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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Barclays Bank Plc, Re [2017] EWHC 1482 (Ch) (26 May 2017) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2017/1482.html Cite as: [2017] EWHC 1482 (Ch), [2017] WLR(D) 461, [2017] Bus LR 2006

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IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT

		Rolls Building
		26th May 2017

SIR GEOFFREY VOS, CHANCELLOR OF THE HIGH COURT:

Introduction

1. The applications before the court concern the Ring Fencing Transfer Schemes that each of the major deposit-taking banks in the United Kingdom is required by statute to have in place by 1^st January 2019. The schemes are required for any banks that have an average total of deposits from individuals or SMEs of more than £25 billion. The schemes are intended to isolate the banks' retail banking activity from its wholesale or investment banking activity.
2. There are four claim forms before the court, each issued on 5^th May 2017, by respectively Barclays Bank Plc and Woolwich Plan Managers Ltd (together "Barclays"), HSBC Bank Plc ("HSBC"), Lloyds Bank Plc and Bank of Scotland Plc (together "Lloyds"), and Santander UK Plc and Abbey National Treasury Services Plc (together "Santander").
3. The claim forms look forward prospectively to the claimants' expected future applications under s.107 of the Financial Services and Markets Act 2000 ("FSMA") for orders sanctioning under s.110 of FSMA four ring fencing transfer schemes ("RFTSs") in the High Court in London, and one in the Court of Session in Edinburgh.
4. Each claim seeks relief broadly as follows:

(1) Appointing a designated judge for each of the applications, sanction hearings and their related hearings.

(2) Directions that individual notice to the customers of the claimants' group or consumers:

(a) need only be effected in accordance with paragraph 41(2) of the FCA's guidance dated March 2016, entitled, "Guidance on the FCA's Approach to the Implementation of Ring Fencing and RFTSs" (the "FCA guidance");

(b) may be effected electronically or digitally where the recipient of the notice has provided an electronic or digital address, or is accustomed to, or has consented to receiving communications in that way;

(c) must be made at least 42 days prior to the Representation Date (being the latest date before the sanctions hearing by which the written statement of representations of any objector must be filed with the court).

(3) A direction that individual notice to other stakeholders of the
claimants should be treated in the same way as notice to customers

and consumers.

(4) A direction that advertisement in print or electronic media must be made not less than 28 calendar days prior to the representation date.

(5) A direction allowing the court to waive any error in communication in appropriate circumstances.

(6) A direction that the principal source of information concerning the RFTSs should be a dedicated section of the bank's website.

(7) A direction that the court should not require the report under s.109A of FSMA to disclose confidential information provided the Prudential Regulation Authority (PRA) and the FCA do not object to the exclusions.

(8) That a provisional timetable should be set for the sanction applications.

(9) That the claimants should have liberty to apply for preliminary rulings on notice to the PRA and the FCA.

The Jurisdiction of the Court

5. These applications then arise because the banks cannot make their formal applications to sanction their RFTSs without the consent of the PRA under s.107(2A) of FSMA, and the PRA cannot give their consent until they have considered the scheme report prepared by a Skilled Person under s.109A of FSMA.
6. The banks have therefore been required to issue claim forms to seek the court's prospective guidance in relation, in particular, to communications to persons potentially affected by the RFTSs, and the timetable for the future conduct of the substantive applications. In the light of the importance of the RFTSs and the need for them to be completed by 1^st January 2019 the procedural innovation provided by these claim forms is, in my view, well within the inherent jurisdiction of the court to regulate its own procedure.
7. I should also record that given the importance of these applications I have directed that two judges should hear them. I did so on the basis that s.66(1) of the Senior Courts Act 1981 provides that:

"Divisional courts may be held for the transaction of any business in the High Court, which is by virtue of rules of court or any other statutory provisions required to be heard by a divisional court."

CPR Part 3.1(2)(m) gives the court power to take any steps, or make any order, for the purpose of managing the case and furthering the overriding objective. Sitting two judges on this application was required both to manage the case and to further the overriding objective. It may well not be possible because of pressure of business for me or for one single judge to hear all the applications in the future. In these circumstances, I thought it desirable for the purposes of continuity and consistency for at least one other judge, who might be called upon to hear a substantive application, to be apprised at the earliest possible stage of the issues that might be raised by them. No objection has been made by the parties to the course of action that I had previously indicated I intended to adopt.

