House of Commons Public Bill Committee Proceedings

House of Commons

Session 2009 - 10
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Other Bills before Parliament

21

House of Commons

Thursday 14 January 2010

Public Bill Committee Proceedings

Financial Services Bill

[thirteenth and fourteenth SittingS]

Mr Mark Hoban

Withdrawn  70

Clause  26,  page  29,  line  13,  leave out ‘to make rules’ and insert ‘for a scheme to be

made’.

Mr Mark Hoban

Not called  71

Clause  26,  page  29,  line  20,  leave out ‘make rules’ and insert ‘propose a scheme’.

Mr Mark Hoban

Not called  72

Clause  26,  page  29,  line  38,  leave out ‘rules are’ and insert ‘scheme order is’.

Mr Mark Hoban

Not called  73

Clause  26,  page  29,  line  41,  leave out ‘making rules’ and insert ‘proposing a

scheme’.

Mr Mark Hoban

Not called  74

Clause  26,  page  29,  line  43,  at end insert—

‘(11)
If the Authority proposes a scheme under this section, it shall apply to the court

for a consumer redress scheme order.

(12)
“Consumer redress scheme order” means an order imposing a consumer redress

scheme on relevant firms.

(13)
Any application by the Authority under this section shall—

(a)
attach a draft order setting out the rules of the proposed consumer redress

scheme in full; and

(b)
be notified to relevant firms and be published as required by the Civil

Procedure Rules or as otherwise directed by the court.

(14)
Upon an application under subsection (11), the court may make a consumer

redress scheme order if it is satisfied that—

(a)
the making of such an order represents the most appropriate means for

the fair and efficient resolution of the liability of relevant firms to pay

redress to consumers;

Public Bill Committee Proceedings: 14 January 2010
22

Financial Services Bill, continued

(b)
the consumer redress scheme is just and equitable; and

(c)
the consumer redress scheme order complies with section 404A.

(15)
At any time after the making of a consumer redress scheme order, any relevant

firm, the Authority, the ombudsman scheme or any other party permitted by

Court rules to do so, may apply to the court for—

(a)
any amendment to be made to the consumer redress scheme order, or

(b)
clarification or directions regarding the operation of the consumer

redress scheme;


and upon any such application the court may make any order it considers

appropriate (including making any amendment to the consumer redress scheme

order).’.

Mr Mark Hoban

Not called  75

Clause  26,  page  30,  line  2,  leave out ‘Rules under section 404’ and insert ‘a

consumer redress scheme order’.

Mr Mark Hoban

Not called  76

Clause  26,  page  30,  line  41,  leave out ‘rules’ and insert ‘consumer redress scheme

order’.

Mr Mark Hoban

Not called  77

Clause  26,  page  30,  line  45,  leave out ‘rules’ and insert ‘consumer redress scheme

order’.

Mr Mark Hoban

Withdrawn  78

Clause  26,  page  30,  line  48,  leave out from beginning to end of line 2 on page 31

and insert—

‘(4)
Matters may not be set out in a redress scheme order as a result of subsection

(1)(d) if a court would not grant such relief in the circumstances specified.’.

Mr Mark Hoban

Not called  79

Clause  26,  page  31,  leave out lines 3 to 5.

Mr Mark Hoban

Withdrawn  80

Clause  26,  page  31,  leave out lines 21 and 22.

Mr Mark Hoban

Not called  81

Clause  26,  page  31,  line  22,  at end insert—

‘404AA
  Rules of court about consumer redress schemes

(1)
Rules of court may make provision about consumer redress schemes.

(2)
Such rules shall be designed with the objectives of ensuring, inter alia, that—

(a)
applications concerning consumer redress schemes are heard and

determined expeditiously; and

Public Bill Committee Proceedings: 14 January 2010
23

Financial Services Bill, continued

(b)
notice of such applications is published so as to bring the application to

the attention of those who may be affected by the consumer redress

scheme.

