direction— (a) it must have regard to any representations made to it in accordance with subsection (2)(b), and (b) if it was required by subsection (1)(b) to consult the other regulator and proposes to give a direction which differs from the draft published under subsection (1) in a way which is, in the opinion of the regulator, significant, it must again consult the other regulator.

(d) in subsections (4) and (5) (in both places), for “the Authority” substitute “ the regulator ”,

(e) for subsection (6) substitute—

(6) Subsections (1)(c) and (2) to (5) do not apply in relation to— (a) a direction given by the FCA if it considers that the delay involved in complying with them would be prejudicial to the interests of consumers, as defined in section 425A, or (b) a direction given by the PRA if it considers that the delay involved in complying with them would— (i) be prejudicial to the safety and soundness of the Society, and the members of the Society, taken together, or (ii) in a case where section 2C applies, be prejudicial to securing the appropriate degree of protection for policyholders.

(f) in subsection (7), for “the Authority” substitute “ the regulator concerned ”,

(g) in subsection (8)—

(i) for “The Authority” substitute “ A regulator who publishes a draft under subsection (1) ”, and

(ii) for “a draft published under subsection (1)” substitute “ the draft ”,

(h) in subsection (9), for “the Authority” substitute “ a regulator ”, and

(i) for subsection (10) substitute—

(10) Cost benefit analysis” means— (a) an analysis of the costs together with an analysis of the benefits that will arise— (i) if the proposed direction is given, or (ii) if subsection (5)(b) applies, from the direction that has been given, and (b) subject to subsection (10A), an estimate of those costs and of those benefits. (10A) If, in the opinion of the regulator concerned— (a) the costs or benefits referred to in subsection (10) cannot reasonably be estimated, or (b) it is not reasonably practicable to produce an estimate, the cost benefit analysis need not estimate them, but must include a statement of the opinion of the regulator concerned and an explanation of it.

(9) In section 320 (former underwriting members)—

(a) in subsection (2), for “Part IV permission” substitute “ Part 4A permission ”,

(b) in subsection (3), for “The Authority” substitute “ The PRA ”, and

(5) In the event that the activity of effecting or carrying out contracts of insurance as principal is not to any extent a PRA-regulated activity, the function conferred on the PRA by subsection (3) is exercisable instead by the FCA. (6) Accordingly, in that case— (a) references in section 321 to the PRA are to be read as references to the FCA, and (b) the reference in section 321(13) to the FCA is to be read as a reference to the PRA.

(10) In section 321 (requirements imposed under section 320)—

(a) in subsection (2), for “the Authority” substitute “ the PRA ”,

(b) in subsection (3)(b), for “the Authority's” substitute “the PRA's”,

(d) after subsection (12) insert—

(13) Before giving a notice under any provision of this section, the PRA must consult the FCA.

(11) In section 322 (rules applicable to former underwriting members)—

(a) in subsection (1), for “The Authority” substitute “ The PRA ”,

(b) in subsection (4), for “Part X (except sections 152 to 154)” substitute “ Part 9A (except sections 137T, 138F, 138G and 138H) ”, and

(5) In the event that the activity of effecting or carrying out contracts of insurance as principal is not to any extent a PRA-regulated activity, the function conferred on the PRA by subsection (1) is exercisable instead by the FCA.

Information

Information, investigations, disclosure etc.

41

Schedule 12 contains miscellaneous amendments of FSMA 2000, including amendments relating to information gathering, investigations and disclosure.

Auditors and actuaries

42

Schedule 13 contains miscellaneous amendments of Part 22 of FSMA 2000 (auditors and actuaries).

Consumer protection and competition

Provisions about consumer protection and competition

43

After section 234B of FSMA 2000 insert—

(234C) (1) A designated consumer body may make a complaint to the FCA that a feature, or combination of features, of a market in the United Kingdom for financial services is, or appears to be, significantly damaging the interests of consumers. (2) “Designated consumer body” means a body designated by the Treasury by order. (3) The Treasury— (a) may designate a body only if it appears to them to represent the interests of consumers of any description, and (b) must publish in such manner as they think fit (and may from time to time vary) criteria to be applied by them in determining whether to make or revoke a designation. (4) Sections 425A and 425B (meaning of “consumers”) apply for the purposes of this section, but the references to consumers in this section do not include consumers who are authorised persons. (5) In this section— (a) “market in the United Kingdom” has the meaning given in section 140A; (b) the reference to a feature of a market in the United Kingdom for financial services has a meaning corresponding to that which a reference to a feature of a market in the United Kingdom for goods and services has (by virtue of section 140A(3)) for the purposes of Chapter 4 of Part 9A. (234D) (1) A relevant person may make a reference to the FCA where it appears to that person that either the first set of conditions or the second set of conditions are satisfied. (2) Each of the following is a “relevant person”— (a) the scheme operator; (b) a regulated person. (3) The first set of conditions is— (a) that there may have been— (i) in the case of a reference by the scheme operator, a regular failure by one or more regulated persons to comply with requirements applicable to the carrying on by them of any activity, or (ii) in the case of a reference by a regulated person, a regular failure by that person to comply with requirements applicable to the carrying on by that person of any activity, and (b) that as a result consumers have suffered, or may suffer, loss or damage in respect of which, if they brought legal proceedings, a remedy or relief would be available in the proceedings. (4) The reference to the failure by a regulated person (“R”) to comply with a requirement applicable to the carrying on by R of any activity includes anything done, or omitted to be done, by R in carrying on the activity— (a) which is a breach of a duty or other obligation, prohibition or restriction, or (b) which otherwise gives rise to the availability of remedy or relief in legal proceedings. (5) It does not matter whether— (a) the duty or other obligation, prohibition or restriction, or (b) the remedy or relief, arises as a result of any provision made by or under this or any other Act, a rule of law or otherwise. (6) The second set of conditions is— (a) in the case of a reference by the scheme operator, that one or more regulated persons have, on a regular basis, acted or failed to act, in such a way that, if a complaint were made under the ombudsman scheme in relation to that conduct, the ombudsman would be likely to determine the complaint in favour of the complainant, (b) in the case of a reference by a regulated person, that the regulated person has, on a regular basis, acted or failed to act in such a way that, if a complaint were made under the ombudsman scheme in relation to that conduct, the ombudsman would be likely to determine the complaint in favour of the complainant, and (c) in either case, that— (i) if the complaint would fall within the compulsory jurisdiction or the consumer credit jurisdiction, the ombudsman would be likely to make an award under section 229(2)(a) or give a direction under section 229(2)(b), or (ii) if voluntary jurisdiction rules made for the purposes of section 227 provide for the making of an award against a respondent or the giving of a direction that a respondent take certain steps in relation to a complainant, and the complaint would fall within the voluntary jurisdiction, the ombudsman would be likely to make such an award or give such a direction. (7) “Consumers” has the meaning given in section 1G. (8) “Regulated person” means— (a) an authorised person; (b) an electronic money issuer, as defined in section 1H(8); (c) a payment service provider, as defined in section 1H(8). (234E) (1) The FCA must within 90 days after the day on which it receives a complaint under section 234C or a reference under section 234D publish a response stating how it proposes to deal with the complaint or reference, and in particular— (a) whether it has decided to take any action, or to take no action, and (b) if it has decided to take action, what action it proposes to take. (2) The response must— (a) include a copy of the complaint or reference, and (b) state the FCA's reasons for its proposals. (3) The Treasury may by order amend subsection (1) by substituting any period for the period for the time being specified there. (234F) (1) This section applies where the FCA has received a reference under section 234D from a person who is a relevant person as a result of subsection (2)(b) of that section. (2) The duty to respond in section 234E does not apply if the FCA considers that the reference is frivolous, vexatious or has been made in bad faith. (3) The FCA must within 90 days after the day on which it receives the reference inform the person who made it— (a) that the duty to respond under section 234E does not apply by virtue of this section, and (b) of its reasons for reaching the conclusion in paragraph (a). (4) The Treasury may by order amend subsection (3) by substituting any period for the period for the time being specified there. (234G) (1) The guidance given by the FCA under section 139A— (a) must include guidance about the presentation of a reasoned case for a complaint under section 234C or a reference under section 234D, and (b) may include guidance about such other matters as appears to the FCA to be appropriate for the purposes of section 234C or 234D. (2) Guidance given under this section is to be taken to be general guidance as defined in section 139B(5). (234H) (1) The FCA may ask the Office of Fair Trading (“the OFT”) to consider whether a feature, or combination of features, of a market in the United Kingdom for financial services may prevent, restrict or distort competition in connection with the supply or acquisition of any financial services in the United Kingdom or a part of the United Kingdom. (2) The OFT must, within 90 days after the day on which it receives the request, publish a response stating how it proposes to deal with the request and in particular— (a) whether it has decided to take any action, or to take no action, in response to the request, and (b) if it has decided to take action, what action it proposes to take. (3) The response must state the OFT's reasons for its proposals. (4) The Treasury may by order amend subsection (2) by substituting any period for the period for the time being specified there. (5) In this section— (a) “market in the United Kingdom” has the meaning given in section 140A(1); (b) the reference to a feature of a market in the United Kingdom for financial services has a meaning corresponding to that which a reference to a feature of a market in the United Kingdom for goods and services has (by virtue of section 140A(3)) for the purposes of Chapter 4 of Part 9A.

