Banking Act 2009 (as amended)
What this means for your business
- Applies to
- United Kingdom
- On this page
- 23 compliance obligations, 2 practical guides
What you must do
23 compliance obligations under this legislation — 3 can result in imprisonment.
Inspections 2
Allow Bank of England inspectors access and cooperate
If your business runs a recognised payment system, a recognised DSA service provider, or supplies services to one of these systems, you must let Bank of England inspectors onto any premises used for the system and cooperate with them whenever they ask. The access must be granted promptly and at reasonable times, and you must aid the inspector in carrying out their inspection.
Allow inspectors access and cooperate with inspections
If your business is a recognised provider of wholesale cash distribution services, you must let Bank of England inspectors into any premises where you carry out that activity and must cooperate with them when they carry out an inspection. This means giving them reasonable access whenever they ask and responding to any requests they make during the inspection.
Management duties 5
Ensure foreign property transfer is effective under foreign law
If your business is a party to a transfer of property located outside the UK, you must take all steps needed to make the transfer effective under the foreign jurisdiction’s law. Until that happens you must hold the property or discharge any related liability for the other party and pay any expenses they incur, and you must follow any directions from the Bank of England.
Prepare and submit a business reorganisation plan
If a resolution instrument is issued for your bank and requires you to draw up a business reorganisation plan, you (or the appointed director(s)) must produce a plan that assesses the causes of failure, sets out measures to restore viability and includes a timetable. You must then submit the plan to the Bank of England within the time‑frame set by the instrument and provide progress reports as required.
Recommend Objective 1 to the bank liquidator
If your bank is placed into liquidation, the liquidation committee must, as quickly as possible, tell the liquidator whether to follow Objective 1(a), Objective 1(b) or a mix of both. In making the recommendation the committee must weigh how fast Objective 1 can be achieved against Objective 2. If the liquidator ignores the recommendation, the committee can apply to the court for directions.
Set up and run a liquidation committee after a bank insolvency order
If your bank is placed into liquidation, you must create a liquidation committee made up of two people nominated by the Bank of England, one by the PRA, one by the FCA and one by the FSCS. The liquidator must keep this committee informed of progress towards the bank’s repayment objectives, and the committee must decide whether full repayment has been achieved or apply to the court for further action.
Work with FSCS to protect eligible depositors and wind up bank affairs
If you are appointed as a liquidator of a failed bank, you must immediately start two things: cooperate with the Financial Services Compensation Scheme to transfer each eligible depositor’s account to another bank or arrange payment for them as quickly as possible, and begin winding up the bank’s affairs to get the best overall result for its creditors. Both tasks must be started straight away.
Notifications 1
Notify PRA and FCA of administration application after rescue objectives met
If the Bank of England has issued an Objective 1 Achievement Notice and the bank administrator believes Objective 2(a) has been achieved, you must apply to the court to end the administration and send a copy of that application to the PRA and FCA. Failing to do so without a reasonable excuse is a criminal offence.
Other requirements 1
Comply with BoE directions under a resolution instrument
If the Bank of England issues a resolution instrument for your bank, or gives you a written direction, you as a director must follow it. The direction must be obeyed within the time set (or as soon as reasonably practicable if no time is given). You will not be blamed for breaching other duties or liable for damages as long as you act in line with the direction.
Payments and fees 1
Pay realised liquidation proceeds into the Insolvency Services Account
If you are acting as a liquidator for a failed bank and you receive money from selling the bank’s assets, you must transfer that money to the Insolvency Services Account held by the Secretary of State. This ensures the proceeds are recorded and managed by the government.
Offences and prohibitions 9
Breach a management disqualification order
Unlimited fineIf the Bank of England has issued an order that bars a particular person from holding a management role at a recognised bank, and that person nevertheless takes up the role, they commit a criminal offence. On conviction the offender faces an unlimited fine (whether tried in the magistrates’ court or the Crown Court). No custodial sentence is provided for this offence.
Breach a management disqualification order
Unlimited fineIf the Bank of England has issued an order that you may not run or hold a decision‑making role in a recognised payment system or DSA service provider, and you ignore that order, you commit a criminal offence. Conviction can lead to a fine – either at the magistrates' court (summary) or the Crown Court (indictable). No custodial sentence is provided for this offence.
Corporate offence liability for officers and partners
3 months imprisonmentIf your company, partnership or unincorporated association commits an offence under section 83ZN, any director, manager, controller, partner or member of the governing body who consents, connives or is negligent can also be prosecuted. You would face the same penalty as the organisation – a fine, imprisonment or both – as set out in the underlying offence.
