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Lord Fraser of Carmyllie: First, I thank the noble Lord, Lord Bach, for the courtesy and care with which he has responded to the amendments. Furthermore, I

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thank him for the acknowledgement that he has given that it is appropriate for us to explore these matters on Part XX because these provisions were first introduced into the Bill on Report in another place. I assure him that I have no intention of pursuing the amendments further at this stage.

I may wish to return on Report to the amendment on accounting and disclosure. But otherwise, I am most grateful to the noble Lord for his explanation of the thinking behind the proposals. I am grateful to him also for the confirmation that what I indicated in opening is broadly speaking correct. If my recollection is accurate, I said that it was under paragraph 6 of Schedule 1 that I understand that there may be a derogation or devolution of some power by the authority to another body.

I understand that that is a slightly delicate matter at present because it may be an issue for administrative decision and not for legislative consideration at this time. But the Government really should think very carefully about and reflect on that pattern of activity. It seems that the power of monitoring is to be given to the Law Society of England and Wales which may find that some part of investment activity by a Scottish solicitor must then be referred to the FSA which, in turn, requires the Law Society of Scotland to suspend, fine or whatever it does to that Scottish solicitor. The Government really do not appreciate what risk they are taking in the devolutionary arrangements which are presently in place.

I am grateful to the noble Lord for his offer to write to me. But I ask the Government to think about this very, very carefully indeed unless they wish to introduce a degree of instability into the recent constitutional arrangements. Having said that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 259YA not moved.]

Clause 316 agreed to.

Clause 317 [Designation of professional bodies]:

[Amendment No. 259ZA not moved.]

Clause 317 agreed to.

Clause 318 [Exemption from the general prohibition]:

Lord Taverne had given notice of his intention to move Amendment No. 259A:

    Page 166, line 27, leave out ("(7)") and insert ("(6)").

The noble Lord said: I am not sure that I fully followed the Minister's reply but at this time of night one's mind is not as clear as it might be.

I do not believe that the Minister really answered the point that there is this distinction between firms which carry out mainstream activities only--and it is perfectly reasonable that they should be regulated by the Financial Services Authority--and those where an investment activity is carried on incidentally to the other legal activity. In the latter cases, there appears to be double regulation. Companies are now demerging or closing down because they find that to be an excessive burden. I am sure that that is not what the Bill is intended to achieve. It is intended to achieve a

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streamlining and simplification of regulation, not an increase in regulation. For that reason, I hope that the Minister will reconsider the matter. We shall look at what he says, but we may well return to the matter on Report.

[Amendment No. 259A not moved.]

[Amendments Nos. 259AA to 259C not moved.]

Clause 318 agreed to.

Clause 319 [Directions in relation to the general prohibition]:

9.30 p.m.

Lord McIntosh of Haringey moved Amendments Nos. 260 to 262:

    Page 167, line 14, at end insert--

("( ) A direction under subsection (1) must be published in the way appearing to the Authority to be best calculated to bring it to the attention of the public.
( ) The Authority may charge a reasonable fee for providing a person with a copy of the direction.
( ) The Authority must, without delay, give the Treasury a copy of any direction which it gives under this section."). Page 167, line 29, after ("use,") insert ("have used or are").

    Page 167, line 34, at end insert--

("( ) If a member of a profession is carrying on an exempt regulated activity in his capacity as a trustee, the persons who are, have been or may be beneficiaries of the trust are to be treated as persons who use, have used or are or may be contemplating using services provided by that person in his carrying on of that activity.").

On Question, amendments agreed to.

Clause 319, as amended, agreed to.

Clauses 320 to 323 agreed to.