Insolvency

44

Schedule 14 contains amendments of Part 24 of FSMA 2000 (insolvency).

Miscellaneous amendments of FSMA 2000

The consumer financial education body

45

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Members of the professions

46

Schedule 16 contains miscellaneous amendments of FSMA 2000 relating to financial services provided by members of the professions.

International obligations

47

In section 410 of FSMA 2000 (international obligations), in subsection (4), for paragraph (a) substitute—

(a) the FCA; (aa) the PRA; (ab) the Bank of England when exercising functions conferred on it by Part 18;

Interpretation of FSMA 2000

48

(1) In section 417 of FSMA 2000 (definitions), in subsection (1)—

(a) omit the definition of “the Authority”,

(b) in the definition of “control of information rules” for “section 147(1)” substitute “ section 137P ”,

“credit-related regulated activity” has the meaning given in section 23(1B);

(d) after the definition of “exempt person” insert—

“the FCA” means the Financial Conduct Authority;

(e) in the definition of “financial promotion rules” for “section 145” substitute “ section 137R ”,

(f) for the definition of “general rules” substitute—

“general rules”— (a) in relation to the FCA, has the meaning given in section 137A(2), and (b) in relation to the PRA, has the meaning given in section 137G(2);

(g) omit the definition of “money laundering rules”,

(h) omit the definition of “notice of control”,

(i) for the definition of “Part IV permission” substitute—

“Part 4A permission” has the meaning given in section 55A(5);

(j) after the definition of “partnership” insert—

“the PRA” means the Prudential Regulation Authority; “PRA-authorised person” has the meaning given in section 2B(5); “PRA-regulated activity” has the meaning given in section 22A;

(k) in the definition of “price stabilising rules” for “section 144” substitute “ section 137Q ”,

(l) after that definition insert—

“principal” in relation to an appointed representative, is to be read in accordance with section 39;

(m) in the definition of “regulating provisions” for “section “159(1)” substitute “ section 140A ”,

(n) after that definition insert—

“regulator” has the meaning given in section 3A(2);

(o) omit the definitions of “regulatory objectives” and “regulatory provisions”,

(p) for the definition of “rule” substitute—

“rule” means a rule made by the FCA or the PRA under this Act;

(q) in the definition of “rule-making instrument” for “section 153” substitute “ section 138G ”,

(r) for the definition of “threshold conditions” substitute—

“threshold conditions”, in relation to a regulated activity, has the meaning given in section 55B(1);

(s) in the definition of “UK authorised person” for “section 178(4)” substitute “ section 191G(1) ”, and

(t) in the definition of “the UK financial system” for “section 3” substitute “ section 1I ”.

(2) After section 421 of FSMA 2000 insert—

(421ZA) In this Act “immediate group”, in relation to a person (“A”), means— (a) A; (b) a parent undertaking of A; (c) a subsidiary undertaking of A; (d) a subsidiary undertaking of a parent undertaking of A; (e) a parent undertaking of a subsidiary undertaking of A.

(3) After section 425B of FSMA 2000 insert—

(425C) (1) In this Act “qualifying EU provision” means a provision of— (a) a directly applicable EU regulation, or (b) an EU decision for whose enforcement the United Kingdom is required by an EU obligation to make provision. (2) In subsection (1)(b) “EU decision” means a decision under an EU directive or EU regulation.

Parliamentary control of statutory instruments

49

(1) Section 429 of FSMA 2000 (Parliamentary control of statutory instruments) is amended as follows.

(2) In subsection (1) (orders subject to the affirmative resolution procedure)—

(a) in paragraph (a)—

(i) after “section” insert “ 1J, 3B(4), 3F(6), 55C, ”,

(ii) after “or (e),” insert “ 138K(6)(c), 192B(6), 204A(7), 213(1A), ”, and

(iii) after “236(5),” insert “ 285(4), 380(12), 382(15), 384(13), ”, and

(b) omit paragraph (b).

(3) In subsection (8)—

(a) after “under section” insert “ 3G(1), 137D(1)(b), ”,

(b) after “165A(2)(d)” insert “ , 192A(4) ”, and

PART 3 — Mutual societies

Transfer of functions

Mutual societies: power to transfer functions

50

(1) The Treasury may by order amend the legislation relating to mutual societies for any of the relevant purposes.

