Banking Act 1987
Banking Act 1987
1987 CHAPTER 22
An Act to make new provision for regulating the acceptance of deposits in the course of a business, for protecting depositors and for regulating the use of banking names and descriptions; to amend section 187 of the Consumer Credit Act 1974 in relation to arrangements for the electronic transfer of funds; to clarify the powers conferred by section 183 of the Financial Services Act 1986; and for purposes connected with those matters.
[15th May 1987]
Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
Part I
Regulation of Deposit-Taking Business
The Bank of England and the Board of Banking Supervision
1 Functions and duties of the Bank of England.
(1) The Bank of England (in this Act referred to as ‘the Bank’) shall have the powers conferred on it by this Act and the duty generally to supervise the institutions authorised by it in the exercise of those powers.
(2) It shall also be the duty of the Bank to keep under review the operation of this Act and developments in the field of banking which appear to it to be relevant to the exercise of its powers and the discharge of its duties.
(3) The Bank shall, as soon as practicable after the end of each of its financial years, make to the Chancellor of the Exchequer and publish in such manner as it thinks appropriate a report on its activities under this Act in that year; and the Chancellor of the Exchequer shall lay copies of every such report before Parliament.
(4) Neither the Bank nor any person who is a member of its Court of Directors or who is, or is acting as, an officer or servant of the Bank shall be liable in damages for anything done or omitted in the discharge or purported discharge of the functions of the Bank under this Act unless it is shown that the act or omission was in bad faith.
2 The Board of Banking Supervision.
(1) As soon as practicable after the coming into force of this section the Bank shall establish a committee to be known as the Board of Banking Supervision.
(2) The Board shall consist of—
(a) three ex officio members, namely, the Governor of the Bank for the time being, who shall be the chairman of the Board, the Deputy Governor of the Bank for the time being and the executive director of the Bank for the time being responsible for the supervision of institutions authorised under this Act; and
(b) six independent members, that is to say, members appointed jointly by the Chancellor of the Exchequer and the Governor, being persons having no executive responsibility in the Bank.
(3) It shall be the duty of the independent members to give such advice as they think fit to the ex officio members—
(a) on the exercise by the Bank of its functions under this Act, either generally or in any particular respect or in relation to a particular institution or institutions; and
(b) on any matter relating to or arising out of the exercise of those functions.
(4) The Bank shall make regular reports to the Board on matters which the Bank considers relevant to the discharge by the independent members of their duty under subsection (3) above and shall provide them with such other information as they may reasonably require.
(5) The ex officio members shall give written notice to the Chancellor of the Exchequer in any case in which it is decided that the advice of the independent members should not be followed and the independent members shall be entitled to place before the Chancellor the reasons for their advice.
(6) The Board shall prepare an annual report on its activities and that report shall be included in the report made by the Bank under section 1(3) above for the financial year in question.
(7) Section 1(4) above shall apply to an act or omission by a member of the Board in the discharge or purported discharge of his functions under this section as it applies to an act or omission of a person there mentioned in the discharge or purported discharge of the functions of the Bank.
(8) Schedule 1 to this Act shall have effect with respect to the Board.
Restriction on acceptance of deposits
3 Restriction on acceptance of deposits.
(1) Subject to section 4 below, no person shall in the United Kingdom accept a deposit in the course of carrying on (whether there or elsewhere) a business which for the purposes of this Act is a deposit-taking business unless that person is an institution for the time being authorised by the Bank under the following provisions of this Part of this Act.
(2) Any person who contravenes this section shall be guilty of an offence and liable—
(a) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or to both;
(b) on summary conviction, to imprisonment for a term not exceeding six months or to a fine not exceeding the statutory maximum or to both.
(3) The fact that a deposit has been taken in contravention of this section shall not affect any civil liability arising in respect of the deposit or the money deposited.
4 Exempted persons and exempted transactions.
(1) Section 3 above shall not apply to the acceptance of a deposit by the Bank or by a person for the time being specified in Schedule 2 to this Act.
(2) The exemption of a person specified in that Schedule shall be subject to any restriction there specified in the case of that person.
(3) The Treasury may after consultation with the Bank by order amend that Schedule—
(a) by adding any person or relaxing any restriction; or
(b) by removing any person for the time being specified in it or imposing or extending any restriction.
(4) Section 3 above shall not apply to any transaction prescribed for the purposes of this subsection by regulations made by the Treasury.
(5) Regulations under subsection (4) above may prescribe transactions by reference to any factors appearing to the Treasury to be appropriate and, in particular, by reference to all or any of the following—
(a) the amount of the deposit;
(b) the total liability of the person accepting the deposit to his depositors or to any other creditors;
(c) the circumstances in which or the purpose for which the deposit is made;
(d) the identity of the person by whom the deposit is made or accepted, including his membership of a class whose membership is determined otherwise than by the Treasury;
(e) the number of, or the amount involved in, transactions of any particular description carried out by the person accepting the deposit or the frequency with which he carries out transactions of any particular description.
(6) Regulations under subsection (4) above may make any exemption for which they provide subject to compliance with specified conditions or requirements.
(7) Any order under subsection (3)(a) above and any regulations under subsection (4) above shall be subject to annulment in pursuance of a resolution of either House of Parliament, and no order shall be made under subsection (3)(b) above unless a draft of it has been laid before and approved by a resolution of each House of Parliament.
5 Meaning of ‘deposit’
(1) Subject to the provisions of this section, in this Act ‘deposit’ means a sum of money paid on terms—
(a) under which it will be repaid, with or without interest or a premium, and either on demand or at a time or in circumstances agreed by or on behalf of the person making the payment and the person receiving it; and
(b) which are not referable to the provision of property or services or the giving of security;
and references in this Act to money deposited and to the making of a deposit shall be construed accordingly.
(2) For the purposes of subsection (1)(b) above, money is paid on terms which are referable to the provision of property or services or to the giving of security if, and only if—
(a) it is paid by way of advance or part payment under a contract for the sale, hire or...
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