References in other enactments

– in the House of Lords am 11:45 pm ar 9 Mai 2000.

Danfonwch hysbysiad imi am ddadleuon fel hyn

. References in any provision of, or made under, any enactment to subsidiaries of, or bodies jointly controlled by, an incorporated friendly society are to be read as including references to bodies which are such subsidiaries or bodies as a result of any provision of this Part of this Schedule.").

On Question, amendment agreed to.

Clause 342 [The record of authorised persons etc.]:

Photo of Lord Bach Lord Bach Government Whip

moved Amendment No. 177A:

Page 181, line 37, after ("relates;") insert--

("( ) approved person;").

Photo of Lord Bach Lord Bach Government Whip

My Lords, on the fifth day in Committee the noble Lord, Lord Saatchi--I am sorry not to see him in his place; I believe that he will also be sorry not to be in his place--moved an amendment that required the authority to maintain a public record of certain details about approved persons under Part V. That amendment was defeated.

At the time I spoke against the amendment. Our main concern was that from the outset the authority might have difficulty in establishing the relevant part of the public record. The particular difficulty arises because of the grandfathering arrangements that are proposed for employees of authorised firms. Our intention is that, for the purposes of Part V of the Bill, people should automatically be treated as having been approved for any controlled functions that they were performing when that part of the Bill is brought into force. The process will be automatic and we cannot be sure that the authority will have all the information in time for the public record to go live on day one.

However, we agree that it would be desirable to remove uncertainty on the question of the coverage of the register, and we have now brought forward amendments which require certain information to be included. That is the minimum that must be included. The authority may add to that such other information as it sees fit. The authority proposes also to include information about the controlled functions for which the person has approval. We have not made that a requirement as we do not yet know how approvals will be classified by the authority. Therefore, we cannot express what they would insert in the register.

By bringing forward the amendments in this group and by paying the necessary compliment to the noble Lord, Lord Saatchi, I hope that it will be clear that the Government have taken careful note of the points made by the noble Lord in Committee. We shall endeavour, working with the authority, to bring the arrangements into force at the earliest moment. It shows that the Government listen. I beg to move.

Photo of Lord Kingsland Lord Kingsland Ceidwadwyr

My Lords, this is indeed a rare moment to savour. The Government have thought again in the most constructive way. I should like to draw to the attention of the noble Lord, Lord Bach, that, if my memory serves me correctly, the noble Earl, Lord Home, also spoke most eloquently to that amendment and, indeed, I see that he is in his place. I believe that the House owes a great deal to his persuasive argument which led to the Government's change of mind.

Photo of Lord Bach Lord Bach Government Whip 12:15, 9 Mai 2000

My Lords, I am grateful to the noble Lord for reminding me of the noble Earl's contribution. I should pay him the same tribute as I paid to the noble Lord, Lord Saatchi.

On Question, amendment agreed to.

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

moved Amendments Nos. 177B and 177C:

Page 182, line 23, at end insert--

("(g) in the case of a person who is an approved person--

(i) his name;

(ii) the name of the relevant authorised person;

(iii) if the approved person is performing a controlled function under an arrangement with a contractor of the relevant authorised person, the name of the contractor.").

Page 183, line 3, at end insert--

("(8) "Approved person" means a person in relation to whom the Authority has given its approval under section 58 and "controlled function" and "arrangement" have the same meaning as in that section.

(9) "Relevant authorised person" has the meaning given in section 65.").

On Question, amendments agreed to.

Clause 343 [Restrictions on disclosure of confidential information by Authority etc]:

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, in moving this amendment I should like to speak also to Amendments Nos. 179 to 183. These amendments are intended to address concerns about the width of the power in Clause 344 which the Delegated Powers and Deregulation Committee raised in its report on the Bill. The committee recommended that the Bill be amended to restrict that power in a way which clearly limits it to information needed for regulatory and other public functions. These amendments achieve that.

Amendments Nos. 178, 182 and 183 make technical drafting amendments to Clauses 343 and 344. I beg to move.

On Question, amendment agreed to.

Clause 344 [Exceptions from section 343]:

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

moved Amendments Nos. 179 to 183:

Page 184, line 6, after ("is") insert ("--

(a) made for the purpose of facilitating the carrying out of a public function; and

(b)")

Page 184, line 13, after ("prescribed") insert ("public").

Page 184, line 17, after ("prescribed") insert ("public").

Page 184, line 23, leave out sub-paragraphs (ii) and (iii).

Page 184, line 35, at end insert--

("(5) "Public functions" includes--

(a) functions conferred by or in accordance with any provision contained in any enactment or subordinate legislation;

(b) functions conferred by or in accordance with any provision contained in the Community Treaties or any Community instrument;

(c) similar functions conferred on persons by or under provisions having effect as part of the law of a country or territory outside the United Kingdom;

(d) functions exercisable in relation to prescribed disciplinary proceedings.

(6) "Enactment" includes--

(a) an Act of the Scottish Parliament;

(b) Northern Ireland legislation.

(7) "Subordinate legislation" has the meaning given in the Interpretation Act 1978 and also includes an instrument made under an Act of the Scottish Parliament or under Northern Ireland legislation.").

On Question, amendments agreed to.

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

moved Amendment No. 183VA:

After Clause 345, insert the following new clause--

:TITLE3:COMPETITION INFORMATION

(".--(1) A person is guilty of an offence if he has competition information (whether or not it was obtained by him) and improperly discloses it--

(a) if it relates to the affairs of an individual, during that individual's lifetime;

(b) if it relates to any particular business of a body, while that business continues to be carried on.

(2) For the purposes of subsection (1) a disclosure is improper unless it is made--

(a) with the consent of the person from whom it was obtained and, if different--

(i) the individual to whose affairs the information relates, or

(ii) the person for the time being carrying on the business to which the information relates;

(b) to facilitate the performance by a person mentioned in the first column of the table set out in Part I of Schedule (Competition Information) of a function mentioned in the second column of that table;

(c) in pursuance of a Community obligation;

(d) for the purpose of criminal proceedings in any part of the United Kingdom;

(e) in connection with the investigation of any criminal offence triable in the United Kingdom or any part of the United Kingdom;

(f) with a view to the institution of, or otherwise for the purposes of, civil proceedings brought under or in connection with--

(i) a competition provision; or

(ii) a specified enactment.

(3) A person guilty of an offence under this section is liable--

(a) on summary conviction, to a fine not exceeding the statutory maximum;

(b) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or to both.

(4) Section 343 does not apply to competition information.

(5) "Competition information" means information which--

(a) relates to the affairs of a particular individual or body;

(b) is not otherwise in the public domain; and

(c) was obtained under or by virtue of a competition provision.

(6) "Competition provision" means any provision of--

(a) an order made under section (Competition scrutiny);

(b) Chapter III of Part X; or

(c) Chapter II of Part XVIII.

(7) "Specified enactment" means an enactment specified in Part II of Schedule (Competition Information).").

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, in moving this amendment, I shall speak also to Amendment No. 226YA. These amendments are concerned with competition gateways. They form a new clause and a new schedule and they are the final chapter in the improvements we have made to the competition scrutiny regimes in the Bill. They address a concern raised in Committee in another place. They provide protection for confidential information obtained by the Director General of Fair Trading and the Competition Commission in carrying out their competition scrutiny responsibilities under the Bill.

They make it clear that such information must be kept confidential unless the persons concerned are content that it should be revealed or because it is necessary for the performance of one of a number of specific public purposes. Those purposes are set out in subsection (2) of the new clause and the new schedule. They are in line with the Competition Act 1998. I beg to move.

On Question, amendment agreed to.

Clause 377 [Restitution orders in cases of market abuse]:

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

moved Amendment No. 183WA:

Page 200, line 39, leave out from ("person") to end of line 40 and insert ("("the person concerned")--

(a) has engaged in market abuse, or

(b) by taking or refraining from taking any action has required or encouraged another person or persons to engage in behaviour which, if engaged in by the person concerned, would amount to market abuse, and the condition mentioned in subsection (1A) is fulfilled,

(1A) The condition is--").

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, in moving this amendment, I shall speak also to Amendments Nos. 183XA, 183YA, 183ZA, 183A, 183AA, 183AB, 183AC, 183AD, 183AE, 183AF, 183AG, 183AH, 183AJ, 183C and 183D. I shall respond to Opposition Amendments Nos. 183WAA and 183ADA when they have been spoken to by them.

When we come to our amendments, the substantive change made by this group is to allow the FSA and the courts to order a person who requires or encourages another person to engage in market abuse to pay restitution. Clause 119(1)(b) already allows the FSA to impose a penalty or make a statement when someone does that. Of course, the FSA can impose a penalty only where it would have been market abuse if the person concerned had engaged in the behaviour themselves, rather than requiring or encouraging another to do so.

Amendments Nos. 183WA and 183AD ensure that restitution can be made in that situation. I do not believe that anyone can dispute the need for that.

The protections for reasonable belief and due diligence will also apply in that circumstance. The FSA and the courts will not be able to order restitution where the persons who required or encouraged behaviour had reasonable grounds for believing that their behaviour was not of that type, or exercised all due diligence and took all reasonable precautions to avoid behaving in that way.

Noble Lords opposite have tabled Amendments Nos. 183WAA and 18ADA which amend our amendments. We had sight of those only this morning. I would prefer that they speak to those amendments before I respond to them. I beg to move.

Photo of Lord Boston of Faversham Lord Boston of Faversham Crossbench

My Lords, Amendment No. 183WAA is on the supplementary sheet and it is an amendment to Amendment No. 183WA.