(2) “The legislation relating to mutual societies” means—

(a) the Industrial and Provident Societies Act 1965;

(b) the Industrial and Provident Societies Act 1967;

(d) the Industrial and Provident Societies Act (Northern Ireland) 1969;

(e) the Friendly Societies Act 1974;

(f) the Credit Unions Act 1979;

(g) the Credit Unions (Northern Ireland) Order 1985;

(h) the Building Societies Act 1986;

(i) the Friendly Societies Act 1992.

(3) The relevant purposes are—

(a) providing for any function of the FSA to be exercisable by that body corporate as the FCA;

(b) providing for any function of the FSA to be transferred to the PRA;

(c) providing for any function of the FSA to be exercisable by that body corporate as the FCA and also to be exercisable concurrently by the PRA;

(d) providing for any function which is exercisable by the FCA or the PRA (whether by virtue of a previous order under this section or otherwise) to be transferred to, or to be exercisable concurrently by, the other regulator;

(e) providing for any function which is exercisable by the FCA and the PRA (whether by virtue of a previous order under this section or otherwise) to be exercisable only by one of them;

(f) making provision that appears to the Treasury to be necessary or expedient in consequence of the provisions of this Act.

(4) In relation to the Industrial and Provident Societies Act (Northern Ireland) 1969 and the Credit Unions (Northern Ireland) Order 1985, the relevant purposes also include—

(a) providing for any function of a Northern Ireland department or the Registrar of Credit Unions for Northern Ireland to be transferred to the FCA or the PRA, or to both the FCA and PRA to be exercised concurrently;

(b) providing for any function of a Northern Ireland department or the Registrar of Credit Unions for Northern Ireland which relates to the determination of disputes to be exercisable instead by a court.

Further provision that may be included in orders under section 50

51

(1) In this section a “transfer order” means an order under section 50 making provision for any of the purposes mentioned in subsection (3)(a) to (e) or (4) of that section.

(2) The additional powers conferred by section 115(2) on a person making an order under this Act include power for the Treasury, when making a transfer order, to include—

(a) such consequential provision as the Treasury consider appropriate;

(b) provision for the transfer of any property, rights or liabilities held, enjoyed or incurred by any person in connection with transferred functions;

(c) provision for the application of the Transfer of Undertakings (Protection of Employment) Regulations 2006 in connection with any transfer of staff;

(d) provision for the carrying on and completion by or under the authority of the person to whom the functions are transferred of any proceedings, investigations or other matters commenced, before the order takes effect, by or under the authority of the person from whom the functions are transferred;

(e) provision amending any enactment relating to transferred functions in connection with their exercise by, or under the authority of, the person to whom they are transferred;

(f) provision requiring either regulator to consult the other, notify the other or obtain the consent of the other in connection with the exercise of transferred functions;

(g) provision for the substitution of the person to whom functions are transferred for the person from whom they are transferred, in any instrument, contract or legal proceedings made or begun before the order takes effect.

(3) For the purposes of subsection (2) a transfer order is to be taken to transfer functions to any person by whom any function becomes exercisable by virtue of the order.

(4) On or after the making of a transfer order (“the original order”) the Treasury may by order make any incidental, supplemental, consequential or transitional provision or provision by virtue of subsection (2) which they had power to include in the original order.

(5) The provisions of this section do not limit—

(a) the powers conferred by section 118 or 119(3), or

(b) the powers exercisable under Schedule 21 in connection with a transfer order that transfers functions to the PRA or to the FCA and the PRA.

Power to apply or disapply provision made by or under FSMA 2000

52

(1) The Treasury may by order provide—

(a) for any relevant provision that would not otherwise apply in relation to transferred functions to apply in relation to those functions with such modifications as may be specified;

(b) for any relevant provision that would otherwise apply in relation to transferred functions not to apply in relation to them or to apply with such modifications as may be specified.

(2) “Relevant provision” means a provision of, or made under, FSMA 2000.

(3) “Transferred function” means a function that has been or is being transferred by an order under section 50; and section 51(3) applies for the purpose of this subsection.

Evidence

53

(1) A certificate issued by the Treasury that property vested in a person immediately before a transfer order takes effect has been transferred as a result of the order is conclusive evidence of the transfer.

(2) “Transfer order” means—

(a) an order under section 50,

(b) an order under section 51(4), or

Repeals in Part 21 of FSMA 2000

54

(1) The following provisions of Part 21 of FSMA 2000 are repealed—

(a) in section 334 (the Friendly Societies Commission), subsections (1) and (2);

(b) section 335 (the Registry of Friendly Societies);

(d) section 337 (the Building Societies Investor Protection Board);

(e) section 338 (industrial and provident societies and credit unions);

(f) section 339 (supplemental provisions).

(2) The repeals in subsection (1) do not have the effect of revoking any order made under any provision of Part 21 of FSMA 2000 before the commencement of this section.

Building societies: miscellaneous

Building societies: creation of floating charges

55

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Power to direct transfer of building society's business

56

(1) Section 42B of the Building Societies Act 1986 (power to direct transfers of engagements or business) is amended as follows.

(2) In subsection (1)—

(a) before the “or” at the end of paragraph (a) insert—

(aa) direct the society, within a specified period, to transfer its business under section 97 to an existing or specially formed company that is a subsidiary of another mutual society by a transfer to which provision made by order under section 3 of the 2007 Act (transfers to subsidiaries of other mutuals) applies;

, and

(b) in paragraph (b), for “to an existing company under section 97” substitute “ under section 97 to an existing company that is not a subsidiary of another mutual society ”.

(3) After subsection (1) insert—

(1A) In this section— (a) “the 2007 Act” means the Building Societies (Funding) and Mutual Societies (Transfers) Act 2007; (b) “mutual society” has the same meaning as in section 3 of that Act.

(4) In subsection (4)—

(a) in paragraph (a), for “(1)(b)” substitute “ (1)(aa) or (b) ”, and

(b) in paragraph (b), after “existing company” insert “ , or to a specially formed company that is a subsidiary of another mutual society, ”.

(5) In Schedule 8A to that Act (directions under section 42B(4)), in paragraph 9(3), for “section 42B(1)(b)” substitute “ section 42B(1)(aa) or (b) ”.

Interpretation

Interpretation of Part 3

57

(1) In this Part “regulator” means the FCA or the PRA.

(2) In this Part a reference to a person's functions under an enactment includes a reference to the person's functions under any other enactment as applied by that enactment.

PART 4 — Collaboration between Treasury and Bank of England, FCA or PRA

Duty of Bank to notify Treasury of possible need for public funds

58

(1) Where it appears to the Bank of England that there is a material risk of circumstances within any of the following cases arising, the Bank must immediately notify the Treasury.

(2) A notification under subsection (1) or section 59(2) is referred to in this Part as a “public funds notification”.

(3) The first case is where the Treasury or the Secretary of State might reasonably be expected to regard it as appropriate to provide financial assistance to or in respect of a financial institution.