(3)
The rules may in particular—

(a)
make provision about applications for or in connection with consumer

redress scheme orders;

(b)
make provision about the notice to be given to relevant firms regarding

such applications;

(c)
make provision about the publication of such applications, so as to bring

the application to the attention of those persons who may be affected by

a consumer redress scheme order;

(d)
set out the criteria to be applied by the court when deciding whether to

make a consumer redress order (or the terms of such an order including

the rules of the consumer redress scheme);

(e)
make provision for any other matter relating or incidental to the proper

management and conduct of the consumer redress scheme;

(f)
make provision for the court to consider whether other means may be

more appropriate for the fair and efficient resolution of the liability of

relevant firms to pay redress to consumers, and to give directions as it

considers necessary.’.

Mr Mark Hoban

Withdrawn  82

Clause  26,  page  31,  leave out lines 32 to 38 and insert—

‘(2)
If a consumer considers that a relevant firm has failed to make an accurate

determination in accordance with a consumer redress scheme, the consumer may,

in respect of that determination or failure, make a complaint under the

ombudsman scheme.’.

Mr Mark Hoban

Not moved  83

Clause  26,  page  33,  leave out lines 7 to 9 and insert—

‘(c)
natural persons who, in the matters to which the consumer redress

scheme relates, are acting for purposes which are outside their trade

business or profession;’.

Mr Mark Hoban

Not moved  84

Clause  26,  page  33,  line  46,  leave out from ‘interest;’ to end of line 2 on page 34.

Clause Agreed to.

Clauses 35 and 36 Agreed to.

Schedule 2 Agreed to.

Clauses 37 to 39 Agreed to.

Public Bill Committee Proceedings: 14 January 2010
24

Financial Services Bill, continued

New Clauses

Disclosure of enforcement actions

Mr Mark Hoban

Not called  NC1

To move the following Clause:—

‘In the Financial Services and Markets Act 2000, after section 349 insert—

“349A
Disclosure of enforcement actions

(1)
Section 348 does not prevent the disclosure by the Authority of

information that—

(a)
an authorised person is subject to actions taken under Part 14 of

the Act; or

(b)
an approved person is subject to actions taken under section 66

of the Act.

(2)
Prior to a public statement that action is being taken under Part 14 or

section 66 of the Act, the Authority must notify the person subject to the

action seven days prior to any disclosure of its intended course of

action.”.’.

Identification of additional powers needed to fulfil responsibilities for financial stability

Mr Mark Hoban

Negatived on division  NC2

To move the following Clause:—

‘The Treasury must lay a report setting out the powers that the Financial Services

Authority and the Bank of England need to fulfil their responsibilities for

financial stability under the relevant legislation within one year of the

commencement of this Act.’.

Securing consumer protection

Mr Andrew Love

Withdrawn  NC3

To move the following Clause:—

‘(1)
The Financial Services and Markets Act 2000 is amended as follows.

(2)
After section 5, insert the following new section—

“5A
Securing consumer protection

(1)
This section applies where the Authority becomes aware that any feature

or combination of features of a financial services market, product,

Public Bill Committee Proceedings: 14 January 2010
25

Financial Services Bill, continued

service, or provider in the United Kingdom is or appears to be

significantly harming the interests of consumers.

(2)
The Authority must take such action as it considers reasonable and

practicable to remedy, mitigate or prevent any detrimental effects on

consumers resulting from or relating to the feature or features of a

financial services market, product or provider.

(3)
The Authority must ensure that action taken under subsection (2) shall

have regard to the need to achieve as comprehensive solution as is

reasonable and practicable.

(4)
Action under subsection (2) may include action by the Authority itself

and recommendations on the taking of action by others where the

Authority can not by itself meet the requirements of subsection (3).

(5)
For the purpose of subsection (1) the Authority becomes aware in the

event of any of the following—

(a)
its own research, reviews, monitoring, supervision or

enforcement work;

(b)
on a referral by the scheme operator of the ombudsman scheme

or the Office of Fair Trading; or

(c)
Following acceptance of a request from a designated consumer

body made under susection (6).

(6)
A designated consumer body may by presenting evidence of apparent or

likely significant harm to the interests of consumers request that the

Authority takes action under this section.

(7)
The Authority shall within 90 days of a request under subsection (6)

publish a response stating—

(a)
whether it accepts or rejects the need for action; and

(b)
the reasons for its decision.

(8)
For the purpose of section (5)(c) “designated consumer body” includes—

(a)
a body designated by the Secretary of State by order under

section 11 of the Enterprise Act 2002;

(b)
the financial services consumer panel; or

(c)
the consumer financial education body.

