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"An applicant who is aggrieved by the determination of an application made under this Part".

Mr. Deputy Speaker: With this it will be convenient to discuss the following amendments: No. 222, in page 24, line 16, at end insert--

"(1A) The Authority shall give notice of its decision to refuse an application to the applicant and the provisions of sections 350 and 351 shall apply as if the notice was a decision notice.".

No. 223, in page 24, line 17, leave out from "person" to end of line 18 and insert--

"who is or may be affected may refer to the Tribunal any decision of the Authority to use its own-initiative power.".

No. 56, in schedule 11, page 227, leave out lines 14 to 21 and insert--

"(a) is a judge of the High Court; or
(b) is a judge of the Court of Session.".

No. 57, in page 227, line 34, leave out "seven" and insert "ten".

No. 58, in page 227, line 36, leave out "seven" and insert "ten".

No. 59, in page 227, line 38, leave out "seven" and insert "ten".

No. 60, in page 227, line 41, leave out "seven" and insert "ten".

No. 61, in page 227, line 41, at end insert--

"(d) he is a judge of the High Court or of the Court of Session.".

No. 62, in page 227, line 42, after "is", insert

"a judge of the Court of Session or".

No. 63, in page 228, line 11, leave out from "The" to "determine" in line 15 and insert--

"Secretary of State shall pay--
(a) the members of the panel of chairmen who are not judges of the High Court or Court of Session;
(b) the members of the lay panel; and
(c) any person appointed under paragraph 7(4),

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such remuneration and such travelling and other allowances as he may, with the approval of the Treasury,".

No. 64, in page 230, line 21, after "unreasonable", insert--

"or based on an ill founded view".

Mr. Timms: We shall be debating procedures more generally when we come to a later group of amendments, but we agree that there is a need to rationalise the procedures for FSA decisions in the same way as we have aligned its consultation procedures. That is why we have tabled amendment No. 115, which will extend the right to refer matters to the tribunal in clause 52 to any applicant who is aggrieved by the determination of his application, such as in cases in which the FSA has granted an application but imposed a limitation or requirement.

At the same time, it is important to distinguish between the essentially prudential and protective nature of the provisions in part IV and the different nature of other provisions in the Bill, such as those relating to market abuse, discipline and restitution. On amendment No. 223, therefore, it is not necessarily correct to extend the right to go to the tribunal to anyone who is merely affected--perhaps positively--or who may be affected by the FSA's use of its own initiative power.

We do, however, accept the need to consider further the procedures that should apply, and to align them as far as we can, and the Government will table further amendments when the Bill is considered in another place. On that basis, I hope that Opposition Members will not feel the need to press amendments Nos. 222 and 223.

Amendment No. 56 would require the Lord Chancellor to appoint a president or deputy president who is a judge of the High Court or Court of Session. Amendment No. 61 would enable the Lord Chancellor to appoint judges of the High Court or Court of Session to be members of the panel of chairmen for the tribunal, in addition to appointing lawyers of suitable standing. Amendment No. 62 is consequential to that, and expands the present requirement for the panel of chairmen to include at least one Scottish lawyer, so that that member could be a judge of the Court of Session.

As hon. Members are aware, the Lord Chancellor must appoint the members of the panel of chairmen, and from that panel, the president and deputy president of the tribunal. The current provisions for those appointments, in paragraphs 2(5) and 3(2) of schedule 11, are sufficient for the proposed new tribunal and are in line with appointments for other tribunals. The president of the tribunal must have a 10-year legal qualification.

Of course we want the tribunal to have a high level of expertise and authority. The Bill leaves it open to the Lord Chancellor to make appointments with greater seniority if a case is made out for doing so. However, the expected character and volume of the tribunal's work load does not, at present, warrant taking the unusual step of making such an appointment.

The amendment would impose too much inflexibility on the appointment of the president. It would, for example, appear to prevent at a future date the appointment of a retired High Court judge or even a more senior judge, should it be found that the work load justified such an appointment. The Bill provides an appropriate framework for appointments to the tribunal, which allows common sense and practice to inform the appointment process.

