Sainsbury's Bank Plc, Re

The court may sanction a banking business transfer scheme where the statutory conditions and regulatory requirements are met and the scheme, considered as a whole, will not materially adversely affect customers or other stakeholders.

The court must scrutinise the scheme fully even where the rate of objection is low. It must consider both the direct effects of the transfer and reasonably foreseeable consequences, including contractual changes required for later migration. Ancillary orders may be made where necessary to secure that the scheme is fully and effectively carried out.

Sainsbury’s Bank and NatWest applied under the Financial Services and Markets Act 2000 for sanction of a banking business transfer scheme. Substantially all of Sainsbury’s Bank’s credit card, personal loan and savings business was to transfer to NatWest.

The application raised issues concerning statutory jurisdiction, regulatory certificates and authorisations, customer notification, objections, continuity of contractual relationships, protection against enlarged rights and preservation of Financial Services Compensation Scheme protection. The court also considered ancillary orders and the consequences of subsequent migration to NatWest’s systems.

1. Jurisdiction and statutory conditions. The court was satisfied that the scheme fell within sections 106 and 107 of the Financial Services and Markets Act 2000, that the required notices and documents had been provided, that NatWest was authorised to carry on the transferred business and that the necessary certificate of adequate financial resources had been obtained.
2. Regulatory timing requirement. Regulation 6(1)(b) of the Transfer Regulations did not require the application supplied to the PRA and FCA to be stamped. An authentic application issued through the court and served in time was sufficient. In any event, the court’s determination occurred more than 21 clear days after the stamped application was provided.
3. Approach to sanction. The principal concern was whether the scheme would materially adversely affect customers or other stakeholders. The court considered the scheme and its ramifications as a whole, including the foreseeable effects of the proposed contractual notices of variation and later migration. The transitional arrangements, regulatory oversight, mitigation measures, customer communications and exit rights adequately addressed the identified risks.
4. Objections. A low objection rate did not remove the need for full scrutiny. The court was satisfied that concerns about service standards, Financial Services Compensation Scheme protection, personal data, interest rates and product functionality had been properly considered and sufficiently mitigated.
5. Ancillary orders and outcome. The court applied the conventional approach to neutralising enlarged rights and made the requested orders under section 112(1)(d), including orders concerning continuity of references, mandates and related matters. The scheme was sanctioned and the draft order was to be sealed.

First-instance decision. No appellate history is stated in the judgment.