Office of Public Sector Information

EXPLANATORY NOTE

(This note is not part of the Order)

This Order is made under the Banking (Special Provisions) Act 2008 (c. 2).

It provides a Scheme for determining the amount of compensation, if any, payable by the Treasury to those whose securities were transferred, or whose rights were extinguished, by the Northern Rock plc Transfer Order 2008 (S.I. 2008/432).

Article 2 of the Order provides that the Scheme, which is set out in the Schedule to the Order, shall have effect.

Paragraphs 3 to 6 of the Scheme provide for the manner in which any compensation is to be assessed, including provision as to the assumptions to be made and the matters to be taken into account when making that determination.

Paragraphs 7 to 9 provide for the appointment of an independent valuer to determine the amount of compensation, if any, and make provision as to the remuneration of the valuer and for the appointment of staff by him.

Paragraph 10 provides that the valuer shall make such rules as to the procedure in relation to the determination of compensation as he considers appropriate, including rules on the procedure for requesting a reconsideration of an assessment notice.

Paragraph 11 provides for the issue of an assessment notice by the valuer. Paragraph 12 provides that a person affected by the determination in an assessment notice or the Treasury may request a reconsideration of the determination and a revised assessment notice.

Paragraph 13 provides that if a person affected by the decision in the revised assessment notice or the Treasury are dissatisfied with the revised assessment notice they may make a reference to the Financial Services and Markets Tribunal (“the Tribunal”) for the notice to be reviewed.

Paragraph 14 makes provision about the payment of any compensation by the Treasury.

Paragraphs 15 to 28 provide that the provisions of Part 9 of, and Schedule 13 to, the Financial Services and Markets Act 2000 (c. 8) and of the Financial Services and Markets Tribunal Rules 2001 (S.I. 2001/2476) shall apply to a reference to the Tribunal under the Scheme, subject to the modifications set out in those paragraphs.

A Regulatory Impact Assessment of the effect of this instrument on the costs to business has been prepared. It may be obtained from the Northern Rock knowledge management team at HM Treasury, 1 Horse Guards Road, London SW1A 2HQ, or e-mail: compensation.order@hm-treasury.gsi.gov.uk. It is also available on HM Treasury’s website (www.hm-treasury.gov.uk). Copies of the document have been placed in the libraries of both Houses of Parliament.

A copy of article 149.1 of the articles of association of Northern Rock plc, as in effect immediately prior to the making of this Order, referred to in paragraph 14(3) of the Schedule, may be obtained from the Northern Rock knowledge management team at the above address.