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"The Authority must secure that the membership of the Consumer Panel is such as to give a fair degree of representation

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to those who are using, or are or may be contemplating using, services otherwise than in connection with businesses carried on by them".

So a great deal needs to be done on the structure of how the panel is set up. Finally, there is the question of reviewing the work of the body itself. I am disappointed that the Government have not written into the Bill the need for it to adhere to the principles of good regulation: that it should carry out its work-as the Better Regulation Task Force manuals say-in an efficient, effective and economic way.

5.45 pm

To summarise, I understand what the Government are driving at with Clause 6 and Schedule 1. I support the broad brush but, as shown by the title, it is the wrong approach and will not help with enforcing and carrying through the RDR. It has inappropriate terms of reference and, potentially, an unbalanced structure within the body itself. The approach needs a lot more work to make it effective. I hope-not with much confidence-that the Government might, even at this late hour, think again about how this body could be made better, because it is so important for the future creation of an effective savings culture in this country.

Lord Davies of Oldham: My Lords, I am grateful for the contributions to this short debate and I note that the noble Baroness accepted with great generosity the government amendments, which were meant to be responsive to the points made by the Opposition and the anxieties they expressed. I heard her reservation about Amendment 59, but we do not need to interpret that as being unduly restrictive. After all, her noble friend from the Back Benches, the noble Lord, Lord Hodgson, has emphasised how much the issue of financial education needs to be addressed with the greatest care. With Amendment 59, we are quite clearly insisting that the necessary relevance to the consumer financial education function is contained in the appointment. That seems to me to be absolutely right.

We are dealing here with what the noble Lord, Lord Hodgson, accurately identified as an area that needs very great and considerable attention; he was buttressed by the contribution from the noble Lord, Lord Oakeshott, particularly on pensions. We all appreciate greatly how much that issue has to be embedded in the public consciousness, so that short-term decisions on such long-term considerations can no longer be the basis on which anyone acts on the pensions position. We particularly all appreciate the extent to which personal and private provision will play such an important part in the future. I do not think that Amendment 59 does anything but specify what is absolutely necessary, but I am grateful to the noble Baroness for indicating that she will not oppose it on this occasion and that she accepts the other amendments in the spirit in which they were given-of contributing to a joint position on this part of the Bill.

I very much appreciate the concern and, indeed, the expertise of the noble Lord, Lord Hodgson, on this issue. He will forgive me if I chide him a little. At one moment, he was saying that it just will not do that we have the wrong phraseology in this title, while at the

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end he was saying that the important thing is that we must insist upon consumer confidence-which is exactly what we have expressed in the Title of the Bill. His own speech indicated that the extent of the interchange on the concepts of customer or consumer ought not to detain us a great deal.

I feel that we may be dancing on the head of a pin here; after all, he says that there is no such thing as a short-term relationship for a customer. Well, I hate to say this but in one day's travel on a train you are likely to hear the rail company referring to you as a customer. I recognise that you may be lucky if you have a short-term acquaintance there, as the journey is often more protracted than one had expected. Nevertheless, the noble Lord will recognise that these terms are close to being interchangeable, and not ones that ought to concern us in legislation.

Lord Hodgson of Astley Abbotts: I am grateful to the Minister. It is a fact that the rail companies and Tesco use the word "customer" because it is seen as a more prestigious title than "consumer".

Lord Davies of Oldham: That may be, but we ought not to be governed by these contemporary fads and fancies. I have known the reaction of many people who regard themselves as passengers on the railway and other forms of transport. The distinction between "consumer" and "customer" in the effectiveness and efficiency of the service that is delivered has largely escaped me. Therefore, although the noble Lord has made some very important points, this issue of nomenclature is not that significant. On the noble Lord's more general point, I agree with him entirely.

Lord Oakeshott of Seagrove Bay: I am not sure I understand the difference between "consumer" and "customer". In our business we like to call them clients, if that helps.

