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Mr. Tyrie: One of the concerns is that there could be excessive bureaucracy where the ombudsman knows that there may be an ECHR inquiry; he will therefore be all the more meticulous, which could lengthen the inquiry. Do the Government have a target that they think would be reasonable for the average duration of an ombudsman's investigation?

Mr. Timms: That would depend very much on the nature of the case and of the complaint. I do not have an anticipated average. It may well be that the ombudsman does, although I imagine that he would have in mind different periods for different kinds of complaint.

There are many other areas in which Parliament has deemed it necessary to redress the imbalance of resources that would otherwise exist between the parties to a civil dispute. For example, in a very different context, there is a comparable situation in disputes between landlord and tenant, where the requirements on the tenant and the requirements on the landlord are rather different, reflecting the different strengths of their position. Other examples are employers and employees, lenders and borrowers. In all of those cases, it is necessary to provide additional procedures that give confidence to the weaker party that he or she will have the same opportunity to present the case. That is exactly the position here as well.

The experience of other schemes is that the vast majority of complaints are settled without the need for a formal hearing. There is no evidence that firms have been or will be prejudiced by giving consumers the theoretical option of having their complaint reheard by the courts. Therefore, I hope that the whole House will accept, on reflection, that the clause is the best model both for firms and for consumers.

I should like to say a few words about the Government's amendments. Amendment No. 180 clarifies the rules governing the budget to be adopted by the ombudsman scheme operator each year. As drafted, the Bill requires only that the budget reflects income from fees. The amendment makes it clear that the budget should set out any income that the operator has from the operation of the scheme--for example, income from publications.

Amendment No. 181 makes it clear that the operator of the ombudsman scheme may include in its standard terms under the voluntary jurisdiction matters relating to the payment of fees and levies. That is consistent with the arrangements for the compulsory jurisdiction under clause 209.

Mr. Flight: We remain of the view that it would be wiser for both sides to be bound by the ombudsman. However, this is not a matter of major principle, and therefore I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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Clause 237

Open-ended investment companies

Amendment made: No. 449, in page 121, line 2, after "of" insert ", or made under,".--[Mr. Timms.]

Clause 240

Representations and references to the Tribunal

Amendment made: No. 450, in page 122, line 36, leave out "A person" and insert--
"The operator of the scheme".--[Mr. Timms.]

Clause 242

Power of Authority to suspend promotion of scheme

Amendments made: No. 451, in page 123, line 23, at end insert--
"( ) If the Authority decides to revoke a direction under this section it must--
(a) give the operator of the scheme a decision notice; and
(b) inform the competent authorities in the scheme's home State of its decision.".
No. 452, in page 123, line 39, at end insert--
"( ) The Authority may, either on its own initiative or on the application of the operator of the recognised scheme concerned, revoke a direction given under subsection (1A) if it appears to the Authority--
(a) that the conditions specified in the direction have been complied with; or
(b) that it is no longer necessary for the direction to take effect or continue in force.".
No. 453, in page 123, line 40, after "effect" insert "(unless revoked earlier)".--[Mr. Timms.]

Clause 252

Power to require information

Amendment made: No. 454, in page 128, line 17, leave out clause 252.--[Mr. Timms.]

Clause 260

Exemption for recognised investment exchanges and clearing houses

Mr. Timms: I beg to move amendment No. 136, in page 132, line 36, leave out from beginning to "in", in line 37 and insert--

"in relation to which a recognition order is".

Mr. Deputy Speaker: With this it will be convenient to discuss the following: Government amendment No. 137.

Amendment No. 481, in clause 262, page 134, line 9, after "for", insert "access to and".

Amendment No. 482, in page 134, line 9, after "services", insert--

"and the capacity of those services".

Government amendment No. 139.

Mr. Timms: Amendment No. 139 makes a drafting change to correct the mistaken indirect reference in

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clause 269(6) to directions made in subsection (2). Subsection (2) in fact contains no such power. The amendment makes a further consequential change.

Amendments Nos. 136 and 137 make minor changes to improve the drafting of clause 260. They do not change the substance of the provisions of this part.

Amendments Nos. 481 and 482, in the name of my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins), would make drafting changes to the provisions on the required particulars which applicants for recognition as recognised investment exchanges must send with their application. I shall be interested to hear what he has to say about this, but I suggest that the amendments are covered already by provisions in the Bill.

Clause 288(2)(b), for example, provides that references to rules of an investment exchange, which must be submitted with the application, are to rules made with respect to

"admission of persons to, or their exclusion from the use of, its facilities".

That, I think, deals with amendment No. 481 and the important point about access.

Amendment No. 482 would add a reference to

"the capacity of those services".

If there is an issue, I think that it can be dealt with by the FSA asking for additional information under clause 262(3)(e)--or, if need be, in the recognition requirements described in clause 261. I think that the points raised by my hon. Friend in his amendment are dealt with by provisions already in the Bill, but I shall be interested to hear what he has to say.

Mr. Cousins: I shall not detain the House for long, but we are dealing with an important aspect of developments in the markets that have taken place since the inception of the Bill. It is important because it concerns the capacity of the London market to continue to maintain its strength and significance: it must have the technological capacity to deal with modern market situations.

The United States has 160 on-line share brokers; 40 per cent. of all share trading there takes place on line rather than directly through the markets. The situation in this country is quite different. On the London stock exchange, although 2,000 shares are listed only 130 can be traded on line, and only a limited number of brokers have on-line trading capacity.

Since the explosion in asset values last autumn, the number of trades on the market has increased incredibly rapidly. The number of trades, particularly by small traders, is now three or four times greater than it was even six months ago. People are attempting to make the most of those trades by telephone, because of the lack of on-line trading capacity. In many cases, the telephone systems handled by brokers have broken down, causing delays and causing consumers attempting to buy and sell stock to doubt whether they have been fairly treated. I have been told by the FSA that in the early part of January as many as 2 billion shares a day were being traded on the markets, and that those included an increasing number of very small trades. In that respect, the London market compares very unfavourably with the market in Frankfurt, which has a completely electronic platform.

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In November and December of last year, the position of small traders in the market led to a major outcry in the press and other media about the lack of ability to place deals when people wanted to execute them. At that time, the Securities and Futures Authority, which is currently responsible for this aspect of the work of the exchanges, produced some guidance for people in the market. That guidance effectively attempted to protect the position of clients who were already registered with brokers and who had nominee accounts. Plainly, they were to be given priority to the disadvantage of other traders who were not similarly placed. That cannot be satisfactory in consumer terms.

It is not clear that the FSA regards the capacity of the market to sustain the volume of trade as part of its duty. After I submitted a dossier of correspondence on the topic to Howard Davies of the FSA, he wrote:

"You can be assured that where a firm does get into difficulties which pose a significant risk to customers--whether with its telephone or internet-based services--our supervision staff can and do get involved. Persistent poor service to customers, causing losses to them, could be grounds for disciplinary action . . . The longer-run development of dealing services is ultimately a commercial matter for the exchanges and their users."

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