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Clause 30
Mr. Timms: I beg to move amendment No. 69, in page 14, line 15, leave out from "person" to end of line 16.
Mr. Deputy Speaker: With this, it will be convenient to discuss Government amendments Nos. 81, 82, 89 and 98.
Mr. Timms: These amendments remove the existing provision in clause 30 for retaining the authorisation of persons who no longer have permission for any regulated activity. Amendments Nos. 69, 89 and 98 provide instead that, under clauses 39 and 40, the FSA will be able to keep an empty permission in force, but may need to cancel it once it is satisfied that this is no longer necessary.
We are not just talking about preventing wrongdoers from escaping the jurisdiction of the FSA. The power could be used, for example, to suspend an authorised person's activities while an aspect of his business is investigated urgently. Following the investigation, his substantive permissions could be restored without forcing him to make a fresh application under clause 36.
Amendments Nos. 81 and 82 are consequential, and limit clause 36 to fresh applications by persons who are not already authorised under the Bill. The amendments exclude applications from persons who already have a permission under part IV. They can apply instead for a variation of their existing permission under clause 39.
I hope that the amendments will meet with the approval of the House.
Mr. Heathcoat-Amory:
I thought that I understood the Bill, but I am a little baffled by the amendment. I think that I see the intention behind it, but as the clause stood, the FSA was to be allowed to maintain someone's status as an authorised person even though the person concerned might not have permission to carry on a regulated activity. From what I understand of the amendment, the authority will be able to keep a permission alive even though the authorised person concerned may not any longer be performing any regulated activities. That is a consequence of the fact that his permission may have been varied.
The amendment would introduce a bizarre concept. Other parts of the Bill might have been drafted by Lewis Carroll, but this seems to break new ground. We were trying, I thought, to make the Bill easy to understand, so perhaps the amendment could have been drafted differently or we could stick with the previous wording,
which was at least logically possible. If a permission is to be kept alive when the person to whom it was granted no longer has it because it has been withdrawn or varied, that requires some explanation.
Mr. Timms:
The benefit of keeping an empty permission in force is that it will allow the FSA to retain its jurisdiction over the firm involved. For example, it may be investigating a possible disciplinary matter or it may be necessary for the firm to complete a past business review. That is the reason for the need to keep the permission alive.
The amended provision will make it clear that the FSA has to cancel a firm's permission once the FSA is satisfied that it is no longer necessary. The previous formulation in clause 30 only required the FSA to have good reason for not withdrawing a person's authorisation. The FSA's refusal of an application to cancel a firm's permission will be subject to the usual procedural safeguards. It is necessary to have the mechanism contained in the amendment to allow the FSA to retain its jurisdiction for a time while an investigation or other matter is in hand.
Amendment agreed to.
Mr. Flight:
I beg to move amendment No. 199, in page 15, line 14, at end insert--
Mr. Deputy Speaker:
With this it will be convenient to discuss the following: Government amendments Nos. 427 and 428.
Amendment No. 53, in clause 374, page 195, line 3, after "section", insert "110(6A), 111(6),".
Government amendments Nos. 430 to 436.
Mr. Flight:
This is a ragbag group of amendments. Amendment No. 199 requires that Treasury exemption orders in respect of people requiring to be authorised persons should be laid before both Houses, both for any initial exemption and for any variation. Amendment No.53 would add two territories of orders requiring the positive affirmation of both Houses and relates back to points that we stressed earlier about limiting the FSA's powers to regulate non-regulated activities and the activities of regulated UK businesses overseas. In essence, the amendments would require affirmative resolutions of both Houses for any new rules made that related to restrictions on businesses or marketing outside the UK and to any extension of non-regulated activities.
Government amendment No. 427 would grant the Lord Chancellor powers to make rules in respect of the tribunal by statutory instrument. As I understand it, the rest are consequential. The remaining Government amendments would require a draft of regulations to be put before both Houses for affirmative order, and we would certainly support those proposals.
Miss Melanie Johnson:
Amendment No. 199 proposes that an exemption order under clause 34 should be made subject to affirmative resolution procedure when it is first made and thereafter when it is replaced and certain exemptions are removed. Clearly, there is a parallel with what is provided for in amendment No. 199 and the provision in the Bill for making the first regulated activities order under clause 20 and subsequently adding to the scope of regulated activities. That is to say that both work together to define the scope of regulation under the Bill. However, the parallel is far from exact.
The effect of the regulated activities order under clause 20 will define the scope of regulation. The effect, therefore, will be to bring within the FSA's remit a wide range of activities and firms. An exemption order will be different. Our intention is to exempt only narrow categories of person whose activities are not generally such as to give rise to risk to consumers. On the one hand there will be bodies such as the Crown and the Bank of
England, who because of their nature, have never been serious candidates for regulation under the financial services legislation.
On the other hand, there will be a series of bodies that do not carry on regulated activities within the normal sense but which do things that just might qualify at the margins as regulated activities. A good example is an organisation such as a trade union or a charitable organisation that raises and invests money for the indirect benefit of its members. The purpose of the exemption in those cases is to make it absolutely clear that they can continue to do those things without fear of committing an offence.
Even to the extent that the activities of such bodies might qualify as regulated activities for the purposes of the Bill, it would happen in a way where there was no potential for consumer detriment. For example, with trade union funds, members contribute to the organisation for a number of reasons, but they do not contribute to make a return on those contributions. Any such benefits would be seen as a bonus.
I am sure that no one would wish to object to our proposals for exemptions in such cases. Regulation is really not necessary. Of course, were a trade union or charity to establish a high street bank as a side line, their exemption would need to be reviewed--and most likely would be withdrawn--in order to ensure the protection of potential depositors.
Amendments made: No. 70, in page 14, line 17, after "under" insert "Part II of".
No. 71, in page 14, line 23, leave out "Schedule 3 authorisation" and insert--
"authorisation under Part II of Schedule 3".
No. 72, in page 14, line 25, after "under" insert "Part II of".--[Miss Melanie Johnson.]
Amendments made: No. 73, in page 14, line 34, leave out "Part XVI qualifier" and insert--
"person authorised as a result of paragraph 1(1) of Schedule 5".
No. 74, in page 14, line 35, leave out "a Part XVI qualifier" and insert "such a person".
No. 75, in page 14, line 36, leave out "Part XVI qualifier" and insert--
"person authorised as a result of paragraph 1(1) of Schedule 5".
No. 76, in page 14, line 37, leave out from "to" to end of line 38 and insert--
"be a person so authorised".--[Miss Melanie Johnson.]
Amendments made: No. 77, in page 15, line 5, leave out
"persons for the purposes of section 17"
and insert "from the general prohibition".
No. 78, in page 15, line 6, leave out from second "person" to end of line 7 and insert--
"as a result of an exemption order if he has a Part IV permission".--[Miss Melanie Johnson.]
"(5) No exemption order to which subsection (7) applies may be made unless a draft of the order has been laid before Parliament and approved by a resolution of each House.
(6) An exemption order to which subsection (7) does not apply shall be subject to annulment in pursuance of a resolution of either House of Parliament.
(7) This subsection applies to an exemption order which:
(a) is the first order to be made under this section in respect of a particular person; or
(b) varies an order previously made so as to vary or remove an exemption."
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