Destroy, conceal or falsify documents relevant to a regulator investigation
3 months imprisonmentIf you delete, hide, alter or otherwise dispose of a document that you know might be needed by the PRA (or a related regulator) for an investigation, you commit a criminal offence. The same applies if you cause someone else to do so, unless you can prove you had no intention to hide facts. On conviction you face up to three months’ imprisonment and an unlimited fine.
Fail to comply with a closure order
Unlimited fineIf the Bank of England issues a closure order telling a recognised person (for example, a systemically important bank) to stop certain wholesale cash‑distribution activities and the person does not obey, they commit a criminal offence. A conviction can result in an unlimited fine, whether the case is heard in a magistrates’ court or a Crown Court. No custodial sentence is prescribed.
Fail to comply with a closure order
Unlimited fineIf the Bank of England serves you with a closure order requiring you to stop operating a payment system, DSA service or related service, you must obey it. Ignoring or breaching that order is a criminal offence. On conviction you face an unlimited fine – either in the magistrates’ court or, if tried in the Crown Court, an unlimited fine as well.
Fail to provide required information or give false information to the Bank of England
Unlimited fineIf the Bank of England serves you with a written notice asking for information (or to report certain events) and you do not provide it without a reasonable excuse, or you knowingly or recklessly supply false information, you commit a criminal offence. Conviction can be in the magistrates’ court (summary) or the Crown Court (indictment) and results in an unlimited fine. No custodial sentence is prescribed in the legislation.
Issue unauthorised banknotes in Scotland or Northern Ireland
10 years imprisonmentIf you or your company issues banknotes in Scotland or Northern Ireland without authority under section 213 of the Banking Act, you commit a criminal offence. On conviction you can be sentenced to up to ten years in prison, an unlimited fine, or both. The offence can also be tried in a magistrates' court, where the maximum sentence is twelve months imprisonment and an unlimited fine.
Pretend a payment system or DSA service is recognised
Unlimited fineIf you run a payment system or a DSA (Digital Service Architecture) service and tell customers or the market that it is recognised by the regulator when it isn’t, or if you claim to be a recognised service provider when you aren’t, you commit a criminal offence. Conviction can bring an unlimited fine, whether the case is dealt with in the Magistrates' Court (summary) or the Crown Court (indictment).
Registration and licensing 1
Prepare and file conversion documents when turning a building society into a public company
If you are converting a building society into a public company limited by shares, you must create a share transfer or resolution instrument that sets out the new company’s name, its memorandum and articles of association, and the information required for the share‑capital certificate. You then file that instrument together with the other registration documents at Companies House; the conversion becomes effective on registration.
Reporting and filing 3
Include balance sheet and profit & loss in required banking reports
When your bank or resolution company has to submit a report under sections 80, 80A(2)(b) or 81, you must attach a balance sheet and a profit‑and‑loss account that give a true and fair view of the business. The accounts should cover the reporting period and be dated on the last day of that period.
Prepare and submit administrator's proposals to regulators
If you are appointed as a bank administrator, you must quickly draft a statement setting out how you will meet the statutory objectives, agree it with the Bank of England (or seek a court order if you cannot), and send copies to the PRA and the FCA. You can later revise the statement following the same steps.
Provide information and access to records during bank administration
If your bank is placed in administration after being transferred to a resolution company, you must promptly share financial information and allow access to records with the Bank of England and the resolution company. You also need to keep both parties informed of any discussions that could affect the resolution objectives.
Penalties for non-compliance
9 penalties under this legislation. 3 can result in imprisonment. 8 carry an unlimited fine.
Destroy, conceal or falsify documents relevant to a regulator investigation
Unlimited fine and/or 3 months imprisonment
Issue unauthorised banknotes in Scotland or Northern Ireland
Unlimited fine and/or 10 years imprisonment
Corporate offence liability for officers and partners
3 months imprisonment
Breach a management disqualification order
Unlimited fine
Breach a management disqualification order
Unlimited fine
Fail to comply with a closure order
Unlimited fine
Fail to comply with a closure order
Unlimited fine
Fail to provide required information or give false information to the Bank of England
Unlimited fine
Pretend a payment system or DSA service is recognised
Unlimited fine
Practical guidance
Our guides explain how to comply with the requirements above.
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Sections and provisions
443 classified provisions from this legislation.