Lord Davies of Oldham: We are in danger of indulging in an English language hierarchy, which I would hesitate to speak on with authority from this Dispatch Box. I was going to say how much I agreed with the noble Lord, Lord Hodgson, about the importance of financial education. We should recognise that there is a nuts-and-bolts dimension to this. Noble Lords will appreciate the extent to which the Government share this viewpoint. That is why we have, over this past decade, put a great deal of emphasis on financial education in schools. The basis of understanding must be communicated to schoolchildren. When they become adults they will find themselves with responsibility for their futures, in which it is very important that they understand the basics of how they save and make dispositions of their resources in the financial sector.

However, the representations in these debates by the noble Lord, Lord Hodgson, will certainly be taken on board by the body. Its task will be to increase the level and perception of financial education in this country, and it will be judged on how effectively it does so. The Government position on this is clear. This is an important function of the FSA and it is important that it is in the Bill. I am grateful that the Opposition have worked and fought hard over the

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nature of the financial education. What we have now is a package that provides the FSA with the necessary role that it must play in this very important area. I am grateful for noble Lords' contributions today. I commend Amendment 38.

Amendment 38 agreed.

Amendments 39 and 40

Moved by Lord Davies of Oldham

39: Clause 6, page 4, line 14, at end insert ", and

(b) in subsection (3) (matters to which FSA must have regard in discharging its general functions), after paragraph (g) insert-

"(h) the desirability of enhancing the understanding and knowledge of members of the public of financial matters (including the UK financial system)""

40: Clause 6, page 4, line 15, at end insert-

"( ) In section 5(2) (the protection of consumers), after paragraph (b) insert-

"(ba) any information which the consumer financial education body has provided to the Authority in the exercise of the consumer financial education function;"."

Amendments 39 and 40 agreed.

Clause 6, as amended, agreed.

Schedule 1 : Further provision about the consumer financial education body

Amendment 59

Moved by Lord Myners

59: Schedule 1, page 52, line 31, at end insert-

"( ) The Authority may appoint a person to be a member of the board only if it is satisfied that the person has knowledge or experience which is likely to be relevant to the exercise by the body of the consumer financial education function."

Amendment 59 agreed.

Amendments 60 to 68 had been withdrawn from the Marshalled List.

Amendments 68A and 68B

Moved by Lord Myners

68A: Schedule 1, page 54, line 28, at end insert-

"(ab) how the extent to which each of those objectives is met is to be determined;"

68B: Schedule 1, page 54, line 32, at end insert-

"( ) In sub-paragraph (4) references to objectives for a financial year include objectives for a longer period that includes that year."

Amendments 68A and 68B agreed.

Amendments 69 to 74 had been withdrawn from the Marshalled List.

Amendments 75 to 77

Moved by Lord Myners

75: Schedule 1, page 56, line 1, at end insert "or payment service providers"

76: Schedule 1, page 56, line 4, after "persons" insert "or payment service providers"

77: Schedule 1, page 56, line 5, after "person" insert "or payment service provider"

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Amendments 75 to 77 agreed.

Amendments 78 and 79 had been withdrawn from the Marshalled List.

Amendment 80

Moved by Lord Myners

80: Schedule 1, page 56, line 15, at end insert-

"( ) "Payment service provider" means a person who is a payment service provider for the purposes of the Payment Services Regulations 2009 as a result of falling within any of paragraphs (a) to (f) of the definition in regulation 2(1)."

Amendment 80 agreed.

Amendments 81 to 86 had been withdrawn from the Marshalled List.

Schedule 1, as amended, agreed.

Amendments 87 to 102 had been withdrawn from the Marshalled List.

Clause 7 agreed.

Clause 8 : Promotion of international regulation and supervision

Amendments 103 to 107 had been withdrawn from the Marshalled List.

Debate on whether Clause 8 should stand part of the Bill.

