THE RING-FENCING TRANSFER SCHEME (RFTS) – THE PROCESS OF TRANSFERRING AGREEMENTS
The RFTS is effected through the High Court of England and Wales. The process is set out in the ring-fencing legislation (Part VII of the FSMA) and facilitates the transfer of large volumes of eligible agreements, between a ring-fenced entity and a non-ring-fenced entity, so banks can comply with ring-fencing requirements. For Lloyds Banking Group it is the most practical way of transferring large volumes of certain client agreements*.
Some agreements* are not suitable for transfer via the RFTS and will instead be transferred to Lloyds Bank Corporate Markets through a process known as novation.
If your account is going to be affected by these changes, we will contact you to let you know what this means for you.
The transfer of agreements to Lloyds Bank Corporate Markets plc via the RFTS requires UK High Court approval. The Court will only sanction the RFTS if it is satisfied that it is appropriate, fair to clients and other affected persons and meets the legal requirements. The Court will consider formal written objections to the RFTS raised by persons who feel they could be adversely affected.
The Court will consider objections
Anyone who feels they could be adversely affected by the RFTS can raise an objection to the Court. This is open to everyone, whether or not they are an existing customer of one of the banks within Lloyds Banking Group. We explain how you can do this below.
We suggest you do this before the 28 February 2018 as the Court may restrict the way it hears any objections made after this date.
There are two ways to raise your objection:
Option 1: As part of a summary report
If you have a concern or objection, you can submit it to us to be included in a summary report to the Court. This means your objection or concern will be summarised and brought to the attention of the Court at the Sanction hearing.
- If you are a Commercial Banking client, please contact your Relationship Team.
- If you are a Business Banking customer, please contact our Business Management team on 0345 072 5555. Lines are open 7am–8pm Monday to Friday (excluding UK Bank Holidays) and 9am–2pm Saturdays.
- Everyone else should call us 24 hours a day 7 days a week on 0800 072 3572 or visit your local branch.
Option 2: A formal written Statement of Representation
This option gives you the right to present your objection in Court and have your written statement considered by the judge at the Sanction hearing.
These Court approved guidelines explain how to do this:
The following guidance for the making of a written statement of representation which a person wishes the Court to consider in relation to the ring-fencing transfer scheme proposed by Lloyds Banking Group under s.110(3)-(5) of the Financial Services and Markets Act 2000 (a “Statement”) has been approved by Mr Justice Hildyard on 4 December 2017.
To help the Court to understand the point(s) you wish to make, we suggest that the Statement should be short and should at least contain the following:
- Your name and your relationship(s) with Lloyds Banking Group (including, if you are a customer, information on which products you have entered into with the bank). It is not necessary to disclose your account details or other balances.
- The nature of the adverse effect which you allege you will suffer as a result of the ring-fencing transfer scheme proposed by Lloyds Banking Group.
- The reason you say that you will suffer the adverse effect.
In addition, if you disagree with any aspect of the report on the terms of the ring-fencing transfer scheme that has been produced by the “Skilled Person” appointed to carry out this role, it would be very helpful if you identify those aspects and explain why you disagree.
The decision that the Court must make is whether it is appropriate in all the circumstances to allow the ring-fencing transfer scheme to be carried out.
The Financial Services and Markets Act 2000 requires that your Statement must be filed with the Court. This may be done in one of these three ways:
- In person by lodging at the Court Office over the counter at the Business and Property Courts of England and Wales, 7 Rolls Building, Fetter Lane, London EC4A 1NL. Please mark it “FAO Lloyds Banking Group Ring-Fencing Transfer Scheme”.
- By post by sending it to Business and Property Courts of England and Wales, 7 Rolls Building, Fetter Lane, London EC4A 1NL. Please mark it “FAO Lloyds Banking Group Ring-Fencing Transfer Scheme”.
- Electronically by using the Court CE Filing system. Guidance on the use of this facility is available here.
A copy of any Statement filed with the Court must be provided to the Prudential Regulation Authority. Guidance on how this can be done (e.g. in person, by post or electronically) is available here.
Lloyds Banking Group has agreed with the Court that a copy of any Statement filed with the Court does not need to be provided to it.
If you are using the CE filing system, these steps should help you file your objection.
Log in to the Court CE filing website or register if you’re using this site for the first time. Then select Create Filing, and input:
- Court = Business List (ChD)
- Filing Category = Existing Case
- Case Number = FS-2017-000004
- Filing Type = Filing
- Filing Subtype = Miscellaneous
Follow the instructions to upload your document and submit your filing. You’ll get a confirmation email once your filing is submitted.
Lloyds Bank plc and Bank of Scotland plc will see a copy of your Statement as filed with the Court.
The Skilled Person’s Report, together with other key documents in relation to the RFTS is available in printable form from our Key documents page, alternatively you can request these documents in any of our branches or by contacting your usual contact on the number you usually use for Lloyds Bank or Bank of Scotland.
You should have all you need
This page should give you the information you need, but if you would like further assistance with the objection process, you may wish to seek independent legal advice.
Before seeking advice, please read section 20 (Fees) of the Scheme Document, found here, which explains the fees Lloyds Bank plc or Bank of Scotland plc will pay on behalf of clients. Optional client legal costs are not covered, except for certain cases where Lloyds Bank plc or Bank of Scotland plc are already contractually obliged to cover relevant fees.
The Court dates are subject to change. If the dates of the Court hearings change, or there are any other relevant developments in the RFTS process, we will publish them on these pages.
The full objection process leaflet can be downloaded from our Key documents page.
Timetable for the Court process:
25 September 2017: Interim hearing, for preliminary directions on some of the communications we need to make for the RFTS.
4 December 2017: Directions hearing to seek the Court’s approval for our application for the Court process to begin, including our overall plan for the communications we need to make for the RFTS.
27 March 2018: Sanction hearing for the Court to consider whether to sanction the RFTS i.e. to allow the RFTS to become effective and transfer the relevant customer agreements and related business.
If the Court sanctions the RFTS on 27 March 2018, we will transfer the relevant customer agreements and related business to Lloyds Bank Corporate Markets plc. This transfer date – also known as the ‘Effective Date’, is currently expected to be 28 May 2018.
These dates are subject to change so please check this page regularly for updates.
The Judgement and Order of each Court hearing is made available, shortly after each hearing has taken place.
You can find these below.
For documents related to the Court process, please see our Key documents page.
*The RFTS Court process will be used wherever possible to transfer large volumes of agreements to Lloyds Bank Corporate Markets plc. However, some agreements are not appropriate for transfer through the RFTS and instead will be transferred to Lloyds Bank Corporate Markets plc individually, in a process known as contract-specific novation, which requires individual client consent to transfer. Contract-specific novation largely applies to contracts governed by the laws of jurisdictions outside the UK, but there could be other exceptions which your Relationship Manager will speak to you about if your business is affected.