The Co-operative and Community Benefit Societies and Credit Unions (Investigations) Regulations 2014
S.I. 2014/574 · Made 10 March 2014
Co-operative Societies
Community Benefit Societies
Credit Unions
Made 10th March 2014
Coming into force 6th April 2014
In accordance with section 4(8) of the Co-operative and Community Benefit Societies and Credit Unions Act 2010f1 the Treasury have consulted such persons as appear to them to be appropriate.
A draft of these Regulations has been laid before Parliament in accordance with section 7 of that Act and approved by a resolution of each House of Parliament.
The Treasury, in exercise of the powers conferred by sections 4(1), (2)(a), (3) and (7), 6 and 7 of the Co-operative and Community Benefit Societies and Credit Unions Act 2010f2, make the following Regulations:
Annotations to the whole text
Footnotes
- f1
- f2
-
Section 4(3) was amended by S.I. 2013/496.
Contents
- 1Citation, commencement and interpretation
- 2Application of Part 14 of the Companies Act 1985 and subordinate legislation
- 3Condition for exercise of powers in regulation 2
- 4Amendment to the Industrial and Provident Societies Act 1965
- 5Consequential amendment to section 17 of the Credit Unions Act 1979
- 6Consequential amendment to the Company Directors Disqualification Act 1986
- 7Consequential amendment to the Community Benefit Societies (Restriction on Use of Assets) Regulations 2006
- 8Transitional provision
- Signature
- Explanatory note
1Citation, commencement and interpretation
These Regulations may be cited as the Co-operative and Community Benefit Societies and Credit Unions (Investigations) Regulations 2014 and come into force on 6th April 2014.
In these Regulations, “the 1965 Act” means the Industrial and Provident Societies Act 1965f1.
In these Regulations and in the provisions of the Companies Act 1985f2 applied by regulation 2, “registered society” means a society registered under the 1965 Act.
2Application of Part 14 of the Companies Act 1985 and subordinate legislation
The provisions of Part 14 of the Companies Act 1985 (investigation of companies and their affairs; requisition of documents) set out in the Table in paragraph (3) apply to registered societies with—
the general modifications set out in paragraph (2);
any other modification specified in the Table in paragraph (3); and
any other necessary modification.
Unless different provision is made in paragraph (3), in the provisions of Part 14 of the Companies Act 1985 applied by paragraph (3)—
a reference to a committee is to be read as a reference to a committee within the meaning of section 74(1) of the 1965 Act;
a reference to a company is to be read as a reference to a registered society;
a reference to an officer of a company is to be read as a reference to an officer (within the meaning of section 74(1) of the 1965 Act f1) of a registered society;
a reference to the Secretary of State is to be read as a reference to the Financial Conduct Authority;
a reference to a subsidiary is to be read as a reference to a subsidiary within the meaning of section 15 of the Friendly and Industrial and Provident Societies Act 1968f2.
The provisions applying to registered societies, and the modifications, are as follows.
Table of applied provisions of Part 14 of the Companies Act 1985
| Applied provision of the Companies Act 1985 | Modification |
|---|---|
| Section 432f3 (other company investigations) | In subsection (3) omit “Subsections (1) and (2) are without prejudice to the powers of the Secretary of State under section 431; and”. Omit subsection (4). |
| Section 433f4 (inspectors’ powers during investigation) | In subsection (1) omit “431 or”. |
| Section 434f5 (production of documents and evidence to inspectors) | In subsection (1) omit “431 or”. In subsection (5) for “any of sections 431 to 433” substitute “section 432 or 433”. |
| Section 436f6 (obstruction of inspectors treated as contempt of court) | |
| Section 437f7 (inspectors’ reports) | In subsection (1A) omit “431 or”. Omit subsection (2A). In subsection (3)(b), “prescribed”f8 means prescribed by regulations made by the Secretary of State. In subsection (3)(b) omit sub-paragraph (iv). |
| Section 439f9 (expenses of investigating a company’s affairs) | In subsection (1), for “an investigation under any of the powers conferred by this Part” substitute “an investigation under, or exercise of any other powers conferred by, this Part”. For subsection (4) substitute—
After subsection (4) insert—
In subsection (6) for “subsection (4) or (5)” substitute “subsection (4)”. In subsection (8) for “subsections (4) and (5)” substitute “subsection (4)”. Omit subsections (5), (9) and (10). |
