Select Committee on Delegated Powers and Deregulation Eighth Report



Memorandum from HM Treasury


1.  The Financial Services and Markets Bill was brought from the House of Commons on 10 February 2000. The Treasury submitted its memorandum on the delegated legislative powers under the Bill to the Committee on 11 February 2000. The Government welcomes the Committee's Seventh Report, of 16 February 2000, which made a number of recommendations to the House of Lords concerning the Bill. This memorandum sets out the Government's response to the recommendations.

Responses to recommendations

Recommendation: The Committee wishes to draw to the attention of the House the width of the power in clause 339 to allow the disclosure of confidential information. We have recommended that the House may wish to consider amending the bill to restrict this power in a way which clearly limits it to information needed for regulatory and other public functions. (Paragraph 25)

2.  The Treasury can confirm that, in general terms, the purposes indicated in the Committee's recommendation are indeed those for which they would anticipate using the power under clause 339. It is important that the Authority is able to exchange information with bodies exercising equivalent or related functions. There may be some circumstances in which the suggested limitation to "regulatory and other public functions" could preclude the necessary provision of information to another body. However, the Government appreciates the Committee's concern about the breadth of the power in its current form and intends to bring forward in due course an amendment that would narrow the power.

Recommendation: We have also recommended that the Bill should be amended so that the first exercise of the power to make exemption orders under clause 36 should attract affirmative procedure. (Paragraph 26)

3.  The Treasury's memorandum to the Committee (paragraph 44) noted that they were considering further the procedure to be attached to the exercise of the power under clause 36(1). The Government will table an amendment requiring the first order made under that clause to be subject to an affirmative resolution procedure, as recommended by the Committee. In addition, that amendment will apply the same procedure to the subsequent exercise of the power, in cases where an exemption is withdrawn and the scope of regulation thereby extended. A draft of the proposed amendment is appended to this memorandum. [not printed]

Recommendation: As a reassurance against concern over whether the substantial powers which are being delegated to the F.S.A. will be exercised in a way which will be compatible with the European Convention on Human Rights we recommend that the F.S.A., in its annual report to be laid before Parliament should include a statement that, in its view, the provisions of the delegated legislation it has made in the reporting period under the Financial Services and Markets Act 2000 are compatible with the Convention rights as defined in section 1 of the Human Rights Act 1998. (Paragraph 27)

4.  The FSA will, as a body exercising public functions, be under a duty to comply with the Human Rights Act 1998. The FSA has stated in response to the Committee's Report that when reporting on the exercise of the rule-making powers under the Bill in its annual report, produced in accordance with paragraph 10 of Schedule 1 to the Bill, it will include a statement about the compatibility of the provisions of the delegated legislation with the Convention rights. No change is required in the Bill to achieve this.

6 March 2000

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