Photo of Lord Kingsland Lord Kingsland Ceidwadwyr

moved, as an amendment to Amendment No. 183WA, Amendment No. 183WAA:

Line 4, in paragraph (b), after ("has") insert ("knowingly").

Photo of Lord Kingsland Lord Kingsland Ceidwadwyr

My Lords, Amendments Nos. 183WA to 183ZA give the court power, on an application by the authority, to award compensation--restitution--against someone who instigates market abuse: he "requires or encourages" the abuser.

The danger is that the court may treat the authorised person as encouraging the abuse because, without knowing about the abuse, it agrees to "approve" a client's communication for the purposes of Clause 19 without being able to discover whether it contains untrue or misleading statements.

The government amendment on restitution does not change the scope of the offence, but regrettably makes it more likely that the authority will want to hit the investment bank or stockbroker that unwittingly takes part in the market abuse. Typically, that will be where it approves, for the purposes of Section 57 of the Financial Services Act, a press release or takeover document at the request of the client. The firm is already required by FSA rules to ensure that the document is not misleading. That will be continued by the authority under the new regime. Neither the FSA nor the authority would bring an action against a firm if it had tried to find out the true position.

However, if the authority can now get restitution in those circumstances, so that innocent investors receive some compensation, I believe that the authority would try to do so. That is the background to our amendments. The authorised person has to know what he is doing in encouraging the commission of market abuse.

Your Lordships are well aware that the Financial Services and Markets Bill already empowers the authority to impose unlimited fines on innocent third parties who require or encourage another person to engage in market abuse. Typically, where a corporate finance firm approves for issue a takeover circular containing statements that it did not know were misleading, that phraseology is less draconian than the Government wanted initially and is a concession that the Government made at the urging of our shadow Treasury team. The authority is unlikely to impose a large fine on an innocent third party, but is much more likely to seek restitution in the circumstances of actual loss.

It is fair to say that the Opposition have so far failed to bring an intent element into the liability to require restitution. None the less, the Government have provided that the innocent third party should not have to pay compensation if he exercised all due diligence to avoid encouraging the abuse. However, he may not do enough for the defence to apply. Nevertheless, it would be unfair to require him to pay compensation if he did not know that what he had agreed to did in fact constitute market abuse.

The problem would disappear if, as we have urged, some element of intent was required before the market abuse of misleading the market was committed. Currently, the market abuser is guilty even if he did not know that he could be misinterpreted. The amendment proposes therefore that the accused should be guilty of committing or encouraging market abuse if intent can be presumed from the facts, which are then proved.

I believe that I am right in saying that Amendment No. 183 is--I hesitate to use the word "otiose" and will therefore use the expression "no longer necessary". Government Amendment No. 183YA brings in safe harbours for reasonable belief and due diligence. That is an initiative that we had requested. I can now withdraw the amendment and I thank the Government for their conduct. I beg to move.

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, I am grateful to the noble Lord for introducing these two pairs of amendments. It may be better to consider them in that way. The first pair comprises Amendments Nos. 183A and 183B and the second pair is the two amendments to our amendments, Amendments Nos. 183WAA and 183ADA.

The noble Lord, Lord Kingsland, was quite right to observe that we have gone further than his Amendments Nos. 183A and 183B. His amendments would require the FSA and the courts, when deciding how much restitution a person who had engaged in market abuse should pay, to have regard to whether he had reasonable grounds for believing that his behaviour was not market abuse or whether he had taken all reasonable precautions and exercised due diligence. Having considered the issue carefully, we feel that the better approach is to provide that restitution cannot be ordered against a person in this position rather than just that "regard" should be had to these factors. Our amendments not only cover the points raised in Amendment No. 183A, but indeed go further than that. I am grateful for the noble Lord's recognition of that fact.

I cannot be so friendly about Amendments Nos. 183WAA or 183ADA which would only allow the FSA or the courts to order restitution where someone had "knowingly" required or encouraged another to engage in behaviour which would be construed as market abuse if he had done it himself. I do not know whether these amendments, which were tabled very late, were put down in response to the wholly inaccurate press comments on these matters over the weekend. I regret that the amendments raise the familiar issue of intent. If the noble Lord thinks that I shall accept them because the Opposition Treasury Front Bench in another place is moving backwards, I am afraid that I shall have to disabuse him.

"Knowingly" clearly adds little to "required" since the circumstances in which one person requires another to do something without being aware of what he is doing are likely to be rare. Nevertheless, it is conceivable that a person may negligently require another to engage in abusive behaviour in the same way as a person may negligently engage in abusive behaviour himself. The simple answer is to take care. That is why we have introduced protections for those who do so.

Knowledge is also, to a certain extent, often implicit in "encouraging". However, again in this case we do not want it to be a requirement of the regime for the FSA to have to prove someone's mental state. We have debated this matter again and again. I can do no better than to recall the example of my noble friend Lord Grabiner's much slandered six year-old son and the possibility of his arguing that he did not know that he was going to break the window at which he aimed a stone, or, in the case of "encouraging", that his giving the stone to another boy and pointing at the window did not amount to "knowingly encouraging".

"Encouraging" is not a new concept. What constitutes encouragement in a specific situation will ultimately be a matter for the courts. But it is something which those who advise the industry, when change was made to the regime in another place, signalled that they were content with. It was a change welcomed by the Opposition in another place, and indeed a change that went further than that suggested by the Opposition. Noble Lords also did not comment on this point when analogous provisions in Part VIII were debated.

Of course, the FSA will be able to provide guidance on the market abuse regime in the code. Indeed, it is obliged to do so. And it is obliged to consult the public. If any further clarity is needed as to the situations in which someone may have action taken against them for encouraging market abuse, then this is the place for it.

We seem again to have "over-lawyering" creeping in, I am sorry to say. It is worth my reiterating that this regime is not designed to catch people out. We made that clear on many occasions. It is designed to protect markets and market users from abuse. What constitutes abuse depends on the expected standards of the market and in certain circumstances may include negligent behaviour; for example, not putting out information to the market which should be put out. That will depend on the market in question. We put in safeguards to protect those who have a reasonable belief or who take due diligence. The regime now strikes the right balance. It is effective and fair. I commend the changes to the House and urge the noble Lord, Lord Kingsland, not to press his amendment to my amendment.

Photo of Lord Kingsland Lord Kingsland Ceidwadwyr

My Lords, I shall read carefully in Hansard what the Minister said and will let him know now that I shall return to this matter at Third Reading. Meanwhile, I beg leave to withdraw the amendment.

Amendment No. 183WAA, as an amendment to Amendment No. 183WA, by leave, withdrawn.

On Question, Amendment No. 183WA agreed to.

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords) 12:30, 9 Mai 2000

moved Amendments Nos. 183XA to 183ZA:

Page 200, line 41, leave out ("him") and insert ("the person concerned").

Page 200, line 43, at end insert--

("( ) But the court may not make an order under subsection (2) if it is satisfied that--

(a) the person concerned believed, on reasonable grounds, that his behaviour did not fall within paragraph (a) or (b) of subsection (1); or

(b) he took all reasonable precautions and exercised all due diligence to avoid behaving in a way which fell within paragraph (a) or (b) of subsection (1).").

Page 200, line 46, leave out ("(1)") and insert ("(1A)").

On Question, amendments agreed to.

[Amendment No. 183A not moved.]

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

moved Amendments Nos. 183AA to 183AC:

Page 201, line 13, leave out ("paragraph (a) of that subsection") and insert ("subsection (1A)(a)").

Page 201, line 15, leave out ("paragraph (b) of that subsection") and insert ("subsection (1A)(b)").

Page 201, line 28, leave out ("(1)") and insert ("(1A)").

On Question, amendments agreed to.

Clause 378 [Power of Authority to require restitution]:

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

moved Amendment No. 183AD:

Page 201, line 41, leave out ("and") and insert (", or

(b) by taking or refraining from taking any action has required or encouraged another person or persons to engage in behaviour which, if engaged in by the person concerned, would amount to market abuse, and the condition mentioned in subsection (2A) is fulfilled,

(2A) The condition is--").

[Amendment No. 183ADA, as an amendment to Amendment No. 183AD, not moved.]

On Question, Amendment No. 183AD agreed to.

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

moved Amendments Nos. 183AE to 183AJ:

Page 201, line 42, leave out ("him") and insert ("the person concerned").

Page 201, line 44, at end insert--

("( ) But the Authority may not exercise that power as a result of subsection (2) if, having considered any representations made to it in response to a warning notice, there are reasonable grounds for it to be satisfied that--

(a) the person concerned believed, on reasonable grounds, that his behaviour did not fall within paragraph (a) or (b) of that subsection; or

(b) he took all reasonable precautions and exercised all due diligence to avoid behaving in a way which fell within paragraph (a) or (b) of that subsection.").

Page 202, line 6, leave out ("(2)") and insert ("(2A)").

Page 202, line 8, leave out ("(2)") and insert ("(2A)").

Page 202, line 10, leave out ("(2)") and insert ("(2A)").

On Question, amendments agreed to.

[Amendment No. 183B not moved.]

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

moved Amendments Nos. 183C and 183D:

Page 202, line 16, leave out ("(2)") and insert ("(2A)").

Page 202, line 18, leave out ("(2)") and insert ("(2A)").

On Question, amendments agreed to.

Clause 381 [Notice for payment]:

Photo of Lord Bach Lord Bach Government Whip

moved Amendment No. 185:

Page 203, line 35, leave out paragraph (b).