(4) The second case is where—

(a) the Treasury, the Bank of England, the PRA, the FCA or the Secretary of State might reasonably be expected to regard it as appropriate to exercise any of their respective powers under Parts 1 to 3 of the Banking Act 2009 or under Schedule 11 to the Financial Services and Markets Act 2023, and

(b) the Treasury might reasonably be expected to regard it as appropriate to incur expenditure in connection with the exercise of any of those powers (whether by the Treasury, the Bank, the PRA, the FCA or the Secretary of State).

(5) The third case is where the scheme manager of the Financial Services Compensation Scheme or any scheme established under paragraph 87 of Schedule 11 to the Financial Services and Markets Act 2023 might reasonably be expected to request—

(a) a loan from the National Loans Fund under section 223B of FSMA 2000, or

(b) financial assistance from the Treasury,

for the purpose of funding expenses incurred or expected to be incurred under the Financial Services Compensation Scheme or any scheme established under paragraph 87 of Schedule 11 to the Financial Services and Markets Act 2023.

(6) A public funds notification must give a general indication of the matters giving rise to the notification.

(7) A public funds notification must be given or confirmed in writing.

Duty of Bank to notify Treasury of changes

59

(1) This section applies where a public funds notification has been given.

(2) If the Bank of England is of the opinion that the risk to which the notification relates continues but that there is a substantial change in the matters which gave rise to the notification, the Bank must notify the Treasury.

(3) If the Bank of England is of the opinion that the risk to which the notification relates has ceased, it must notify the Treasury.

(4) Before giving a notification under subsection (3), the Bank must consult the Treasury.

(5) A notification under subsection (3) must be given or confirmed in writing.

Circumstances in which Treasury power of direction exercisable

60

(1) This section makes provision about the circumstances in which the Treasury's power of direction under section 61 is exercisable, subject to the provisions of that section.

(2) Where a public funds notification has been given, the power of direction is exercisable by reference to the notification unless the notification has been superseded by a notification under section 59(3).

(3) Where qualifying financial assistance has been provided, the power of direction is exercisable by reference to the provision of the assistance unless it appears to the Treasury that the assistance has been recovered.

(4) It is immaterial for the purposes of subsection (3)—

(a) whether the qualifying financial assistance was provided before or after the commencement of this section, and

(b) whether or not a public funds notification had been given in connection with it.

(5) For the purposes of this Part qualifying financial assistance is provided if, and only if—

(a) the Treasury or the Secretary of State provide financial assistance to or in respect of a financial institution,

(b) the Treasury incur expenditure in connection with the exercise by the Treasury, the Bank, the PRA, the FCA or the Secretary of State of any of their powers under Parts 1 to 3 of the Banking Act 2009 or under Schedule 11 to the Financial Services and Markets Act 2023,

(c) the Treasury arrange a loan from the National Loans Fund in pursuance of a request by the scheme manager of the Financial Services Compensation Scheme under section 223B of FSMA 2000, or

(d) the Treasury provide financial assistance to the scheme manager of that scheme for the purpose of funding expenses incurred or expected to be incurred under it.

(6) For the purposes of this section the circumstances in which qualifying financial assistance is to be taken to have been recovered include the following—

(a) where, in the case of a loan, the principal of the loan has been repaid and all interest due under the terms of the loan has been paid,

(b) where, in the case of a guarantee or indemnity, the Treasury or the Secretary of State will not become liable under the guarantee or indemnity,

(c) where, in a case involving the issue or transfer of shares to the Treasury in connection with the provision of qualifying financial assistance, the shares are no longer held by the Treasury.

Treasury power of direction

61

(1) Subsection (2) applies where—

(a) the power of direction is exercisable by virtue of section 60(2) by reference to a public funds notification and the Treasury are satisfied that Condition A is met, or

(b) the power of direction is exercisable by virtue of section 60(3) by reference to the provision of qualifying financial assistance and the Treasury are satisfied that Condition A or Condition B is met.

(2) The Treasury may give a direction to the Bank of England relating to one or more of the following—

(a) the provision by the Bank to one or more financial institutions of financial assistance other than ordinary market assistance offered by the Bank on its usual terms,

(b) the exercise by the Bank of any of the stabilisation powers, as defined by section 1(4) of the Banking Act 2009 or paragraph 1(4) of Schedule 11 to the Financial Services and Markets Act 2023 or the making by the Bank of a mandatory reduction instrument within the meaning of section 6B of the Banking Act 2009, or

(3) Condition A is that the giving of the direction is necessary to resolve or reduce a serious threat to the stability of the financial system of the United Kingdom which is connected—

(a) in case within subsection (1)(a), with the matters to which the public funds notification relates;

(b) in a case within subsection (1)(b), with the matters that gave rise to the provision of the qualifying financial assistance.

(4) Condition B is that—

(a) the qualifying financial assistance was provided for the purpose of resolving or reducing a serious threat to the stability of the financial system of the United Kingdom, and

(b) the giving of the direction is necessary to protect the public interest in connection with the provision of that assistance.

(5) References to the provision of qualifying financial assistance are to be read in accordance with section 60(5).

(6) This section is subject to section 62.

(7) Nothing in this section limits the powers conferred by section 4(1) of the Bank of England Act 1946 (Treasury directions to the Bank).

Directions under section 61: supplementary provisions

62

(1) References in this section to a direction are to a direction under section 61.

(2) Before giving a direction, the Treasury must consult the Bank of England.

(3) On being given a direction, the Bank must give the Treasury one or more reports on how it is complying or intends to comply with the direction, and on such other matters relating to the direction as it considers appropriate.

(4) The Treasury may at any time by notice to the Bank revoke a direction.

(5) The revocation of a direction does not affect the validity of anything previously done in accordance with it.

(6) Where the Treasury's power of direction is exercised by virtue of section 60(2) by reference to a public funds notification, the direction remains in force (unless revoked under subsection (4)) even if the public funds notification is subsequently superseded by a notification under section 59(3).

(7) Where the Treasury's power of direction is exercised by virtue of section 60(3) by reference to the provision of qualifying financial assistance, the direction remains in force (unless revoked under subsection (4)) even if it appears to the Treasury that the qualifying financial assistance has subsequently been recovered.

(8) Each of the following must be in writing—

(a) a direction,

(b) a report under subsection (3), and

Duty to lay direction etc before Parliament

63

(1) As soon as practicable after giving or revoking a direction under section 61 or receiving a report under section 62(3), the Treasury must lay before Parliament a copy of the direction, notice of revocation or report.

(2) But subsection (1) does not apply in a case where the Treasury consider that the publication of the direction, notice of revocation or report would be against the public interest.

(3) Where the Treasury decide that publication of a direction, notice of revocation or report would be against the public interest, they must from time to time review that decision and if they subsequently decide that publication is no longer against the public interest they must comply with subsection (1).

