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Lord McIntosh of Haringey moved Amendments Nos. 77 to 79:

    Page 114, line 22, leave out from first ("of") to ("to") in line 23 and insert ("a relevant insurer's business so far as it consists of the carrying out of contracts of insurance, or of any part of that business,").

    Page 114, line 25, leave out ("insurance business") and insert ("to effect or carry out contracts of insurance").

On Question, amendments agreed to.

Clause 219 [Scheme manager's power to inspect documents held by Official Receiver etc.]:

Lord McIntosh of Haringey moved Amendment No. 80:

    Page 118, line 9, leave out ("qualified for authorisation under Schedule 3 at that time") and insert (", at that time--

(a) qualified for authorisation under Schedule 3, and
(b) fell within a prescribed category,").

On Question, amendment agreed to.

Clause 224 [Awards]:

Lord Bach moved Amendment No. 81:

    Page 121, line 23, leave out from ("for") to ("of") in line 26 and insert ("--

(a) financial loss; or
(b) any other loss, or any damage,").

The noble Lord said: My Lords, this amendment deals with Clause 224(3). Several noble and learned Lords around the House voiced concerns during Report stage that this provision might be open to misinterpretation. We undertook to consider carefully whether anything could be done by way of clarification.

The purpose of Clause 224(3) has always been simply to refer to types of loss or damage. It was never our intention that the ombudsman should be required to try to construct hypothetical contracts, nor to award compensation according to whether or not there had been a breach of an actual contract. Indeed, such an approach would cut straight across the principle set out in Clause 223 that the ombudsman should settle cases on the basis of what is fair and reasonable in all circumstances. We have always wanted that to be clear.

The amendment is intended to put matters beyond doubt. It recasts subsection (3) so that the reference to awards of a kind a court could make for breach of contract is replaced by a more straightforward distinction between financial loss and other loss or damage of a specified kind.

The amendment is similar to the one we considered on Report. The difference is that it preserves the requirement that awards for non-financial loss or damage, covered by paragraph (b), must be specified in rules made by the FSA. That is to ensure clarity and certainty for those affected by the scheme and is a long-standing feature of this provision which we believe is widely accepted.

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One final point which perhaps I may mention relates to future losses. The noble Lord, Lord Hunt of Wirral, mentioned on Report the question of whether the expression "financial loss" in the amendment to which he spoke could be taken to refer to future losses. Financial loss in this context is intended to mean loss which is susceptible of measurement in money or, to put it another way, capable of calculation in economic terms. It is intended to include future losses of earnings or profits. Those losses which, by their nature, cannot be assigned a monetary value by other than artificial means--for example, mental distress, pain and suffering--fall under paragraph (b).

I congratulate the noble Lord, on the day of this first test match, on a hat trick. I beg to move.

Lord Hunt of Wirral : My Lords, I rise to point out that my ability to succeed in a hat trick is only made possible by the fact that I was the privileged Lord to speak on behalf of the four musketeers--namely, the noble Lords, Borrie, Donaldson, Phillips and myself--in putting forward these points. I did so with strong support. I did so, also, with the intention that we should preserve the best of the existing schemes, namely the simplicity, informality and speed with which these matters are dealt with, while at the same time not erring towards situations which might need interpretation by the courts.

Perhaps I may ask the Minister: presumably the power to make money awards is not limited by the powers of the courts--I believe that was very much what he was explaining to us--and that future loss includes uncrystallised future losses? I believe he has made that clear. However, obviously I shall reflect on the points he has made. I very much welcome the amendment.

On Question, amendment agreed to.

Clause 233 [Restrictions on promotion]:

[Amendment No. 82 not moved.]

Clause 293 [Directions and revocation: procedure]:

Lord McIntosh of Haringey moved Amendment No. 83:

    Page 157, line 41, leave out from ("decision") to ("and") in line 42.

The noble Lord said: My Lords, in moving Amendment No. 83, I shall speak also to Amendment No. 84. I can deal with Amendment No. 83 quickly. It is simply a drafting amendment removing some unnecessary words. Amendment No. 84 is more important.

On the final day of Report stage, I referred to the proposal by the noble and learned Lord, Lord Donaldson, that the Bill should be amended to ensure that the tribunal's jurisdiction could, if necessary, be extended to cover disciplinary proceedings of recognised bodies in the area of market abuse. I said that we intended to table an amendment at Third Reading to deal with this.

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That is what the present new clause does. The noble and learned Lord, Lord Donaldson, has kindly taken time to write to me and, to use the words of his letter,

    "I concur and have nothing to add".

If a person who is a member of a recognised investment exchange or recognised clearing house engages in behaviour which amounts to market abuse under Clause 114, it is likely that this will also constitute a breach of the rules of the recognised body concerned. Rather than taking market abuse proceedings, the FSA might leave this to be dealt with as an internal disciplinary matter.

In many cases, the recognised bodies might be best placed to take such action, as the bodies closest to the markets. That is right, but when it is the case, the person disciplined would not have the right to refer the matter to an independent tribunal as he would if it had been dealt with by the FSA under Clause 114. The problem with this is that it is conceivable that inconsistency might develop over time between the way such cases are dealt with by recognised bodies as compared with the tribunal. It might; I am not saying that it will but there is a possibility. Subsection (2) allows the Treasury to make an order enabling disciplinary cases to be referred to the tribunal, should that possibility arise.

Subsection (2)(b) deals with a different possibility. We are confident that all the provisions of the Bill are consistent with the provisions of the Human Rights Act 1998 and the European Convention on Human Rights. But it is possible that at some point in the future, developments in the courts' jurisprudence on these matters might require us to provide for an appeal from the internal disciplinary procedures of recognised bodies in market abuse cases to a body such as the tribunal established by the Bill. Subsection (2)(b) would allow the Treasury to make an order allowing for such issues to be referred to the tribunal.

We are taking a power which will enable the Treasury to provide for exchange and clearing house disciplinary cases involving market abuse to be considered by the tribunal in certain circumstances. We do not have any plans to use this power, but if we did we would consult widely, including in particular with the recognised exchanges and clearing houses themselves. I beg to move.

On Question, amendment agreed to.

7.30 p.m.

Lord McIntosh of Haringey moved Amendment No. 84:

    After Clause 294, insert the following new clause--


(".--(1) If the Treasury are satisfied that the condition mentioned in subsection (2) is satisfied, they may by order confer functions on the Tribunal with respect to disciplinary proceedings--
(a) of one or more investment exchanges in relation to which a recognition order under section 285 is in force or of such investment exchanges generally, or
(b) of one or more clearing houses in relation to which a recognition order under that section is in force or of such clearing houses generally.

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(2) The condition is that it is desirable to exercise the power conferred under subsection (1) with a view to ensuring that--
(a) decisions taken in disciplinary proceedings with respect to which functions are to be conferred on the Tribunal are consistent with--
(i) decisions of the Tribunal in cases arising under Part VIII; and
(ii) decisions taken in other disciplinary proceedings with respect to which the Tribunal has functions as a result of an order under this section; or
(b) the disciplinary proceedings are in accordance with the Convention rights.
(3) An order under this section may modify or exclude any provision made by or under this Act with respect to proceedings before the Tribunal.
(4) "Disciplinary proceedings" means proceedings under the rules of an investment exchange or clearing house in relation to market abuse by persons subject to the rules.
(5) "The Convention rights" has the meaning given in section 1 of the Human Rights Act 1998.").

On Question, amendment agreed to.

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