| Previous Section | Back to Table of Contents | Lords Hansard Home Page |
Lord Fraser of Carmyllie: I did not suggest that it did or, indeed, that it should. I am trying to ascertain from the Minister, now or at some future point, whether there will be an expectation on RIEs that they should in future have that separation. It would seem anomalous if, as the noble Lord is advancing, there should be only one chairman for the FSA.
Lord McIntosh of Haringey: That is a hypothetical situation. The Bill does not say so and the Government are not proposing to introduce amendments which would make the Bill say so.
The FSA has made clear that it will have a separate enforcement committee, which will not include executive board members, which will decide both on
bringing charges and on appropriate sanctions. The FSA structure does not envisage a role for the chairman in the disposal of enforcement cases.I shall not go over the views of the non-executives; they have been roundly criticised. The noble Lord, Lord Newby, spoke of the paucity of their case. Without going over the arguments, they did point out that the Government's model for the FSA is based on the model put in place for the Bank of England in the Bank of England Act, which we approved here in 1998. As the Minister who took the Bill through this House, I do not recall any objection to this element of its governance.
I turn now to Amendment No. 9A, which is grouped with this amendment, to which the noble Lord, Lord Kingsland, and others have spoken. As we have indicated in our response to the Joint Committee report, we do not consider that an extended role for Parliament would sit comfortably with the principle of ministerial accountability for appointments endorsed by the Nolan Committee for Standards in Public Life in its first report.
The appointments of the chairman and chief executive, like the appointments of all members of the governing body, are made by the Treasury, and therefore will be an issue on which Treasury Ministers will be accountable to Parliament. It is important that a clear line of accountability is maintained. If the appointments were subject to the approval of a Select Committee, we believe that that would interfere with ministerial responsibility. As my noble friend Lord Peston said, the prospect of a public hearing and the possibility of being turned down may deter suitable candidates from coming forward. These are non-remunerative posts which are enormously important because they represent the financial community. We want the very best people to do those jobs.
I should say to my noble friend Lord Desai that I am not against constitutional innovation, but it would seem rather strange to introduce this one constitutional innovation--confirmation by a legislative committee--when we are dealing with the FSA. If we are going to take a major step in constitutional innovation, surely we should do it in a deliberate and considered way rather than almost accidentally in one amendment to this Bill.
I have made it clear that we do not believe the amendments are necessary or desirable. It is up to the noble Lord, Lord Newby, what he does with them, but if he decides to divide the Committee I shall advise my noble friends to vote against them.
Lord Alexander of Weedon: Before the Minister sits down, perhaps I may ask a question about Amendment No. 9A. Sharing, as I do, his doubts as to whether an amendment of this kind should be introduced in regard to one particular body, is it right that if we had to consider the issue of principle, we would have to consider it across the board? We would have to consider it as applying to a whole range of prospective posts, such as Chairman of the BBC and
even possibly to the appointment of judges. The issue would have somewhat wide-ranging implications that we would need to look at very carefully as a whole.Does the Minister also agree that, if we were considering this issue, we would have to look at whether the control mechanism should be simply a committee of the House Commons or a committee of both Houses of Parliament?
Lord McIntosh of Haringey: The noble Lord has said much more ably what I said rather falteringly and briefly. I am sure that he is right.
5.45 p.m.
Lord Newby: I do not know whether this will be the most contentious debate on the Bill, but I certainly hope that it is the longest. I am extremely grateful to all noble Lords who have taken part. I hope that they will forgive me if I do not go through all their contributions and comment on them. I want to make only two brief, specific comments in regard to questions that have been asked.
My first point relates to a question which was asked initially by the noble Viscount, Lord Bledisloe, and which was followed up by the noble Lord, Lord McIntosh. The noble Lord asked whether the amendment would mean that one would necessarily have a separate chairman and chief executive. On first reading, that is what it means. That was in our minds when we tabled the amendment; as we have discovered, how it may be interpreted in the future is a different matter. On a straight reading of it, there would be two people with two distinctive roles. That was in our minds when we drafted the amendment and is what I tried to say when I opened the debate.
My second point is in response to the noble Lord, Lord Peston, who asked whether we on this side of the debate were arguing that there was something different about the financial services industry from the other regulated industries. It was a lacuna in my argument that I did not make the point that there clearly is. The circumstances are completely different. A 300 year-old industry which has been in the private sector throughout--which is fiercely competitive and which has many, many practitioners--is completely different from a privatised public body. In terms of the regulatory tasks faced by a regulator, it is almost self-evident that the financial services sector is of a different order to the railways, the water, the gas and the electricity industries.
Lord Peston: I am pleased that the noble Lord has been forthright in his statement. I do not want to try and influence what he now decides to do about voting or not voting, but, on reflection, does he not think that as we have not debated precisely what I certainly regard, and what I think other noble Lords regard, as the essence of the subject--it may be that the industry is different--it would be rather foolish to divide on the
issue? I do not want to stop him dividing the Committee; I merely want him to reflect on it for 10 seconds.
Lord Newby: Let me proceed and all will become clear.
This has been an extremely thoughtful debate. As a number of noble Lords have said, the matter is not completely black and white. I set out the arguments as forcefully as I could because I thought they needed to be put at the start of the debate. A reason for such a degree of greyness about some of these matters is that the FSA is up and running. If it were not, there would be even wider support than there has been for the arguments we have advanced. I accept that.
As to what we intend to do next, we on these Benches have always--perhaps not always, but during my time in your Lordships' House--as a matter of principle chosen not to divide at Committee stage, specifically because we like to grapple with issues. We like to hear what people say and to decide whether our mind has been changed. We shall return to this matter at Report stage. We never intended to force a vote at this stage and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment Nos. 8 and 9 not moved.]
Lord Kingsland moved Amendment No. 9A:
- Page 216, line 28, at end insert--
The noble Lord said: I should like to respond to the kind comments made by certain of your Lordships about my introduction of Amendment No. 9A, but, in particular, to try to deflect the enfilading fire from my noble friend Lord Alexander of Weedon and the noble Viscount, Lord Bledisloe.
I entirely accept that this amendment would introduce, if it were accepted, an unprecedented procedure into our constitution. I make no apologies for taking this initiative. In my submission, the powers that will be exercised by the SFA will be unprecedented for an authority which is, after all, framed in the context of a private company set up under the Companies Act 1985, albeit limited by guarantee.
It appears that even the benefits of that structure as a form of discipline are not to be allowed to your Lordships: by definition, there are no shareholders in this company and therefore the management will not be disciplined by a shareholders' meeting; there is to be no separation of powers between the chairman and the chief executive, so that the latest advice that we have on proper governance is ignored; moreover, the powers of the non-executive directors are to be derisory. So there are no checks and balances whatsoever within the framework of the organisation in which the new authority is to have its being.
What other controls are there? There is no parliamentary control. We see from the Bill that the authority is to have substantial legislative functions; but none of the draft legislation will be laid before either your Lordships' House or another place. Moreover, the organisation will not be subject to the discipline of the Comptroller and Auditor General. So there is no parliamentary control whatsoever on the FSA. Moreover, it is to enjoy--except for acts of bad faith--statutory immunity.
I think I am entitled to say that here is an organisation which has been defined in a Bill, by the Government, who seek not to maximise, but to minimise, control over it. In those circumstances, I believe that the constitutional initiative contained in my amendment is wholly justified.
("( ) The appointments of the chairman, the chief executive and the non-executive deputy chairman shall not take effect until they are confirmed by the House of Commons Treasury Select Committee following a public hearing.").
Next Section
Back to Table of Contents
Lords Hansard Home Page