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Lord Kingsland: I have learned in the course of the past two-and-a-quarter days that the Opposition have two types of amendment: those that are just wrong; and those that are right, but unnecessary.
Lord McIntosh of Haringey: A considerable number of opposition amendments have been helpful; we have received them with pleasure and with thanks and we have agreed to take them away and consider them. We actually accepted one.
Lord Kingsland: These are questions of ratios and proportions. I think that I shall do my mathematics at the end of today!
I was not happy with the Minister's reaction to Amendment No. 134. I may have misheard him. However, I wonder whether he can think of an illustration of a situation in which someone ought to have his permission cancelled, but the FSA does not think that it could be safely cancelled. Did I hear the Minister right in saying that, or words to that effect? It seems to me that if someone ought to have his permission cancelled, his permission ought to be cancelled. I cannot conceive of any circumstances in which there would be flanking reasons for the FSA wishing to continue to authorise someone even though it thought that he ought not to have that status.
Lord McIntosh of Haringey: I do not think that is quite the question. The point is that under the amendments the status of a person who had had his Part IV permission cancelled would depend on whether, as a result of that, there was no regulated activity for which he had permission. There are other means by which a person may have permission to carry on a regulated activity; for example, EEA or treaty firms qualifying under Schedules 3 or 4. We have to take those into account. The amendment does not provide for that additional complication.
Lord Kingsland: I thank the Minister for those comments. I shall consider his response to the amendments and I may wish to return to some of them on Report. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 135 and 136 not moved.]
[Amendment No. 137 not moved.]
Schedule 6 [Threshold Conditions]:
Lord McIntosh of Haringey moved Amendment No. 138:
- Page 237, line 25, leave out from beginning to ("the") in line 26 and insert--
The noble Lord said: In moving Amendment No. 138, I should like to speak also to Amendments Nos. 139, 140 and 145. These amendments will enable the FSA to take proper account of the risks arising from an authorised person's membership of a group. The amendments to Schedule 6 make it clear that in assessing the adequacy of a person's resources for carrying on regulated activities, the FSA can have regard to implications that group membership may have for persons who are members of a group. When making the assessment, the FSA must take account of a person's membership of the group, as defined in Clause 396, and the implications that this may have in terms of provisions against liabilities and contingencies and the means whereby business risks are managed.
The amendment to Clause 41 inserts the provision that if the authority imposes a requirement as part of an authorised person's permission to carry on particular activities under Part IV, it may frame this requirement with reference to the person's group or to members within that group; for example, by placing a limit on exposures to other members of the group, or imposing a requirement to hold more capital to reflect risks elsewhere in the group.
These are important amendments that ensure that the existing approach to consolidated supervision can be maintained in line with European Community law, the Basle principles for banking supervision, and good banking practice generally. I beg to move.
On Question, amendment agreed to.
Lord McIntosh of Haringey moved Amendments Nos. 139 and 140:
[Amendments Nos. 141 and 142 not moved.]
Lord McIntosh of Haringey moved Amendment No. 143:
The noble Lord said: This amendment was spoken to with Amendment No. 134. I beg to move.
On Question, amendment agreed to.
Schedule 6, as amended, agreed to.
Clause 40 [Giving permission]:
Lord McIntosh of Haringey moved Amendment No. 144:
The noble Lord said: In moving Amendment No. 144, I shall speak also to Amendments Nos. 159 to 163 and Amendment No. 277A. Clause 40 sets out the authority's basic power to give permission for the applicant to carry on the regulated activity or activities to which his application relates. Under Part XIX the Society of Lloyd's is to be authorised to carry on certain regulated activities. The permission will be defined by the authority as if it had been granted under Part IV.
Under Clause 55, the FSA is able to make an order prohibiting any individual whom it considers to be unfit and not proper to perform the functions in connection with regulated activities from performing such activities. Amendment No. 144 is a technical amendment which allows a Lloyd's member to hold a Part IV permission at the same time as benefiting from the provisions of Part XIX which deals with Lloyd's. Its effect will be to reduce the activities for which Lloyd's members need to seek FSA authorisation. Thus an application to the FSA by a Lloyd's member will be treated as relating only to the regulated activity for which he is seeking Part IV permission. The amendment would introduce a provision which would be equivalent to that provided for recognised investment exchanges in subsection (3).
Amendments Nos. 159 to 163 are to Clause 55 which deals with prohibition orders. They are technical amendments extending the scope of the clause so as to ensure that the FSA has the requisite powers to prevent a person performing functions in relation to regulated activities carried on by members of a profession or persons controlled or managed by members of a profession and who benefit from the exemption under Part XX. As such, it ensures that members of professions are treated consistently with other authorised persons in respect of prohibition orders.
Amendments Nos. 159 to 162 are consequential to the changes made by Amendment No. 163. Opposition Amendment No. 277A proposes that we insert wording at the end of the definition of "exempt person" in Clause 392 so as to bring professional firms which have the benefit of the Part XX exemption within this definition. The effect of that will be to subject professional firms carrying on exempt
On Question, amendment agreed to.
Clause 40, as amended, agreed to.
Clause 41 [Imposition of requirements]:
Lord McIntosh of Haringey moved Amendment No. 145:
The noble Lord said: This amendment was spoken to with Amendment No. 138. I beg to move.
On Question, amendment agreed to.
Clause 41, as amended, agreed to.
Clause 42 [Variation etc. at request of authorised person]:
[Amendment No. 146 not moved.]
Clause 43 [Variation etc. on the Authority's own initiative]:
[Amendment No. 147 not moved.]
Clause 45 [Exercise of powers in support of overseas regulator]:
[Amendments Nos. 148 to 150 not moved.]
Clause 46 [Prohibitions and restrictions]:
("(2) In reaching that opinion, the Authority may--
(a) take into account the person's membership of a group and any effect which that membership may have; and
(b) have regard to--
(i)") £
4 p.m.
Page 237, line 26, after ("makes") insert ("and, if he is a member of a group, which other members of the group make").
Page 237, line 28, after ("manages") insert ("and, if he is a member of a group, which other members of the group manage").
On Question, amendments agreed to.
Page 238, line 15, at end insert--
("(3) "Specified" means specified in, or in accordance with, an order made by the Treasury.
. The Treasury may by order--
(a) vary or remove any of the conditions set out in Parts I and II;
(b) add to those conditions.").
Page 17, line 25, at end insert--
("( ) If the applicant--
(a) is a person to whom, in relation to a particular regulated activity, the general prohibition does not apply as a result of Part XIX, but
(b) has applied for permission in relation to another regulated activity,
the application is to be treated as relating only to that other regulated activity.").
Page 17, line 43, at end insert--
("( ) A requirement may be imposed by reference to the person's relationship with--
(a) his group; or
(b) other members of his group.").
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