| Section 441f10 (inspectors’ report to be evidence) | In subsection (1) the reference to section 8 of the Company Directors Disqualification Act 1986 includes a reference to section 8 as applied by section 22E of that Actf11. |
| Section 446Af12 (general powers to give directions) | In subsection (2) omit “431,” and “or 442(1)”. |
| Section 446B (direction to terminate investigation) | In subsection (2), omit “or 442(3)”. |
| Section 446C (resignation and revocation of appointment) | |
| Section 446D (appointment of replacement inspectors) | |
| Section 446E (obtaining information from former inspectors etc.) | |
| Section 447f13 (power to require documents and information) | |
| Section 447Af14 (information provided: evidence) | |
| Section 448f15 (entry and search of premises) | |
| Section 448Af16 (protection in relation to certain disclosures: information provided to Secretary of State) | |
| Section 449f17 (provision for security of information obtained) | In subsection (3), the reference to the Secretary of State is to be read as a reference to the Secretary of State, and not as a reference to the Financial Conduct Authority. In subsection (6A)(b)(ii) omit “or Northern Ireland”. |
| Section 450f18 (punishment for destroying, mutilating etc. company documents) | Omit subsection (1A). In subsection (3)(b)(ii) omit “or Northern Ireland”. |
| Section 451f19 (punishment for furnishing false information) | In subsection (2)(b)(ii) omit “or Northern Ireland”. |
| Section 451Af20 (disclosure of information by Secretary of State or inspector) | Omit subsection (5). |
| Section 452f21 (privileged information) | In subsection (1) for “431” substitute “432”. In subsection (1A) omit “, 443 or 446”. In subsection (1B) omit “431,”. In subsection (4) omit paragraph (a). |
Section 453Af22 (power to enter and remain on premises) | In subsection (7) omit “431,” and “or 442”. |
| Section 453Bf23 (power to enter and remain on premises: procedural) | In this section, “prescribed” means prescribed by regulations made by the Secretary of State. |
| Section 453Cf24 (failure to comply with certain requirements) | |
| Section 453Df25 (offences by bodies corporate) | |
| Schedule 15Cf26 (specified persons to whom disclosure can be made for the purposes of section 449) | In paragraph 1, the reference to the Secretary of State is to be read as a reference to the Secretary of State, and not as a reference to the Financial Conduct Authority. After paragraph 10 insert—
|
| Schedule 15Df27 (disclosures for the purposes of section 449) | In paragraph 2, an inspector appointed under Part 14 includes an inspector appointed under Part 14 as applied by these Regulations. In paragraph 3, a person authorised under section 447 includes a person authorised under section 447 as applied by these Regulations. |
The Companies (Inspectors’ Reports) (Fees) Regulations 1981f28 apply for the purposes of section 437 of the Companies Act 1985 as applied by this regulation.
The Companies Act 1985 (Power to Enter and Remain on Premises: Procedural) Regulations 2005f29 apply to registered societies with the general modifications set out in paragraph (2).
3Condition for exercise of powers in regulation 2
In deciding whether and how to exercise the powers conferred by regulation 2, the Financial Conduct Authority must adopt an approach which is based on the principle that those powers should be exercised only to the extent necessary to maintain confidence in registered societies.
4Amendment to the Industrial and Provident Societies Act 1965
Section 48 of the 1965 Actf1 (production of documents and provision of information for certain purposes) is repealed.
5Consequential amendment to section 17 of the Credit Unions Act 1979
For section 17 of the Credit Unions Act 1979f1 (power to require information) substitute—
“Powers of FCA and PRA to obtain information for certain purposes
17.(1)The FCA or PRA may by notice in writing require a credit union or an officer or former officer of a credit union—
(a)to produce to it such books, accounts and other documents relating to the credit union’s business, and
(b)to provide it with such other information relating to that business,
as it considers necessary for the exercise of its functions under this Act.
(2)The notice must be served on the credit union or other person.
(3)The notice may contain a requirement that any information provided in accordance with the notice is to be verified by a statutory declaration.
(4)A credit union or other person who fails to comply with a notice under this section commits an offence.
(5)A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale.
Section 17: recovery of FCA’s and PRA’s costs
17A.(1)This section applies where the FCA or PRA has exercised its powers under section 17 in relation to a credit union.