Photo of Lord Bach Lord Bach Government Whip

My Lords, these amendments represent 12 government amendments; namely, Amendments Nos. 185, 186, 187, 188, 195, 196, 197, 198, 199, 200, 201, and 212A. There are four opposition amendments; namely, Amendments Nos. 188A, 199A, 199B and 199C. I am happy to say that as regards the last amendment the Government accept it and they are grateful to the Opposition for having spotted the point.

Perhaps I may move the government amendments briefly and then invite the Opposition to speak to theirs. The Government's amendments in this group complete the rationalisation of the authority's decision-making procedures under the Bill. They are not very substantial, making a number of necessary further adjustments to Part XXVI mainly to reflect the other amendments we have considered at Report stage.

Clause 383 deals with decision notices. Amendment No. 185 deletes subsection 1(b) which is the requirement for a decision notice to specify the date on which the decision takes effect following the rationalisation. That is otiose because only supervisory notices will be capable of specifying a date on which the decision takes effect. Amendment No. 186 deletes subsection (3) for the same reason.

Clause 384 requires a notice of discontinuance to be issued when the FSA decides not to proceed with action proposed in a warning notice or for which a decision notice has been issued. Amendments Nos. 187 and 188 make minor drafting improvements to Clause 384 to make clear that that also applies where the refusal of an application which has been dropped was not a complete refusal of the original application. The previous text appeared only to apply to a complete refusal.

Clause 387 determines which decisions attract the third party's rights under Clause 388 to receive copies of warning and decision notices, to make representations, refer matters to the tribunal and the rights of access to material under Clause 389. These are the kinds of decisions which we have loosely described as disciplinary-type decisions. As we made clear in Committee, we propose to apply these provisions to certain types of supervisory-type decisions; namely, those which involve the final cancellation of authorisation, approval or recognition.

Amendments Nos. 195 and 197, therefore, add to references to warning and decision notices issued under the second new clause after Clause 51, which deal with the cancellation of a Part 1V permission. Similarly, Amendments Nos. 196 and 198 add references to warning and decision notices issued under Clause 66, which concern the exercise of the FSA's disciplinary powers under Part V of the Bill or the power of the competent authority for listing under Clause 87 to cancel a person's approval to act as sponsor for listing. Again, the Government consider it appropriate to apply Clauses 388 and 389 to these decisions.

Amendment No. 199 is a minor drafting change correcting a punctuation omission. Amendment No. 200 adds various references to clauses which involve supervisory notices to Clause 390. Amendment No. 201 alters some of the existing paragraph references in order to refer quickly to those places where the term "supervisory notice" applies. Amendment No. 212A is a consequential amendment. Clause 400 deals with the consequences of a Treasury direction made under Clause 398 in order to implement a third country decision. That is a decision taken by the European Council or the European Commission to restrict market access to persons from certain non-EEA countries on the grounds that reciprocal market access to persons from the EEA is not available in those countries.

Subsection (1) of Clause 400 disapplies the normal warning and decision notice procedure where refusal of an application for permission is given in accordance with such direction. The amendment simply updates the references to the procedural provision in line with Amendments Nos. 107 to 112.

If it is convenient to the House I invite the Opposition to speak to their amendments.

Photo of Lord Kingsland Lord Kingsland Ceidwadwyr

My Lords, the Opposition has four amendments in this group but, as the Minister has kindly said, our Amendment No. 199C has been accepted by the Government for which we are duly grateful.

I shall deal with Amendments Nos. 199A and 199B and then go on to deal with Amendment No. 188A. That may seem numerically illogical but politically my contribution will accordingly rise to a crescendo.

As far as concerns Amendments Nos. 199A and 199B, a major preoccupation for firms that are at present subject to disciplinary proceedings is that the regulator is at a considerable advantage, first, because it possesses a full file of evidence relating to the firm's alleged offence which the firm may not have; and, secondly, because the regulator also possesses full information about its other disciplinary cases which enables it to make a comparison between the seriousness of the offence of the firm in question and other firms' offences. As disciplinary cases are nearly always held in private, this information is never made generally available.

Those two disadvantages are magnified in the case of disciplinary action being taken against an individual, who will not necessarily have access to his own firm's information relating to the circumstances of the alleged offence. Clause 389 gives a statutory right of access to material upon which the authority has relied; and what is now defined as "secondary material", which is other material that the authority has considered and which might undermine that decision.

However, there are significant carve-outs in subsections (2) to (7). One of those exclusions is of particular concern; namely, where the material was taken into account by the authority for the purpose of comparison with other cases. The present regulators are under a duty to exercise their disciplinary powers in a consistent fashion. It is virtually impossible for a firm to prove whether or not it is observing this requirement if it does not have access to other comparable material. Therefore, it is essential that this kind of information is revealed. There is no requirement for full case papers or the names of other firms to be revealed. All that is necessary is for the authority to produce a schedule of the other cases and their key characteristics.

Before I turn to Amendment No. 188A, I should like to make two short observations on Clause 390. I hesitate to continue because I am not certain whether these have been covered completely by Amendment No. 199C. Perhaps the Minister could assist me in this respect.

Photo of Lord Bach Lord Bach Government Whip

My Lords, as I understand it, the amendments that touch on Clause 390 are one Opposition amendment, Amendment No. 199C, which we have accepted, and two government amendments, namely Amendments Nos. 200 and 201. I dealt with the latter shortly, but I did deal with them. Amendment No. 200 adds various references to clauses which involve supervisory notices under Clause 390. It is a consequential amendment on the addition of the new clause after Clauses 51 and 77. Amendment No. 201 alters some of the existing paragraph references in order to refer correctly to those places where the term "supervisory notice" applies. Those are the only amendments which relate to Clause 390.

Photo of Lord Kingsland Lord Kingsland Ceidwadwyr

My Lords, I am much obliged to the Minister. I think this follows logically from what he said, but perhaps the noble Lord could just confirm that the tribunal's ability to take into account a failure by the authority to follow its procedure under Clause 390(12) applies when a supervisory notice is given, as well as when a warning or decision notice is issued. I think it follows, from what the Minister said, that he agrees with that approach. If he confirms that, I need not say anything more about Amendment No. 199C. I see that he confirms that. I am much obliged.

I turn to Amendment No. 188A. The Minister will be well aware of what lies behind Amendment No. 188A. It is the firm belief of the Opposition that the procedure followed in the underlying clause breaches the European Convention on Human Rights. I expect that the Minister is, at least in part, familiar with the argument that I am about to deploy. However, just in case he is not, I draw his attention again to the case of Fayed v. the United Kingdom. The Minister will recall that one of the issues in this case was whether the DTI inspectors, who were looking into the takeover of Harrods, had to comply with the ECHR.

The Fayeds argued that the making, and subsequent publication of, the inspectors' report damaged their reputation and, thereby, their civil rights to honour and reputation. The European Commission of Human Rights was, however, of the opinion that Article 6(1) of the convention was not applicable to the proceedings conducted by the inspectors because those proceedings did not determine any civil right or obligation. The same view was subsequently adopted by the court, which stated that it was,

"satisfied that the functions performed by the Inspectors were in practice as well as in theory essentially investigative ... The Inspectors did not adjudicate, either in form or in substance [and] did not make a legal determination as to criminal or civil liability ... The purpose of their enquiry was to ascertain and record facts which might subsequently be used as a basis for action by other competent authorities.

In Fayed v. the United Kingdom, the role of the inspectors was indeed limited to investigating the facts. But the role of the authority under the Bill in relation to this clause is completely different. The authority does not only investigate the facts, but also imposes a fine--albeit subject to a later independent tribunal hearing. It is quite clear that the authority reaches a view as to whether the accused is or is not guilty; and the accused obviously would argue that he is not. If the accused does not make the effort to appeal to the tribunal and incur the costs of an appeal, there will be an adjudication on a dispute by the prosecutor rather than by an "independent and impartial tribunal". This is, in our view, impermissible under the convention. A prosecuting authority can prosecute but cannot impose a penalty.

I make it clear, of course, that we are not suggesting that the authority cannot reach a settlement with an accused. If the accused is willing to settle, there is no need for a determination of his civil rights and obligations. The informal procedure which the authority wants to bring in, that already exists in the SROs, can therefore continue, but not the other set of circumstances which we believe is incompatible with the convention. I hope that the Minister, on due and mature reflection, will come to the same conclusion.

Photo of Lord Bach Lord Bach Government Whip 12:45, 9 Mai 2000

My Lords, I shall speak to the Opposition amendments in the order in which the noble Lord, Lord Kingsland, spoke to them. Amendments Nos. 199A and 199B concern access to authority material. They both concern material to which the authority is not required to give access. Subsections (2) and (3) of Clause 389 enable the authority to withhold material in a number of circumstances, including where the material is subject to legal privilege; where it is only being considered by the authority with a view to maintaining consistency of approach between different cases; where providing access would not be in the public interest; and, lastly, where access would be unfair given the likely significance of the materials of the current case weighed against the potential prejudice to the commercial interest of another person.

Amendment No. 199B would require the authority to provide a written summary of any such evidence and to allow access to the material for the tribunal. We believe that this goes too far.

Subsections (4) and (5) require notice to be given of the fact that material is being withheld on grounds that it is subject to privilege, or because the authority has taken the view that access would be unfair or against the public interest. Where such a view has been reached, subsection (5) also requires these reasons to be included in the notice. This will enable the person who is subject to the notice to consider whether he should refer the matter to the tribunal.

