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The Earl of Caithness: I accept that the noble Lord cannot comment on the Cruickshank report, but will he comment on the principle of the amendment?

3.15 p.m.

Lord McIntosh of Haringey: The amendment has not been spoken to by its mover. Therefore, it is not entirely appropriate for me to do that without some stimulus.

The Earl of Caithness: I disagree with the noble Lord. The amendment is in the hands of the Committee. It has been spoken to. Whether or not that is by the mover of the amendment is totally irrelevant. That is a poor excuse for not giving me a reply.

Lord McIntosh of Haringey: I am happy to give a reply but I should rather have given it, having been given the opportunity to hear the arguments put forward by the mover of the amendment. I seek only to defer a reply rather than to avoid giving a reply.

However, I shall give the noble Earl my initial thoughts on the subject. Without prejudging any response that the Government may give, I understand that the Cruickshank report pays considerable attention to the issue of cheque clearance, which is included in this amendment. I have no doubt that we shall consider very carefully our response to that.

I understand also that the Treasury and the Department of Trade and Industry have referred those aspects of the Cruickshank report to the Competition Commission. Therefore, the matter will certainly be an issue of public debate in the months to come.

Lord Elton: Perhaps the Minister will take us a little more carefully through his opening objections to my noble friend's Amendment No. 47.

He started by resisting it on the grounds that coupling it so closely with financial crime in the same objective would confuse the issue because financial crime and market abuse are only partially coterminous. I take it that that difficulty would be removed by making the reduction of market abuse free-standing within that subsection.

But the Minister then put the pith of his argument almost into a single sentence. He said that in his view the regulatory objective of market confidence was sufficient for the purpose of creating a duty on the authority to regulate market abuse and making that an objective because, if there was market abuse, confidence would be diminished.

But if that argument is valid in relation to market abuse, which is not to be included, it must surely be valid in relation to financial crime because financial crime will also reduce confidence in the market. Therefore, what is sauce for the regulatory goose must be sauce for the regulatory gander. Perhaps the noble Lord will tell the Committee his other reason for

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resisting this amendment, other than that which could be overcome by tabling my noble friend's amendment as paragraph (e) rather than as part of paragraph (d).

Lord McIntosh of Haringey: The two parts of the argument complement and strengthen each other rather than being separate arguments which could be overcome in the way which the noble Lord, Lord Elton, suggested.

I said at the beginning that it would be wrong to associate market abuse only with financial crime as one of the objectives. I said that that was because market abuse overlaps with a number of the objectives but is associated in particular with market confidence, although I acknowledge that there was an overlap both with financial crime and with the protection of consumers.

But the implication of that is not that it would be right to have a fifth objective--market abuse--but that the coverage of market abuse was adequately achieved by the market confidence objective, with which we shall deal in more detail in the later clauses of the Bill. I said also--and it is another reason for rejecting the noble Lord's suggestion--that market abuse is covered separately for a significant reason; that is, it is designed to apply not only to the regulated community but to everyone. It must therefore be dealt with separately from the objectives and principles which relate specifically to the regulated community. For those reasons, if the noble Lord were to return with a fifth objective, it would not be acceptable to the Government.

Lord Elton: To clear my mind entirely on the matter, is the Minister in effect saying that there are both regulatory and non-regulatory objectives for the authority; that the regulatory ones are set out in Clause 2(2) and that the others are to be deduced, as it were, from the titles of the succeeding parts of the Bill, Part VIII being concerned with market abuse?

Lord McIntosh of Haringey: They are all regulatory objectives. It is not that there are non-regulatory objectives, but that the objectives set out in Clause 2 with the principles set out in the subsequent clauses relate to the regulated community. There can be regulatory objectives which go beyond that, as indeed, market abuse does.

Lord Peston: I have no great strength of opinion on the amendment itself, but do I understand my noble friend rightly? Is he saying that the authority will be able to consider all aspects of market abuse in their entirety, to expose all aspects of market abuse in their entirety and to deal with all aspects of market abuse in their entirety under the "market confidence" heading? It does not matter whether anything is specifically said, so long as the Minister can assure us that those three aspects of market abuse are all dealt with by the Bill and can and will be dealt with by the authority. I speak as someone who is a consumer in that regard and, as

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always, as someone who believes in Adam Smith's dictum that only consumers matter when such phenomena are judged.

Lord McIntosh of Haringey: It is certainly true that all market abuse can be thought of as damaging market confidence and therefore as coming under the heading, "market confidence". But I made it clear also that there are forms of market abuse which are damaging in terms of financial crime and of consumer protection.

Lord Elton: I believe that the noble Lord, Lord Peston, and I are seeking a response on the same issue: will the authority be capable of dealing with market abuse when the market abuse is conducted by someone who is not a regulated body?

Lord McIntosh of Haringey: Yes. That is what the whole of Part VIII of the Bill on market abuse is about.

Lord Peston: Will my noble friend reflect again on the amendment of my noble friend Lady Uddin and the intervention of the noble Earl, Lord Caithness, in regard to it? It seems to me absurd that we should ask my noble friend to comment on a 350-page report today. However, purely a priori in terms of first principles, in a world where one can send an e-mail message which reaches the United States virtually instantaneously and all sorts of other transactions take place through computers in such a way, does not my noble friend agree that it is ridiculous that it takes five days for a cheque to clear?

Lord McIntosh of Haringey: The answer I can best give is the statement made this morning in response to the Cruickshank report by the Secretary of State for Trade and Industry and the Chancellor of the Exchequer. Stephen Byers said that the health of small and medium firms is crucial to the success of the economy and the employment of many people. The provision of banking services is an important influence on their prospects for growth and success in the future. The Cruickshank report considers that there is a substantial case for a reference of the market. He considers the issues identified and the concerns expressed about this important area to be such that the provision of banking services to SMEs should be fully investigated by the competition commission.

I believe that that answers my noble friend's point about the seriousness with which the Government take the recommendations from Mr Cruickshank. It enables me also to confirm that the Chancellor will make a further response covering other recommendations of the Cruickshank report in the Budget statement tomorrow.

Lord Kingsland: I yield to no one in my admiration for the draftsman of the Bill. It is a monumental achievement, but, on occasion, even giants stumble. My noble friend Lord Elton surely put his finger on the real problem: if market abuse is subsumed in "market

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confidence", why is not financial crime? We are entitled to conclude from the way in which the subsection is drafted that, if financial crime is incapable of falling within market confidence, then surely the same must be true of market abuse.

It would therefore be reasonable to conclude, on the current drafting, that control of market abuse is not one of the regulatory objectives. That conclusion would be extremely inconvenient for the Government, because there is no doubt whatever that where a regulated party commits an alleged act of market abuse, it will be much easier to attack that party under the rules relating to regulation than it is under the rules relating to market abuse. This is not a party political point. It is simply a question of making the Bill clear. There will be serious consequences for people who transgress under the Bill. Their lives may be ruined by it. They are entitled to understand the law clearly. Why will the Minister not add that clarification?

With enormous respect to the Minister, we had exactly the same problem on day one of Committee stage in relation to non-executive directors. We tabled four amendments to clarify the Bill. The Minister said that he agreed with the substance of each amendment, but he believed that the Bill did not need changing because it was absolutely clear. With great respect, it must have been absolutely clear only to him. It was certainly not absolutely clear to any of the Opposition Front Bench, nor indeed to any of those who advise the Opposition Front Bench. I hope that the Minister will reconsider non-executive directors by Report stage. Here is an opportunity for the Minister to reconsider now the objectives clause. Why on earth would the insertion of "market abuse" not clarify something which clearly is not clear at present?

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