8. It goes without saying that the court will give such assistance as it can in cases of this kind to ensure that the applications proceed expeditiously and efficiently, and that all necessary parties are heard, and that the issues are resolved and concluded within the statutory timetable. It is nonetheless important for the parties, and all those affected by the RFTSs with which we are concerned, to understand that the directions which the court will give at this stage are given on the information currently available to the court. They are not to be regarded as set in stone. They are necessarily subject to any further directions and orders that the court may make in the individual application for each bank. That is especially true because although the hearing before us has been attended by counsel for the banks and for the Regulators (the FCA and the PRA), the hearing has not been notified to consumers, customers or stakeholders, or to others who may be affected, nor even to representatives of such groups. Such people, therefore, have had no opportunity to make representations concerning the process which is to be adopted.
9. Moreover, although the FCA, as part of its regulatory function, will give consideration to the best interests of customers of the banks and consumers, and it has indicated that it currently intends to be represented at all the forthcoming hearings, I take the view that the banks and the Regulators should ensure that adequate publicity is given to the forthcoming Directions Hearings concerning the banks' communication programme. Therefore customers, consumers and others who might wish to have a voice on the process to be adopted can, at least, have the opportunity to be heard.

The nature of the schemes

10. In essence the Barclays and HSBC proposals involve a transfer of the ring fenced business to a newly authorised ring fenced body (an "RFB"). The Lloyds ring fencing plan involves a transfer of business out of the existing entities and into a newly formed entity, which will be a non-ring fenced bank. The business transferred out will be business which a RFB will be prohibited from carrying on. The Santander plan involves transfers of certain largely prohibited business between existing authorised banks.

The Relevant Statutory Provisions

11. Section 106B of FSMA provides as follows:

"(1) A scheme is a ring fencing transfer scheme if it -

(a) is one under which the whole or part of the business carried 
on -

(i) by a UK authorised person, or

(ii) by a qualifying body,

- is to be transferred to another body (the transferee),

(b) is to be made for one or more of the purposes mentioned in 
subsection 3, and

(c) is not an excluded scheme or an insurance business transfer 
scheme ...

(3) The purposes are

(a) enabling a UK authorised person to carry on core activities as 
a ring fenced body in compliance with the ring fencing 
provisions;

(b) enabling the transferee to carry on core activities as a ring
fenced body in compliance with the ring-fencing provisions;

(c) making provision in connection with the implementation of 
proposals that would involve a body corporate whose group 
includes the body corporate to whose business the scheme 
relates becoming a ring fenced body while one or more other 
members of its group are not ring fenced bodies;

(d) making provision in connection with the implementation of 
proposals that would involve a body corporate whose group 
includes the transferee becoming a ring fenced body while 
one or more other members of the transferee's group are not 
ring fenced bodies ...


(5) For the purposes of subsection 1(a) it is immaterial whether or not 
the business to be transferred is carried on in the United Kingdom.

(6) 'UK authorised person' has the same meaning as in section 105 ...

(8) 'The ring fencing provisions' means ring fencing rules and the duty 
imposed as a result of s.142G."

12. Section 107 provides as follows:

"(1) An application may be made to the court for an order sanctioning an insurance business transfer scheme or banking business transfer scheme, a reclaimed fund business transfer schemes or a ring fencing transfer scheme.

(2) An application may be made by -

(a) the transferor concerned

(b) the transferee, or

(c) both.

(2A) An application relating to a ring fencing transfer schemes may be made only with the consent of the PRA.

(2B) In deciding whether to give consent the PRA must have regard to the scheme report prepared under s.109A in relation to the ring fencing transfer scheme."

13. Section 109A of FSMA provides as follows:

"(1) An application under s.106B in respect of a ring fencing transfer scheme must be accompanied by a report on the terms of the scheme ('a scheme report').

(2) A scheme report may be made only by a person—

(a) appearing to the PRA to have the skills necessary to enable the person to make a proper report, and

(b) nominated or approved for the purpose by the PRA.

(3) A scheme report must be made in a form approved by the PRA.

(4) A scheme report must state -

(a) where the persons other than the transferor concerned are likely to be adversely affected by the scheme, and

(b) if so, whether the adverse effect is likely to be greater than is reasonably necessary in order to achieve whichever of the purposes mentioned in s.106B(3) is relevant.