Lord Myners: My Lords, we seek to remove from the Bill the clauses relating to the FSA's international remit. The Council for Financial Stability-Clauses 1 to 4-the FSA's international remit-Clause 8-and the provisions relating to collective proceedings-Clauses 18 to 25-were casualties of the wash-up process. In order to secure the passage of the remainder of the Bill, the Government have agreed to withdraw these provisions from the Bill. That is why I have provided notice of my intention to oppose Clause 8 standing part of the Bill and lay government Amendments 322A and 332B, which make necessary consequential changes to Clauses 30 and 38. I will, in a moment, do the same for Clauses 18 to 25. Tomorrow, on Report, I will withdraw the Government's support for Clauses 1 to 4 relating to the Council for Financial Stability.

I should point out that the Government continue to believe that all these provisions are necessary, sensible and desirable. However, in the interests of securing other important elements of the Bill on which greater consensus exists, the Government have agreed to withdraw them. I therefore urge noble Lords to support these government amendments.

Clause 8 disagreed.

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Clause 9 : Executives' remuneration reports

Amendment 108

Moved by Lord Myners

108: Clause 9, page 7, line 11, leave out "The first"

Lord Myners: It is clearly appropriate for full parliamentary scrutiny to apply in instances where the regulations placed on firms will be strengthened. Similarly, it is appropriate for Parliament to scrutinise fully any efforts to reduce the regulatory requirements placed on firms, particularly where such regulations are designed to prevent excessive risk taking. We believe it is very unlikely that any future Government would wish entirely to remove the reporting requirements in this clause. However, in order to ensure that this cannot happen without adequate scrutiny, Amendments 108 and 109 will require the affirmative resolution procedure to be used for any and all regulations made under these powers. I do not believe that it is necessary for sunset clauses to apply in these cases for two main reasons: first, because these clauses are designed as permanent rather than temporary enhancements to the regulatory regime; and, secondly, because they do not prescribe the specific content of regulation-instead, they provide enabling powers. These are designed precisely in order to allow for further subsequent consultation on the detail and to enable future international standards and agreements to be built into these requirements.

Sunsetting these clauses would cause confusion and a lack of clarity about the regulatory requirements the industry is expected to meet. In light of this and the strong international commitment to many of these clauses, and given that much of their detailed content will be specified in FSA rules and subject to further consultation, I do not consider that it would be appropriate to sunset these provisions.

Baroness Noakes: My Lords, I will speak to the remuneration clauses together. The noble Lord has spoken to Amendment 108, which affects Clause 9. It is perhaps as well that we are dealing with these remuneration clauses in wash-up as I had envisaged that we would have several interesting and lengthy debates on the clauses had we discussed them in an ordinary Committee.

I hold no candle for bankers' bonuses but I share the very real concerns that the financial services sector and others have raised about the powers in Clause 11 in particular, which, inter alia, have no parliamentary oversight. An excess of regulatory zeal when implementing these powers-and, indeed the disclosure regulations under Clause 9-could be damaging to the UK. I shall not labour the point but say merely that whatever Government are in power after May will have to monitor how these powers are used and their impact on the international competitiveness of our financial services sector.

Clauses 9 to 11 would, I believe, benefit from the sunset clause that the noble Baroness, Lady Valentine, has tabled, and to which I hope she will speak in a moment. On an ordinary Committee day, the noble Baroness's amendment would have received our

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enthusiastic support. The clauses would also have benefited from the report after three years, proposed by the amendment we had tabled, but that amendment has fallen by the wayside.

I turn to the amendments tabled by the Government. We of course have no problem with Amendments 108 and 109, given that we tabled similar amendments in the first instance to which the Minister had added his name. Indeed, the Marshalled List still shows that that is the case as regards Amendment 109, although not Amendment 108. It is right that all the regulations made under Clause 9, not just the first, are subject to the affirmative procedure.

6 pm

Baroness Valentine: I speak to Amendment 336 which would apply sunset clauses to the clauses of the Bill relating to remuneration, living wills, short selling and the FSA's disciplinary powers. I must declare my interest as chief executive of London First-a not-for-profit business membership organisation.

