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Lord Peyton of Yeovil: My Lords, I am extremely grateful to the noble and learned Lord. Had I realised that I would be surrounded by such warmth, I might have tabled a Question for the noble and learned Lord, Lord Falconer, who, to mark a special occasion, could then have answered it.

Moved, That Standing Order 40 (Arrangement of the Order Paper) be dispensed with today to allow the Motion standing in the name of the Lord Kingsland to be taken before the Report stage of the British Overseas Territories Bill [HL].--(Lord Williams of Mostyn.)

On Question, Motion agreed to.

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Deputy Chairmen of Committees

The Chairman of Committees (Lord Tordoff): My Lords, I beg to move the first Motion standing in my name on the Order Paper.

Moved, That the Lord Cope of Berkeley be added to the panel of Lords appointed to act as Deputy Chairmen of Committees for this Session, in the place of the Lord Henley.--(The Chairman of Committees.)

On Question, Motion agreed to.

European Union: Select Committee

The Chairman of Committees: My Lords, I beg to move the second Motion standing in my name on the Order Paper.

Moved, That the Lord Cavendish of Furness be appointed a member of the Select Committee in the place of the Baroness O'Cathain.--(The Chairman of Committees.)

On Question, Motion agreed to.

Financial Services and Markets Tribunal Rules 2001

3.23 p.m.

Lord Kingsland rose to move, That this House calls upon Her Majesty's Government to withdraw the rules (S.I. 2001/2476) and replace them with rules that preserve the confidentiality of proceedings in the Financial Services Appeals Tribunal.

The noble Lord said: My Lords, I shall be as brief as I can in speaking to the Motion. The rule in issue is Rule 17 entitled "Hearings in Public" of the Financial Services and Markets Rules 2001. Until the rules were published some six months after the Financial Services Bill became an Act of Parliament, there was a common understanding that disciplinary hearings in financial matters would be heard in private. When the tribunal resolved the issue on one or other side of the argument, then and only then would a public statement be made.

Most of those involved in the financial services world, not only the practitioners but also those involved who chair tribunals, have always taken the view that this was the right approach. People in the City are responsible for other people's money. Any taint or suggested taint on their competence or honour immediately has an adverse and damaging effect on many others, even if, subsequently, that person turns out to be blameless. Therefore, a strong argument has always been advanced for private proceedings in financial tribunals. That is a characteristic of the Financial Services Act 1986 and of the Banking Act 1987.

Throughout the debates held on the Financial Services Bill, both in another place and in your Lordships' House, I think I can say that all noble Lords believed that that presumption would remain enshrined in the Act and would affect every delegated

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order made under it. The first draft of the Act did suggest that public hearings should be held, but as a result of the joint committee chaired by the noble Lord, Lord Burns, the Government changed their view. The basis of the Bill, as it went through the House of Commons, remained unchanged. Indeed, in the course of November 1999, in another place, the Economic Secretary to the Treasury said in terms that the presumption of privacy would be maintained.

When the Bill came to your Lordships' House on 30th March last year, an amendment was tabled by the noble and learned Lord, Lord Fraser of Carmyllie. The noble Lord, Lord Bach, responded to it in the following manner:

    "The remainder of my remarks relate to publication. The new clause on publication, therefore, requires the authority to publish such details about a final notice as it considers appropriate, except for information the publication of which would, in its opinion, be unfair to the person concerned or prejudicial to the interests of consumers.

    The Government believe, however, that it is necessary to avoid any risk that a person might be unfairly tainted, by giving publicity to the fact that some contravention had been alleged by the FSA, before the person concerned had had an opportunity to refer the matter to the tribunal, or before a matter referred to the tribunal had been finally determined by the tribunal or the appeal courts. Under the new clause on publication, the authority is, therefore, prevented from publishing details about warning and decision notices".--[Official Report, 30/3/00; cols.915-916.]

I submit that that statement is unequivocal. In quoting it to noble Lords, I hasten to add that it is not in any way my intention to make any criticism of the noble Lord, Lord Bach. I am convinced that, when he made that statement, that was the situation as he understood it.

Contrast Rule 17 in the rules published six months after the Bill became law:

    "(2) Subject to the following paragraphs of this rule, all hearings shall be in public.

    (3) The Tribunal may direct that all or part of a hearing shall be in private--

    "(a) upon the application of all the parties; or

    (b) upon the application of any party, if the Tribunal is satisfied that a hearing in private is necessary, having regard to--

    (i) the interests of morals, public order, national security or the protection of the private lives of the parties; or

    (ii) any unfairness to the applicant or prejudice to the interests of consumers that might result from a hearing in public,

    if, in either case, the Tribunal is satisfied that a hearing in private would not prejudice the interests of justice".

I understand that the Government now take the view that financial services tribunals ought to hold their hearings in public because they are required to do so by the terms of Article 6.1 of the Human Rights Convention. I shall say something about that at the end of my remarks, but, in my submission, that is not the real issue in this debate.

The real issue is that the Government never signalled that they were going to make this change during the course of the Bill. Worse, as we have seen from the remarks of the noble Lord, Lord Bach, they made statements which led your Lordships' House to believe that the presumption of privacy was safe in their hands. Had your Lordships' House had the

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slightest knowledge that this was not so, it is certain that your Lordships would have required a full debate on the issue, with amendments tabled, when we reached the stage in the Bill where the provision for making orders was to be discussed.

It is also very important for your Lordships' House to recall the basic deal that was struck over the Financial Services Bill. It was often said, especially by many of your Lordships who have great experience in the City, that the FSA was judge and jury, investigator and prosecutor in its own cause, and conducted all these functions with very few constraints. It was therefore decided that there should be an independent tribunal to which someone who had been subject to an investigation and an adverse decision by the FSA could appeal.

It was part of that balanced and structured deal between the City and the Government that the proceedings of the tribunal should be held in private. That was for the reason that it would be a deep disincentive for anyone subject to an adverse decision of the FSA--which would be taken in private and not publicised--to go to a tribunal knowing that the alleged offence would be discussed in public. Were the tribunal proceedings to be conducted in public, therefore, there would be a very strong disinclination for someone judged to have contravened the FINSMA rules by the FSA to appeal. He would rather take his medicine knowing that at least no one would ever find out about what he had done. The addition of the independent tribunal, together with privacy, was, I repeat, an essential part of a balanced and structured deal to which we all thought the Government had signed up. Indeed, it could be argued that publicity in financial services tribunals contravenes Article 6.1 of the Human Rights Act because it militates against an individual using his full rights to appeal against a potentially unjust decision.

What have the Government had to say in response? They have said, really, two things. First, that some two weeks before the noble Lord, Lord Bach, made his statement in your Lordships' House, the first set of draft tribunal rules were circulated signalling the Government's change of policy. These rules were not circulated to the general public but to select Members of the Committee of your Lordships' House which was responsible for the Financial Services Bill. I know that the Minister will say that a letter was sent to my noble friend Lord Saatchi. I believe she will also say that she knows that a letter was not sent to me.

Lord McIntosh of Haringey: My Lords, I have the letter in front of me. It was sent to all noble Lords who took part in the debate.

Lord Kingsland: My Lords, that is the first time that I have heard a letter was sent to me. Neither my noble friend Lord Saatchi nor I have received those letters. I have a complete file of all the letters that the Government sent to me during the course of the Bill--it is a very large piece of furniture--and, curiously, that letter is not in it. Nor is it, I understand, in the file of my noble friend Lord Saatchi.

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It would be an extraordinary coincidence if a letter sent to both of us failed to reach either of us. The Government are not suggesting, I hope, that we are not telling the truth?

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