(5) The PRA must consult the FCA before -

(a) nominating or approving a person under subsection 2(b), or

(b) approving a form under subsection 3."

14. Insofar as it applies to RFTSs, s.110 of FSMA provides as follows:

"(3) Subsections 4 and 5 apply when an application under s.107 relates to a ring fencing transfer schemes.

(4) The following are also entitled to be heard -

(a) the PRA

(b) where the transferee is an authorised person the FCA, and

(c) any person ('P') (including an employee of the transferor concerned or of the transferee) who alleges that P would be adversely affected by the carrying out of the scheme.

(5) P is not entitled to be heard by virtue of subsection 4(c) unless before the hearing P has -

(a) filed ... with the court a written statement of the representations that P wishes the court to consider, and

(b) served copies of the statement on the PRA and the transferor concerned."

15. Section 111 of FSMA provides as follows:

"(1) This section sets out the conditions which must be satisfied before the court may make an order under this section sanctioning an insurance business transfer scheme, a banking business transfer scheme or a reclaim fund business transfer scheme, or a ring fencing transfer schemes.

(2) The court must be satisfied that -

... (ab) in the case of a ring fencing transfer scheme the appropriate certificates have been obtained (as to which see Parts IIB of that Schedule);

(b) the transferee has the authorisation required (if any) to enable the business, or part, which is to be transferred to be carried on in the place to which it is to be transferred (or will have it before the scheme takes effect).

(3) The court must consider that, in all the circumstances of the case, it is appropriate to sanction the scheme."

16. A relevant definition for the purposes of any RFTS is that of "consumer" in s.1G of FSMA. This terms is defined very broadly to include persons who use, or have used, or may use regulated financial services or services which are provided by persons other than authorised persons, but are provided in carrying on regulated activities.

The FCA and PRA Guidance

The FCA has issued the FCA guidance and the PRA has issued its "Statement of Policy" in relation to the ring fencing regime. The FCA sets out its appropriate overall approach at paragraph 20 as follows:

"A key concern for the FCA will be to satisfy itself that the firms' notification plan, which relates to the communications to consumers likely to be adversely affected by the scheme, has adequate information and allows reasonable time within which consumers are able to understand:

(1) Whether or not they are likely to be adversely affected to an extent greater than is reasonably necessary in order to achieve the purpose of the ring fencing

(2) If so, whether to make representations to the court, and

(3) How, and by when, to -

(a) File (or lodge) with the court a written statement of the representations that the consumer wishes the court to consider, and

(b) Serve copies of the statement on the PRA and the transferor concerned."

17. In relation to critical issue for the scheme report by the Skilled Person of the identity of "persons who are likely to be adversely affected" by the scheme, the FCA's guidance states as follows:

"33 From the perspective of the FCA's objectives, the key 'persons' who could be expected to be adversely affected and are the focus of this guidance are consumers who are the customers of the group, and some specific categories of other consumers. Consumers are defined quite broadly in section 1G of [FSMA] ... The specific categories of consumers who are not customers of the group but whom the Skilled Person should, where relevant, consider when addressing the statutory question include:

(1) Counterparties

(2) Firms that are provided indirect access to payments systems or other services by the transferor or transferee, and

(3) Groups of other consumers with homogenous characteristics who are likely to be adversely affected by the scheme.

Such persons could have connections to the whole banking group and not just to the transferor or transferee. Persons who we consider in this context fall outside the scope of the FCA's objectives include employees of the transferor or transferee, shareholders and members of the transferor, or transferee's pension scheme."

18. The PRA has also stated similar views as follows:

"3.13 Transfers may have both positive and negative effects on persons other than the transferor. A key concern for the PRA will be to satisfy itself that persons other than the transferor have adequate information and a reasonable time within which to determine whether or not they are adversely affected and, if adversely affected, whether to make representations to the court ...

5.6 By 'persons other than the transferor' [in s.109A(a)] the PRA would expect the Skilled Person to consider at least the implications for depositors, customers and counterparties of the transferor, irrespective of whether their relationships are being transferred ... Given the size and complexity of the banks ... the Skilled Person may wish to consider the effects of the scheme on material groups of persons where it would be impractical otherwise to assess the effects on all individual persons."