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Amendment No. 57 would require the members of the panel of chairmen to have a 10-year legal qualification as opposed to a seven-year qualification. The Bill's provisions for appointing the panel of chairmen will ensure that suitable people are appointed to the tribunal and have the necessary qualifications to deal with the cases that will arise. Those provisions do not need to be changed as the amendment suggests. It is normal practice for other tribunals to appoint people with a seven-year legal qualification to the panel of chairmen. Examples include the VAT and duties tribunal, employment tribunals and transport tribunals.

If there is a case that raises particularly complex or ground-breaking legal issues, the tribunal may appoint one or more experts to provide assistance. It can also bring in additional members of the panel of chairmen with expertise relevant to the case in question. I suggest that the current arrangements for appointing the members of the panel of chairmen are sufficient for the purposes of the tribunal.

The tribunal's independence is certainly important. Amendment No. 63, which would give the Secretary of State and the Treasury responsibility for paying tribunal members' expenses, could be seen as undermining that independence. As the Lord Chancellor's Department will be running the tribunal, it makes sense for the Lord Chancellor to pay its expenses, thus reinforcing its independence.

6.30 pm

Amendment No. 64 is designed to widen the circumstances in which the FSA may be liable to pay the costs of the other party. Currently, the Bill allows the tribunal to award costs if it considers that the FSA decision giving rise to the reference was "unreasonable". Inserting the words

after "unreasonable" adds nothing, but might instead muddy the waters. Were the FSA, based on the facts available, to reach a decision that subsequently proved to be incorrect, would its position be

    "based on an ill founded view",

even though it had taken all reasonable steps to establish the correct facts? The wording of the amendment reflects no other statutory provision of which I am aware; its meaning is unclear. The Council on Tribunals agrees that the "unreasonable" test is appropriate for the purposes of the tribunal. Given that explanation, and on the basis that the current drafting provides a practical consequence for any unreasonable exercise of powers by the FSA, I hope that the Opposition will not press amendment No. 64.

Mr. Flight: The Government will be aware that, under the current regime, the issue of applications being turned down in whole or in part is troublesome. We welcome Government amendment No. 115, which enables an appeal to the tribunal where an application is turned down in part. We remain of the view that amendment No. 222, which would require the decision notice procedure to apply in the case of a refusal of permission, and amendment No. 223, which would extend to an authorised

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person who is or may be affected the right to refer matters to the tribunal, are desirable and would solve current practical problems.

The amendments relating to the tribunal would make provisions that are not as demanding as those covering the employment appeals tribunal. Requiring the Secretary of State to be responsible for pay and rations is a practical step. If the Financial Secretary had consulted candidates for appointment to the tribunal, he might have heard many express the view that they would not receive reasonable remuneration were the Lord Chancellor's Department responsible. In our view, it is crucial that the tribunal be staffed with top calibre people. Our amendments both provide for top calibre appointments to be made and solve a practical problem. The Government would be advised to give their attention to such problems before the Bill is considered in the other place.

Amendment No. 64 is, to some extent, a probing amendment. As the Financial Secretary said, the tribunal can award costs against the FSA when it regards the FSA as having acted unreasonably. The amendment addresses the complex question of how people can defend themselves. A positive step has been taken in allowing costs to be awarded against the FSA in certain circumstances, and in ensuring that the tribunal will not award costs against those who have brought cases to it, unless they have acted vexatiously, frivolously or unreasonably. However, we regard the term "unreasonable" as slightly vague.

What if the FSA is wrong, or brings a case that the tribunal finds does not stand up? The FSA might have acted perfectly reasonably in such circumstances; it might have thought that it was right. However, if someone has been prosecuted wrongly, it strikes us as fair in law that that person should get his or her costs paid. It is also necessary under the provisions of the European convention on human rights relating to people's ability adequately to defend themselves.

We have therefore tabled what I acknowledge to be a not especially well worded amendment, the intent of which is to ensure that the Government consider whether the word "unreasonable" is sufficient, or whether costs should be able to be awarded against the FSA if the authority loses in a case that it has referred to the tribunal.

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