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Mr. Flight: We know that there are arguments on both sides. The Opposition accept that, during the reign of the great Howard Davies, it is sensible to keep the role unified. We accept that there is much to be done in establishing the body and addressing all the issues.

We tabled amendment No. 18 because, after examining all the issues, we believe that Parliament should signal that, in the longer term, it would be wiser to have a non-executive chairman. We had thought that the Government shared that view because, as hon. Members will note, the Bill uses only the word "chairman", thereby leaving the door open to a subsequent split.

Liz Blackman: The hon. Gentleman should be aware that, although many of the witnesses appearing before the Joint Committee were practitioners who favoured not splitting the role, none of them cited Howard Davies's personality as a factor in forming their view. They said that the position should remain one for reasons of accountability and clarity.

Mr. Flight: I thank the hon. Lady for that intervention. I was not a member of the Joint Committee, and it was not my impression from the report that its contribution was so large. The issue is simple, and we concede that both sides of the argument have merit. We prefer the IMRO model and believe that the non-executive chairman position has advantages and does not damage the authority of the chief executive. However, others argue otherwise.

The case that the authority of a chief executive is damaged by the appointment of a non-executive chairman is not proven by experience. However, the opposite

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case--that a chief executive without a non-executive chairman may have too much power and be unaccountable in the absence of a person to consult with--can be illustrated by experience.

If amendment No. 22 is not accepted, the role of the excellent non-executive board will be emasculated because it will not be given the normal duties and responsibilities--as set out under the Cadbury guidelines--to scrutinise and monitor the work, performance and standards of conduct of the FSA executive management. We see no reason why those activities should have been excluded from the non-executive board's role.

The question of who appoints whom deserves consideration. As I thought, the authority, not the Treasury, will appoint the non-executive members. Our objection to that is that a chief executive without a chairman clearly has the power to appoint his cronies. Despite all the problems described earlier, the Treasury should make those appointments, not the FSA. Perhaps it would be better if industry representatives were to nominate members, but the Government's intention was to move away from self-regulation. Therefore, we believe that, for the time being at least, the Treasury option is to be preferred.

Mr. Beard: Where in the Bill are the powers of the board circumscribed in the way that the hon. Gentleman has set out?

Mr. Flight: My point is that the roles and duties of non-executive directors that I described--and which appear in the standard list recommended by the FSA--are not included in the Bill. That is not to say that they could not be added in the future, but why on earth exclude now what are the proper and normal roles of non-executives?

Mr. Cousins: I draw the hon. Gentleman's attention to paragraph 5(1) of schedule 1, which deals with this matter. It correctly leaves to the authority the responsibility for devolution of function and powers in the authority.

Mr. Flight: That reinforces my point that it should not be for the authority to make its own constitution. Schedule 1 deals with the constitution of a body entrusted with running the financial services industry. I do not see how what the hon. Gentleman said interferes with the straightforward proposition that the constitutional role of the non-executives should be set out clearly in the relevant part of the constitution.

We wanted to put on record what we consider to be the right constitutional structure, which we hope the FSA will move towards. That will have to await the end of the reign of Howard Davies, and can be dealt with subsequently. The Government do not want to admit it, but the Bill is drafted with enough flexibility to cover that. However, we have not been persuaded by the arguments advanced by the Government and Howard Davies in favour of having a single chief executive.

Sir Nicholas Lyell: With permission, Mr. Deputy Speaker--

Mr. Deputy Speaker: Order. I am afraid that the right hon. and learned Gentleman cannot speak a second time. Only the person who has tabled the amendment can automatically speak a second time on Report.

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Is the hon. Member for Arundel and South Downs (Mr. Flight) pressing the amendment?

Mr. Flight: I thought, Mr. Deputy Speaker, that I had indicated in what I just said that we would not press the amendment to a vote.

Mr. Deputy Speaker: Is the hon. Gentleman therefore withdrawing his amendment?

Mr. Flight: I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Miss Melanie Johnson: I beg to move amendment No. 480, in page 197, line 47, at end insert--


"( ) The complaints scheme must be designed so that, as far as reasonably practicable, complaints are investigated quickly.".

Mr. Deputy Speaker: With this it will be convenient to discuss the following amendments: No. 186, in page 198, line 27, leave out "reference" and insert "submission".

No. 187, in page 198, line 27, leave out--


"which the Authority is investigating".

No. 23, in page 198, line 33, leave out "and".

No. 32, in page 198, line 36, at end insert--


"; and
(iv) to recommend to the Authority the award of such sum as appears to him to be fair and reasonable in all the circumstances of the case in relation to any maladministration by the Authority.".

No. 188, in page 198, line 36, at end insert--


"(iv) to make an award against the Authority of such amounts as he considers fair compensation for loss or damage resulting from the subject matter of the complaint".

No. 189, in page 198, line 37, leave out "Authority" and insert "investigator".

No. 190, in page 198, line 37, leave out--


"it must notify the investigator"

and insert "must notify the complainant".

No. 191, in page 198, line 39, leave out sub-paragraph (4).

Government amendments Nos. 437 to 441.

Miss Johnson: The complaints scheme is an important part of the accountability package delivered by the Bill. The Bill should deliver an open and transparent mechanism that will allow people's complaints to be dealt with quickly, cheaply and informally.

However, the Bill delivers other important protections as well. For example, firms will be able to go to the financial services and markets tribunal to challenge the FSA's decisions. The Government introduced amendments to the complaints scheme provisions following the Joint Committee's recommendations, to make it clear that the investigator should be fully independent of the FSA. That independence will include having adequate funds and staff.

The investigator's appointment is also to be approved by the Treasury, and he or she cannot be removed from office without the Treasury's consent. It is important that

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everyone is happy with the independence of the arrangements, and the FSA will consult further on them fairly shortly. I understand that the issues to be studied are likely to include ways to secure the investigator's independence through the appointment arrangements and the provision of independent support staff. I recognise how important it is to secure the investigator's independence. The Government amendments, together with the provisions already in the Bill, will achieve that.

I shall not respond to the Opposition amendments now, Mr. Deputy Speaker, in the hope that I will have the opportunity to do so later.

Mr. Flight rose--

Mr. Deputy Speaker: Order. Perhaps I can help the Minister. By leave of the House, she is able to speak a second time, as she would be were she tabling her own amendment. However, it may be for the convenience of the House were she to say all that she wishes to say on this occasion, in case she wishes to come back a second time later.

Miss Johnson: Thank you for your guidance, Mr. Deputy Speaker. I shall take this opportunity to make some brief remarks about the Opposition amendments in this group.

The amendments would partly take the FSA out of the process--or at least, they would not give it the opportunity to deal with complaints in the first instance. The Government consider that it would not be sensible to take the FSA out of the process in the way proposed. Most complaints arrangements--such as those relating to regulating firms under the current system--give the subject of the complaint the chance to put his house in order before an independent investigator is brought in. What would be the implications for the time and resources of the investigator if he or she were to investigate all complaints in the first instance? We are trying to set up a mechanism for cases which the FSA cannot resolve with complainants, not a first port of call, and not a port of call for every single case that might arise.


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