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Lord McIntosh of Haringey: Before my noble friend concludes, this is a relatively simple issue, as he
says. Let us discuss it at the same time as we have the more wide-ranging discussion on his earlier amendments before Report stage.
Lord Eatwell: I am looking forward to these extended discussions with my noble friend. I thank him for his comments and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 33 [Closure of National Savings Stock Register to gilts]:
7.30 p.m.
The Earl of Home moved Amendment No. 66:
The noble Earl said: In moving Amendment No. 66, I shall also speak to Amendment No. 67. These are two very quick points but important ones for the small investor. They refer to the transfer to the Bank of the gilt business of the National Savings Stock Register and the future provision of brokerage services in connection with gilt registration.
The purpose of these amendments is to ensure that no extra financial strain is placed on the small investors. Institutions or high-net worth individuals have a whole range of stockbrokers and financial advisers to help them negotiate commissions, but the small man with a little spare cash to invest does not have that type of protection. Yet he is the sort of person whom we want to encourage to invest.
As far as that type of person is concerned, I do not believe that he ought to stand the cost of these transfers through increased charges. I may have missed it, but I do not believe we have yet been told what the cost of this transfer is, and I would ask the Minister to let us know if he has a figure at this stage. However, on the assumption that it does not run into many millions, I would hope that the Government would agree that the transfer could be sourced either out of the Bank's profits or at least from a source that did not impact on the small investor.
Amendment No. 67 simply recognises the fact that the Bank is in a near monopolistic position in this instance and, again, the small investor should be protected. I am not asking that this service should be offered at a loss but rather charged out at a rate which is consistent with market practice elsewhere for a similar service. I beg to move.
Lord McIntosh of Haringey: I am slightly puzzled by this proposal. The FSA is already, or will be, subject to the restrictions under Part V of the Banking Act in relation to all of the confidential information which it obtains in the discharge of its functions. So imposing
The main purpose of this measure is to reduce costs by merging the two similar services, although, in response to the request of the noble Earl, it is not possible yet to put a precise figure on the costs of the transfer. However, it is not appropriate to specify in legislation that the charge for providing a service cannot be increased since future increases in running costs may require an increase in charges to avoid making losses. However, we do expect existing holders of stock on the NSSR to benefit from the transfer. National Savings has been running the NSSR at a loss because the commission charged on the service does not cover the costs. Without a merger, there would have been pressure on National Savings to raise charges. However, once the transfer has been implemented, the economies of scale that the Bank can bring to bear mean that charges to customers using the official brokerage service can be contained.
The Earl of Home: I thank the noble Lord for that answer. When we have the precise figure, we may wish to readdress this question. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 34 [Provision of brokerage service in connection with gilt registration]:
Schedule 7 [Restriction on disclosure of information]:
The Earl of Home moved Amendment No. 68:
Page 13, line 35, at end insert--
("( ) In making an order under subsection (1)(b) above, the Treasury shall ensure that no extra costs arising from such transfer shall be imposed on existing holders of stock on the National Savings Stock Register and that the overall level of charges is subject to controls similar to those in other parts of this Act.").
Page 41, line 2, at end insert--
. In this Schedule, "the Bank" includes the Financial Services Authority, where that Authority is exercising functions transferred to it under section 21 or Schedule 4.").
The noble Earl said: We have already discussed the removal of Crown status from members of the authority and the effect of that change. This amendment picks up the important point of disclosure of information by members of the authority. It is a point which my noble friend Lord Boardman and I raised during Second Reading and the Minister was kind enough to acknowledge it at that stage and said he would be addressing it.
As I have said before, it is important that the authority and the institutions develop the same mutual trust which currently exists between the Bank and the financial practitioners. Banks want to be open with the authority, but they will not be open unless they feel there are adequate safeguards protecting them from action by third parties because they have been required to disclose
The MOU, to which we have referred in the past, in paragraphs 5 and 6 specifically addresses the collection of information point. Paragraph 6 says:
If either the Bank or the authority can collect the information and then use it, it seems strange that the Bank is subject to restriction on disclosure but the authority is not. Surely both institutions should be subject to the same discipline. I beg to move.
Lord McIntosh of Haringey: With renewed apology, I will now respond to the amendment which is before us. The FSA is subject to the restrictions under Part V of the Banking Act in relation to all the confidential information it obtains in discharge of its functions. This amendment refers only to the information needed for compiling monetary statistics and assessing liability for cash ratio deposits. What would happen is that we would have a second regulatory regime for those statistics. We would have regulatory information subject to two different sets of confidentiality requirements.
The question is, what does the FSA do when the requirements differ? What if information could be disclosed to another regulatory body or a public authority under Part V of the Banking Act but could not be disclosed under Schedule 7? Presumably the FSA would not be able to make a disclosure that Parliament and indeed the noble Earl thought was necessary for the purposes of sound regulation when the Banking Act was passed. The confusion is relatively simple and I hope that the noble Earl will feel able to withdraw the amendment.
The Earl of Home: I thank the noble Lord for that reply. I do not in fact have Part V of the Banking Act in front of me, but I shall study his comments in Hansard in great depth and we may have to return to this topic at Report stage. Meantime, I beg leave to withdraw.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey moved Amendment No. 69:
The noble Lord said: In moving Amendment No. 69 I would like to speak also to my Amendment No. 72 and to Amendments Nos. 70 and 71 in the name of the noble Lord, Lord Mackay of Ardbrecknish. My amendments give direct effect to the opinions of the Delegated Powers and Deregulation Committee. Paragraph 3(2) of Schedule 7 empowers the Treasury to amend the table specifying authorities to whom the board may disclose information obtained under
The amendments of the noble Lord, Lord Mackay, would extend the affirmative procedure to paragraph 3(3), which empowers the Treasury to impose restrictions on conditions on such disclosures. Although I am perfectly happy to talk to him about it, I do not see why he has brought them forward when the Delegated Powers and Deregulation Committee did not seem to think that they were necessary.
Lord Mackay of Ardbrecknish: I am deeply grateful to the noble Lord, Lord McIntosh. He rightly pointed out that I became a little more enthusiastic in my amendment than was properly justified by the Delegated Powers and Deregulation Committee. I am not in the least surprised that he brought forward this amendment. I would have been deeply disappointed if he had not, but knowing his track record on these matters he did not let me down. I just hope that his good example is followed by the rest of the Government.
On Question, amendment agreed to.
[Amendments Nos. 70 and 71 not moved.]
"Where both need access to the same information, they will reach agreement as to who should collect it and how it should be transmitted to the other".
Page 16, line 12, at end insert ("or
paragraph 3(2) of Schedule 7,").
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