(2)The FCA or PRA may, if it considers it just to do so, direct that the expenses incurred by it in exercising the powers (or any part of those expenses) are to be met—
(a)out of the credit union’s funds, or
(b)by the credit union’s officers or former officers (or any of them).
(3)Any sum which the credit union or other person is required by a direction to pay is a debt due from the credit union or person to the FCA or PRA.”.
6Consequential amendment to the Company Directors Disqualification Act 1986
In section 22E(4)(c)(ii) of the Company Directors Disqualification Act 1986f1 (application of Act to societies registered under the 1965 Act) for “section 48 of the 1965 Act” substitute “Part 14 of the Companies Act 1985 as applied by the Co-operative and Community Benefit Societies and Credit Unions (Investigations) Regulations 2014”.
7Consequential amendment to the Community Benefit Societies (Restriction on Use of Assets) Regulations 2006
In Schedule 2 to the Community Benefit Societies (Restriction on Use of Assets) Regulations 2006f1 (application of the 1965 Act with modifications), omit paragraph 3.
8Transitional provision
In relation to an offence committed before the commencement of section 280 of the Criminal Justice Act 2003f1, section 17(5) of the Credit Unions Act 1979 (as substituted by regulation 5) has effect with the addition after “standard scale” of “or to imprisonment for a term not exceeding 3 months (or both)”.
Signature
Mark Lancaster
Sam Gyimah
Two of the Lords Commissioners of Her Majesty’s Treasury
10th March 2014
Explanatory note
(This note is not part of the Regulations)
These Regulations repeal section 48 of the Industrial and Provident Societies Act 1965 (c.12) (“1965 Act”) which gave the Financial Conduct Authority (“FCA”) power to require a co-operative or community benefit society (“society”) to produce documents and provide it with information. In place of section 48, the Regulations provide the FCA with certain of the powers of the Secretary of State under Part 14 of Companies Act 1985 (c.6) (“the 1985 Act”) and apply related provisions of Part 14 with modifications. Section 48 and these Regulations also apply to credit unions which are registered under the 1965 Act, see sections 1 and 31(3) of the Credit Unions Act 1979 (c.34).
Regulation 3 provides that in deciding whether and how to exercise the powers conferred by these Regulations the FCA must adopt an approach which is based on the principle that those powers should be exercised only to the extent necessary to maintain confidence in societies.
The FCA’s new powers include the power to appoint an inspector to investigate the affairs of a society in the circumstances set out in section 432(2) of the 1985 Act, for example where it appears to the FCA that the society may have been conducted with an intention to defraud creditors or for unlawful purposes. The Regulations also apply section 432(1) of the 1985 Act so as to require the FCA to appoint an inspector if the court orders the affairs of a society to be investigated. The Regulations apply sections 446A and 446B of the 1985 Act to give the FCA power to give directions to inspectors, and sections 446C to 446E of the 1985 Act (resignation, removal and replacement of inspectors and obtaining information from former inspectors) to inspections of societies.
Section 447 of the 1985 Act is applied so as to give the FCA or an authorised investigator power to require a society to produce documents and provide information. The Regulations also apply section 448 of the 1985 Act, which gives the FCA or an authorised person power to apply to a magistrate for a warrant of entry to premises of a society on the grounds set out in section 448(2), and section 453A of the 1985 Act which gives an inspector or an investigator authorised under section 447 power to require entry to premises (but does not authorise forcible entry). Section 449 of, and Schedules 15C and 15D to, the 1985 Act (relating to the disclosure of information obtained under sections 447 and 453A) are applied in relation to societies, and in addition to the bodies listed in Schedule 15C disclosure can also be made to the Charity Commission, the Office of the Scottish Charity Regulator, the Homes and Communities Agency, the Scottish Housing Regulator and the Welsh Assembly Government.
Section 439 of the 1985 Act (expenses of investigating a company’s affairs) is applied so that the expenses of investigation of a society are payable in the first instance by the FCA but recoverable from the society investigated.
The sanctions and offences in Part 14 of the 1985 Act are also applied, including those in section 436 (obstruction of inspectors treated as contempt of court), section 450 (punishment for destroying company documents) and section 451 (punishment for providing false information).
Regulations 5 to 7 contain amendments in consequence of the repeal of section 48 of the 1965 Act.
An impact assessment has not been produced for this instrument as no significant impact on the costs of business or the voluntary sector is foreseen.