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Miss Melanie Johnson: I understand why the right hon. Member for Haltemprice and Howden (Mr. Davis) tabled the amendment and I know that he has already argued his case on behalf of the Public Accounts Committee in a memorandum to Lord Burns Joint Committee, as well as arguing it fulsomely in connection with another Bill.
Clause 10 provides that the Treasury may appoint an independent person to conduct a review of the economy, efficiency and effectiveness with which the FSA has used its resources in discharging its functions. However, it does not provide that the NAO must always carry out such reviews. I am not apologetic about that. In some cases, if the Treasury concluded that a review was justified, it might want to ask the NAO to do the job and nothing would prevent it from doing so. However, on other occasions, the Treasury may wish to appoint another body to perform that task. If so, that would not be any reflection on the NAO's expertise or professionalism, but simply of the fact that another body may be more familiar with how the financial markets work, and thus the constraints under which the FSA operates. A different body may be more appropriate to perform the task in a particular case.
Mr. David Davis:
I take the hon. Lady's point entirely. As we heard from the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins), preclusion from policy might be another reason for having a body other than the NAO perform the task. However, in answering my points, I hope that the Minister will answer the simple question of how
Miss Johnson:
I am happy to answer the question, but should first say that, if the amendment were accepted, it would create a dual system in which the Treasury could initiate a review under clause 10, whereas the National Audit Office might begin its own review under the amendment. I am not sure whether the right hon. Gentleman intends his amendment to have that effect, but, as drafted, it certainly has the potential to cause overlap and confusion.
Therefore, although I certainly agree that the FSA should be susceptible to value-for-money scrutiny, we share the Burns committee's conclusion--to which the right hon. Gentleman referred in his earlier remarks--that
The right hon. Gentleman asked how the FSA can be held to account. It is important to recognise that much stronger accountability requirements--both to Ministers and to Parliament--are being imposed on the FSA than were imposed on its many predecessor bodies, some of which he also referred to. There is, for example, provision for the Treasury to appoint and remove the board. Additionally, non-executives will have to report annually on the FSA's efficiency and economy, and that report will have to be laid before Parliament. We should also fully expect that report to be debated by Parliament. The Treasury could also commission inquiries into regulatory failures.
We feel that the best way of ensuring full accountability to Parliament would be to ask--as the Burns committee did--a parliamentary Committee to review the FSA's annual report and to take regular evidence from a broad spectrum of consumers and practitioners.
Mr. David Davis:
Will the hon. Lady give way?
Miss Johnson:
I shall happily give way.
Mr. Davis:
I thought that there was a great deal of power in the point made by the hon. Member for Newcastle upon Tyne, Central--who may want to intervene on this point himself--on parliamentary Committees' resources and access. I wholly agree with the Minister's comments on the right to dismiss the board and the other powers that she mentioned. However, all of that depends on the information that is available to Parliament. Without the right information, all those decisions are not only irrelevant, but would certainly be ill-founded. The availability of impartial information is a specific concern, and a report produced by the body itself could not conceivably be seen in such terms.
Miss Johnson:
I apologise to my hon. Friend the Member for Newcastle upon Tyne, Central, who I did not realise was trying to intervene. I am grateful to the right hon. Gentleman for drawing it to my attention.
Mr. Cousins:
I am most grateful to the Minister for those comments, and should like to pursue the points made by the right hon. Member for Haltemprice and Howden. Currently, the Treasury Select Committee--of which I, like some other hon. Members in the Chamber, am a member--scrutinises the FSA's work. Although I cannot prejudge what the Committee will do in future, I am reasonably confident that we intend to continue to scrutinise it. However, the issue arises of access to sufficient resources to perform that work of scrutiny of a body such as the Financial Services Authority will be after the Bill is passed.
The FSA will be a powerful and significant body, and there should be sufficient resources to perform proper scrutiny. Although I realise that my hon. Friend might regard that as a matter for the authorities of the House rather than for Ministers, the issue is so important that--even if it were to be seen as a matter for the authorities of the House--the Government's guidance and intentions on the issue now would be significantly advantageous.
Miss Johnson:
I am grateful to my hon. Friend for those comments. However, I am a little puzzled by his difficulties on the matter. Obviously, the FSA would be audited and subjected not only to value-for-money scrutiny, but to reviews on effectiveness and on fulfilling other criteria. The scrutiny and reviews will be done by those who are appointed to do them, and they will be reported. Therefore, all the information will be available. Moreover, future difficulties in scrutiny will be the same as those that already exist--such as hon. Members' ability to find sufficient time and to put in the effort to review all the information that is produced by those activities, to ensure that the information is subjected to the scrutiny and oversight that it merits.
I do not think that the difficulties encountered in scrutinising the FSA under the arrangement that we envisage will be any different from, or greater than, those currently confronting the House or Committees in scrutinising the authority.
Mr. David Davis:
The hon. Lady has been very courteous in giving way so many times. The hon. Member for Newcastle upon Tyne, Central made a valid point. Even before that, however, the issue of access was raised. The Select Committee on the Treasury is probably the proper Committee to deal with the matter. However, even if it had sufficient resources, it would not be able to gain
Miss Johnson:
The FSA will have to be reviewed and to subject itself to such scrutiny, and will not have the option of deciding whether to undergo those processes. Therefore, that information and those reports will come back to Parliament and be available for hon. Members to debate and consider. Specifically, presentation of the annual report to Parliament will be a major occasion. In the annual report, non-executives are required to report on both efficiency and economy.
I am quite confident that the arrangements that we have provided in the Bill are entirely satisfactory. In meeting the desires of the right hon. Member for Haltemprice and Howden, the arrangements fail in only one respect--they do not, in totality, specify the National Audit Office. Although I am sorry to disappoint him again, I trust that the House will not support amendment No. 483.
Mr. David Davis:
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Dr. Cable:
I beg to move amendment No. 444, in page 205, line 12, at end insert--
I realise that, for the first time in its long passage in the House, the Bill is ahead of the clock. I do not intend to fill the remaining 40 minutes, but should like to return to an issue that I raised in Committee--mortgages, and how they are handled in the Bill and by the FSA. There is a paradox here, in that the aspect of financial services regulation and the work of the FSA that will have the greatest impact on our constituents is almost certainly the one relating to mortgages, yet it has been subject to very little discussion during the passage of the Bill.
It might be useful to recap briefly how the issue has emerged. It was subject to considerable discussion at the pre-legislative stage by the Select Committee on the Treasury and by the Joint Committee. There was consensus at that point that mortgages should be regulated under the Bill. Last year, there was a strong media offensive by the Chancellor and the Secretary of State for Trade and Industry, who pointed to the many areas of abuse in the market and made it clear that regulation was urgent, overdue and needed to be draconian.
We then discussed the Bill in Committee, and the Government and the Treasury properly went through a process of public consultation. It was a little discordant, in the sense that there was a difference between Ministers and officials as to whether it should be a statutory or a voluntary process. We were promised that the Government would report eventually, and that a policy would be announced. It emerged in the new year.
"The NAO rightly seeks to follow public money wherever it goes, but the FSA will be paid for by the industry, not the taxpayer."
The right hon. Gentleman advanced some arguments that he felt countered that fact, but many people would say that the FSA is in a different position from other bodies and that his arguments might be stronger in relation to those.
"23A. The provision of loans for the purchase of property for residential use, where the obligation of the borrower to repay the lender is secured on the value of the property in question.".
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