Duty of Treasury, Bank and PRA to co-ordinate discharge of functions

64

(1) The Treasury (on the one hand) and the Bank of England and the PRA (on the other) must arrange to co-ordinate the discharge of their respective functions so far as they—

(a) relate to the stability of the UK financial system, and

(b) affect the public interest.

(2) In complying with subsection (1), the Treasury, the Bank and the PRA must have regard in particular to the importance of co-ordination in circumstances where the Bank has given, or is considering the giving of, a public funds notification.

Memorandum of understanding: crisis management

65

(1) The Treasury (on the one hand) and the Bank of England and the PRA (on the other) must prepare and maintain a memorandum describing in general terms how they intend to comply with section 64 in relation to

(a) the sharing of information by the Bank about any proposals to include in a resolution plan or a group resolution plan an option for the exercise of a stabilisation power by the Bank in relation to an institution or group entity;

(b) the circumstances mentioned in subsection (2) of that section.

(2) For the purposes of subsection (1)(b), The memorandum must, in particular, make provision about—

(a) what the Treasury and the Bank regard as a material risk for the purposes of section 58(1);

(b) steps to be taken when the Bank has given a public funds notification;

(c) the respective roles of the Treasury, the Bank and the PRA, in cases where the Bank has given a public funds notification, in relation to the consideration and assessment of, and taking of, steps to resolve or reduce, threats to the stability of the UK financial system;

(d) how the Treasury, the Bank and the PRA will co-operate in fulfilling those roles;

(e) the use by the Treasury of their power under section 61;

(f) matters connected with the Bank's compliance with a direction under that section;

(g) the obtaining and sharing of information.

(3) The memorandum may make provision about such other matters as may be agreed between the Treasury, the Bank and the PRA, which must be matters that—

(a) relate to the stability of the UK financial system or the regulation of financial services, and

(b) affect the public interest.

(4) The memorandum need not make provision about the relationship between the Bank and the PRA.

(5) The Treasury, the Bank of England and the PRA may, with the agreement of a body falling within subsection (6), include in the memorandum provisions relating to co-operation between any of them and that body in relation to matters falling within subsection (3)(a) and (b).

(6) The bodies falling within this subsection are—

(a) the FCA;

(b) the scheme manager of the Financial Services Compensation Scheme;

(c) any other body exercising functions that relate to the stability of the UK financial system or the regulation of financial services.

(7) The Treasury must—

(a) lay before Parliament a copy of the memorandum and any revised memorandum, and

(b) publish the memorandum as currently in force in such manner as they think fit.

Memorandum of understanding: international organisations

66

(1) The Treasury, the Bank of England, the FCA and the PRA (“the UK authorities”) must prepare and maintain a memorandum describing how they intend to co-ordinate the exercise of their relevant functions so far as they relate to membership of, or relations with, ... international organisations.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) “Relevant function”—

(a) in relation to the FCA or the PRA, means any of its functions;

(b) in relation to the Bank of England, means any of its functions relating to the stability of the UK financial system or the regulation of financial services;

(4) The memorandum is to be made with a view to ensuring—

(a) that, to the extent that it is appropriate to do so, the UK authorities agree consistent objectives in relation to matters of common interest;

(b) that, to the extent that it is appropriate to do so, they exercise their relevant functions in a way that is likely to advance those objectives;

(5) The memorandum must, in particular, make provision—

(a) stating, in relation to each of the UK authorities, those international organisations of which it is a member or with which it has relations and which are concerned with matters that are related to its relevant functions;

(b) for there to be a committee for the purposes of the co-ordination mentioned in subsection (1);

(c) for that committee to include representatives of the UK authorities and to be chaired by a representative of the Treasury;

(d) about the procedures to be followed by the UK authorities in agreeing consistent objectives in relation to matters that materially affect 2 or more of them;

(e) about how the UK authorities will consult each other about the discharge of their relevant functions relating to international organisations.

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) The UK authorities may, with the agreement of a body exercising functions relating to the stability of the UK financial system or the regulation of financial services, include in the memorandum provisions relating to co-operation between any of them and that body in relation to membership of, or relations with, ... international organisations.

(8) The Treasury must—

(a) lay before Parliament a copy of the memorandum and any revised memorandum, and

(b) publish the memorandum as currently in force in such manner as they think fit.

Interpretation of Part 4

67

(1) This section has effect for the interpretation of this Part.

(2) “Public funds notification” is to be read in accordance with section 58(2).

(3) “Financial assistance” includes giving guarantees or indemnities and any other kind of financial assistance (actual or contingent).

(4) The Treasury may by order provide that a specified activity or transaction, or class of activity or transaction, is to be or not to be treated as financial assistance for the purposes of this Part; and subsection (3) is subject to this subsection.

(5) “Qualifying financial assistance” is to be read in accordance with section 60(5).

(6) Group entity” has the same meaning as in the Bank Recovery and Resolution (No. 2) Order 2014 (S.I. 2014/3348).

(7) “Group resolution plan” means a group resolution plan drawn up by the Bank under Part 5 of that Order.

(8) “Resolution plan” means a resolution plan drawn up by the Bank under Part 5 of that Order.

(9) “Stabilisation power” has the same meaning as in section 1(4) of the Banking Act 2009.

PART 5 — Inquiries and investigations

Inquiries

Cases in which Treasury may arrange independent inquiries

68

(1) This section applies in three cases.

(2) The first case is where it appears to the Treasury that—

(a) events have occurred in relation to—

(i) a collective investment scheme,

(ii) a person who is, or was at the time of the events, carrying on a regulated activity (whether or not as an authorised person), or

(iii) listed securities or an issuer of listed securities,

which posed or could have posed a serious threat to the stability of the UK financial system or caused or risked causing significant damage to the interests of consumers, and

(b) those events might not have occurred, or the threat or damage might have been reduced, but for a serious failure in—

(i) the system established by FSMA 2000, or by any previous statutory provision, for the regulation of such schemes, or of such persons and their activities, or the listing of securities, or

(ii) the operation of that system.

(3) The second case is where it appears to the Treasury that—

(a) events have occurred in relation to a recognised clearing house or , a recognised payment system or a recognised CSD which—

(i) posed or could have posed a serious threat to the stability of or confidence in the UK financial system, or

(ii) caused or risked causing significant damage to business or other interests throughout the United Kingdom, and

(b) those events might not have occurred, or the threat or damage might have been reduced, but for a serious failure in—

(i) the system established by Part 18 of FSMA 2000, or by any previous statutory provision, for the regulation of clearing houses or central securities depositories ,

(ii) the system established by Part 5 of the Banking Act 2009 for the regulation of ... payment systems, or

(iii) the operation of either of those systems.

