---

The Finance Act 1991 (c. 31)
.--(1) The Finance Act 1991 is amended as follows.
(2) In section 47 (investor protection schemes), omit subsections (1), (2) and (4).
(3) In section 116 (investment exchanges and clearing houses: stamp duty), in subsection (4)(b), for "Financial Services Act 1986" substitute "Financial Services and Markets Act 2000".".--[Miss Melanie Johnson.]

Schedule 17

Repeals

Amendment made: No. 183, in page 241, line 23, at end insert--

"1988 c. 1.	The Income and Corporation Taxes Act 1988.
	In section 76, in subsection (8), the definitions of "the 1986 Act", "authorised person", "investment business", "investor", "investor protection scheme", "prescribed" and "recognised self-regulating organisation".
	In section 632, subsections (2ZA) and (2B).
	Section 840A(2).
1991 c. 31.	The Finance Act 1991.
	In section 47, subsections (1), (2) and (4).".
	--[Miss Melanie Johnson.]

Bill, as amended, to be reported.

Order for Third Reading read.

8.56 pm

The Chief Secretary to the Treasury (Mr. Andrew Smith): I beg to move, That the Bill be now read the Third time.

9 Feb 2000 : Column 358

First, I pay a warm tribute to all those who have contributed to our debates. In particular, I thank all the members of the Standing Committee who worked long and hard through 35 sittings and for 90 hours or so--to say nothing of the three further sittings on the Floor of the House--properly to scrutinise the Bill and to make many improvements. The work of Lord Burns and his committee and of Don Cruickshank has also helped to improve the Bill. I am grateful to them for all their hard work.

I take this opportunity to thank especially my hon. Friends the Economic Secretary and the Financial Secretary for their enormous contribution. Theirs is real achievement and something of which they can be proud. I know that, even when it might not have seemed like it, it was truly a labour of love. I therefore extend thanks to them and to their predecessors. I am also grateful to our officials, to their colleagues in the FSA and to parliamentary counsel without whose skill and dedication a Bill of this size could simply not have been prepared and carried forward.

The reason for the extent of those labours is the importance, the scope and the inevitable technical complexity of such a Bill. I do not believe that there are real differences of opinion in the House or outside on the underlying objectives of modernising the regulation of financial services. We therefore very much welcomed the co-operation of the Opposition parties in using the innovative roll-over procedure last autumn and the other ways to progress the Bill. That will allow us, I hope, to get a fully scrutinised Bill on to the statute book in the spring. That is in the interests of everybody concerned.

As the right hon. Member for Wells (Mr. Heathcoat- Amory) said on Second Reading, the importance of the Bill is undoubted. Its purpose is to put into place modern and effective regulation for one of our most important industries. Financial services account for 7 per cent. of gross domestic product and contribute £32 billion net to the balance of payments. The United Kingdom's world-beating financial services industry is vital not only because it employs more than a million people, but because it provides a means to look after the savings of many millions more. Firms in all sectors of the economy rely crucially on it for the provision of finance.

The Government inherited a regulatory system that could, perhaps, be most tactfully described as complex and interesting--if one likes that kind of thing. We are replacing that with something much better. In place of the outdated multiplicity of regulators, we shall have a single statutory, accountable regulator.

The FSA will have clear objectives and the right balance of powers and duties to provide, as we have said, a light touch where possible and effective consumer protection where necessary. It will be required and expected to operate in a way that is fair, transparent and accessible.

Important improvements have been made in the House to many aspects of the Bill; for example, the new market abuse regime, which was discussed earlier this evening, and the competition provisions, helping to protect the integrity and effectiveness of markets. Important clarifications and safeguards have been added in those and other areas. In addition, of course, many more technical improvements have been made with the support of both sides of the House.

9 Feb 2000 : Column 359

The Bill will go to another place with its general framework in the shape in which I hope and expect it to emerge. Inevitably with a Bill of this nature, further refinements will be needed; for example, in additional technical improvements and transitional provisions. We shall also bring forward, as promised, changes to part VI, as a consequence of the developments in the stock exchange, which occurred after the Bill was introduced.

