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Lord Hodgson of Astley Abbotts: My Lords, the noble Lord referred to the question of insider dealing. That is a matter for the Department of Trade.
Lord Phillips of Sudbury: My Lords, of course I accept that. I sought to draw a picture of the way in which the general public views this extraordinarily powerful institution with extraordinarily rich and powerful players (as they are inappropriately called) involved in the City. Far from it being against the interests of the City that the tribunal hearings should be in public, in the interest of public satisfaction with the conduct of affairs within the City--on the whole they are honourably and effectively undertaken--they should be reported. It is idle to pretend that the Sun or the Star, or any of the other "red tops" will be
interested in the normal disciplinary proceedings which come before the tribunal. It is more important that the financial press should be able to report the details, background and story behind cases which could prove not only a deterrent to others but, above all, could give them insight into the background of many of those cases.In conclusion, I agree with the noble Baroness, Lady Crawley. It would be a bizarre state of affairs if the man who steals a bottle of milk or the confused old woman who takes a packet of sweets from the supermarket store and does not pay for them should suffer the extreme pain of the deterrence of local publicity until he or she is acquitted but that the greatest and most powerful institutions in our land should be free of those constraints.
Lord Kingsland: My Lords, I am most grateful to the noble Lord for giving way. Throughout the proceedings on the Bill it was one of the Government's contentions that the nature of the offences dealt with by the FSA were not criminal. I understand why the noble Lord seeks to draw the parallel that he does but it is not an exact one.
Lord Phillips of Sudbury: My Lords, I accept that. I speak at large. However, the noble Lord, Lord Kingsland, will accept that the issues brought before the tribunal are important to those concerned and the market place. Since the City is vital to our economy, they are important to us all. I simply attempt to rebut the argument that somehow these firms would suffer irreparable damage if the tribunal proceedings were publicised. The City is the most sophisticated market on earth and knows precisely how to deal with responsible reports of tribunal proceedings. While I agree with the noble Lord's remarks on the way in which the matter has been dealt with, I beg to differ with him as to the merits of the open private tribunal debate.
4.15 p.m.
The Parliamentary Secretary, Lord Chancellor's Department (Baroness Scotland of Asthal): My Lords, perhaps I may say how grateful I am for this opportunity to debate the procedural rules. It is rare indeed that your Lordships have been treated to such passion in relation to rules of any kind. I was rather troubled when I first became aware of the issues which seemed to divide a number of noble Lords in this House--there appeared to have been a misunderstanding about what was said by my noble friend Lord Bach during the Committee stage on 30th March--not least because it was a misunderstanding as to the proper interpretation to be given to the comments made by my noble friend. That was shared by a number of noble Lords. A number of people have referred to the passages; therefore, at this stage I shall not repeat them but I shall come back to them in due course.
As your Lordships know, I come rather fresh to the fray regarding this Bill and the rules. Therefore, I thought that the best way of understanding how we
came to this sorry pass was to look at the history to see whether I could work out the chronology and how we came to be in the position we now are. With your Lordships' leave, I ask you to come on the journey with me because we may be able to draw the sting out of what appears to be the disagreement.We all appear to agree on certain matters. I start with the agreement. The following appears to be clear and, I hope, not subject to disagreement. First, the Financial Services Authority should have a clear remit. Secondly, the tribunal should be independent, robust and Article 6 compliant. We put to one side for the moment what that involves. There should be proper safeguards in place to ensure that procedures adopted by the FSA and the tribunal are fair, open and transparent; and that any legislation brought forward would be ECHR compatible and enable the Government to make a Section 19 compatibility statement in respect of it. All those appear to be given.
Therefore, perhaps we may start our journey quite a long time ago when the matter came before the Joint Committee on Financial Services and Markets. The first report, volume II, was printed on 27th April 1999. I invite noble Lords' attention to Appendix 2. In Appendix 2 the Government set out their overall objectives. Your Lordships will recall that this appendix was submitted as a note by Her Majesty's Treasury on enforcement procedures. It states:
- "The Government's overall objectives, which appear to be shared by many of the witnesses the Committee has heard on the subject, are:
- "(i)A procedure that is objectively fair and secures a person's rights to a fair hearing as enshrined in the ECHR and Human Rights Act".
- "The procedure must also allow justice to be done, and be seen to be done, from the point of view of any victims of regulatory breaches and the wider public, whose confidence in the financial services industry is central to the wider aims of this Bill".
- "The way in which we have sought to achieve these objectives is by making a distinct separation between the regulatory procedures of the FSA, which are administrative in nature, and the judicial procedures of the tribunal. The Government would welcome the Committee's views on whether the separation is sufficiently clear at present".
Paragraph 8 states that the precise procedural rules for the tribunal will be a matter for the Lord Chancellor and will be consulted on in draft in due course.