19. Against this background the FCA has considered the question of notification of the court proceedings. The FCA guidance includes the following passages:

"40. Under section 110 of [FSMA], any person who alleges that he would be adversely affected by the carrying out of the scheme is entitled to be heard in the final hearing of the court that is conducting the sanction proceedings. However, this right is limited. A person is not entitled to be heard in the proceedings unless before the hearing:

(1) they have filed with the court a written statement of the representations that they wish the court to consider, and

(2) served copies on the PRA and the transferor concerned.

41. The transferor concerned or transferee, or both, should give notice to those persons likely to be adversely affected by the scheme. In particular, the transferor or transferee should consider giving notice of the application in one or more of the following ways:

(1) publication in:

(a) the London, Edinburgh and Belfast Gazettes, and

(b) individually sent to all consumers who are likely to be adversely affected by the scheme."

The banks' submissions on who should be notified

20. As I have already pointed out the banks' schemes differ somewhat. It is important to consider the evidence of each bank on the communication plans they propose.

(1) Mr. Steven Penketh of Barclays says at paragraph 26 of his statement that the current expectation is that following the FCA guidance, "a relatively small proportion of the overall customer base of the Barclays group," will be individually notified.

(2) Mr. Robert Pugsley of HSBC says at paragraph 20 of his statement that HSBC's communication plans entail, "sending individual notices of all customers of [HSBC] who will transfer to the RFB, whether or not HSBC believes them to adversely affected by the RFTS". In addition they will so notify all remaining UK customers, Channel Islands and Isle of Man domestic customers, certain cohorts of stakeholders in HSBC and other consumers, "where [HSBC] believes that they are likely to be adversely affected by the RFTS." In total that amounts to some 13 million individual notices.

(3) Mr. Mark Culmer of Lloyds says at paragraph 33 of his statement that it is their current intention "that only those whom the transferors consider are likely to adversely affected by the scheme will be notified individually, and not all persons who might be thought in some to be affected (but not adversely so) by the scheme". The vast majority of the 25 million odd customers will not be individually notified.

(4) Mr. Antonio Roman of Santander says at paragraph 5.2 of his statement that most of the 14.8 million customers, "are not expected to fall within the scope of the RFTS as they already bank with Santander UK. As such we do envisage these customers experiencing any discernible change to their banking relationship with Santander UK in connection with the RFTS". Santander therefore propose not to send these customers individual notices.

21. Mr. Martin Moore QC, leading counsel for all the banks argued at paragraph 20 of his skeleton argument that:

"The Banks propose that the FCA's approach on this point be adopted as a general guiding principle for their various communication programmes. The intended effect of the draft orders is to make it clear that the banks in devising their communications programmes do not need to consider giving individual notice to consumers or others who are not likely to be adversely affected by the RFTS".

22. Mr. Moore also made clear that the court is not being asked at this stage to determine what the term, "likely to be adversely affected by the scheme," in s.109A(4)(a) of FSMA means, nor who is likely to be so adversely affected. Instead the banks ask that the court approves the "general principle" that they are only obliged to consider giving individual notice to those persons (whoever they may be) who are likely to be adversely affected. (See paragraph 30 of his skeleton argument.)
23. In oral argument Mr. Moore sought to emphasise the relationship between an insurance transfer scheme and a ring fencing scheme of the kind in issue in this case, and to suggest that it was not necessary to give individual notice to every person who might allege that they were adversely affected by the proposed scheme. He submitted that it was all a question of balance and proportionality depending on the views of the Skilled Person and that the court should only consider, in effect, whether and to whom individual notice should be given at a later stage when the communication plan for each bank was placed before the court.
24. Mr. Rory Phillips QC for the PRA and the FCA pointed out that according to their evidence some of the banks proposed to treat the proposed direction as a minimum requirement; for example by giving notice to all relevant consumers whether or not adversely affected. He indicated, as might be expected, that the Regulators have no objection to that approach (see paragraph 26 of his Skeleton Argument). In oral argument Mr. Phillips did not push back on the suggestion of the court, to the effect that, at least the starting point ought perhaps to be giving notice to anybody who might fall within s.110(4) of FSMA, namely a person who might wish to allege that they would be adversely affected by the carrying out the RFTSs.
25. The divergence of views between the banks in this regard does raise, in my judgment, a question of principle in relation to who should be notified of the applications.