(9)
The Authority shall prepare and publish a report within one year of any

of the events set out in subsection (5) setting out the action it intends to

take and the reasons for its decisions.

(10)
In this section reference to a financial services market, product or

provider refers to regulated activities as defined by Section 22.”’.

Duty regarding socio-economic inequalities

Mr Andrew Love

Withdrawn  NC4

To move the following Clause:—

Public Bill Committee Proceedings: 14 January 2010
26

Financial Services Bill, continued

‘(1)
The Financial Services and Markets Act 2000 is amended as follows.

(2)
In section 2(1) (the FSA’s general duties), after paragraph (b) insert—

“(c)
which when making decisions of a strategic nature about how to exercise

its functions the Authority considers desirable so as to exercise them in a

way that is designed to reduce the inequalities of outcome which result

from socio-economic disadvantage.”’.

Restrictions on provision of credit limit increases

Mr Colin Breed

Dr Vincent Cable

Withdrawn  NC5

To move the following Clause:—

‘(1)
A consumer credit firm which provides an increase in credit limit otherwise than

in accordance with this section commits an offence.

(2)
Credit limit increases may be provided only to a person who has asked to receive

such an increase.

(3)
This request may take the form:

(a)
of a specific one-off request from a person, or

(b)
of a decision by a person to opt in to being offered a limit increase.

(4)
In the case of section 3(b), the consumer credit firm may offer a person a limit

increase, but must gain specific approval from the person before providing this

increase.

(5)
In the case of section 3(b), a person may choose to opt out of receiving offers of

limit increases at any time by informing the consumer credit firm, and their

request must be processed with immediate effect.

(6)
A consumer credit firm must undertake proper credit checks and an assessment

of the person’s ability to repay before offering an increase in their credit limit.’.

Amendment of the Unfair Terms in Consumer Contract Regulations 1999

Mr Colin Breed

Dr Vincent Cable

Withdrawn  NC6

To move the following Clause:—

‘(1)
The Unfair Terms in Consumer Contract Regulations 1999 (S.I. 1999/2083) is

amended as follows.

(2)
After regulation 6(1), insert—

“(1A)
Paragraph 2 shall not apply to contracts for the supply of financial

services.”.

(3)
After regulation 6(2) insert—


“In so far as it is in plain and intelligible language, the assessment of a term in a

contract for financial services shall not relate—

Public Bill Committee Proceedings: 14 January 2010
27

Financial Services Bill, continued

(a)
to the definition of the main subject matter of the contract, or

(b)
to the adequacy of the main price or remuneration, as against the goods

or services supplied in exchange.

(4)
Where a term of a contract provides for the charging of a consumer and the

circumstances in which that charge can be imposed need not arise during the term

of the contract, then such price or remuneration shall not fall within the main price

or remuneration for the purposes of paragraph 3.

(5)
If for the purposes of paragraph 3 there is doubt about what represents the main

price or remuneration, the interpretation which is most favourable to the

consumer shall prevail.”’.

Removal of reduction of financial crime as an FSA regulatory objective

Mr Mark Hoban

Withdrawn  NC7

To move the following Clause:—

‘(1)
The Financial Services and Markets Act 2000 is amended as follows.

(2)
In section 2(2) (the FSA’s regulatory objectives) omit paragraph (d) (which

provides for the reduction in financial crime to be one of its objectives).

(3)
Omit Section 6 (the reduction of financial crime).’.

Maintenance of competition

Mr Andrew Tyrie

Withdrawn  NC9

To move the following Clause:—

‘(1)
The Financial Services and Markets Act 2000 is amended as follows.

(2)
In section 2(2) (the FSA’s regulatory objectives), add a new paragraph—

“(e)
the maintenance of competition.”.

(3)
In section 2(3), omit paragraphs (f) and (g).

(4)
After section 2, add a new section—


“Maintenance of competition

(1)
The maintenance of competition objective referred to in section 2(2)(e)

is: regulating in a way which facilitates competition in financial services

and markets in the United Kingdom between those who are subject to any

form of regulation by the Authority or those in any category of authorised

participants, and in a way which minimises the adverse effect on

competition that may arise from anything done in the discharge of the

Authority’s general functions.



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