In this respect, may I make it clear to the noble Lord that Clause 389 deals only with the material to which the authority is or is not required to provide access at the warning notice/decision notice stages. Nothing in Clause 389 constrains the rights of the tribunal to consider relevant evidence. Our amendments to Part IX of the Bill have been drafted to put this beyond all doubt. If the matter is referred, it will be for the independent tribunal to consider whether the material should be disclosed. That will be covered by the tribunal's procedural rules.

Turning to Amendment No. 199A, subsection (2) of Clause 389 ensures that the authority is able to consider how similar or comparable cases have been dealt with in order to ensure proper consistency in its proposed actions and penalties, without thus opening up sensitive commercial details about other businesses to scrutiny by the subject of the action currently proposed. As my noble friend Lord McIntosh said in Committee:

"If action is being taken against a person X, it is no business of X's whether or not similar action was previously taken against another person, Y".--[Official Report, 30/3/00; col. 1032.]

Indeed, disclosure might well be unfair, particularly if the action in the earlier case had not been pursued.

Nor were we attracted to the idea of requiring the authority to provide summaries with the identities of the persons in the comparative cases removed. This is administratively burdensome and might not always be effective in protecting the legitimate commercial interests of the persons involved in those cases.

I appreciate that Amendment No. 199A does not seek to impose a requirement on the FSA but simply says that subsection (2) of Clause 389 does not prevent the FSA from providing a summary of the principal characteristics of those cases. Let me assure the noble Lord, if I can--as my noble friend attempted to do in Committee--that, as currently drafted, subsection (2) does not prevent this.

Let me repeat another assurance given in Committee: there will be considerable material in the public domain to assist our character X, the subject of a notice, in assessing whether the action proposed is in line with general authority policy and practice. Apart from the statement of the policy on financial penalties, which we have discussed already, there will be considerable detail on already determined cases.

I have already said how grateful we are to the noble Lord for tabling Amendment No. 199C. When it comes to the vote on that amendment, we shall vote with him to accept it.

I turn now to Amendment No. 188A, which the noble Lord considered to be the high point of his speech. The amendment requires that if the person concerned does not opt to refer the matter to the tribunal the authority would be obliged to do so or to drop the action proposed. Effectively, it would require all decisions to be referred to the tribunal. This is entirely unacceptable. We have explained on a number of occasions that we do not think it is necessary or desirable to involve the tribunal in all decisions as a matter of course. That would be burdensome not only for the authorised community but also for the authority.

We have deliberately structured the procedures to make reference to the tribunal a right, to be exercised at the discretion of person against whom the authority is taking action or in respect of whom the authority is taking a decision. Importantly, this approach has been considered and endorsed by the Joint Committee chaired by the noble Lord, Lord Burns, and, we believe, was also recognised by the industry as being in its own interests. Requiring all decisions to be considered by the tribunal would be too costly for all concerned--the FSA, the industry and the taxpayer, who, of course, funds the tribunal.

I understand from the noble Lord's remarks that his concern is that providing for a decision to take effect without adjudication by the independent and impartial tribunal if the matter is not referred might conflict with the requirements of the ECHR. There has been correspondence on this matter following the noble Lord's remarks in Committee concerning the Fayed judgment. The Government have never sought to argue that disciplinary action under the Bill does not potentially involved a determination of a person's civil rights and obligations. However, it is not a necessary consequence of that that disciplinary action can be taken only if the case has been argued in front of a tribunal. Article 6.1 of the convention--we shall soon all know it by heart--says:

"In the determination of his civil rights and obligations of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law".

There can be no question that the Bill confers the necessary entitlement to such a hearing. It allows all those against whom the FSA proposes to take disciplinary action to refer the matter to the independent tribunal to be established under the Bill. Where there has been a breach of rules, the authority simply comes to a decision as to what disciplinary action it believes should be taken in all the circumstances of the particular case. In reaching that conclusion, the authority does not determine anyone's civil rights or obligations through the process. It takes an administrative, not a judicial, decision. Once that conclusion has been reached, the person is entitled to refer the matter to the tribunal. The FSA's decision has no effect--I underline that--where a person chooses to exercise his right to have the matter referred to the tribunal. Where the person concerned does exercise his right, then it is the tribunal which determines the person's civil rights and obligations. If a person chooses not to refer the matter to the tribunal, the FSA can proceed to take a final decision. Of course, in such a case the person affected by that decision will have chosen freely not to exercise the entitlement which the convention requires should be afforded to him.

In sum, therefore, we believe that the Bill does provide the appropriate convention safeguards. It is not necessary to provide for all decisions to be taken by the tribunal; nor, for the reasons which I have attempted to give, is it desirable to provide for that. Therefore, in spite of the eloquent way in which the noble Lord put his case, we do not believe that the provision goes against the ECHR. I invite the noble Lord to consider what has been said. I beg to move.

On Question, amendment agreed to.

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

moved Amendments Nos. 187 and 188:

Page 204, line 26, leave out from ("if") to ("of") in line 27 and insert ("the discontinuance of the proceedings concerned results in the granting").

Page 204, line 27, at end insert ("warning or decision").

On Question, amendments agreed to.

Clause 385 [Final notice]:

Photo of Lord Kingsland Lord Kingsland Ceidwadwyr

had given notice of his intention to move Amendment No. 188A:

Page 204, line 33, leave out from ("130(1)") to end of line 35 and insert ("by the person concerned, the Authority must either itself refer the matter or give the person concerned a notice of discontinuance in relation to it.").

Photo of Lord Kingsland Lord Kingsland Ceidwadwyr

My Lords, I am most grateful to the Minister for giving such a full reply in response to Amendment No. 188A. I shall read very carefully what he said before deciding whether to pursue this matter at Third Reading. The weak point of his argument concerns a situation in which an individual chooses not to pursue his rights in the tribunal. In these circumstances, he will suffer a penalty which has been determined by the authority. I entirely understand that the noble Lord's answer will be, "Ah, but that situation was chosen by the individual's free will". It is in relation to whether he is right about the effect of that that any future argument on the matter will take place. I shall not move the amendment.

[Amendment No. 188A not moved.]

Photo of Lord Boston of Faversham Lord Boston of Faversham Crossbench

My Lords, in putting the following amendments, I should point out to your Lordships that there is a mistake in the Marshalled List as printed. In line 3 of Amendment No. 191, the word "section" should be "subsection".

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords) 1:00, 9 Mai 2000

moved Amendments Nos. 189 to 191:

Page 205, line 11, at end insert--

("(5A) A final notice about a requirement to make a payment or distribution in accordance with section 378(3) must state--

(a) the persons to whom,

(b) the manner in which, and

(c) the period within which, it must be made.").

Page 205, line 15, after ("(5)(b)") insert ("or (5A)(c)").

Page 205, line 19, at end insert--

("( ) If all or any of a required payment or distribution has not been made at the end of a period stated in a final notice under section (5A)(c), the obligation to make the payment is enforceable, on the application of the Authority, by injunction or, in Scotland, by an order under section 45 of the Court of Session Act 1988.").

On Question, amendments agreed to.

Clause 386 [Publication]:

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

moved Amendments Nos. 192 to 194:

Page 205, line 33, at end insert--

("( ) When a supervisory notice takes effect, the Authority must publish such information about the matter to which the notice relates as it considers appropriate.").

Page 205, line 38, at end insert--

("(6A) For the purposes of determining when a supervisory notice takes effect, a matter to which the notice relates is open to review if--

(a) the period during which any person may refer the matter to the Tribunal is still running;

(b) the matter has been referred to the Tribunal but has not been dealt with;

(c) the matter has been referred to the Tribunal and dealt with but the period during which an appeal may be brought against the Tribunal's decision is still running; or

(d) such an appeal has been brought but has not been determined.").

Page 205, line 39, at end insert--

("( ) "Supervisory notice" has the same meaning as in section 390.").

On Question, amendments agreed to.

Clause 387 [Application of sections 388 and 389]:

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

moved Amendments Nos. 195 to 198:

Page 206, line 3, after ("section") insert ("(Cancellation of Part IV permission: procedure)(1),").

Page 206, line 4, after ("66(1),") insert (" 87(4)(b),").

Page 206, line 7, after ("section") insert ("(Cancellation of Part IV permission: procedure)(2),").

Page 206, line 8, after ("66(4),") insert (" 87(6)(b),").

On Question, amendments agreed to.

Clause 388 [Third party rights]:

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

moved Amendment No. 199:

Page 206, line 38, at end insert ("or").

On Question, amendment agreed to.

Clause 389 [Access to Authority material]:

[Amendments Nos. 199A and 199B not moved.]

Clause 390 [The Authority's procedures]:

Photo of Lord Kingsland Lord Kingsland Ceidwadwyr

moved Amendment No. 199C:

Page 209, line 5, after ("giving") insert ("a supervisory notice or").

On Question, amendment agreed to.

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

moved Amendments Nos. 200 and 201:

Page 209, line 15, at end insert--

("( ) (Exercise of own-initiative power to vary Part IV permission: procedure)(4), (7) or (8)(b);

( ) (Discontinuance or suspension: procedure)(2) or (5);

( ) 193(3), (6) or (7)(b);").

Page 209, line 17, leave out paragraphs (b) and (c) and insert--

("( ) 264(3), (7)(a) or (9)(a) (as a result of subsection (8)(b));

( ) 278(3), (6) or (7)(b);").

On Question, amendments agreed to.