Consideration of who needs to be notified: the proposed direction under paragraph 2(a)

26. This question, which has formed the bulk of the argument before the court in the hearing this morning, relates, in effect, to the starting point and not to a final determination of who is to be notified in any particular case. It is quite clear that whatever order the court makes now, each bank will be able to come back to the court with its communication plan and argue that a different cohort of notifications should be sent based on reasons, which are not at this stage before the court. Taking an example that I gave in the course of oral argument, it may possibly-- and I make no determination upon it-- be open to a bank to submit that the customers in a particular part of its business will only be beneficially affected by the scheme in question. They may submit that it is impossible to imagine that such persons could be adversely affected, and in such circumstances it would be inappropriate to give individual notification to them. I know not whether that will be possible or appropriate in the future, but certainly nothing I say now should be taken to rule it out.
27. Section 110(4) of FSMA provides that, as I have said, "any person ("P") ... who alleges that P would be adversely affected by the carrying out of the scheme", is entitled to be heard on the court application for sanction of the RFTS.
28. In these circumstances, it seems to me that it is not for the banks to limit notification of their schemes to persons who they have determined are likely to be adversely affected by the scheme. The statutory framework for potential objections suggests that anyone who might wish to allege that he would be adversely affected by the carrying out of the scheme ought to be notified of it. It may be for consideration in the future whether "anyone who might wish to allege that he would be adversely affected by the carrying out of the scheme", can only include a person who might reasonably allege, or might reasonably wish to allege that he would be adversely affected by the scheme.
29. Obviously it is no part of the court's purpose to encourage applications from unreasonable objectors. Nonetheless, in my judgment, it is at least important that anybody who might have a reasonable contention that they would be adversely affected is able to make their point at the appropriate stage in these proceedings.
30. In saying what I have said, I recognise that in the light of the indications from the FCA and the PRA in setting out the potential range of persons who might be likely to be adversely affected, and since the banks have not asked the court to determine at this stage whether any particular person or group can or should be excluded from notification, it is possible that the net will have to be spread fairly wide. The proposed direction is that:

"Individual notice to the customers of the Company's group or consumers ... need only be affected in accordance with paragraph 41(2) of ... [FCA Finalised Guidance 16/1]",

namely to send notification individually only to "all consumers who are likely to be adversely affected."

31. In my judgment that is not an appropriate direction to be given at this stage for the reasons I have just given. Subject to any specific exclusions that will need to be justified to the court at the hearing to approve each banks' individual communications plan, the starting point must be that individual notice will need to be given to all customers and consumers as defined in section 1G of FSMA, because it has not yet been shown that any of them is not in the category of persons who "might wish to allege that he would adversely affected by the carrying out of the scheme". I quite accept Mr. Moore's submission that if this preliminary view gives the banks difficulty in preparing their communication plan, bearing in mind the complexity of the schemes and the tightness of the timetable over which they have to be executed and completed under the statute, it may be necessary for one or more of the banks to make an interim application to the court for concrete directions as to their proposed communication plan earlier than the Directions Hearing contemplated in the timetable, to which I shall shortly refer. Nothing I have said indicates that such a preliminary application would not be appropriate and, if it is necessary, the court will deal with it in an appropriate fashion at the time.
32. Accordingly, in my judgment, the appropriate direction to give at this stage in response to the application that has been made to the court in these preliminary proceedings is as follows:

"Subject to any further directions that might be given in relation to specific persons or groups of persons, individual notice should be given to any and all customers of the Company's group or consumers (within the meaning of section 1G of FSMA) who might wish to allege that they would be adversely affected by the carrying out of the scheme."

33. I emphasise, in closing in this section, that this direction is not intended to prejudge the individual circumstances of the banks' cases on any subsequent application when their communication plan is put to the court.

The proposed directions as regards electronic notification

34. The proposed direction at para.2(b) of the proposed orders is as follows:

"That individual notice to the customers of the Company's group or consumers ... may be affected electronically, or digitally, where the recipient of the notice has provided an electronic or digital address, or is accustomed to, or has consented to receiving communications from the Company's group in that fashion."

35. The PRA and the FCA emphasised that there should be a printed method of communication as well as an electronic one, in case the electronic method failed. But subject to that, they did not object to the proposed order. It seems to me the order is entirely appropriate and will abrogate the need for many millions of individual letters to be sent. I would therefore propose that the order suggested is made.

