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Lord McIntosh of Haringey: The noble Lord is right. I did not answer; I am sorry. We said at Second Reading that we might have between 500 and 600 amendments in Committee. The number will be somewhat lower. The good reason is that we have found ways of turning the figure of between 500 and 600 amendments into a lower number. The bad reason is that some of the amendments are still not ready and will have to be laid at Report stage. It is a serious burden for which we are deeply apologetic.

Lord Stewartby: Is there a special reason for having this definition of "consumer" just for the purposes of Clause 129?

Lord McIntosh of Haringey: It is not just for the purposes of Clause 129. If the noble Lord looks at the other amendments, there are differences but they are all based on the core of the definition which is to be found in Amendment No. 229 in Clause 129.

Lord Hunt of Wirral: I thank the Minister for having already answered the point that I was about to make. In the light of his answer, I am a little concerned about the extension of the definition to persons who have rights or interests which may be adversely affected by the use of services by other persons. That broadens the definition by moving away from some sort of causation to a general adverse effect. That causes me concern. It may well have unintended impact. It may make it necessary for the FSA to broaden the scope of the ombudsman scheme beyond complainants with a contractual customer relationship with the authorised firm to include all third parties such as third parties under motor policies following road traffic accidents. It would extend protection to third parties injured under liability policies. It might extend the definition of customer to those adversely affected by a polluting incident.

I mention those examples. I do not wish to press the point now but ask the Minister to reflect on that aspect. I can supply further details in due course.

Lord McIntosh of Haringey: The noble Lord was good enough to write giving me notice that he would put down the amendment. However, we saw the amendment only this morning. It is a complicated issue. Perhaps he will allow me to write to him in more detail with the benefit of more reflection.

Lord Peston: I have lectured on consumer theory for about 40 years and believed that I understood what a

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consumer was. I thought that the Bill as drafted was clear. I do not understand the amendments; they are supposed to improve the Bill. The Bill states what a consumer is. I nod my head and agree with it. Paragraph (b) refers to other people who may be acting in ways for a consumer. That is perfectly clear to me. I have no difficulty with the Bill.

However, I find the amendment completely incomprehensible. With no disrespect to my noble friend I find the Minister's explanation even more incomprehensible. I cannot understand what is wrong with the Bill as drafted.

I do not want to prolong the debate, but as the noble Lord, Lord Hunt, asked my noble friend to think again, could he persuade those who are advising him to do so, too, in case they got it right the first time?

Lord McIntosh of Haringey: Without the amendments, there are different definitions of "consumer" in different parts of the Bill. I do not know where my noble friend looked, but he would have found different definitions in different places.

In Amendment No. 229, the core amendment in the group, the bulk of the explanation is not about who a consumer is--he is a user of services, which no doubt is what my noble friend has been saying for 40 years--but about whose services he uses. As the Bill is all about authorised and unauthorised persons, trustees and people carrying on financial services as representatives of someone else, it is important to be precise about the definition of the providers of the services. That is why, unfortunately, there are still differences between the definition of "consumer" in different parts of the Bill. At least they are all referenced to and rooted in Amendment No. 229.

Lord Elton: I am sure that we all recognise the Government's difficulty when faced with amendments which they have only recently seen. The Minister will realise that from time to time Members of the Committee are in a similar difficulty. Therefore, he will forgive me if I ask whether in advance of his correspondence he could expand on his reply to my noble friend Lord Hunt. Presumably, the issue is simple for him to explain, but not so simple for me to understand.

As regards Amendment No. 229, I understand the direct links and interests held by persons,


    "who have rights or interests which ... are derived from, or otherwise attributable to ... the use of services by other persons".

That is a clear link. However, I cannot get my mind around the link, and therefore the right to protection, to someone whose interests may be merely adversely affected by a person with such rights. It seems to me that the world is full of people who may be adversely affected by my decision to buy, sell or insure something, but that can be of no possible interest to the regulator or impose any moral obligation on the person making the sale.

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I am speaking at leisure in the hope that some succour might be granted to the Minister, but it appears not. Therefore, I shall bring my remarks to a conclusion.

Lord McIntosh of Haringey: I am grateful to the noble Lord, Lord Elton, for his consideration. Rather than attempt to reach a final conclusion on an amendment that has been available for only a few hours, it is better to include the noble Lord in my correspondence with the noble Lord, Lord Hunt. Indeed, if a meeting is desirable, I shall be only too happy to meet them and anyone else concerned.

Lord Elton: I am most grateful for the offer.

Lord Kingsland: As the Minister proposed to take my noble friend's amendment away and subject it to a certain degree of textual exegesis, perhaps I may add one or two reflections from the Front Bench on Amendment No. 229. It adds three subsections to Clause 129. The government amendments propose that the definition of "consumer" in Clauses 5(3), 9(7) and 12(5) would be replaced by reference to the definition in new subsection (7) in Clause 129.

We are happy with new subsection (8) and, I think, new subsection (9), although it may need consideration should occupational pensions be brought within the scope of the legislation. However, we share the concern of my noble friend Lord Hunt about the effect of new subsection (7)(b)(ii). That paragraph extends the definition to persons,


    "who have rights or interests which ... may be adversely affected by, the use of any such services by other persons".

In the context of Clause 129, which deals with the scope of the authority's rule-making powers, such a wide-ranging definition is perhaps understandable. But our concern is that it could extend the consumer protection objective in unpredictable ways. For example, if a company, using the services of an authorised firm in speculative dealing, loses money and has to lay off employees, would the employees be persons whose interest had been adversely affected by their employer's use of the authorised firm's services? If so, it would seem that the FSA might need to take such interests into account when determining how the consumer protection objective worked. Can that really be the Government's intended result?

Surely, the real problem is that there is no nexus, no contact, between authorised firms and the persons covered by Clause 129(7)(b)(ii). For example, the new definition of "consumer" is used in Clause 177(2)(b), which deals with the approval requirements which the FSA must assess when considering whether to object to the acquisition of control of an authorised firm. It would seem that under the definition in Clause 129(7)(b)(ii), the authority is obliged to consider the position of persons who have rights or interests which may be adversely affected by the use by other persons of the service which the authorised firm provides. It is

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not apparent to us how the authority can do that. Nevertheless, it seems that it would be obliged to do so because Clause 177(1) states that the FSA must be,


    "satisfied that the approval requirements are met".

There is nothing between us on seeking to have a common definition of "consumer" which covers the Bill, but it is in the interests of us all to ensure that the clause does not have the unintended effects that we believe that it might have. We do not believe that the authority would be in a position successfully to deal with transactions in those unexpected situations.

Lord McIntosh of Haringey: I hope that I can reassure the noble Lord, Lord Kingsland, who asks why we need a reference to persons,


    "who have rights or interests which ... may be adversely affected by, the use of any such services by other persons".

Perhaps I may give an example. Trust beneficiaries and members of a pension scheme would not otherwise be protected where somebody apart from themselves--namely, the trustees--had used financial services offered by a third party. In that case, the beneficiaries' rights or interests continue to derive from the trust and not from the use of the services. Clearly, it would be wrong to deny them protection. These people would not necessarily be protected under the new subsection (8) of Clause 129, which is designed to protect consumers where trustees themselves are providing the service.

I realise that giving one example might not satisfy the noble Lord on the general principle, but I repeat what I said to the noble Lord, Lord Hunt: we shall look again at the scope of Clause 129 to see whether there is a danger that it might be interpreted too widely. We shall consult before deciding what to do, if anything, at a later stage.


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