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Lord Elton: In that case, the Minister must surely recognise that, if those people are to represent the

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interests of a regulated industry, there will unavoidably be times when the industry feels that it is being unfairly constrained, trammelled, or treated and it will be at odds with the authority and pass complaints and advice to the authority. I then ask your Lordships whether it is altogether sufficient to leave it to the authority, which may receive perhaps quite valid and justified complaints, to be entirely in control--except for the need for the Treasury's approval of the appointment or dismissal of the chairman--of the way in which the panel operates; and, it would seem, the extent to which it can satisfy the requirements of listening to its advice? Should there not be something more prescriptive on the statute book after all?

Lord McIntosh of Haringey: We are back to square one. The British Bankers' Association will still exist. If it feels that it is being traduced or badly treated, it will say so. The panel is not a trade association; that is not its job. Its job is to provide effective arrangements for consulting practitioners and consumers on the extent to which what the authority does--the "general policies and practices"--is consistent with the general duties under Clause 2. That is not the only way in which practitioners abut on the work of the authority. The trade would not like it if it were.

Lord Elton: That is for later discovery, but it seems that the Minister has entirely endorsed what my noble friend Lord Jenkin of Roding said; that the panel is a representative body. Indeed, the Bill states that it is,

    "a panel of persons ... to represent the interests of practitioners".

If practitioners see that their interests are being ridden over roughshod, I presume that it is their job to say so. If they are to say so effectively, they must have effective means of expressing that dissatisfaction. The simple question I am asking the Minister is not whether I am right in those assumptions; I cannot see how I can be wrong. I am asking him whether it is altogether prudent to leave the doorway through which representations come from the panel to the authority entirely under the authority's control.

Lord McIntosh of Haringey: We are discussing the membership of the panel in these amendments. Shall we discuss the other issues which the noble Lord is raising when we come to the amendments which deal with them?

Lord Elton: They seem germane to the conversation that we have already had, but I am quite happy to resume at a later stage when I have had time to sharpen my arguments.

Lord Sharman: I have listened with great interest to noble Lords batting the argument back and forth, if I may say so. The purpose of the amendment was, as I said, to get a clearer view as to what comprises practitioners. I am conscious that the Bill, as presently drafted, deals with the practitioner panel using the words,

    "to represent the interests of practitioners".

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I am conscious of the words that the Minister used in saying that he did not want to be too prescriptive. Nevertheless, the Bill is prescriptive to a degree, because it sets out a number of categories which must be represented. The purpose of my amendment--in particular, the addition of "authorised persons"--was deliberate. It is important to understand that, where a representation issue arises in the corporate sphere, those who represent a corporation represent the corporation's views and, I suggest, probably disagree with them publicly in panels at their peril. There is a vast body of opinion and expertise called "authorised persons". The purpose of adding such a category was to enable the panel to have a different perspective from that of the corporate perspective. I ask the Minister to consider that point further. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Saatchi moved Amendment No. 71:

    Page 4, line 5, after ("on") insert--

("(a) whether any proposed rules, codes, general guidance or statements, or amendments to them, are appropriate in light of the Authority's general duties; and

The noble Lord said: In moving the amendment I shall address also the principles behind other amendments grouped with it. I hope that that will give my noble friend Lord Elton an opportunity to pursue his inquiries. My noble friend Lord Kingsland will specifically address Amendments Nos. 74A and 75A.

We have just heard the Minister say several times that we must not be too prescriptive and that it is unnecessary to be prescriptive. Our Benches take the opposite view. I shall try to explain why. Under Clause 7, the FSA,

    "must make and maintain effective arrangements for consulting practitioners and consumers on the extent to which its general policies and practices are consistent with its general duties under section 2".

Therefore, the consultation takes place only in relation to general policies and practices. The purpose of Amendment No. 71 is to require the FSA to consult also on,

    "whether any proposed rules, codes, general guidance or statements, or amendments to them, are appropriate in the light of the Authority's general duties".