As set out on the website of the Department for Business, Innovation and Skills, sunset clauses are particularly appropriate when proposals are made based on a particular set of market conditions in an area characterised by fast-moving events. The financial services industry is characterised by its fast-moving nature, and the turbulent economic circumstances that currently prevail make it important to revisit this legislation, once stability has returned.

I regret that this Bill has been pushed into wash-up and hence that time has not been available for adequate consultation and scrutiny. The complexity of this legislation and the volatile economic climate lead me to suggest the application of sunset clauses. I do not intend to divide on my amendment, but I support the recommendations made earlier by the noble Lord, Lord Rooker, on a review in due course of wash-up legislation, which would, in part, deal with my concerns.

Lord Oakeshott of Seagrove Bay: My Lords, we have some sympathy with the arguments of the noble Baroness, Lady Valentine, on sunset clauses, but not with those in relation to disclosure of remuneration-the point that the noble Baroness, Lady Noakes, touched upon. If I heard her correctly, the noble Baroness is concerned about an excess of regulatory zeal in dealing with well paid bankers' remuneration packages. If only. There has been precious little sign of that so far. There is plenty of room for more. There would be no danger of damaging the UK's competitive position. What has damaged that is the lack of dealing with such packages and the wild operations in the City of London that have done much damage to Britain's reputation as a place to do business. We support the Government on this amendment.

Lord Hodgson of Astley Abbotts: I support the noble Baroness, Lady Valentine. She made some extremely sensible points about the need for a sunset clause. As she rightly pointed out, legislation that is rushed through in response to a particular set of events may well prove to be outdated and unnecessary. If Parliament as a whole has a chance to examine the efficacy of the

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provisions some years hence, sufficient time will have elapsed to see how the dust has settled and how the new architecture, whatever it may be, has taken shape. The noble Baroness's amendment is entirely sensible.

Lord Myners: My Lords, I express appreciation from these Benches for the gracious approach of the noble Baroness, Lady Noakes. I fully agree that all issues of regulation need to be tempered by tests of reasonableness and proportionality. We must have regard to competition. However, we must have regard to competition which is responsible and does not place the financial system-and thereby the taxpayer-at risk.

In response to the points on a sunset clause eloquently made by the noble Baroness, Lady Valentine, and supported by the noble Lord, Lord Hodgson, these clauses are not designed as short-term fixes which might be removed once stability has returned. Rather, they are designed fundamentally to improve the regulatory regime and its effectiveness. Improved remuneration practices and robust contingency plans, for example, are crucial regulatory requirements that should become a permanent feature of our strengthened regulatory regime. We are undoubtedly moving towards much greater stability, but we should not be seduced into believing that the restoration of stability means that the problems of the past will never revisit us. The powers contained in these clauses are designed to empower the regulatory bodies with appropriate measures, and shareholders with appropriate information, whereby they may fulfil their right and proper functions in terms of contributing towards the abatement of any risks to financial stability.

I also note the support given to these clauses by the noble Lord, Lord Oakeshott, who is speaking as a substitute on this occasion, but who is evidence of the considerable strength in depth on the Liberal Benches on these issues.

Amendment 108 agreed.

Amendment 109

Moved by Baroness Noakes

109: Clause 9, page 7, line 13, leave out subsections (7) and (8)

Amendment 109 agreed.

Clause 9, as amended, agreed.

Amendments 110 to 154 had been withdrawn from the Marshalled List.

Clauses 10 and 11 agreed.

Clause 12 : Rules made by FSA about recovery and resolution plans

Amendment 155

Moved by Lord Myners

155: Clause 12, page 12, line 30, at end insert-

"( ) An authorised person may provide information (whether received under subsection (6) or otherwise) that would otherwise be subject to a contractual or other requirement to keep in confidence if it is provided for the purposes of anything required to be done as a result of section 139B or 139C or this section."

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