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Mr. Loughton: My hon. Friend has probably said it all on this great hotchpotch, but I want to echo some of his words regarding the practitioner panel and amendment No. 236.
I fear that I may incur the wrath of the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) because the amendment does not deal with the body of consumers. We have addressed that subject many times in the Bill's passage. Many of us would contend that if we get the practitioners right, we are acting in the interests of consumers, but I shall not re-open that argument. No doubt he will intervene on me if he chooses to take us down that lane.
We had a good debate in Committee about the status and effectiveness of the practitioner panel. Many Conservative members of the Committee would have preferred the panel to be given much greater independence, to the extent that panel members could be nominated by practitioners from their own body instead of being appointed entirely by the authority; because it is essential that the practitioner panel has clout and is not just a form of tokenism, supposedly to give respectability to some of the greater excesses that the FSA rule-makers may wish to impose on the financial community. If the latter were the case, it would inevitably lead to prejudice to the consumer.
I have another worry. I have no qualms about the qualifications and standard of the people who have been proposed for the practitioner panel--indeed, some are highly qualified--but many are what I would term compliance and regulator people rather than practitioners. There seems to be a difficulty in filling the practitioner panel with practitioners, the people who are at the sharp end of the financial services business and conduct business day to day. Someone who regulates individual firms as a compliance officer does not constitute a practitioner.
In Committee, we also had problems when we contended that the practitioner panel should have first sight--and before the consultation was launched--of any consultation exercises that the authority recommended should go out to the general membership. It appears eminently sensible to suggest that the practitioners, who might have a sensible and pragmatic input to make to the consultation exercise, should be able to make it at the beginning. It would then be a rather more meaningful exercise, but, unfortunately, the Government did not accept our amendment. As we failed on those scores, it is essential that amendment No. 236 is taken on board. It would be absurd for the authority to appoint the people that it saw fit to serve on the practitioner panel without it consulting widely with the very people that the panel supposedly represents.
The Bill must contain a mechanism whereby the FSA is obliged to consult the practitioners properly before it names the people who it wants to appoint to the panel.
That is plain common sense if the panel is to be effective, independent and is to have an input into the workings of the FSA. It will be one of the worst cases of tokenism if it is made up of yes-men and women.
Mr. Timms:
The hon. Member for Arundel and South Downs (Mr. Flight) asked me three questions about the Government amendments and I shall deal with them first.
First, the hon. Gentleman asked me about altering and replacing the rules under part IX. That is a drafting matter. It is not right to talk about rules being altered or replaced; they are revoked and new rules are made. In that sense, part IX is no different from other parts of the Bill.
The hon. Gentleman also asked me about grandfathering. Our intention is to lay transitional provisions in another place to deal with that. To some extent, it is a matter for the FSA. For example, in the case of prudential rules, it is consulting on a proposal to make interim rules. The aim is to allow it to take account of procedural steps, including consultation, before the Act comes into force.
Finally, the hon. Gentleman asked me about the need for consultation on the Treasury powers to prescribe. There are a number of powers in the Bill for the Treasury to make regulations. It would be unduly rigid to include in the Bill a requirement to consult on the regulations. However, we shall of course consult when it is appropriate to do so.
Mr. Tyrie:
The Minister has just mentioned the transitional arrangements. As he has touched on them, will he explain why the Government have not yet taken the opportunity to table them? A huge number will be required with the ending of 18 separate sets of regulatory schemes and their replacement by the omnibus scheme. What has been the obstacle to tabling those arrangements for consideration in this House rather than waiting for them to be considered in the other place?
Mr. Timms:
We referred to several matters earlier today and in the debate last week that we shall return to in another place. As a result of all our deliberations and the close attention that we have paid to all the points made to us, we have many matters to resolve, and those are among them. It has not been possible to table amendments on that in time for debate today, but I have no doubt that those matters will be properly scrutinised in the other place.
I shall deal with the Opposition amendments in the order in which they were explained by the hon. Member for Arundel and South Downs. Amendment No. 236 would require the FSA to consult practitioners about possible candidates. The hon. Member for East Worthing and Shoreham (Mr. Loughton) referred to that. The FSA is under a duty to establish a panel of practitioners able to represent the views of practitioners. Clause 8 specifies categories of person who should be represented on the panel, and places the FSA under a duty to have regard to representations made to it.
I have no objection to the FSA consulting in the way proposed so that it can identify suitable people, but it is unnecessary and undesirable to specify so precisely the steps that it should take. Consultation with the industry
may well be a good approach, but other methods may be suitable; for example, it may be appropriate to advertise. I would not want to tie the FSA's hands on that matter.
Mr. Flight:
Will the Minister be a little more specific? He is saying that the Bill covers the spirit of what we seek to achieve, but what is the FSA likely to do? There are many trade bodies that represent different parts of the financial services industry. Is it envisaged that the FSA will discuss suitable candidates with them? Is it envisaged that the FSA will talk directly to any leaders or sections of the industry? We are concerned because it seems to us that the boards of comparable existing bodies could have been improved.
Mr. Timms:
That will be a matter for the FSA. Its obligations in that respect are pretty clear, and they cover the points about which Opposition Members are concerned. Categories of person are specified; the panel has to be able to represent the views of practitioners, and the FSA is placed under a duty to have regard to representations made to it. Precisely how the FSA fulfils those obligations is a matter that we can leave to it, although I imagine that it will do much of what the hon. Gentleman suggested.
Amendments Nos. 216 to 223 are interesting. They would extend full warning notice, decision notice and tribunal procedures to all FSA decisions under part IV. There is a need to rationalise the procedures for FSA decisions, in the same way that we have aligned consultation procedures. For example, we 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, however, 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 on market abuse, discipline and restitution.
The interests of third parties will vary according to whether one is considering permission given to an authorised person or his wrongdoing. That will have a bearing on the urgency of the case and the amount of material that it will be appropriate for the FSA to disclose in a particular case.
We do not think that it is right that all consequences should flow in exactly the same way from all FSA decisions, which would be the result of the Opposition amendments. However, we accept the need to consider further the procedures that should apply and to align them as far as possible. We shall want to return to that matter in another place. I shall take on board the central thrust of the hon. Gentleman's case, but more detailed work is needed.
8.45 pm
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