(3A) The third case is where it appears to the Treasury that—

(a) events have occurred in relation to a regulated payment system which caused or risked causing significant damage to business or other interests throughout the United Kingdom, and

(b) those events might not have occurred, or the threat or damage might have been reduced, but for a serious failure in—

(i) the system established by Part 5 of the Financial Services (Banking Reform) Act 2013 for the regulation of payment systems, or

(ii) the operation of that system.

(4) If the Treasury consider that it is in the public interest that there should be an independent inquiry into the events and the circumstances surrounding them, they may arrange for an inquiry to be held under section 69.

(5) In this section—

“event” does not include any event occurring before 1 December 2001 (but no such limitation applies to the reference in subsection (4) to surrounding circumstances);

“recognised ... payment system” means a payment system, as defined by section 182 of the Banking Act 2009, that is a recognised system for the purposes of Part 5 of that Act.

Power to appoint person to hold an inquiry

69

(1) If the Treasury decide to arrange for an inquiry to be held under this section, they may appoint such person as they consider appropriate to hold the inquiry.

(2) The Treasury may, by a direction to the appointed person, control—

(a) the scope of the inquiry;

(b) the period during which the inquiry is to be held;

(d) the making of reports.

(3) A direction may, in particular—

(a) confine the inquiry to particular matters;

(b) extend the inquiry to additional matters;

(c) require the appointed person to postpone the start of, or suspend, an inquiry until a specified time or until a further direction;

(d) require the appointed person to discontinue the inquiry or to take only such steps as are specified in the direction;

(e) require the appointed person to make such interim reports as are so specified.

Powers of appointed person and procedure

70

(1) The person appointed to hold an inquiry under section 69 (“A”) may—

(a) obtain such information from such persons and in such manner as A thinks fit,

(b) make such inquiries as A thinks fit, and

(2) A may require any person who, in A's opinion, is able to provide any information, or produce any document, which is relevant to the inquiry to provide any such information or produce any such document.

(3) For the purposes of an inquiry, A has the same powers as the court in respect of the attendance and examination of witnesses (including the examination of witnesses abroad) and in respect of the production of documents.

(4) “The court” means—

(a) the High Court, or

(b) in Scotland, the Court of Session.

Conclusion of inquiry

71

(1) On completion of an inquiry under section 69, the person holding the inquiry must make a written report to the Treasury—

(a) setting out the result of the inquiry, and

(b) making such recommendations (if any) as the person considers appropriate.

(2) Any expenses reasonably incurred in holding an inquiry under section 69 are to be met by the Treasury out of money provided by Parliament.

Obstruction and contempt

72

(1) If a person (“P”)—

(a) fails to comply with a requirement imposed on P by a person holding an inquiry under section 69, or

(b) otherwise obstructs such an inquiry,

the person holding the inquiry may certify the matter to the High Court (or, in Scotland, the Court of Session).

(2) The court may enquire into the matter.

(3) If, after hearing—

(a) any witnesses who may be produced against or on behalf of P, and

(b) any statement made by or on behalf of P,

the court is satisfied that P would have been in contempt of court if the inquiry had been proceedings before the court, it may deal with P as if P were in contempt.

Investigations

Duty of FCA to investigate and report on possible regulatory failure

73

(1) Subsection (3) applies where it appears to the FCA that—

(a) events have occurred in relation to a regulated person or collective investment scheme which—

(i) indicated a significant failure to secure an appropriate degree of protection for consumers,

(ii) had or could have had a significant adverse effect on the integrity of the UK financial system, as defined by section 1D of FSMA 2000 (the integrity objective), or

(iii) had or could have had a significant adverse effect on effective competition in the interests of consumers in the markets for the services described in paragraphs (a) and (b) of section 1E(1) of FSMA 2000 (the competition objective), and

(b) those events might not have occurred, or the failure or adverse effect might have been reduced, but for a serious failure in—

(i) the system established by FSMA 2000 for the regulation of authorised persons and of the carrying on of regulated activities, for the listing of securities , for the regulation of collective investment schemes or for the regulation of recognised investment exchanges,, so far as it relates to the functions of the FCA, or

(ii) the operation of that system, so far as it relates to those functions.

(2) Subsection (3) also applies where the Treasury direct the FCA that it appears to the Treasury that the conditions in subsection (1) are met in relation to specified events.

(3) The FCA must carry out an investigation into the events and the circumstances surrounding them and report to the Treasury on the result of the investigation.

(4) Subsection (3) does not apply by virtue of subsection (1) if the Treasury direct the FCA that it is not required to carry out an investigation into the events concerned.

(5) “Regulated person” means—

(a) an authorised person,

(b) a recognised investment exchange,

(d) a person carrying on business in contravention of the general prohibition in section 19 of FSMA 2000, or

(e) an issuer of listed securities.

Duty of PRA to investigate and report on possible regulatory failure

74

(1) Subsection (4) applies where it appears to the PRA that—

(a) relevant public expenditure has been incurred in respect of a PRA-authorised person, and

(b) that expenditure might not have been incurred but for a serious failure in—

(i) the system established by FSMA 2000 for the regulation of PRA-authorised persons and their activities, so far as it relates to the functions of the PRA, or

(ii) the operation of that system, so far as it relates to those functions.

(2) Subsection (4) also applies where it appears to the PRA that—

(a) events have occurred which—

(i) had or could have had a significant adverse effect on the safety or soundness of one or more PRA-authorised persons, or

(ii) if the effecting and carrying out of contracts of insurance is a PRA-regulated activity for the purposes of FSMA 2000, related to a PRA-authorised person carrying on that activity and indicated a significant failure to secure an appropriate degree of protection for policyholders, and

(b) those events might not have occurred, or the adverse effect or failure might have been reduced, but for a serious failure in—

(i) the system established by FSMA 2000 for the regulation of PRA-authorised persons and their activities, so far as it relates to the functions of the PRA, or

(ii) the operation of that system, so far as it relates to those functions.

(3) Subsection (4) also applies where the Treasury direct the PRA that it appears to the Treasury—

(a) that the conditions in subsection (1)(a) and (b) are met in relation to a specified person, or

(b) that the conditions in subsection (2)(a) and (b) are met in relation to specified events.

(4) The PRA must—

(a) carry out an investigation into—

(i) the events that gave rise to the incurring of the public expenditure mentioned in subsection (1)(a) and the circumstances surrounding them, or

(ii) the events mentioned in subsection (2)(a) and the circumstances surrounding them, and

(b) report to the Treasury on the result of the investigation.

(5) Subsection (4) does not apply by virtue of subsection (1) if the Treasury direct the PRA that it is not required to carry out an investigation into the events concerned.

Interpretation of section 74

75

(1) This section has effect for the interpretation of section 74.

(2) “Policyholder” has the same meaning as in FSMA 2000.