Clause 8 gives the authority a specific duty to set up the practitioner panel which is designed to represent the interests of this community. It sits alongside the consumer panel. The authority is obliged to have regard to any representations made to it by the panel, but that is the extent of its statutory consultation duties. There is no obligation on the FSA actively to consult the panel.

In our view, the authority should be obliged to consult the panels in advance of any general public consultation. Amendments Nos. 74A and 75A tabled by my noble friend Lord Kingsland will deal with that point directly. The APCIMS, LIBA and the Burns Committee have all recommended that, at the very least, if the authority does not act on recommendations made by the panel it should be obliged to publish its reasons for not doing so.

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This matter is important because David Challen, the chairman of the panel, currently called the Practitioner Forum, expressed his fears to the Joint Committee that in the absence of strong statutory obligations to involve practitioners, they could easily end up being marginalised. He argued that the Bill should include an obligation on the FSA to give reasons if submissions by the panel were ignored.

The first annual report of the Practitioner Forum reiterated its concern:

    "In the absence of this requirement [to publish reasons for ignoring Forum/Panel submissions], we feel it would be possible for a future administration to sideline the Panel and make it difficult for the Panel to assert its viewpoint".

However, the Government have so far strenuously refused to strengthen the consultation obligation.

Amendment No. 77 applies to Clauses 8 and 9 respectively. At present, there is no requirement on the FSA to consult either the practitioner panel or the consumer panel before issuing draft rules, codes, general guidance, statements and other matters for more general public consultation. The amendment would make it a requirement that, before publishing draft rules, codes, and so forth, for public consultation, the FSA must have given the two panels a reasonable opportunity to make representations on the draft rules and codes, and so forth. We believe that that will have the benefit of establishing clearly the way in which the panels would fit into the consultation procedure and would result in draft rules, codes, and so forth, which are published for public consultation already incorporating suggestions and improvements made by the two panels. I beg to move.

6 p.m.

Lord Faulkner of Worcester: I am puzzled as to why the noble Lord, Lord Saatchi, believes that this amendment is necessary. Extensive consultation requirements are listed in Clause 146, so that every time the FSA wants to make rules it has to take into account matters such as cost benefit analysis and the reasons for believing that the rules are compatible with the FSA's general duties as set out in Clause 2. Similar provisions would apply to codes of practice and so on.

It seems to me that the industry, consumers and everybody else will have ample opportunity under Clause 146 to comment on those draft rules. I would have thought that the practitioner panel and indeed the consumer panel, to which we shall turn in a moment, would be able to feed in views along with everybody else. I am puzzled as to why it is felt necessary that those two panels should be given a special position in terms of consultation when the provisions that the FSA makes under Clause 146 are so extensive.

I do not believe that the authority is backward in seeking consultation on its various procedures and plans. Since its introduction it has published no fewer than 45 consultation papers and has actively sought the views of the public, consumers and practitioners

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on what it is doing. Therefore, I feel that these amendments are not necessary and that we should be able to rely on the provisions contained in Clause 146.

Lord Jenkin of Roding: My noble friend referred to the evidence of Mr David Challen, the chairman of the FSA Practitioner Forum. It is worth while reminding ourselves what Mr Challen told the Joint Committee. I quote from page 104 of the evidence in the second column:

    "we ask ourselves what power do we have to enforce accountability in terms of the question we are addressing? The answer of course is none except the threat of public dissent. As things currently stand, however, I think we will exercise real influence. The trouble of course is that arrangements have to be inspected for their durability not just in relation to the present incumbents in the job".

We have to look at that. At the moment it is working well and there is delight, in which I join, that it will be statutory. We have to have regard to what may happen. In other walks of life one has seen that people who have substantial regulatory powers come to think of themselves as, not immune to criticism, but certainly as not having to pay too much attention to it. In relation to this panel--the same can be said of the consumer's panel where there is probably common interest--a way has to be found whereby the authority can be made to listen. As I understand it, this group of amendments is intended to make that more explicit. I believe that if we accepted these amendments we would reflect Mr Challen's concerns. I hope that the amendment will be pressed.

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