Lord McIntosh of Haringey moved Amendment No. 262A:

    After Clause 323, insert the following new clause--


(" .--(1) A person who--
(a) describes himself (in whatever terms) as a person to whom the general prohibition does not apply, in relation to a particular regulated activity, as a result of this Part, or
(b) behaves, or otherwise holds himself out, in a manner which indicates (or which is reasonably likely to be understood as indicating) that he is such a person,
is guilty of an offence if he is not such a person.
(2) In proceedings for an offence under this section it is a defence for the accused to show that he took all reasonable precautions and exercised all due diligence to avoid committing the offence.
(3) A person guilty of an offence under this section is liable on summary conviction to imprisonment for a term not exceeding six months or a fine not exceeding level 5 on the standard scale, or both.
(4) But where the conduct constituting the offence involved or included the public display of any material, the maximum fine for the offence is level 5 on the standard scale multiplied by the number of days for which the display continued.").

On Question, amendment agreed to.

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Clause 324 agreed to.

Schedule 17 agreed to.

Clauses 325 to 330 agreed to.

Clause 331 [Auditor or actuary's access to books etc.]:

Lord McIntosh of Haringey moved Amendment No. 263:

    Page 173, line 32, leave out ("thinks") and insert ("reasonably considers").

On Question, amendment agreed to.

Clause 331, as amended, agreed to.

Clauses 332 to 336 agreed to.

Clause 337 [The record of authorised persons etc.]:

Lord Saatchi moved Amendment No. 263A:

    Page 176, line 8, at end insert--

("( ) approved persons within the meaning of section 63(13);").

The noble Lord said: In moving the amendment I shall speak also to Amendment No. 263B. The Committee will be delighted to hear that these are possibly the simplest amendments that we have discussed in the whole of Committee stage. I hope that the Government have no difficulty with them. Part XXIII requires the FSA to maintain certain public records. The items of information which the records must cover are defined in Clause 337(1) paragraphs (a) to (h). However, in that list there is no requirement for the FSA to keep a record of approved persons; in other words, the individuals approved to be employed by authorised persons. Amendments Nos. 263A and 263B simply require records of approved persons to be kept, covering the name of the approved person--the people working in the company--and the name and address of the authorised person--the company itself--for which the approved person performs a controlled function. I beg to move.

Lord Bach: Clause 337 requires the FSA to maintain a public record of certain categories of person. Of greatest importance will be the record of authorised persons, since it will enable consumers to check that the firm with which they are dealing is authorised. It includes also a number of other people and bodies subject in one way or another to oversight under the Bill, such as recognised investment exchanges. The two amendments so briefly and well spoken to by the noble Lord, Lord Saatchi, would impose requirements on the authority to maintain a public record of persons approved under Part V to perform particular functions. We do not believe that that is necessary. Clause 337 does not limit the information that may be included in the public record; it simply sets out the minimum that must be made publicly available.

I understand that the authority hopes to set up a record containing relevant information about approved persons. However, it has some concerns about the practicalities of setting up a public record of approved persons, at least in the early days. The other persons referred to in subsection (1) will, for the most part, already be established and included on the current register. It should be reasonable to expect the public record to be in good shape when this provision

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comes into force. It is not reasonable to think that the public record of approved persons, which will be quite different from the records currently available--where indeed they are available--can be up and running quite as quickly.

If the authority overcomes those difficulties and establishes a public record of that information, there will be a further question of how easy it will be to keep it up to date. That too will be of real concern to the authority, given that the information will need constant revision. Changes to the entries for the other persons mentioned in subsection (1) will not change on anything like such a regular basis, and so the concerns will not arise.

We are not persuaded that the need for the public register is so great in the case of approved persons. While we would expect consumers to take reasonable care to ensure that the firm with which they deal is an authorised person or within one of the other categories specified in subsection (1), we would normally expect them to want to check on a regular basis that employees of such firms have been approved under Part V. The concepts of approval and authorisation are different, as are the consequences of acting without the necessary regulatory consent.

However, the authority intends to seek to make publicly available information of the kind sought by the noble Lord. If it overcomes the practical difficulties that I have attempted to describe, we are sure that it will do so in the way suggested, but we cannot place on the authority an obligation that it may not be able to fulfil. I invite the noble Lord to withdraw his amendment.

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