The proposed direction 2(c), as to the length of the individual notices to be given to consumers and customers

36. The proposed direction is:

"That individual notice to the customers of the Company's group or consumers ... must be made at least 42 calendar days prior to the Representation Date."

37. Paragraph 45 of the FCA's guidelines suggests, following the practice in other Part VII transfer cases, that a period of more than six weeks should elapse between sending notices to persons likely to be adversely affected and the date of the court hearing.
38. I agree that six weeks is the minimum period of notice that would be appropriate for customers and consumers to assimilate the information that they will be given and to prepare their case if they so wish. Since, however, the RFTS procedure has an additional requirement that persons wishing to appear must provide a written statement of representations that they wish the court to consider, that six-week period cannot end on the date of the hearing itself. It must run from an earlier date, which will give the court the chance to consider any submissions and organise the sanctions hearing. That is the purpose of the proposed Representation Dates, which will all be at least 20, and perhaps because of something I am about to say, as much as 27 days before the proposed sanction hearings. I am therefore content to indicate that notification should be no less than 42 days prior to the Representation Date as the parties ask.

The proposed direction 3(a) on giving notice to stakeholders other than consumers

39. The proposed direction is:

"That individual notice to stakeholders of the Company's group not referred to in [proposed direction] 2 ... need only be affected in accordance with the guidance referred to in [proposed direction] 2(a) where for these purposes such guidance shall be implemented as if it applied to those other stakeholders of the Company's group".

40. Although this direction applies to persons other than customers or consumers, I think it is also affected by the same problem as proposed direction 2(a). It will need to be broadened so that "individual notice is given to any stakeholders of the bank's group who might wish to allege that they would be adversely affected by the carrying out of the scheme". The persons who might fall within this category might be limited but it will be up to the banks concerned to devise a plan in each case for working out who such stakeholders might be and to seek the approval of the court to that plan at the communications directions hearing or at an earlier directions hearing if that is necessary. Again, in making this direction, the court is not seeking to limit the submissions that the banks may wish to make in respect of the detail of their proposed communication plan.

The proposed direction 3(b) on length and means of notice to stakeholders other than consumers

41. The proposed direction is:

"That individual notice to stakeholders of the Company's group not referred to in [proposed direction] 2 ... may also be given in accordance with ... [proposed direction] 2(b) and must be given in accordance with [proposed direction] 2(c)".

42. The PRA and the FCA have no objection to this direction and, for similar reasons to those that I have already expressed in relation to notification to customers and consumers, neither do I.

Proposed direction 4 in relation to the timing of advertisements in print or electronic media

43. The proposed direction is as follows:

"That advertisements in print or electronic media must be made not less than 28 calendar days prior to the representation date."

44. This relates to a "catch all" provision for advertisements as a means of notifying persons who ought to have notice of the hearings but who might, for whatever reason, such as a change of address or individual communications being lost or misdirected, not otherwise get to learn of the hearing. The question of which publications are suitable for such an advertisement is a point that will have to be addressed at the communications directions hearing in relation to each bank and its customer base, but the PRA and the FCA have no objection to the timing of such advertisements in principle, and I am content also to adopt the banks' proposals.

Proposed direction 5 in relation to waiving errors and defects in communications programmes

45. The proposed direction 5 is:

"That in appropriate circumstances the court may waive any defect, error or omission in the company's communications programmes to be outlined to the court in accordance with [proposed direction] 8(a)".

46. The Regulators do not object to the proposed direction, noting that the court in any event has the inherent power to waive compliance with any communications programmes embodied in an order for directions as proposed direction 8(a) contemplates. I agree. In analogous Part VII cases, subject always to any specific statutory provision to the contrary, the court has a well-established inherent power to waive compliance, or excuse non-compliance with, its procedural directions. The same regime should operate in these cases.

Proposed direction 6 as to websites being the principal source of information

47. The proposed direction is:

"that the principal source of information concerning the RFTS should be a dedicated section of the website, or part thereof, of the Company's group, provided that hard copy documents be made available on request".

48. Paragraph 42 of the FCA guidance said this about documentation:

"It would normally be appropriate for the following documents to be made available, free of charge, to anyone requesting them:

(1) a statement setting out the terms of the scheme and containing a summary of the scheme report, and

(2) a copy of the scheme report.

The internet can be used for this purpose if it is suitable for the person making the request".