There has already been reference to the speech of my honourable friend, Melanie Johnson, in another place on 4th November. She told the Standing Committee:
- "As the Minister for Small Business and E-Commerce, my hon. Friend the Member for Leicester, West (Ms Hewitt)--my predecessor as Economic Secretary--explained to the Joint Committee, the tribunal will be a first-instance tribunal. It will be able to consider all the facts and all the merits of the case, in full compliance with the requirements of Article 6(1) of the European Convention on Human Rights.
- The tribunal will also comply with the current best practice, as laid down by the Council on Tribunals. The council will oversee the tribunal's working in accordance with its role under the Tribunals and Inquiries Act 1992. Our amendments make it clear that the tribunal comes within the council's responsibilities under the Act".
The rules that were current at that stage--the 1991 model rules--were published as a Command Paper. However, the version on the council's website was the September 1999 revision of those rules, which would have been available by 4th November 1999, though they had not been laid before Parliament. As I understand it, those new September 1999 rules provided for publicity.
We then move on to the troubled letter. The Government have throughout tried to be helpful. Although I hear and have sympathy for what the noble Lord, Lord Newby, says about being showered with a piece of paper, many people would prefer to be showered than not showered at all and remain unclean and uninformed about what was in the Government's mind.
The letter was written by my noble friend Lord McIntosh in his usual inimitable style in an attempt to be helpful. It might help if I read it, because we have been talking about the letter. It was not in any way intended to supersede what was said by my noble friend Lord Bach; it was intended to better inform the debate that was then proposed to take place on 30th March. My noble friend Lord McIntosh said in his letter:
- "Please find attached a draft of the procedural rules for the Financial Services and Markets Tribunal, which are to be made by the Lord Chancellor under clause 123 of the Bill. I am circulating this draft to assist noble Lords when we reach Part IX of the Bill in Committee.
- I must stress that this is only a working draft. An earlier draft has been shown to the Council on Tribunals, the Court Service, the Northern Ireland Court Service, and the FSA, but this draft does not yet reflect all of their comments. I am sorry that it has not been possible to circulate a more final draft, but I hope that you will nevertheless find it a useful guide as to the sorts of issues being covered in the rules and that it will thereby help to inform our debate.
- I also attach a brief summary of the rules".
That was an attempt to be entirely helpful and to make sure that there was a degree of clarity and a better understanding that when the noble Lord, Lord Bach, came to discuss the issues there would be a discussion about the FSA and then a separate issue in relation to the tribunal. That was on 14th March.
We then move on to the comments of my noble friend Lord Bach. However, before I do that it might help noble Lords to know what was contained in the document that was circulated by my noble friend Lord McIntosh. Paragraph 18 of the Explanatory Notes, which was the summary of the rules of the Financial Services and Markets Tribunal, helpfully says, under the heading "Hearings in Public":
- "All hearings, including preliminary hearings and pre-hearing reviews, will be conducted in public except in limited circumstances which reflect the exceptions permitted under the European Convention on Human Rights (namely where a private hearing is required in the interests of morals, public order,
- national security or the protection of the private lives of the parties, or where it considers that publicity would prejudice the interests of justice)".
We then get to the noble Lord, Lord Bach, himself. For the whole of the period of about a year before, it had been strongly urged that there should be a clear distinction between the FSA rules and the tribunal rules. They were two separate, distinct entities and the independence of the tribunal was key.
One of the fears, as noble Lords may remember, was that the FSA would behave in a way that would prejudice those who might wish to appeal the notices issued by them. It was therefore very important to make sure that the constraints that were going to be put on what they could and could not do were fair, open and transparent. My noble friend Lord Bach set the context in which this discussion should take place. He said:
- "This group of government amendments all deal, in one way or another, with the end of a notice procedure and the manner in which the final determination of the matter may be notified to the person concerned and published more widely".--[Official Report, 30/3/00; col. 914.]
Let me help your Lordships on why that is the case. My noble friend said:
- "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".--[Official Report, 30/3/00; col. 916.]
I am sure that none of your Lordships will suggest that they were misled into thinking that if the matter was referred to the Court of Appeal, those hearings would be heard in camera by the Court of Appeal and would not have the normal publicity that goes with the full panoply of the court. Under the new clause on publication, the authority--I repeat, the authority--is therefore prevented from publishing details about warning and decision notices. The Government have accepted that there should be a division between FSA procedures and tribunal procedures. When my noble friend Lord Bach referred to that, he was referring to the procedure in relation to the FSA, not in relation to the tribunal.
The matter was not specifically dealt with. That is why I understand how the confusion arose, even though I am surprised by it. I am surprised because it certainly appears that in what went before there was no indication that the Government were irrevocably wedded to private hearings. The belief was that that matter was going to be looked at when the rules were prepared. The rules were prepared and circulated before--
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