Mr. Tyrie: It is absolutely clear that the other place will have to put in transitional arrangements and repeals. The Chief Secretary has made it clear that he wants to get the Bill on the statute book as early as possible in April, so why was it not possible to make those amendments before the Bill goes to the other place?

Mr. Smith: There is a simple, commonsense reason for that. It makes sense to put in place the architecture and design of the new building before one handles all the arrangements for moving in, and that is the logical reason why many transitional provisions will be made later. As I said, demutualisation of the stock exchange has occurred since the Bill was introduced.

It is right at this stage to thank all those responsible for the important work of pre-legislative scrutiny carried out by Members of both Houses under the chairmanship of Lord Burns. That is a further aspect of the modernisation of procedures from which the Bill has undoubtedly benefited. The hon. Member for Arundel and South Downs (Mr. Flight) is on the record as saying that the Joint Committee virtually rewrote the Bill. That may be an exaggeration, but there is no doubt that it made a vital contribution in the form of several important recommendations on the draft Bill, the great majority of which we accepted and implemented prior to the Bill's introduction or during its passage through the House.

The Joint Committee proceedings laid the foundations for the co-operative scrutiny of this far-reaching, technical Bill in the House. The discussions have, at least until tonight, engaged many hon. Members, but we have exhausted the interest even of some of the more assiduous Conservative Members, as is evident from the sparse attendance.

For the overwhelming majority of the time there has been a constructive approach to the Bill, and I trust that it will continue in another place. It is clearly important that it should since we must all do what we can to get right this important legislation, while avoiding unnecessary delay in its enactment. I am glad that the right hon. Member for Wells acknowledged that point on Second Reading and on several subsequent occasions.

A couple of weeks ago, I had the pleasure of visiting the FSA with the Chancellor of the Exchequer, and we were both very impressed by what Howard Davies and his colleagues have already achieved. I have no doubt whatever that they are putting in place a world-class regulator for a world-beating industry. The Bill will give them a statutory framework to match, and I commend it to the House.

9.4 pm

Mr. David Heathcoat-Amory: The Bill is nearing the end of its long passage through the House. It has been something of a parliamentary epic, and I can claim to be a founder member of the club, together with my

9 Feb 2000 : Column 360

hon. Friend the Member for East Worthing and Shoreham (Mr. Loughton). He was in at the start, and I am glad that he is in at the finish.

The origins of the Bill go back to the weeks following the general election, when the Government announced their intention to legislate for a new, unified regulator to oversee financial services and banking. I am not sure that the Government understood what they were taking on in those days.

There have been many changes, many of them good, but the process has not been helped by the fact that there have been so many ministerial changes. That is no criticism of the industry and commitment of the Economic and Financial Secretaries, but there have been three complete changes of the ministerial team, which has undoubtedly caused a hiccup from time to time.

For our part, we have been constructive throughout in our criticism. We want a Bill that will be effective in regulating an important industry, while being fair in its procedures and just towards those accused of financial crimes. The problem has been that the more we scrutinise the Bill, the more misgivings we have, despite the fact that the Government have moved on a number of issues. I acknowledged that several times this evening.

Many of the difficulties are in the wording and the detail of the clauses. Matters are not helped by the fact that much of the Bill remains submerged. It will become apparent in secondary legislation, which we have not seen, even in draft form.

We have been more or less alone in carrying out our scrutiny task. It is flattering that we now have a Liberal Democrat with us--the hon. Member for Weston-super-Mare (Mr. Cotter), whose constituency is in my county, Somerset, is always welcome, as an observer if nothing else. We would have appreciated a more active role from that party during the long days and evenings last year when we were considering the Bill clause by clause. The silence of the Liberal Democrats, who were entirely absent from most of the Committee stage, will have been noticed by the trade bodies concerned and by the million or so people who are directly employed in that important industry.

---