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Lord Elton: I am obliged to the Minister for what he said but I am not altogether convinced by it.

He said that the introduction of activities as the criteria on which people were recruited to the panel would confuse matters. He said that people in fact should be recruited from certain categories. But my narrow experience of operation in this field is that people of those few categories may become involved in widely different and highly complex activities.

The advice of an authorised person on an activity in which he has taken no previous part, and a highly technical one at that, may be insufficient, absent or

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flawed. With my amendment I was seeking to elicit an explanation from the Government as to how it would be incumbent on the authority to make sure that those advising it on operations of different kinds, within the highly variegated field which it is to regulate, had personal knowledge of each of those fields.

I suppose that if the answer is that that cannot be guaranteed, then I ask how, in that case, the deficiency may be made good by other means.

5.45 p.m.

Lord McIntosh of Haringey: It certainly cannot be guaranteed because Part I of Schedule 2 contains a very long list indeed. That would mean that we should have a very large panel. I am sure that the noble Lord remembers that his government used to set great store by the argument that bodies of people meeting together should be as small as possible. We used to have terrific arguments about the size of committees, panels and bodies of that kind.

We could not possibly cover all of them. We are slicing it in the other direction: slicing it by those activities which cross-cut the sectoral description which is in Part I of Schedule 2. We do not wish to be entirely prescriptive and so it is for the authority to make its judgment about how to cover the activities.

Lord Elton: I am handicapped by a momentary lack of attention earlier in the day when the noble Lord gave the Committee the very important definition of the italicised words in the middle of the page. There are only 8 chapeaux in Part I of the schedule and perhaps I should be referring only to those wearing those eight hats.

The noble Lord's answer begins to throw an interesting light on how the panel is expected to work. It will work by meeting together. Another way of using panels is to bring forward selected people from a panel to give advice on particular issues. I hope that at this or a subsequent stage, we shall be told whether the advice of the panel is always to be tendered corporately; whether it is to be sought individually or in parts. All that will be a matter of great interest to practitioners. If that information is not forthcoming now, I hope that it will be forthcoming before too long.

Lord McIntosh of Haringey: I shall answer that point now. It is for the panel to decide how it tenders its advice, whether corporately or individually.

Lord Elton: Then it is for the panel, is it not, to decide whether or not the number of categories which I have suggested is too many? If the number of chapeaux means a very large committee, then it will be constrained to act through sub-committees, as a later amendment of mine suggests that it should.

It seems that we are perhaps at a disadvantage in trying to determine the composition of this panel if we do not know how it is to work.

Lord McIntosh of Haringey: I am not trying to determine the composition of the panel. I am saying

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that, fundamentally, it is a matter for the authority. The control, independent of the authority, which is contained in the clause, is that the appointment of the chairman must be with the approval of the Treasury. But the composition, size, origin and destination of the individual members of the panel is a matter for the authority. What I am trying to say--and it should apply to all the amendments and not merely the one in the name of the noble Lord, Lord Elton--is that we must not be too prescriptive. The panel is there to help. It is not part of the independent inspection process which plays such a prominent part in the rest of the Bill.

Lord Peston: I was hoping to be helpful. One difficulty that arises is that Clause 7 includes practitioners and consumers as though they are on a par, when, in fact, the two panels are completely different. One can easily be misled simply by starting with Clause 7 and thinking that other things should be added to Clause 7.

However, I concentrate on Clause 8. Will my noble friend confirm that the role of the practitioner panel is to give expert advice? It is not a representative body in any sense, whereas in Clause 9 there is a body which may well be representative. However, in Clause 8 we are looking for expert advice of the kind we are all used to; namely, someone who knows about this or that part of the market will say to the authority, "You are doing that and, if you really understood what you were doing, you just would not do it. You do not understand this or that point because you do not have the experience", and so on.

I could easily put up a case for not having a practitioner panel at all. In fact, listening to the remarks just made, it seems to me that the authority simply should be asked to obtain expert advice as and when it needs it. I believe that my noble friend said that that is what it will do in any event, if such advice were not available through the practitioner panel. But if there is going to be a practitioner panel, will my noble friend at least confirm that its role will be simply either to be asked, "What do you think of what we are doing?", or, perhaps more importantly, to say, "Oh, we see what you are doing and you're stupid; you shouldn't be doing it"; or, "We are not the right people for this. We have a sense that it is not right, but go and ask X who knows about these things"?

I see all that as the role of the practitioner panel, if there is to be one, or as the role of the authority, which I hope we can trust to do its job correctly if we suddenly decide to save some money by not having a practitioner panel. It is all to do with obtaining good expert advice. Simply trying to advise noble Lords of what we should not do is to fall into the trap of assuming that Clauses 8 and 9 are on a par because Clause 9 is about representation and representing interests, whereas Clause 8 should not remotely be about representation, interests, or anything of the sort. It should simply be about expertise.

Lord Jenkin of Roding : Before the noble Lord sits down, the first subsection of Clause 8 states that it shall

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represent interests. Therefore, I really do not understand what the noble Lord is saying. The practitioner body is surely intended to be as much a representative body as the consumer panel.

The Earl of Home: I find myself, unusually, in agreement with quite a lot of what the noble Lord, Lord Peston, says. I accept that the Minister does not want to be too prescriptive about the number of people on the panel. But will he tell us what the minimum number on the panel must be? When advice is sought, can there be a panel of one? What is a panel quorate going to be? How many representatives of those people who are all listed in the plural under the existing drafting will be required to make up a panel before its advice can be taken seriously?

Lord McIntosh of Haringey: The panel is 12-strong at present. The constraint on the size and membership of the panel is in Clause 7, which states,

    "The Authority must make and maintain effective arrangements for consulting practitioners and consumers on the extent to which its general policies and practices"--

that is, what it does--

    "are consistent with its general duties under section 2".

If it was seriously skewed in favour of particular sectors, or indeed, missed out certain absolutely essential interests, one could doubt whether it was effective. Beyond saying that it must be effective, the Bill does not seek to prescribe its size, composition, times of meeting or any of those things which a panel might do. We should be accused of over-regulating by far if we were to seek to make the kind of provision implied in some of the comments noble Lords are making.

Lord Jenkin of Roding: Will the Minister make it perfectly clear to the noble Lord, Lord Peston, that the panel is indeed intended to represent the interests of practitioners? It is not there simply as a body to be consulted. It is perfectly proper that it should say, "We don't like this and we don't like the way you're doing it. Will you now make changes?". In a sense, it is a hangover from the earlier system of what was called, quite wrongly, "self-regulation". It was never self-regulation. It was practitioner regulation. The practitioner panel is the element of that which remains; of the practitioners being in a position to make effective representations--and to report outside if necessary and to gain support for their views--against the way in which the Financial Services Authority is running its business. Is that not right?

Lord McIntosh of Haringey: I do not accept the noble Lord's historical description. I am not saying that he is right about why the practitioner panel was set up, but he is certainly right in saying that Clause 8(1) states that the practitioner panel represents the interests of practitioners and that Clause 9(1) states that the consumer panel represents the interests of consumers.

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