Commentary Ring-fencing Section 8: Independent review of operation of legislation relating to ring-fencing
90.Section 8 provides for an independent review of the ring-fencing legislation. Under subsections (1) and (2), the Treasury are required to appoint a panel of five or more people to carry out a review of the way in which ring-fencing legislation works in practice. The panel must be appointed within 2 years after that legislation has come into force. Ring-fencing legislation is defined in subsection (2) as Part 9B of FSMA (ring-fencing); the secondary legislation made under that Part, and any rules made by the PRA or by the FCA either under Part 9B, or under new section 192JA of FSMA, which permits the regulators to make rules applying to parent undertakings of ring-fenced bodies. The secondary legislation covered by the review will include, for example, any orders exempting certain classes of banks from the definition of “ring-fenced body” or providing that only deposits of individuals and small and medium sized businesses need be kept in a ring-fenced body; and any orders setting out the circumstances in which a ring-fenced body is permitted to deal in investments as principal, or specifying other activities which it may not do. The requirements which must be satisfied by members of the review panel are set out in subsections (4) and (5). They must be independent of the regulators (including the Bank of England) and the Treasury, and have no financial or other interest which might be thought to influence their views on ring-fencing. The members of the panel must include someone who has significant experience as a senior central banker or bank regulator, and more generally, the members of the panel must collectively have sufficient experience of the subjects under review to undertake the review. The Treasury is required to consult the chair of the Treasury Select Committee before before appointing any members of the panel (subsection (6)), and provision is made in subsection (7) for the possibility that that Committee may be renamed or its functions be reassigned. The Panel must complete their report to the Treasury within a reasonable time after finishing the review (subsection 9) and that report must be laid before Parliament and published (subsection (10)).