(3) Relevant public expenditure has been incurred in respect of a PRA-authorised person (“P”) in each of the following cases (but no others)—

(a) where the Treasury or the Secretary of State have provided financial assistance to or in respect of P for the purposes of resolving or reducing a threat to the stability of the UK financial system;

(b) where the Treasury have incurred expenditure in connection with the exercise by the Treasury, the Secretary of State or the Bank of England of any power under Parts 1 to 3 of the Banking Act 2009 in relation to P;

(c) where the scheme manager of the Financial Services Compensation Scheme has received a loan from the National Loans Fund, or financial assistance from the Treasury, for the purpose of funding expenses incurred or expected to be incurred under the Financial Services Compensation Scheme by reason of events relating to P.

(4) In subsection (3)(a) and (c) “financial assistance” includes giving guarantees or indemnities and any other kind of financial assistance (actual or contingent), but does not include the giving by the Treasury of an indemnity or guarantee in respect of the provision of financial assistance by the Bank of England.

(5) The Treasury may by order made by statutory instrument provide that a specified activity or transaction, or class of activity or transaction, is to be or is not to be treated as financial assistance for the purposes of subsection (3)(a), and subsection (4) is subject to this subsection.

Modification of section 74 in relation to Lloyd's

76

(1) This section applies only if PRA-authorised persons include—

(a) the Society, or

(b) other persons who carry on regulated activities in relation to anything done at Lloyd's.

(2) Section 74 has effect as if—

(a) in subsection (1)(a) (and section 75(3)), the reference to a PRA-authorised person included a reference to a member of the Society,

(b) in subsection (2)(a)(i), the reference to one or more PRA-authorised persons included a reference to the Society, and the members of the Society, taken together, and

(c) in subsection (2)(a)(ii), the reference to a PRA-authorised person carrying on the activity of effecting and carrying out contracts of insurance included a reference to—

(i) the Society, or

(ii) any other person who carries on PRA-regulated activities in relation to anything done at Lloyd's.

(3) In this section—

(a) “PRA-regulated activity” is to be read in accordance with section 22A of FSMA 2000, and

(b) terms which are defined in Lloyd's Act 1982 have the same meaning as in that Act.

Power of Treasury to require FCA or PRA to undertake investigation

77

(1) This section applies where—

(a) the Treasury consider that it is in the public interest that a regulator should undertake an investigation into any relevant events, and

(b) it does not appear to the Treasury that the regulator has undertaken or is undertaking an investigation (under this Part or otherwise) into those events.

(2) The Treasury must give the regulator a direction specifying the relevant events and requiring the regulator to undertake an investigation into those events and the circumstances surrounding them and to report to the Treasury on the result of the investigation.

(3) “Relevant events” means events that have occurred in relation to—

(a) a collective investment scheme,

(b) a person who is, or was at the time of the events, carrying on a regulated activity (whether or not as an authorised person), ...

(d) a regulated payment system.

(4) “Relevant events” do not include any events occurring before 1 December 2001 (but no such limitation applies to the reference in subsection (2) to surrounding circumstances).

Conduct of investigation

78

(1) Where a regulator is required by section 73 , 74 or 76A or under section 77 to carry out an investigation, it is for the regulator to decide how it is to be carried out, but this is subject to the following provisions.

(2) In carrying out such an investigation, the regulator must have regard to the desirability of minimising any adverse effect that the carrying out of the investigation may have on the exercise by the regulator of any of its other functions.

(3) The regulator may postpone the start of, or suspend, an investigation if it considers it necessary to do so to avoid a material adverse effect on the exercise by it of any of its other functions.

(4) The regulator must notify the Treasury if it postpones the start of, or suspends, an investigation under subsection (3), and the notification must specify when the investigation will begin or resume.

(5) The Treasury may, by a direction to the regulator, control—

(a) the scope of the investigation;

(b) the period during which the investigation is to be carried out;

(d) the making of reports.

(6) A direction may, in particular—

(a) confine the investigation to particular matters;

(b) extend the investigation to additional matters;

(c) require the regulator to postpone the start of, or suspend, an investigation until a specified time or until a further direction;

(d) where a notification has been received under subsection (3), require the regulator to begin or resume the investigation immediately or at a specified time;

(e) require the regulator to discontinue the investigation or to take only such steps as are specified in the direction;

(f) require the regulator to make such interim reports as are so specified.

(7) In exercising the power conferred on them by this section, the Treasury must have regard to the desirability of minimising any adverse effect that the carrying out of the investigation may have on the exercise by the regulator of any of its other functions.

Conclusion of investigation

79

On completion of an investigation required by section 73 , 74 or 76A or under section 77, the regulator must make a written report to the Treasury—

(a) setting out the result of the investigation,

(b) setting out the lessons (if any) that the regulator considers that it should learn from the investigation, and

Statements of policy

80

(1) Each regulator must prepare and issue a statement of its policy with respect to the exercise of its functions under sections 73 to 79 (“the relevant sections”) and, in particular—

(a) the matters it will take into account in determining whether the conditions which give rise to its duty to carry out an investigation under section 73 , 74 or 76A (as the case may be) are met, and

(b) how it will carry out investigations under the relevant sections.

(2) A regulator may at any time alter or replace a statement issued by it under this section.

(3) If a statement issued under this section is altered or replaced by a regulator, the regulator must issue the altered or replacement statement.

(4) A regulator must obtain the consent of the Treasury before issuing a statement under this section.

(5) A statement issued under this section by a regulator must be published by the regulator in the way appearing to the regulator to be best calculated to bring it to the attention of the public.

(6) A regulator must, without delay, give the Treasury a copy of any statement which it publishes under this section.

(7) In exercising, or deciding whether to exercise, its functions under the relevant sections a regulator must have regard to any statement published by it under this section and for the time being in force.

(8) A regulator may charge a reasonable fee for providing a person with a copy of a statement issued by it.

Publication of directions

81

(1) This section applies to a direction given by the Treasury under any of the following provisions—

(a) section 73(4);

(b) section 74(5);

(ba) section 76A(4);

(2) As soon as practicable after giving the direction, the Treasury must—

(a) lay before Parliament a copy of the direction, and

(b) publish the direction in such manner as the Treasury think fit.

(3) Subsection (2) does not apply where the Treasury consider that publication of the direction would be against the public interest.

Publication of reports

Publication of reports of inquiries and investigations

82

(1) This section applies where a report is made to the Treasury under section 71 or 79.

(2) Subject to subsection (3), the Treasury must publish the report in full.

(3) The Treasury may withhold material in the report from publication to such extent—

(a) as is required by any statutory provision (including any provision of assimilated direct legislation) or rule of law, or

(b) as the Treasury consider to be necessary in the public interest, having regard in particular to the matters mentioned in subsection (4).

(4) Those matters are—

(a) the extent to which withholding material might inhibit the allaying of public concern;

(b) the risk of harm or damage that could be avoided or reduced by withholding any material;

(c) any conditions of confidentiality subject to which any person acquired information that was given to the inquiry or used in the investigation.