Clause 392 [Misleading statements and practices]:

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

moved Amendment No. 202:

Page 210, line 27, at end insert--

("( ) In proceedings for an offence under subsection (2) brought against a person to whom subsection (1) applies as a result of paragraph (a) of that subsection, it is a defence for him to show that the statement was made in conformity with price stabilising rules or control of information rules.").

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, in moving this amendment, I should like to speak also to Amendments Nos. 203 to 206. The first two amendments in the group, Amendments Nos. 202 and 203, arise from the introduction of the new clause concerning control of information rules and fulfil a commitment to provide a defence from the offence of misleading statements and practices for behaviour in conformity with such rules. Such a defence currently exists in the Financial Services Act 1986. The amendments also ensure that there is a defence for behaviour in conformity with price stabilisation rules for both the offences in Clause 392.

The other amendments in the group make drafting changes, correcting the way in which Clause 392 relates to Schedule 2 dealing with regulated activities. I beg to move.

Photo of Lord Kingsland Lord Kingsland Ceidwadwyr

My Lords, I do not seek to question the objective of the amendment, which relates to the market manipulation offence and the intention of which is entirely helpful. Perhaps I may make a point about the drafting.

A misleading statement, promise or forecast is exempted from the offence if it is made in conformity with control of information rules; but that would seem to apply only where the person making it is aware of the information and is allowed or required not to mention it.

With respect, I do not think it proper to provide an exemption for this, because it involves--does it not?--a deliberate lie. It would be much better if the individual concerned did not say anything. But what is perhaps more likely in practice is that the person who makes the statement, promise or forecast is the company acting through an individual who is not aware of the true position because he is on the wrong side of the Chinese wall. That ought to be covered as well, or perhaps instead. In this case, an exemption should apply where the person makes the statement, promise or forecast without knowing that it is misleading, false or deceptive because the relevant information is withheld from him in compliance with the control of information rules. In addition, the company should not be treated as knowingly or recklessly making such a statement if the individual who makes the statement, promise or forecast is not aware of the relevant information and is not told to make it by somebody who is. I am aware that I have not canvassed this matter with the Minister. He may well wish to reflect on what I have said and return to it at Third Reading.

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, I shall seek to avoid that. The control of information rules are, as I believe the noble Lord, Lord Kingsland, is aware, the Chinese wall rules. Subsections (1) and (2) of Clause 392 make it an offence knowingly or recklessly to make misleading statements in order to induce someone to enter into an investment agreement, or if the person is reckless as to whether it will induce someone to do it. Subsection (3) goes on to provide that it is an offence for a person to act in a way which creates a false or misleading impression if it is done for the purpose of creating that impression and thereby induces someone to enter into an investment agreement.

Subsection (4) provides certain defences. Amendments Nos. 202 and 203 are intended to fill a number of gaps in the coverage of these defences. At the moment subsection (4) provides that a person is not guilty of an offence under subsection (3) if he takes action in conformity with price stabilisation rules made by the FSA under Clause 141. That is repeated in Amendment No. 202. However, that amendment extends the provision to cover not only actions but also statements and thus also provides a defence to the offence created by subsections (1) and (2).

Amendment No. 202 also creates a new defence to the offence created by subsections (1) and (2). This follows the introduction of an amendment which enables the FSA to make control of information rules; in other words, Chinese wall rules. Accordingly, it will be a defence for a person to show that he acted in conformity with the control of information rules; that is to say, that he operated so-called "Chinese wall" rules. It would be a defence for him to say that he was on the wrong side of the Chinese wall and could not, therefore, be expected to act in the way that he would have done had he been on the other side of it.

Photo of Lord Kingsland Lord Kingsland Ceidwadwyr

My Lords, I am most grateful to the Minister for that helpful explanation.

On Question, amendment agreed to.

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

moved Amendments Nos. 203 to 206:

Page 210, line 35, at end insert ("; or

(c) that he acted or engaged in the conduct in conformity with control of information rules").

Page 211, line 14, after ("2") insert ("(except paragraphs 25 and 26)").

Page 211, line 14, leave out ("subsection (9)") and insert ("subsections (8) and (9)").

Page 211, line 15, leave out ("that subsection") and insert ("each of those subsections").

Page 211, line 17, after ("subsection") insert ("(8) or").

On Question, amendments agreed to.

Clause 395 [Offences by bodies corporate etc.]:

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, in moving Amendment No. 207, I should like to speak also to Amendments Nos. 208 to 211. When we debated this clause in Committee, the noble Lord, Lord Kingsland, drew attention to a possible ambiguity in the wording. As he pointed out, it was not clear whether in referring to offences committed by partnerships in England or Scotland what was being referred to was the jurisdiction in which the offence was committed or the jurisdiction in which the partnership was formed. I said that the Government were aware of that and would address it in due course. We have managed to do so as part of an improvement to the clause to achieve fairness.

The purpose of the clause is to enable persons in positions of managerial responsibility within businesses to be prosecuted alongside the business itself if that business has committed an offence which they have connived at or consented to, or which is the result of the neglect of their duties. That must be right. At the moment, company directors and officers, and members of partnerships constituted under the law of Scotland, are treated differently from members of partnerships constituted under the law of England and Wales or the law of Northern Ireland. While directors and Scottish partners commit an offence only if they are actively involved in the wrongdoing, or let it arise through their own neglect, English, Welsh and Northern Irish partners are effectively deemed to have been involved in any offence under the Bill committed by their partnership, unless they can show that they did not know it was being committed or that they took reasonable steps to prevent it.

We have reviewed the matter and believe that the position is unfair. Amendments Nos. 207 and 208 make it clear that all partners are to be treated in the same way as company directors and officers. In doing this, the amendments remove any need to refer in the clause to the nationality of individual partners because all partnerships are now covered by the provisions of subsection (4). They also, coincidentally, rectify the ambiguity identified by the noble Lord, Lord Kingsland, earlier.

Amendments Nos. 209, 210 and 211 are intended to ensure that this clause covers not only corporate bodies and partnerships but also unincorporated associations, and they substantially reproduce the equivalent provisions in the Financial Services Act 1986. I beg to move.

Photo of Lord Kingsland Lord Kingsland Ceidwadwyr

My Lords, I am most grateful to the noble Lord the Minister for at least reflecting on one of the things we said in relation to this clause.

On Question, amendment agreed to.

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

moved Amendments Nos. 208 to 210 inclusive:

Page 212, line 10, leave out ("in Scotland").

Page 212, line 23, at end insert--

("( ) If an offence under this Act committed by an unincorporated association (other than a partnership) is shown--

(a) to have been committed with the consent or connivance of an officer of the association or a member of its governing body, or

(b) to be attributable to any neglect on the part of such an officer or member, that officer or member as well as the association is guilty of the offence and liable to be proceeded against and punished accordingly.").

Page 212, line 26, after ("unincorporated") insert ("association").

On Question, amendments agreed to.

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

moved Amendment No. 211:

After Clause 397, insert the following new clause--

:TITLE3:JURISDICTION AND PROCEDURE IN RESPECT OF OFFENCES

(" .--(1) A fine imposed on an unincorporated association on its conviction of an offence is to be paid out of the funds of the association.

(2) Proceedings for an offence alleged to have been committed by an unincorporated association must be brought in the name of the association (and not in that of any of its members).

(3) Rules of court relating to the service of documents are to have effect as if the association were a body corporate.

(4) In proceedings for an offence brought against an unincorporated association--

(a) section 33 of the Criminal Justice Act 1925 and Schedule 3 to the Magistrates' Courts Act 1980 (procedure) apply as they do in relation to a body corporate;

(b) section 70 of the Criminal Procedure (Scotland) Act 1995 (procedure) applies as if the association were a body corporate;

(c) section 18 of the Criminal Justice (Northern Ireland) Act 1945 and Schedule 4 to the Magistrates' Courts Northern Ireland) Order 1981 (procedure) apply as they do in relation to a body corporate.

(5) Summary proceedings for an offence may be taken--

(a) against a body corporate or unincorporated association at any place at which it has a place of business;

(b) against an individual at any place where he is for the time being.

(6) Subsection (5) does not affect any jurisdiction exercisable apart from this section.

(7) "Offence" means an offence under this Act.").

On Question, amendment agreed to.

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

moved Amendment No. 212:

Before Clause 398, insert the following new clause--

:TITLE3:SCHEMES FOR REVIEWING PAST BUSINESS

(" .--(1) Subsection (2) applies if the Treasury are satisfied that there is evidence suggesting--

(a) that there has been a widespread or regular failure on the part of authorised persons to comply with rules relating to a particular kind of activity; and

(b) that, as a result, private persons have suffered (or will suffer) loss in respect of which authorised persons are (or will be) liable to make payments ("compensation payments").

(2) The Treasury may by order ("a scheme order") authorise the Authority to establish and operate a scheme for--

(a) determining the nature and extent of the failure;

(b) establishing the liability of authorised persons to make compensation payments; and

(c) determining the amounts payable by way of compensation payments.

(3) An authorised scheme must be made so as to comply with specified requirements.

(4) A scheme order may be made only if--

(a) the Authority has given the Treasury a report about the alleged failure and asked them to make a scheme order;

(b) the report contains details of the scheme which the Authority propose to make; and

(c) the Treasury are satisfied that the proposed scheme is an appropriate way of dealing with the failure.

(5) A scheme order may provide for specified provisions of or made under this Act to apply in relation to any provision of, or determination made under, the resulting authorised scheme subject to such modifications (if any) as may be specified.

