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Lord McIntosh of Haringey: My Lords, this is very strange because I have a photocopy of the letter, topped and tailed by me--"Dear Maurice", "Yours ever, Andrew", "March 14th 2000". I have it here. It is clear that it went to the noble Lord, Lord Saatchi. Others on the receiving list--notably the noble Lord, Lord Burns--did receive it.
Lord Kingsland: My Lords, I entirely accept that the noble Lord, Lord Burns, received it because the noble Baroness, Lady Scotland, has informed me that that was so. But neither my noble friend Lord Saatchi nor I received it.
In any event, if it was the Government's plain intention on 14th February to reverse the presumption, why did they not announce that on the Floor of your Lordships' House at some stage after 14th February? Such a dramatic change in government policy surely merited some explanation on the Floor of your Lordships' House.
Lord McIntosh of Haringey: My Lords, I hope that the House will forgive me, but this is becoming so personal that I have to intervene. I hope that my noble friend Lady Scotland will also forgive me. There is no dramatic change. The letter simply had attached to it a copy of the summary of the rules for the Financial Services and Markets Tribunal. I do not think that the noble Lord, Lord Kingsland, is claiming that these were not in the public domain. They certainly were.
Lord Kingsland: My Lords, they were not in the public domain. The rules were not put out for consultation until long after that. They may have been circulated to some Members of the Committee, but they were not put out to general circulation. In any event, why was this crucial provision not drawn to the attention of your Lordships' House? Moreover, the speech of the noble Lord, Lord Bach, to your Lordships' House was made two weeks after the document was circulated. So it would be reasonable for your Lordships to conclude that, in respect of any suggestion in that document that the presumption was going to be changed, on that issue the Government had thought again.
The other objection to the presumption of privacy is the suggestion that public hearings are necessary to conform with the Human Rights Act. I find that a curious proposition. It is of course true that Article 6.1 of the convention requires a public hearing. The reason for that is that at the time the convention was drafted many states on the Continent did not give citizens the benefit of public hearings, sometimes in criminal cases and sometimes in other kinds of cases. The public hearing is an entitlement that an individual citizen of Europe rightly has; but, just because it is an entitlement, it should not become a burden to that
Baroness Crawley: My Lords, in the light of the statement of the noble Lord, Lord Kingsland, the Government are on strong ground to say that it would be a breach of the Human Rights Convention if such tribunals were to be heard in private. The noble Lord, Lord Kingsland--
The remarks of the noble Lord, Lord Kingsland, have not convinced me that he has dealt with the issue of the human rights convention. Nor, I believe, has he convinced many Members of this House who were of the opinion that such tribunals were to take place in public. This praying against the rules by the Opposition goes contrary to the mood in the country; namely, people want more and more tribunals to be heard in public. I understand the present political consensus to be in favour of a whole agenda of greater transparency. In relation to financial matters in particular the public are angry at unnecessary confidentiality. Many would say that there should not be one rule for the City and one for the rest of us. I believe that the public will increasingly want transparency in these matters, particularly in the light of a number of recent controversies over pensions.
The noble Lord, Lord Kingsland, referred to paragraph 17 of the rules, which contains a provision--if the tribunal is in agreement--for cases to be heard in public. When he responds to the debate, perhaps the noble Lord will tell us why the protection laid down in the rules is not sufficient.
Lord Newby: My Lords, I have considerable sympathy with the Motion. I shall refer to two aspects: first, the way in which the Government behaved during the passage of the Bill and subsequently; and, secondly, the substance of the issue. Having sat through virtually every debate during the passage of the Bill through this House, the Motion accords with my belief regarding the view that the Government were giving to those of us who were involved.
Faced with the recommendation in the report of the Joint Select Committee that privacy should be maintained in respect of tribunals, we began with the presumption that that would be the Government's view. It is my belief that that view was not openly
Much has been made of the question of a letter that we may or may not have received. I was almost certainly on the list of recipients. The only point I make is that at the time the letter was sent I and other noble Lords involved with proceedings on the Bill were probably receiving at least six letters a day from the noble Lord, Lord McIntosh. They were not merely billets-doux; each letter had attached to it possibly 20 pages of amendments. If I received a letter with a covering note stating merely, "Here is a set of statutory instruments" among a pile of papers several inches thick, I can say with almost complete certainty that I did not give that letter the attention that we are now invited by the Government Benches to believe it deserved. It was frankly impossible, under the "blizzard" of letters and amendments--many hundreds were put forward over a short time-scale--for anyone on this side of the House to spend hours poring over every page to check whether the Government had changed their mind without telling us.
Also, the consultation process did not allow outside bodies to comment on the statutory instruments before the Bill became law. I therefore believe that, on the first question about how the Government behaved during the passage of the legislation, they are guilty as charged.
The second point relates to the substance. Should the tribunals created by the Financial Services and Markets Act be based on a presumption of privacy or on presumption of public hearings? During the passage of the Bill in this House we supported a presumption of privacy. We did so because we took the strength of the argument that financial institutions could be put at risk if information about tribunal hearings was made public at an early stage. We believed that the decision as to whether a hearing should be held in public or in private should be essentially in the hands of the appellants. We did so, believing that this was compatible with the European Convention on Human Rights--a view which I believe went unchallenged by the Government.