Duties 69
- s.3B Safeguards relating to directions under section 3A
- s.4 Special resolution objectives
- s.5 Code of practice
- s.6D Mandatory reduction instruments: supplementary matters other matters in relation
- s.6E Pre-resolution valuation consideration
- s.10 Banking Liaison Panel The Treasury
- s.24 Procedure: instruments
- s.39 Foreign property take any necessary steps
- s.41 Procedure
- s.44C Report on special bail-in provision A report
- s.48E Report on special bail-in provision A report
- s.48T Procedure
- s.48H Business reorganisation plans
- s.48O Directions in or under resolution instrument duty owed
- s.48X Replacement of Bank’s provisional valuation
- s.50 Sale to private sector purchaser
- s.51 Transfer to temporary public ownership
- s.52A Bail-in option
- s.52 Transfer to resolution company
- s.54 Independent valuer : compensation scheme order or bail-in compensation order compensation payable
- ... and 49 more duties
Offences and penalties 9
Powers 116
- s.9 Specific conditions: temporary public ownership
- s.11 Private sector purchaser
- s.13 Temporary public ownership
- s.18 Continuity
- s.19 Conversion and delisting
- s.20 Directors and senior managers
- s.21 Ancillary instruments: production, registration, &c.
- s.23 Incidental provision
- s.36A Directors and senior managers
- s.39B Property transfer instrument: delisting
- s.40 Incidental provision
- s.44B Property transfer instruments: special bail-in provision
- s.44BA Property transfer instruments and special bail-in provision: supplementary matters
- s.47 Restriction of partial transfers
- s.48N Directors and senior managers
- s.48G Priority between creditors
- s.48Y Consequences of a replacement valuation
- s.48Q Continuity
- s.48A Creation of liabilities
- s.48R Execution and registration of instruments etc
- ... and 96 more powers
Definitions 86
- s.2 Interpretation: “bank” bank UK institution
- s.3 Interpretation: other expressions Additional Tier 1 instruments the capital requirements regulation client assets
- s.6C Mandatory reduction instruments: implementation of requirements of section 6B UK parent undertaking parent undertaking
- s.6B Mandatory write-down, conversion, etc of capital instruments and liabilities the original instrument) has contained provision under paragraph (a), provision for the transfer of— i) securities which were transferred by the original instrument, or ii) securities which were issued by the bank after the original instrument was made. 6) Provision made in accordance with subsection (5) may relate to— a) specified securities, or b) securities of a specified description. 7) Where the Bank of England has exercised the power in subsection (5)(a) to transfer securities to a resolution administrator, the Bank must exercise its functions under this Part with a view to ensuring that any securities held by that person in the capacity of resolution administrator are so held only for so long as is, in the Bank of England’s opinion, appropriate having regard to the special resolution objectives. 8) Where Case 1 in section 6A applies, the Bank must comply with subsection (1) before or at the same time as exercising the stabilisation power. 9) Where Case 3 in section 6A applies, the principal amount of a relevant capital instrument issued by the bank must not be reduced under this section to a greater extent, or converted on worse terms, than equally ranked capital instruments at the level of any parent undertaking of the bank which are reduced, or converted a) pursuant to this section as it applies in relation to a banking group company by virtue of section 81AA, or b) in the course of applying the bail-in option provided for by section 12A or section 81BA. 10) In this section “parent undertaking
- s.12A Bail-in option
- s.12AA Bail-in: sequence of write-down and conversion of capital instruments and liabilities the shortfall amount
- s.12ZA Asset management vehicle
- s.14 Interpretation: “securities”
- s.15 Share transfer instrument
- s.16 Share transfer order
- s.29A Interpretation: “resolution company” resolution company
- s.32 Interpretation: general transfer date service contract
- s.35 Transferable property
- s.36 Continuity
- s.48B Special bail-in provision Associated provision core business lines micro, small and medium-sized enterprises
- s.48L Powers in relation to securities regulated market
- s.48C Meaning of “protected deposit” deposit
- s.48D General interpretation of section 48B client assets credit institution designated settlement system
- s.48WA Bail-in option: recovery of expenses
- s.48Z Termination rights etc default event provision Part 1 instrument recognised third-country resolution action
- ... and 66 more definitions
Exemptions 51
- s.3A Removal of impediments to the exercise of stabilisation powers etc
- s.6A Cases where mandatory write-down, conversion, etc applies
- s.7 General conditions
- s.7A Effect on other group members, financial stability in UK etc
- s.11A Private sector purchaser: marketing
- s.12 Bridge bank
- s.26 Supplemental instruments
- s.26A ... reverse share transfer instruments
- s.26ZA Onward share transfer instruments
- s.27 Supplemental orders
- s.28 Onward transfer
- s.29 Reverse share transfer orders
- s.30 Resolution company: share transfers
- s.31 Resolution company: reverse share transfer
- s.33 Property transfer instrument
- s.41A Transfer of property subsequent to resolution instrument
- s.42 Supplemental instruments
- s.42A Private sector purchaser: reverse property transfer
- s.43 Onward transfer
- s.44D Bridge bank: supplemental property transfer powers
- ... and 31 more exemptions