Paragraph 43 provides that:

"Recipients should understand from the summary of the scheme report, in broad terms, how the scheme is likely to affect them. The summary should be clear and concise while containing sufficient detail for the purpose".

49. The Regulators do not therefore object to the use of the internet to provide information and documents provided that provision is made for persons with special needs; for example, those who are visually impaired. Modern practice in many recent analogous cases involving schemes of arrangement and Part VII transfer schemes has been to move towards increasing use of a dedicated website, or section of a website, established by the applicant. This enables persons affected, or potentially affected by the scheme, to have easy electronic access to relevant information and documents. In almost all cases this is more efficient and cheaper than the applicant having to print and distribute large numbers of hard copies at great expense.
50. Accordingly, provided there is a fall-back position under which persons affected can ask for a hard copy, the use of a website in this way is to be encouraged. That is particularly so in a case such as the present where there are likely to be many millions of customers and consumers.
51. Whilst the detail of the communication programmes will have to be worked out in each case, and the different banks may have different practices as regards communicating with their customers by electronic means, as I say, I agree with this proposal in principle subject to the proviso concerning special needs.

Proposed direction 7 concerning confidential and commercial sensitive information

52. The proposed direction is:

"That the court follow by analogy its practice in relation to insurance business transfers and not require the report made pursuant to section 109A of FSMA for the RFTS to disclose information which the Company considers on reasonable grounds to be confidential or commercially sensitive in respect of the company or the Company's group, provided that the PRA and the FCA do not object to the exclusion of that information".

53. The practice to which this proposed direction refers is one that is said to be most commonly applied in the insurance business transfer context to protect the confidential and commercially sensitive information of the applicant. The practice is for the independent expert who reports on such cases, and the PRA which has to indicate its views on the scheme, to confirm that, based on the information made available to each of them, the necessary solvency tests are met, without revealing the underlying data on which that conclusion is based.
54. The Regulators do not object in principle to the application of that practice by analogy in the context of an RFTS provided they are satisfied that, in each case, the proposed exclusion or redaction of relevant information does not undermine the clarity, intelligibility or effectiveness of the scheme report to achieve its intended purpose.
55. I agree with the proposed direction. I would however make it clear that such a direction would not prevent the court from making an order in due course for the disclosure of such information, if it considers that necessary for the proper determination of the application, and of any objections from interested parties. In any such case, however, it is to be expected that the court would seek to ensure that any such sensitive information was protected by suitable confidentiality undertakings.

Proposed Direction 8 concerning the Representation Date

56. The proposed direction is:

"That the provisional timetable ... should include a date by which the written statement of representations, which any persons ("P") wishes the court to consider, must have been filed with the court with copies served on the PRA and the Company, failing which, P shall not be entitled (save with the leave of the court) to be heard, whether orally or in writing, at the hearing to sanction the RFTS (the 'Representation Date') such date to be sufficiently in advance of the sanction hearing to permit preparation for the orderly disposal of the sanction hearing".

57. As I have indicated, s.110(5) provides that a person, who alleges that he would be adversely affected by the carrying out of the scheme, is not entitled to be heard unless he has filed with the court a written statement of his representations, and served copies of the statement on the PRA and the transferor concerned.
58. Although s.110(5) does not prescribe any timetable for the filing and service of such written statements, it is implicit that this should take place before the hearing. In my judgment that is plainly designed to enable the applicant, the Regulators and the judge hearing the application to have written information concerning any objections in advance of the hearing, and in sufficient time to enable such objections to be considered, and for the parties in the court to be able to plan for the efficient conduct of the hearing.
59. I therefore think that it is consistent with s.110(5) for the court to give a direction setting a specific time in advance of the hearing, by which written submissions should be produced. The proposed Representation Date is in each case 20, or perhaps now 27, days before the proposed sanction hearing, and is before the CMC, which precedes the hearing. That should hopefully give sufficient time for all concerned. As Mr. Phillips said in his Skeleton Argument at para.60:

"Against that background the Regulators would not object if the court were to fix a date by which written representations must be filed and served, whilst recognising that [s.110(5) of FSMA] does not expressly shut out representations filed and served after a specified time. Accordingly the Regulators would expect the applicants

(a) to continue to review and consider representations received after any representation date, and before the date of the sanction hearing, and

(b) to bring to the attention of the Regulators and the court any novel representations of substance made during that time."

