Memorandum from The Right Honourable The
Lord Hobhouse of Woodborough
Thank you for sending me a copy of the Treasury
Memorandum dated 14 May and inviting me to comment upon it.
The Memorandum is specifically directed to the
impact of the European Convention on Human Rights upon the present
draft of the proposed Financial Services and Markets Bill. As
the question whether a bill in accordance with the draft is compatible
with the Convention would be a justiciable issue, I must continue
to decline to express an opinion. But the Memorandum also touches
upon questions upon which I have given evidence and I will shortly
respond to these.
The Memorandum recognises the distinction between
the disciplinary parts of the draft Bill and the provisions of
Part VI. However the mere fact that both are designed to be protective
does not provide a relevant similarity. The important point is
that the disciplinary provisions apply to the regulated community
whereas the market abuse provisions apply to the world at large.
Paragraph 12 of the Memorandum repeats that Part VI applies to
"anyone who participates in the financial markets".
As I have said in my evidence, the present draft does not so provide.
Paragraph 15 of the Memorandum refers to the
question whether clause 56 is sufficiently certain for the purposes
of the Convention. I express no view about this. But it is a mistake
to believe that there is no need to address the drafting of clause
56. The existing draft is defective in ways to which I and other
witnesses have drawn attention independently of the Convention.
These defects of drafting can be remedied if the Treasury so chooses.
So long as the draft for clause 56 remains in its present form,
there will be a serious risk that it will fail in its objective
and, far from providing a scheme which will catch the unscrupulous,
will provide them with a means of escape which a properly drafted
provision would foreclose.
17 May 1999