Since this Motion was tabled, I have, however, received advice from our own experts in human rights law. It is their clear view that the tribunal rules proposed by the Government are compatible with Article 6 of the European Convention on Human Rights and that the proposal contained in this Motion would be incompatible with that provision.
The Motion seeks to do two things. It seeks to give the Government a bloody nose on their handling of this issue, and to persuade them to reverse their policy. I believe that they deserve the bloody nose; but I do not now believe that a policy reversal is compatible with
Lord Hodgson of Astley Abbotts: My Lords, I was not a Member of this House when the Financial Services and Markets Bill was debated, so I was not a recipient of the "blizzard" of correspondence from the noble Lord, Lord McIntosh. However, I want to speak in support of my noble friend's Motion. This issue is of great importance to the City and to the financial community generally.
The Government's approach may be ingenuous. As my noble friend said, the noble Lord, Lord Bach, gave a clear undertaking to the House during the passage of the Bill, and later. If, as has been said, the Government now wish to argue that the tribunal is outside the processes of the Financial Services Authority, that is extraordinary. Lawyers may be able to construct otherwise; but, to a mere layman like myself, a body with the title "the financial services and markets tribunal" is clearly part of the processes of the Financial Services Authority and is, therefore, covered by the undertaking given by the noble Lord, Lord Bach. If they are not being ingenuous, I fear that the Government have simply decided to change their mind and for some reason do not want to admit it. The only other possibility is that they are taking a rather more duplicitous approach: namely, they now want to push the matter through in the blizzard of statutory instruments accompanying the coming into force of the new Act.
Before going further, I must declare two interests. I am the chairman of an investment bank in the City which is regulated under the present provisions and will be regulated under the provisions of the Financial Services and Markets Act. More importantly, I was until March this year a member of the board of the Securities and Futures Authority, which will be subsumed within the new provisions. For the next few weeks, at least until N2 on 30th November, I remain the deputy chairman of its Enforcement Committee, which is concerned with the provision and enforcement of discipline on the City community. So for the past six or seven years I have seen at first hand the challenges of discipline in the financial services industries.
I have absolutely no problem with making public the names of individuals and firms that have transgressed, once the disciplinary process has been exhausted. Publicity and the threat of publicity is an extremely powerful weapon in the hands of a regulator. It may not be appreciated by many of your Lordships how much even the largest firms hate publicity of that nature. A disciplinary notice published by the authority on 18th October carries a headline reporting that a firm and an individual were expelled. Notices of that nature, which are made public, are invariably fought line by line by even the largest firms because the financial services industry often deals with intangibles. It cannot, probably
During my years on the SFA enforcement committee, it has not always been able to convince defendants of the view that they have transgressed and should accept a penalty. Instead, they have chosen to go before a tribunal. I regret that my committee's view has not always prevailed before the tribunal--which has, from time to time, found in favour of the defendant.
Under the current system, all that takes place in private. The defendants were left with no stain on their public reputation and therefore with none on their business. If the Government's approach is accepted, that carefully constructed balance will be upset. Regulated firms, knowing that there will be publicity whatever the outcome, will inevitably be reluctant to avail themselves of their full legal rights.
Despite tribunal hearings being in private, there is a significant disciplinary element. The SFA always believes that there is at least an element of sailing close to the wind. The firm in question will know that the authority holds that belief and will be doubly careful in future.
Nowhere is confidence and reputation more important than in the case of smaller firms. Over the past half century, the City of London has been one of this country's great success stories. Part of that success has come about because smaller firms have continuously promoted new ideas and approaches--so nipping at the heels of their larger, lumbering rivals. Not all ideas have been good. Some have been downright bad. However, the overall effect has been beneficial--providing fresh impetus to the City as a whole.
Small firms are not always welcomed by regulators because they represent risk--something regulators hate. From a regulator's point of view, it is much safer to have fewer, larger firms with which one can establish a long-term relationship than small firms engaged in freelance pioneering.
A referral to a tribunal with proceedings held in public, no matter what the outcome, would almost certainly be fatal to a small firm. Even if the defendant is found not guilty, the aura of being so referred will take a long time to dispel. The City has a long collective memory: "Wasn't that the firm involved in a tribunal? I don't remember the details." Such recollections would make a significant dent on any firm's operations for a long time.
I conclude with a parallel point. Clause 23(b)--which I think should be (a) anyway--uses the word "anonymising". The Oxford English Dictionary in the Library does not endorse the use of "anonymous" as a verb--although its use as an adjective, adverb or noun is fair enough. To render or make anonymous or even
Lord Fraser of Carmyllie: My Lords, my noble friend Lord Kingsland fully and carefully narrated the response, which he characterised as unequivocal. It seems impossible to characterise the response as anything other than unequivocal. Had I sought to challenge that response, when it was made by a Minister at the Dispatch Box in such unequivocal terms, your Lordships would have viewed it as a shameful waste of time.
As I understand the principle now enunciated by the noble Lord, Lord McIntosh, we should prefer in future not an unequivocal statement by a Minister but a set of draft regulations attached to a letter that appears in an avalanche of other paperwork circulated to all those interested.
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