(6) For the purposes of this Act, failure on the part of an authorised person to comply with any provision of an authorised scheme is to be treated (subject to any provision made by the scheme order concerned) as a failure on his part to comply with rules.

(7) This section applies whenever the failure in question occurred.

(8) "Authorised scheme" means a scheme authorised by a scheme order.

(9) "Private person" has such meaning as may be prescribed.

(10) "Specified" means specified in a scheme order.").

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, I referred to this amendment and to Amendment No. 222, which is grouped with it, much earlier in our debates on this Bill. Amendment 212 allows the Treasury, by order, to authorise the FSA to establish and operate a scheme requiring firms to review their past business and, where appropriate, make restitution where retail customers have suffered loss.

This is an important power, as illustrated by the cases of mis-selling which have come to light in recent years, particularly cases of personal pensions, under which the value of redress offered and accepted already amounts to over £3 billion. In this sort of case experience has shown that it is expedient to require all firms which have conducted a certain class of business to check their past business, even though the regulator cannot know that every one of those firms will turn out to have failed to comply with the rules. However, this is not a power we envisage being used regularly.

The amendment reflects a commitment given in Committee by the Economic Secretary to the Treasury. It also, I believe, meets the concerns raised by my noble friend Lady Turner when tabling her Amendment No. 167 in Committee. At that time I promised my noble friend a Government amendment to Part X but we have looked at it again and it does not really fit in there. It does not sit comfortably with the Part XXV restitution powers. The nature of the exercise carried out in the unusual circumstances in which a review will be required is such that it involves a combination of mapping out the matters that fall to be dealt with under the scheme, detailed provisions to determine how the scheme will operate and the making of payments in an appropriate case.

So we have created a specific power for the creation of schemes under secondary legislation. The Treasury will, by order under the Bill, authorise the FSA to establish and operate the scheme: it will be set up under the order. The Delegated Powers and Deregulation Committee have considered our approach and raised no concern.

Amendment No. 222 specifies that the Treasury orders under this clause must be made by affirmative resolution of both Houses of Parliament. This will ensure that any such arrangements must be subject to debate. This will be informed by the report and other details that must be provided before the Treasury can make an order under the power. I beg to move.

On Question, amendment agreed to.

Clause 400 [Consequences of a direction under section 398]:

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

moved Amendment No. 212A:

Page 214, line 22, leave out ("section 51 does") and insert ("subsections (7) to (9) of section 50 do").

On Question, amendment agreed to.

Clause 405 [Gaming contracts]:

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, with Amendment No. 213, I should like to speak also to Amendments Nos. 214 and 215. These amendments make changes to Clause 405 in line with a commitment that we made in Committee in another place to look again at the clause and ensure that it is capable of giving the same protection for the enforceability of certain contracts, which might otherwise be subject to the statutory and common law rules relating to gaming provided for under the existing legislation.

These regulations are important--at least they are for some people--although they are technical amendments. The clause as it stands is too narrow, because under subsection (2)(b) it expressly applies only to regulated activities. Therefore, it would not apply to a contract entered into in the course of any activity benefiting from the exclusion of the scope of regulated activities under the Bill. This contrasts with the Financial Services Act 1986 which states that contracts entered into in the course of an activity which benefits from an exclusion set out in Part III or IV of Schedule 1 to that Act do benefit from the exemption set out in the Act.

At the same time subsection (2) of Clause 405 does not work in its current form. It refers to regulated activities falling within paragraph 2 of Schedule 2, whereas in fact no activities as such fall within Schedule 2, given that Schedule 2 simply provides an indicative list of the sort of things about which orders under Clause 20 may be made rather than sets out which activities will be regulated under the Bill.

Amendments Nos. 213 to 215 introduce a new Treasury order-making power which will be used to specify which contract-based activities will be covered by the statutory exemption from unenforceability replacing the reference to regulated activities in subsection (2)(b). I beg to move.

On Question, amendment agreed to.

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords) 1:15, 9 Mai 2000

moved Amendments Nos. 214 and 215:

Page 218, line 10, at beginning insert ("it is").

Page 218, line 11, leave out paragraph (b) and insert--

("(b) the entering into or performance of it by either party constitutes an activity of a specified kind or one which falls within a specified class of activity; and

(c) it relates to an investment of a specified kind or one which falls within a specified class of investment.

(3) Part II of Schedule 2 applies for the purposes of subsection (2)(c), with the references to section 20 being read as references to that subsection.

(4) Nothing in Part II of Schedule 2, as applied by subsection (3), limits the power conferred by subsection (2)(c).

(5) "Investment" includes any asset, right or interest.

(6) "Specified" means specified in an order made by the Treasury.").

On Question, amendments agreed to.

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

moved Amendment No. 216:

After Clause 406, insert the following new clause--

("Service of notices

:TITLE3:SERVICE OF NOTICES

.--(1) The Treasury may by regulations make provision with respect to the procedure to be followed, or rules to be applied, when a provision of or made under this Act requires a notice or other document to be given.

(2) The regulations may, in particular, make provision--

(a) as to the manner in which a document must be given;

(b) as to the address to which a document must be sent;

(c) requiring, or allowing, a document to be sent electronically;

(d) for treating a document as having been given, or as having been received, on a date or at a time determined in accordance with the regulations;

(e) as to what must, or may, be done if the person to whom a document is required to be given is not an individual;

(f) as to what must, or may, be done if the intended recipient of a document is outside the United Kingdom.

(3) Subsection (1) applies however the obligation to give a document is expressed (and so, in particular, includes a provision which requires a document to be served or sent).

(4) Section 7 of the Interpretation Act 1978 (service of notice by post) has effect in relation to provisions made by or under this Act subject to any provision made by regulations under this section.").

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, this new clause enables the Treasury, by order, to specify the way in which notices given to or by the authority (or other relevant persons) are to be taken to have been given. On the face of it, it may appear a minor point but precision would be important if, for example, a person had a specified number of days in which to do something from the date on which the notice was deemed to have been given or there was a question as to whether the notice was served on an appropriate person.

Such matters could be extremely important if the possibility of referring a matter to the tribunal depended on when the notice was deemed to have been given. Clearly it is also important that a notice should be given to an appropriate person in the firm, often the company secretary but certainly not the cleaner.

Section 204 of the Financial Services Act makes specific provision about service of notices. The Government considered making similar provision in the Bill. However, the Section 204 provision would not adequately deal with the range of matters that would need to be covered given the much wider scope of the Bill.

A further concern is that the provisions of Section 204 of the 1986 Act envisage service of notice in hard copy. Since that provision came into force, the use of the fax machine has become commonplace and acceptable for many types of formal communication but is not provided for under the 1986 Act. Clearly the development of new forms of transmission--mobile short messaging, electronic mail and other Internet-based communications systems--means that the extended use of electronic communications is inevitable. The Government would not wish to prevent the financial services industry from benefiting from the use of those technologies in its dealings with the regulator. For example, to keep regulatory burdens low, the authority is currently exploring an Internet-based system to enable firms to apply for approvals under Clause 58 of the Bill for their prospective employees.

This new clause is a routine procedural measure which forms an important part of the overall package of measures to ensure that the authority acts appropriately when it carries out its regulatory functions. I beg to move.

On Question, amendment agreed to.

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

moved Amendment No. 216A:

After Clause 406, insert the following new clause--

("Jurisdiction

:TITLE3:JURISDICTION IN CIVIL PROCEEDINGS

.--(1) Proceedings arising out of any act or omission (or proposed act or omission) of--

(a) the Authority,

(b) the competent authority for the purposes of Part VI,

(c) the scheme manager, or

(d) the scheme operator, in the discharge or purported discharge of any of its functions under this Act may be brought before the High Court or the Court of Session.

(2) The jurisdiction conferred by subsection (1) is in addition to any other jurisdiction exercisable by those courts.").

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, with Amendment No. 216A I should like to speak also to Amendment No. 226ZA. These amendments effectively transpose the arrangements under Section 188 of the Financial Services Act 1986 so as to enable a person to seek judicial review of the authority, the competent authority under Part VI, the compensation scheme manager or the ombudsman scheme manager before an appropriate court in any part of the United Kingdom.

This is necessary because under the Civil Jurisdiction and Judgements Act 1982 a case against a company registered under the Companies Acts would normally need to be brought in the jurisdiction in which the company has its registered office. The companies to which these provisions relate are all registered in England and Wales. So without this provision a person would not otherwise be able to bring a case for judicial review before the Court of Session or the High Court in Northern Ireland. I beg to move.

On Question, amendment agreed to.

Clause 407 [Definitions]:

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

moved Amendments Nos. 217 and 218:

Page 219, line 16, at end insert ("(except in provisions relating to the Competition Commission)").

Page 219, line 17, at end insert--

(""control of information rules" has the meaning given in section (Control of information)(1):").

On Question, amendments agreed to.

[Amendment No. 218A not moved.]:

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

moved Amendment No. 219:

Page 220, line 3, leave out ("233(2)") and insert ("232").

On Question, amendment agreed to.

Clause 412 [Controller]:

[Amendments Nos. 219A to 219F not moved.]

[Amendment No. 220 had been withdrawn from the Marshalled List.]

Photo of Lord Bach Lord Bach Government Whip

moved Amendment No. 220A:

After Clause 416, insert the following new clause--

:TITLE3:TRANSITIONAL PROVISIONS

(".--(1) Subsections (2) and (3) apply to an order under section 416 which makes transitional provisions or savings.

