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Mr. Kidney: Will the hon. Gentleman give way?

Mr. Tyrie: I shall give way to the hon. Gentleman because he has such a happy smile on his face.

Mr. Kidney: I remind the hon. Gentleman of how well he spoke earlier in favour of the need for regular cost-benefit analyses of, for example, new rules. What is his view of the Opposition's proposal that the reviews should be undertaken regularly, irrespective of cost or benefit?

Mr. Tyrie: That is an extraordinary intervention. The object of any review is to undertake cost-benefit analyses of regulations to ascertain whether they are intelligent or cost the industry more than they save it. We would expect the Treasury to use its intelligence to ensure that the review did not become an excessive and irredeemably burdensome examination of the FSA's activity.

The Opposition have consistently argued for at least one thoroughgoing review of the fundamental change in legislation. The Government consistently refuse to say whether we can have such a review--[Interruption.] The Minister nods; perhaps that is because he has read a pleasant note, which he has stuffed into his pocket, but perhaps he was agreeing with me that the Government have consistently refused to accept the need for at least one thoroughgoing review of the measure.

The arguments were well presented in Committee, and people can read them in Hansard.

Liz Blackman (Erewash): Will the hon. Gentleman give way?

Mr. Tyrie: If the hon. Lady will forgive me, I am about to conclude my remarks.

The City would be greatly reassured by the prospect of a review. There is much uncertainty about this Bill in the City, and the knowledge that a review will take place will help allay it. We must not underestimate that point.

A second crucial reason for having a review is that the Bill alters the structure of the regulatory system. We have

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not simply transferred existing legislation; we have fundamentally altered it. In addition, rapid change is occurring, and an on-going review should probably take place, even if there were no Bill.

A third reason for supporting the spirit of the amendments, which do not cover the point about the Comptroller and Auditor General, is that granting him power to review will increase accountability to Parliament because he will be able to report to the Public Accounts Committee. The accountability to Parliament of the extremely powerful body that we are creating should be important to all hon. Members.

I cannot understand why the Government are afraid of reviews. Why do they consider it unreasonable to undertake, after three or four years, a fundamental review of the leviathan Bill that we are considering?

Mr. Timms: Our new review proposals have received a rather grudging welcome. I should have thought that Opposition Members would show a little more enthusiasm for the new arrangements.

Clause 10 gives the Treasury the power to appoint an independent person to review the efficiency, economy and effectiveness with which the FSA has used its resources in discharging some or all of its functions. We are considering value-for-money audits. Under the clause, an audit can be carried out at any time, but the amendment seeks to alter that so that the first audit would take place in 2002, with subsequent further audits at five-year intervals. The Treasury would have the power to require further audits to be undertaken outside that timetable, if that appeared necessary.

The amendment is unnecessary. The purpose of the clause is to allow the Treasury to commission a review when it believes that that would be helpful. That is a matter of judgment and it is impossible to specify the right time in advance, because that may depend mainly on events outside the FSA. Let us suppose, for example, that a crisis suddenly occurred in a sector of the financial services industry and the FSA had to step in and put matters right. In those circumstances, the Treasury might want to ask for a review to see how the FSA's systems stood up to the crisis. The amendment would not prevent that, but we could be in the absurd position of having to begin another review--on the regular timetable--immediately after the first review had concluded and when it was apparent to everybody that there was nothing new to report.

Unlike the hon. Member for Chichester (Mr. Tyrie), I suggest to the House that my hon. Friends the Members for Bexleyheath and Crayford (Mr. Beard) and for Stafford (Mr. Kidney) were absolutely right. He should have taken much greater note of their remarks because there is a serious issue here of forcing on to people unwanted and unwarranted reviews and procedures that do not merit the costs associated with them. There is no advantage in having fixed periods for external reviews; they should take place when they are needed.

Mr. Tyrie: Will the Minister commit the Government to at least one thoroughgoing review of the legislation?

Mr. Timms: Many people will look at how the legislation works, not least the Treasury Committee. The timing of the value-for-money audits should depend on

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circumstances--for example, the non-executive directors might draw to our attention in the annual report the FSA's efficient and economic use of resources. Schedule 1 requires that to be included in the FSA's annual report.

Sir Nicholas Lyell: I am most grateful to the Minister for giving way and hope that I have not cut him off at a vital moment, but one of my worries is that the reviews appear to be confined to the

Would that cover circumstances of growing and perhaps widespread concern in the City that the authority was using its powers in an overbearing and tyrannical way?

Mr. Timms: I suppose that that would depend on the particular circumstances, but the right hon. and learned Gentleman's intervention brings us on to the points that were made about amendments Nos. 477 and 478. Let me respond to those.

There is no doubt that the FSA's performance in terms of making policy--the type of area to which he referred--and establishing principles in pursuit of its regulatory objectives should be open to scrutiny, but amendment No. 477 is not the right way to achieve that. The Bill already provides a number of mechanisms that will achieve that outcome, which I think we all seek.

Schedule 1 requires the FSA to report on the extent to which its objectives have been met in its annual reports. Clause 7 requires it to consult with practitioners and consumers, including the statutory practitioner and consumer panels, on

which are set by clause 2. The FSA will be under a duty under clauses 8 and 9 to have regard to any representations made to it by the consumer and practitioner panels.

Mr. Hawkins: Does the Minister accept that even as authoritative a trade association as the Association of British Insurers still does not feel that the Bill provides for enough scrutiny? With such important trade bodies saying that more needs to be done, our amendments are necessary to satisfy the needs of those with a legitimate interest in the legislation being reviewed properly when it is in force.

7.15 pm

Mr. Timms: There will be ample scrutiny through the mechanisms that I have set out--for example, the work of the Treasury Committee and the role of the Treasury--and I disagree with the hon. Gentleman. Arrangements will be in place to meet that concern.

Mr. Cousins: Virtually all the points made by Conservative Members have been designed, perfectly properly, to protect the position of people in the trade. My hon. Friend has said that the review clause will take account of the points made by consumer panels. Will he make it clear that the review procedure will be symmetrical in order to protect the interests of consumers

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as much as those of the trade? The point is that "effectiveness" also covers effectiveness on behalf of consumers.

Mr. Timms: My hon. Friend's important point provides a helpful corrective to the balance in the debate. He is absolutely right that the position of consumers and the protection of their interests is at the heart of the Bill. That is only right.

Mr. Loughton rose--

Mr. Tyrie rose--

Liz Blackman rose--

Mr. Timms: I give way to my hon. Friend the Member for Erewash (Liz Blackman).

Liz Blackman: Does my hon. Friend also accept that consumers and practitioners alike will be far more reassured by a review that results from a trigger rather than a meaningless regular mechanism?

Mr. Timms: My hon. Friend is absolutely right. Unnecessary regular reviews, with all the costs that they entail, are not a feature of the system that anybody wants, least of all consumers.

Mr. Tyrie: Will the Minister give way?

Mr. Timms: I shall give way for the last time; then I shall conclude.

Mr. Tyrie: I am concerned that the Minister seemed to agree with the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) and appeared to suggest that there is a trade-off between the interests of consumers and of producers. I had hoped that we had moved on and that, somehow or other, Labour--which talks of the third way--had managed to shed such language, but it seems that we are back to where we were and the Minister accepts the trade-off. Will he acknowledge that the interests of consumers and producers are the same with respect to reviews and that a review that makes a producer more efficient will give greater benefit to the consumer?

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