On December 17, 2015, the UK Government launched a consultation on further proposals for implementing the BRRD into UK law following the identification of a few changes that the Government believes will clarify and strengthen the UK’s transposition of the BRRD. The proposals would amend the Banking Act 2009, the Financial Services and Markets Act 2000 and certain secondary legislation and a draft Order was published with the consultation paper. In summary, the Government is proposing to: (i) provide that the Bank of England or HM Treasury may decide, on a case-by-case basis, that a default event provision in a contract with a firm that is subject to resolution should come into effect; (ii) introduce specific powers for the PRA and FCA to require the removal and replacement of directors and senior managers and to appoint temporary managers (which would normally be called administrators but the Government is keen to avoid confusion of terms that are used when a firm is put into administration). Such powers would form part of the regulators’ more general early intervention powers and, as is the case under the BRRD, would not require any fault on behalf of the individual to be proved before such power could be utilized; (iii) give the PRA and FCA specific powers to convene a meeting of shareholders themselves; (iv) introduce new powers for the BoE to resolve a branch of a third country firm, independently of the third country resolution authority, subject to certain conditions being met. The Government considers that the circumstances where such powers would be used would be exceptional because of all the work at international level to ensure that resolution authorities co-operate when a cross-border bank is under resolution. The BoE would still have the power, subject to certain conditions being met, to transfer some or all of the assets, rights and liabilities of a UK branch to a private sector purchaser, a bridge bank or an asset management vehicle and the power to bail in liabilities in connection with such transfer. Any resolution action taken for a UK branch of a third country firm would benefit from safeguards and compensation arrangements, such as “no creditor worse off” compensation. The consultation closes on February 25, 2016.
The consultation is available at: https://www.gov.uk/government/consultations/consultation-on-the-implementation-ofthe-bank-recovery-and-resolution-directive-brrd.