BoE publishes policy statement on wholesale cash distribution supervision

BoE has published a statement of policy and the responses to a consultation on its supervisory approach to market oversight for wholesale cash distribution (WCD) under its new powers under Part 5A FSMA 2023. BoE’s powers can be divided broadly into four categories:

(1) Codes of practice

Under the new rules, BoE may publish codes of practice about recognised firms’ performance of relevant functions in relation to WCD activities. The codes are binding on firms.

BoE expects to publish three initial codes, on information gathering, third-party arrangements, and cash centre closure and market exit. BoE aims to consult on its plans for codes of practice in autumn 2023.

(2) Information

BoE has power to require information that it needs for the purpose of advising Treasury about recognition, and in connection with the exercise of its powers in pursuance of ensuring the effectiveness, resilience or sustainability of the WCD network, or in pursuance of BoE’s financial stability objective.

(3) Powers of direction

The power of direction enables BoE to address emerging issues that might not be covered in the codes of practice. BoE may direct firms to take actions that bring it back into compliance where it is not having due regard to BoE’s principles or codes of practice.

(4) Enforcement powers

Should a recognised firm fail to comply with a Code of Practice, act in accordance with a direction, or ensure compliance with a requirement, sanctions may be applied. BoE may choose to impose one or more of the sanctions set out in Part 5A:

• requiring a recognised person to pay a financial penalty;
• prohibiting a specified person from holding an office or position involving responsibility for taking decisions about the management of a recognised person; and
• publishing details of that failure or the sanction imposed where it has issued the above management disqualification.

BoE has also published details of responses on the following topics:

• Cash centre closures
• Cash in transit
• Coin
• Powers
• Codes of Practice
• Principles
• Fees
• Directions
• Information gathering and sharing
• Penalties
• Proportionality
• Wider industry participants
• Scotland and Northern Ireland
• Consolidation and market exit
• Prudential supervision