(2) The order may, in particular--

(a) if it makes provision about the authorisation and permission of persons who before commencement were entitled to carry on any activities, also include provision for such persons not to be treated as having any authorisation or permission (whether on an application to the Authority or otherwise);

(b) make provision enabling the Authority to require persons of such descriptions as it may direct to re-apply for permissions having effect by virtue of the order;

(c) make provision for the continuation as rules of such provisions (including primary and subordinate legislation) as may be designated in accordance with the order by the Authority, including provision for the modification by the Authority of provisions designated;

(d) make provision about the effect of requirements imposed, liabilities incurred and any other things done before commencement, including provision for and about investigations, penalties and the taking or continuing of any other action in respect of contraventions;

(e) make provision for the continuation of disciplinary and other proceedings begun before commencement, including provision about the decisions available to bodies before which such proceedings take place and the effect of their decisions;

(f) make provision as regards the Authority's obligation to maintain a record under section 342 as respects persons in relation to whom provision is made by the order.

(3) The order may--

(a) confer functions on the Treasury, the Secretary of State, the Authority, the scheme manager, the scheme operator, members of the panel established under paragraph 4 of Schedule 17, the Competition Commission or the Director General of Fair Trading;

(b) confer jurisdiction on the Tribunal;

(c) provide for fees to be charged in connection with the carrying out of functions conferred under the order;

(d) modify, exclude or apply (with or without modifications) any primary or subordinate legislation (including any provision of, or made under, this Act).

(4) In subsection (2) "commencement" means the commencement of such provisions of this Act as may be specified by the order.").

Photo of Lord Bach Lord Bach Government Whip

My Lords, Amendments Nos. 220A and 226 deal with transitional arrangements for bringing the Bill into force. It is of course our intention to ensure that the transition to the new regime is as smooth as possible and causes the minimum disruption to firms and, indeed, to the regulators who we do not wish to be distracted from doing their core work.

We believe that it is sensible to make transitional provisions in an order as provided for under the new clause. Part of the reason is that we are moving from nine existing regulators--not counting the recognised professional bodies or Lloyd's--each with their own regulatory frameworks under six principal Acts of Parliament.

While our approach is very simple in policy terms, the precise arrangements will be very complex and very detailed. It would add substantially to the length of the Bill to include these provisions. More importantly, we wish to be able to publish the secondary legislation in draft before it is made so that those affected by it, and especially the industry, will be able to consider the arrangements and comment if they see any difficulty with the detail of the proposals. I believe that there has been widespread support for the Government's approach.

I turn to Amendment No. 226. In Committee, the Government moved amendments which introduced arrangements to enable the FSA to work with the self-regulating organisations under the Financial Services Act 1986 to bring about their demise. I can remind your Lordships that the amendments have the effect of removing the risk of challenge as the independence of the SROs diminishes in the months to come.

Amendment No. 226 is consequential to those changes. It ensures that those transitional arrangements for the SROs come into force on the passing of the Act rather than on a day to be appointed. The current statutory framework under the 1986 Act has caused some problems for the FSA as it has sought to restructure the various regulators that are merging together. Understandably, the FSA now wishes to press on with its preparations. I beg to move.

On Question, amendment agreed to.

Clause 417 [Regulations and orders]:

Photo of Lord Bach Lord Bach Government Whip

moved Amendment No. 220B:

Page 225, line 35, leave out from ("make") to ("is") in line 36 and insert ("an order which is conferred on the Treasury by this Act and any power to make regulations which is conferred by this Act").

Photo of Lord Bach Lord Bach Government Whip

My Lords, I shall first introduce the Government's amendment which simply tidies up a few loose ends. There is an Opposition amendment in the group which will no doubt be spoken to.

The Bill confers a number of powers to make orders. Some refer to administrative functions of the authority. For example the FSA may make a prohibition order under Clause 55 in relation to an individual who it considers unfit to perform certain functions. The court may also make orders for particular purposes. It may, for example, make orders under Clause 194(3) in relation to injunctions against incoming insurance companies from other EEA member states.

While I am sure it will be clear to most people that such orders--as opposed to orders made by the Treasury--are exercisable by statutory instrument, that is not the effect of Clause 417(1) as currently drafted. The Government's amendment makes it clear that those order-making powers conferred on the Treasury are exercisable by statutory instrument. However, court orders will be made in the usual way. FSA orders will be made in accordance with the relevant procedural requirements under the Bill.

The same issue does not arise in the case of regulations as all powers to make regulation under the Bill are to be exercisable by statutory instrument, whether they are exercised by the Treasury or other Ministers of the Crown. I beg to move.

Photo of Lord Newby Lord Newby Democratiaid Rhyddfrydol

My Lords, I wish to speak to Amendment No. 221. This amendment is self-explanatory. It requires simply that, where the Treasury plans to introduce regulations or orders, it makes proper provision for those regulations or orders to be considered in draft by all those who might have an interest in them. It also makes provision for representations to be duly considered and for the Treasury to respond to the representations before the regulations or orders are considered by Parliament.

The reason for proposing the amendment is extremely straightforward. Much secondary legislation will come forward under this Bill. As we have seen in this House on a number of occasions during this Session, the role of Parliament in scrutinising secondary legislation is in reality extremely limited. The point at which secondary legislation can be given careful scrutiny is before it is laid before Parliament. This amendment enables that to be required of the Treasury as a matter of course.

When the Minister moved Amendment No. 220A, I was very interested to hear him say that the Government would be issuing draft orders or, perhaps, regulations and looking for comments. This amendment seeks merely to make that a requirement rather than an optional extra.

Photo of Lord Saatchi Lord Saatchi Ceidwadwyr

My Lords, I speak briefly in support of the amendment of which we are co-authors. As the noble Lord, Lord Newby, said, one of the points made at an earlier stage of the Bill was that, despite its enormous length, it is in many ways a skeleton Bill--I believe that that was the phrase used--for the reason that he gave; that is, so much is submerged and yet to come in the form of codes, guidance, manuals, regulations or orders.

We believe that this amendment is important because it would require the Treasury to consult on regulations to be made under the Act. In fact, I believe that the Treasury usually does consult, but there is no obligation to do so. Just as important, there is no obligation to make any public response to consultation.

In relation to consultation on this Bill and on the draft orders that have been published, we gather that some of those involved with the Treasury have described it as a "black hole"; in other words, as an entity which absorbs a tremendous amount of comment and suggestion but where the response is not visible to the naked eye. I am sure that the Minister will say shortly that he does not wish to be too prescriptive about the Treasury's role. However, I hope that he will understand that our concern arises because so many important regulations to be made under the Bill have yet to appear.

Therefore, a proper consultation exercise, as proposed by the noble Lord, Lord Newby, with a requirement for a public response should be made in relation to all these future regulations. We can see no reason in principle why the Treasury should not be obliged to consult. It would be a valuable discipline to do so. It would mean, as the noble Lord, Lord Newby, said, that secondary legislation that comes before Parliament would have the added benefit of being considered by Parliament following a proper public consultation. It would be extraordinary if the Government found it difficult to accept this most reasonable amendment.

Photo of Lord Bach Lord Bach Government Whip

My Lords, I must confess to having feelings of some dismay to see this amendment on the Marshalled List. It concerns a matter that we have debated at least twice. I suppose that there is no harm in debating it a third time. The last time that we did so was in the context of an amendment tabled by the noble and learned Lord, Lord Fraser of Carmyllie, on the second day of Report.

This amendment would require the Treasury to consult on all orders and regulations proposed under the Bill. As I attempted to explain a few minutes ago, it will not always be the Treasury that will make regulations and orders under the Bill. Other departments will have responsibility for making certain regulations. Some powers to do things by order will be exercised by the authority itself or by the court, although, of course, such orders are not orders in the sense of secondary legislation.

But the amendment does not make that distinction, so it is defective in that it requires all such consultations to be conducted by the Treasury. We believe that the Treasury already has a good record. It has regularly consulted on proposals generally in the financial services field in recent years and specifically on Bill-related matters. It has already been consulting on the draft secondary legislation it proposes to make under the Bill.

We have had formal public consultations on a number of draft Statutory Instruments and more informal discussions with industry representatives on some other drafts; for example, amendments to building and friendly societies legislation.

We have also had discussions on the underlying policy in order to inform the drafting process and we consulted on a draft of the Bill, although noble Lords may be forgiven for forgetting that, given the time that has passed since then.

The Treasury proposes to continue to consult where that is helpful. We have even given specific commitments to do so in certain cases. It is, of course, well established Cabinet Office procedure that departments should seek to consult as they consider most appropriate and produce regulatory impact assessments before making any legislation that imposed burdens. The Treasury will always ensure that it complies with relevant guidance of the kind I have just mentioned.

This Bill imposes statutory consultation requirements on the authority. That is right for the authority, given its legal status. But the Treasury is rather different from the authority. The Government are directly accountable to both Houses of Parliament and Parliament rightly scrutinises and questions what the Government do. The Bill does not change that.

So the reality is that if the Treasury should fail to follow the procedures set out in those Cabinet Office guidelines, it will be open to Parliament to question that. It is of course the case that amendments to the best practice promoted by the Cabinet Office will flow through to the exercise of the powers under the Bill. The amendment before us would seem to cast matters in stone.

Finally, we need to look at the amendment in a wider context. There is nothing special about the powers under the Bill for the Treasury or Ministers to make orders and regulations. They are normal arrangements and we have applied the standard procedures.