(5) In subsection (4)(b) “harm or damage” includes in particular—

(a) damage to national security or international relations;

(b) damage to the economic interests of the United Kingdom or a part of the United Kingdom;

(6) The Treasury must lay before Parliament whatever is published under subsection (2).

(7) If the Treasury receive a report under section 71 or 79, but withhold all or part of the material in the report from publication, they must publish and lay before Parliament a statement of their reasons for not publishing the report in full.

(8) Publication under subsection (2) or (7) is to be in such manner as the Treasury think fit.

(9) References to a report under section 71 or 79 include references to an interim report required under section 69 or 78.

Supplementary

Interpretation and supplementary provision

83

(1) In this Part—

“authorised person” has the same meaning as in FSMA 2000;

“collective investment scheme” has the same meaning as in FSMA 2000;

“consumer” has the meaning given in section 1G of FSMA 2000;

“listed securities” means anything which has been admitted to the official list under Part 6 of FSMA 2000;

“PRA-authorised person” has the same meaning as in FSMA 2000;

“recognised clearing house” has the same meaning as in FSMA 2000;

“recognised CSD” has the same meaning as in FSMA 2000;

“recognised investment exchange” has the same meaning as in FSMA 2000;

“regulated activity” has the same meaning as in FSMA 2000;

“regulator” means the FCA , the PRA or the Payment Systems Regulator.

(2) A direction by the Treasury under this Part must be given in writing.

PART 6 — Investigation of complaints against regulators

Arrangements for the investigation of complaints

84

(1) The regulators must—

(a) make arrangements (“the complaints scheme”) for the investigation of complaints arising in connection with the exercise of, or failure to exercise, any of their relevant functions (see section 85). ...

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1A) The Treasury must appoint an independent person (“the investigator”) to be responsible for the conduct of investigations in accordance with the complaints scheme.

(2) For the purposes of this Part “the regulators” are the FCA, the PRA and the Bank of England, and references to a regulator are to be read accordingly.

(3) The complaints scheme must be designed so that, as far as reasonably practicable, complaints are investigated quickly.

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) The terms and conditions on which the investigator is appointed must be such as, in the opinion of the Treasury, are reasonably designed to secure—

(a) that the investigator will be free at all times to act independently of the regulators, and

(b) that complaints will be investigated under the complaints scheme without favouring the regulators.

Relevant functions in relation to complaints scheme

85

(1) This section has effect for the interpretation of the reference in section 84(1)(a) to the relevant functions of the regulators.

(2) The relevant functions of the FCA or the PRA are—

(a) its functions conferred by or under FSMA 2000, other than its legislative functions and its standards review functions, and

(b) such other functions as the Treasury may by order provide.

(3) The relevant functions of the Bank of England are—

(a) its functions under Part 18 of FSMA 2000 (recognised clearing houses and CSDs ) or under Part 5 of the Banking Act 2009 (... payment systems) or Part 5A of that Act (wholesale cash distribution), other than its legislative functions, and

(b) such other functions as the Treasury may by order provide.

(4) For the purposes of subsection (2)(a), the following are the FCA's legislative functions—

(a) making rules under FSMA 2000;

(b) issuing codes under section ... 119 of FSMA 2000;

(i) section 63ZD, 63C, ... 69, 88C, 89S, 93, 124, 131J, 138N, 192H, 192N, 210 or 312J of FSMA 2000,

(ii) section 345D of FSMA 2000 (whether as a result of section 345(2) or 345A(3) or section 249(1) or 261K(1) of that Act), or

(iii) section 80 of the Financial Services Act 2012;

(d) giving directions under section 316, 318 or 328 of FSMA 2000;

(e) issuing general guidance, as defined in section 139B(5) ... of FSMA 2000.

(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(g) making technical standards in accordance with Chapter 2A of Part 9A of FSMA 2000;

(h) making EU Exit instruments under the Financial Regulators’ Powers (Technical Standards) (Amendment etc.) (EU Exit) Regulations 2018.

(4A) For the purposes of subsection (2)(a), the FCA's standards review functions are the FCA's functions under sections 9(2) and 10 of the Financial Guidance and Claims Act 2018 (approving and reviewing standards set by Money and Pensions Service).

(5) For the purposes of subsection (2)(a), the following are the PRA's legislative functions—

(a) making rules under FSMA 2000;

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(i) section 63ZD, 63C, ... 69, 192H, 192N, 210 or 345D of FSMA 2000, or

(ii) section 80 of the Financial Services Act 2012;

(d) giving directions under section 316 or 318 of FSMA 2000;

(e) issuing guidance under section 2I of FSMA 2000.

(f) making technical standards in accordance with Chapter 2A of Part 9A of FSMA 2000;

(g) making EU Exit instruments under the Financial Regulators’ Powers (Technical Standards) (Amendment etc.) (EU Exit) Regulations 2018.

(6) For the purposes of subsection (3)(a), the following functions of the Bank of England under Part 18 of FSMA 2000 are legislative functions—

(a) making rules;

(b) issuing statements—

(i) under section 312J, or

(ii) by virtue of the application by Schedule 17A of a provision mentioned in subsection (5)(c)(i) of this section.

(7) For the purposes of subsection (3)(a), the following functions of the Bank of England under Parts 5 and 5A of the Banking Act 2009 are legislative functions—

(a) publishing principles or codes of practice under sections 188 ,189, 206K and 206L;

(b) preparing statements under section 198(3) and 206T(3).

(8) For the purposes of subsection (2), sections 1A(6) and 2AB(3) of FSMA 2000 do not apply.

Consultation in relation to, and publication of, complaints scheme

86

(1) Before making the complaints scheme, the regulators must publish a draft of the proposed scheme in the way appearing to them to be best calculated to bring it to the attention of the public.

(2) The draft must be accompanied by notice that representations about it may be made to any of the regulators within a specified time.

(3) Before making the proposed complaints scheme, the regulators must have regard to any representations made to any of them in accordance with subsection (2).

(4) If the regulators make the proposed complaints scheme, they must publish an account, in general terms, of—

(a) the representations made to any of them in accordance with subsection (2), and

(b) their response to the representations.

(5) If the complaints scheme differs from the draft published under subsection (1) in a way which is, in the opinion of the regulators, significant the regulators must (in addition to complying with subsection (4)) publish details of the difference.

(6) The regulators must publish up-to-date details of the complaints scheme including, in particular, details of—

(a) the provision made under section 87(5), and

(b) the powers which the investigator has to investigate a complaint.

(7) Those details must be published in the way appearing to the regulators to be best calculated to bring them to the attention of the public.

(8) The regulators must notify the Treasury of the publication of details under subsection (6).

(9) A regulator may charge a reasonable fee for providing a person with a copy of—

(a) a draft published under subsection (1), or

(b) details published under subsection (6).

(10) Subsections (1) to (5) and (9)(a) also apply to a proposal to alter or replace the complaints scheme.

Investigation of complaints

87

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