Barclays Bank Plc And Woolwich Plan Managers Ltd, Re

The court’s discretion to sanction a ring-fencing transfer scheme under the Financial Services and Markets Act 2000 is genuine and unfettered. It must assess likely material adverse effects through the statutory question: whether the effect is a real possibility that cannot sensibly be ignored, is a consequence of the scheme, and is materially adverse. A negative answer to the second limb does not automatically require refusal. The court must consider all the circumstances, including the scheme’s statutory purpose, its benefits, the adverse effects identified, and the views of the skilled person and regulators. The design of a compliant scheme remains primarily a matter for the bank’s directors, provided they act properly under section 172(1) of the Companies Act 2006.

Barclays Bank plc and Woolwich Plan Managers Limited sought sanction under Part VII of the Financial Services and Markets Act 2000 for a ring-fencing transfer scheme. The scheme would transfer UK retail and business banking activities to Barclays Bank UK plc and wealth-management activities to Barclays Investment Services Limited.

Representations concerned pensions, customers in the Crown Dependencies, client-money and compensation protection, and the preservation of legal claims. The skilled person identified only the loss of certain branch counter services for transferring customers in Jersey, Guernsey and the Isle of Man, and concluded that this effect was no greater than reasonably necessary. The central issue was whether the statutory preconditions were satisfied and whether sanction was appropriate in all the circumstances.

1. Sanction. The court sanctioned the scheme under section 111(3) of the Financial Services and Markets Act 2000. The statutory preconditions had been or would be satisfied, including the required certificates and authorisations.
2. Applicable approach. The discretion is genuine and unfettered, and is not a rubber stamp. The court must assess adverse effects through the statutory question in section 109A(4). Relevant effects are those which are realistic possibilities that cannot sensibly be ignored having regard to the nature and gravity of the feared harm, are consequences of the scheme, and present a real or significant rather than fanciful or insignificant risk.
3. The scheme’s design is for the bank’s board, which may choose between different statutorily compliant designs affecting stakeholders differently, subject to the directors’ duties under section 172(1) of the Companies Act 2006. The court is not required to select the best possible scheme.
4. Even if an adverse effect is greater than reasonably necessary to achieve the statutory purposes, refusal does not automatically follow. The court must weigh the chosen design, the benefits of ring-fencing, and the nature of the adverse effects, while giving appropriate weight to the skilled person’s and regulators’ views.
5. The skilled person’s conclusion that the loss of certain Crown Dependency counter services was unavoidable under the ring-fencing legislation and adequately mitigated by communications was endorsed. The pension objections were rejected because the mitigation package reasonably protected the pension scheme, and the remaining representations identified no material adverse effect.
6. The ancillary orders, including the transfer of shares and residual assets and liabilities, were incidental, consequential and supplementary matters necessary to secure that the scheme was fully and effectively carried out under section 112 of the Financial Services and Markets Act 2000.