I remind noble Lords that the Treasury has submitted a number of memoranda to our own Delegated Powers and Deregulation Committee explaining the delegated legislative powers under the Bill. The Government have responded positively to recommendations made by the committee when it considered the consultation draft of the Bill. After the Bill was brought to this House from another place, the Government have accepted every recommendation made by the committee.

I repeat that departments are expected to follow Cabinet Office guidelines, just as they are required to respect parliamentary procedure. There is nothing special about the powers in the Bill. There are a lot of them because it is a big Bill covering a wide subject area and they are also related to matters which are largely technical.

We maintain that this Government have reinforced the procedures for consultation and regulatory appraisal compared with the system that we inherited. If noble Lords opposite believe that those arrangements are still inadequate, that rather begs the question what they must have thought about the rather more lax procedures which the previous government applied. That is perhaps a matter which is best pursued in another context. Indeed, if there are inadequacies in the Cabinet Office guidelines, it would be useful if those issues were raised so that those views could be taken into account when the guidelines are next reviewed.

The logic of the amendment is that all departments should be under a duty to consult on all secondary legislation all the time. We believe that that is unnecessary and, we would argue, positively undesirable. Government departments should consult where it is appropriate for them to do so and it is the responsibility of Parliament to ensure that they do.

I hope that the noble Lord, Lord Newby, will take some comfort from my remarks and will be satisfied to some degree by the assurances that I have given him.

Photo of Lord Newby Lord Newby Democratiaid Rhyddfrydol

My Lords, I am not sure that I can take much comfort from what the Minister has said. When he started he made an extremely valid point about certain orders under this Bill not being secondary legislation and that, therefore, there was a defect in the drafting, of which I can see the strength. I thought he would suggest coming forward with an amendment that rectified that defect, given that he started off by being so positive about publishing draft regulations and orders that are secondary legislation.

In relation to the phrase "the Treasury would normally consult", as a general rule departments consult when it is helpful or appropriate to do so. That begs the question: to whom it is helpful and to whom it is appropriate? I am not happy simply to accept that the Treasury, when it believes that it is helpful and appropriate to do so, will publish draft orders. However, I accept that the drafting may be defective. Therefore, I shall look at this and I may return to the matter next week.

On Question, amendment agreed to.

[Amendment No. 221 not moved.]

Clause 418 [Parliamentary control of statutory instruments]:

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

moved Amendments Nos. 222 to 225:

Page 226, line 3, after ("232(5)") insert (", (Schemes for reviewing past business)").

Page 226, line 19, at end insert--

("( ) it varies a previous order made under section 19(5) so as to make section 19(1) apply in circumstances in which it did not, as a result of that previous order, apply;").

Page 226, line 21, after ("19(9)") insert ("or (9A)").

Page 226, line 23, at end insert ("; or

( ) it adds one or more investments to those which are controlled investments for the purposes of section 19").

On Question, amendments agreed to.

Clause 420 [Commencement]:

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

moved Amendments Nos. 226 and 226YA:

Page 227, line 1, leave out subsection (1) and insert--

("(1) The following provisions come into force on the passing of this Act--

(a) this section;

(b) sections 417, 419 and 422;

(c) paragraphs 1 and 2 of Schedule 20.").

Before Schedule 19, insert the following new schedule--

:TITLE3:("SCHEDULE

:TITLE3:COMPETITION INFORMATION

:TITLE3:PART I

:TITLE3:PERSONS AND FUNCTIONS FOR THE PURPOSES OF SECTION (Competition information)

1. The Table set out after this paragraph has effect for the purposes of section (Competition information)(3)(b).

:TITLE3:TABLE

Person Function
1. The Commission. Any function of the Commission under Community law relating to competition.
2. The Comptroller and Auditor General. Any function of his.
3. A Minister of the Crown. Any function of his under a specified enactment.
4. Director General of Telecommunications. Any function of his under a specified enactment.
5. Director General of Gas Supply Any function of his under a specified enactment
6. The Director General of Gas for Northern Ireland. Any function of his under a specified enactment.
7. The Director General of Electricity Supply. Any function of his under a specified enactment.
8. The Director General of Electricity Supply for Northern Ireland. Any function of his under a specified enactment.
9. The Director General of Water Services. Any function of his under a specified enactment.
10. The Civil Aviation Authority. Any function of that authority under a specified enactment.
11. The Rail Regulator. Any function of his under a specified enactment.
12. The Director General of Fair Trading. Any function of his under a specified enactment.
13. The Competition Commission. Any function of the Competition Commission under a specified enactment.
14. The Authority. Any function of the Authority under a specified enactment.
15. A person of a description specified in an order made by the Treasury. Any function of his which is specified in the order.

:TITLE3:PART II

:TITLE3:THE ENACTMENTS

1. The Fair Trading Act 1973

2. The Consumer Credit Act 1974

3. The Estate Agents Act 1979

4. The Competition Act 1980

5. The Telecommunications Act 1984

6. The Airports Act 1986

7. The Gas Act 1986

8. The Control of Misleading Advertisements Regulations 1988

9. The Electricity Act 1989

10. The Broadcasting Act 1990

11. The Water Industry Act 1991

12. The Electricity (Northern Ireland) Order 1992

13. The Railways Act 1993

14. Part IV of the Airports (Northern Ireland) Order 1994

15. The Gas (Northern Ireland) Order 1996

16. The EC Competition (Articles 88 and 89) Enforcement Regulations 1996

17. The Unfair Terms in Consumer Contracts Regulations 1999

18. This Act.

19. An enactment specified for the purposes of this paragraph in an order made by the Treasury.").

On Question, amendments agreed to.

Schedule 19 [Minor and Consequential Amendments]:

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

moved Amendment No. 226ZA:

Page 279, line 10, at end insert--

("The Civil Jurisdiction and Judgments Act 1982 (c. 27)

. In paragraph 10 of Schedule 5 to the Civil Jurisdiction and Judgments Act 1982 (proceedings excluded from the operation of Schedule 4 to that Act), for "section 188 of the Financial Services Act 1986" substitute "section (Jurisdiction in civil proceedings) of the Financial Services and Markets Act 2000".").

On Question, amendment agreed to.

Schedule 21 [Repeals]:

Photo of Lord Hunt of Wirral Lord Hunt of Wirral Ceidwadwyr

moved Amendment No. 226A:

Page 282, line 12, at end insert--

("1923 c. 8. The Industrial Assurance Act 1923. The whole Act.
1948 c. 39. The Industrial Assurance and Friendly Societies Act 1948.") The whole Act.

Photo of Lord Hunt of Wirral Lord Hunt of Wirral Ceidwadwyr

My Lords, it must be a special privilege to have the honour of opening the final debate on the third day of the Report stage of the Financial Services and Markets Bill at just after 25 minutes to two. I thank the Government most warmly for giving me this opportunity. On several occasions in the other place assurances were given about the repeal of the industrial assurance Acts. I have been carefully watching the Order Paper over the past few weeks, but sadly no government amendments to the necessary effect have yet been tabled.

I do not expect to speak for more than 45 minutes! However, to be clear about this matter, the industrial assurance Acts of 1923 and 1948 once provided consumers with a necessary degree of protection for those buying low premium life assurance policies where premiums are paid in cash to company agents visiting someone's home. Those days are now over and save for one small area that I shall cover, those Acts are now an encumbrance and not a protection. The Acts, for example, forbid the conversion of the collection of premiums by standing order or direct debit and that severely damages the value that policyholders ultimately receive.

However, for existing policyholders the Acts provide certain protection where the assurance contract confers a right to the policyholder that has a monetary value. One example is the written notices that have to be sent to policyholders before a policy can be terminated. I acknowledge that that protection will have to be re-enacted in a suitable form, either in the FSA's rules or in a statutory instrument. In the meantime, I cannot see any reason why those Acts should not be included to be repealed when the Bill becomes an Act. I beg to move.

Photo of Lord Bach Lord Bach Government Whip

My Lords, at this hour I can hardly do anything other than respond positively to the amendment of the noble Lord. It would be churlish to do otherwise. I can respond by assuring him of the Government's continued commitment to the repeal of the industrial assurance Acts. The Acts impose restrictions on the conduct of home services assurance businesses that are necessary, particularly given the nature of the powers to be conferred on the authority more generally by the Bill.

The constraints under the existing statutory framework are driving providers out of the market. That, in turn, means that those who are most likely to benefit from the kinds of services provided by home services are being denied access to valuable products to help them to save and provide for their futures.

In other debates we have explained that the Government are committed to taking practical steps to help disadvantaged consumers and repeal of much of this legislation is one such measure that we shall adopt. The amendment before the House may not be adequate because it will be necessary to make certain savings to the industrial assurance Acts for existing policies. That will be necessary because those Acts confer certain rights on policyholders and must be protected. However, I can tell the noble Lord that the Government will bring forward an amendment at Third Reading that will include provisions to ensure that the Acts cease to have effect while enabling any necessary savings to be made.

Lord Hunt of Wirral: My Lords, even at this late hour, I must say to the Minister how warmly I appreciate his generous words. I fully accept what he has said and I look forward to seeing the amendment when it is brought forward at Third Reading next week. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

moved Amendments Nos. 227 and 228:

Page 283, line 2, column 3, at beginning insert--

("In section 13, subsections (2) to (5), (8) and (11).")

Page 283, line 2, column 3, at end insert--

("In section 52, subsection (2)(d) and, in subsection (5), the words from "or where" to the end.
Schedule 7.
In Schedule 8, paragraph 3(2).")

On Question, amendments agreed to.

House adjourned at eighteen minutes before two o'clock.