60. I agree with that submission. I do not therefore accept that it is permissible for a person who falls within s.110(4), and who has filed and served a statement before the hearing so as to comply with s.110(5), to be barred from being heard or required to seek the court's leave because he has not done so by the Representation Date. Section 110(4) gives him an entitlement to be heard subject to compliance with s.110(5). It seems to me that the appropriate sanction for non-compliance with the Representation Date is that the court may exercise a case management power to restrict the manner and time in which such a latecomer is to be heard, and might in a suitable case impose cost sanctions.
61. I would therefore remove the words, "failing which P shall not be entitled (save with the leave of the court) to be heard, whether orally or in writing at the sanction hearing of the RFTS," from the proposed direction.

The proposed timetabling directions in paragraph 8

62. I have already given an indication as to some of the timetabling issues that arise and the parties have provided the court with a provisional timetable for each of their applications. In the course of the hearing Mr. Moore indicated that he would prefer to move each date for the CMC back by about seven days so as to give greater time for preparation of the sanctions hearing after the identity and nature of the objections are known. I have no objection to that as a matter of principle, but it is important that the proposed timetable fits in with the court's availability.
63. I shall attach to this judgment a document entitled "Note of indicative dates for prospective RFTS hearings," the original version of which the court prepared and circulated to the parties prior to the hearing. This gives the dates of the proposed hearings and the identity of the judge nominated to hear them. In this case, diary commitments have required that two judges hear the four applications. Those judges are likely to be me and Hildyard J, although those judges may change if diary commitments change. I will indicate now that the parties should apply to the Listing Office immediately after this hearing to seek to move each of the CMCs approximately seven days earlier, and in addition that the Representation Dates identified in the papers before the court will also be moved seven days earlier in each case.
64. I should say this. I recognise that even these dates may be unworkably tight if, for example, the court required that a particular issue or objection to the scheme should be the subject of a supplementary scheme report, or if the evidence filed by objectors had to be responded to by the banks and the Regulators. If that did require the date for the sanction hearing to be postponed, then that would have to be a consequence. But it is to be hoped that by moving the CMC date seven days forward that can be avoided. Mr. Moore indicated that the sanctions date is particularly important because the implementation activities that need to be undertaken after the sanctions date and before the final date of the 1^st January 2019, are very substantial indeed. Likewise, the current proposal is that each sanction hearing should be set for two days. That length of hearing may have to be reconsidered at the CMC in the light of any objections received.

Direction 9 concerning preliminary rulings and liberty to apply

65. The proposed direction is:

"That the Company has liberty to apply generally and in particular to seek preliminary rulings on any matters which can be appropriately dealt with. Any such application to be on reasonable notice to the PRA and the FCA".

66. I am content to give such a direction providing for permission to apply on reasonable notice to the Regulators. I have already indicated that it may be necessary for such a preliminary application to be made by one or more banks in relation to their communication plans in the light, particularly, of the direction that the court has given under paragraph 2(a) of the proposed orders.
67. I would also reiterate the point I made at the outset that consideration should at every stage be given to providing proper notice to customers, consumers and others who may wish to allege that they adversely affected by the schemes, and by the particular issues raised before the court.

Conclusion

68. If Snowden J agrees with this judgment, the orders that I have indicated will be made and the indicative timetable, subject to the corrections that I have indicated for the prospective hearings, will be as set out in an amended schedule to this judgment.

SNOWDEN J:

69. I agree with the judgment the Chancellor has just given and have nothing to add.
________________________
Schedule of dates for hearings

Barclays CR-2017-003470

Before The Chancellor

Directions Hearing	1 day	13/11/17
Case Management Conference	1 day	01/02/18
Sanction Hearing	2 days	26 & 27/02/18

Lloyds CR-2017-003471

Before Mr Justice Hildyard

Directions Hearing	1 day	04/12/17
Case Management Conference	1 day	09/03/18
Sanction Hearing	2 days	27 & 28/03/18

HSBC CR-2017-003467

Before The Chancellor

Directions Hearing	1 day	22/01/18
Case Management Conference	1 day	04/05/18
Sanction hearing	2 days	21 & 22/05/18

Santander CR-2017-003469

Mr Justice Hildyard

Directions Hearing	1 day	05/12/18
Case Management Conference	1 day	25/05/18
Sanction Hearing	2 days	11 & 12/06/18