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Lord Bach: I am to reply to these amendments. I think that the noble Earl, Lord Northesk, was under a misunderstanding. The Minister, my noble friend Lord McIntosh, would not dream of disappearing while the noble Earl was on his feet. I am afraid that the noble Earl has me to reply to him.

Lord Kingsland: I see that the noble Lord, Lord McIntosh, finds the attractions of your Lordships' House quite irresistible because he is amongst us again.

Amendment No. 234YC follows on the requirement in Clause 157(5) that certain service providers to the person referred to in Clause 157(2), to whom the authority has given a notice under Clause 157(1), must provide all such assistance to the person appointed to provide a report under Clause 157(1). Those service providers could be bankers, lawyers and other advisers and indeed agents who owe fiduciary duties of confidentiality to their clients. The amendment makes it clear that those persons do not breach their duties to their clients by complying with the obligation imposed by Clause 157(5).

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Amendment 234YD makes the same amendment to Clause 159 by replacing the words "circumstances suggesting" with the words "reasonable grounds for suspecting". This is the judicial review point to which I have already referred. Interestingly, the words "has reasonable grounds for suspecting" were in the original draft of the Bill printed on 17th June 1999; but it was only later that the Government replaced those words with the words "circumstances suggesting".

Amendment No. 234YG also relates to the point about judicial review and adds the words "on reasonable grounds" to Clause 161(3)(a). Members of the Committee may recall, in the course of their preparations for work on the Bill, that it was remarked in the Committee stage in the Commons that the Government appeared to be determined to reduce the risk of the authority's activities being subject to judicial review. Many of the amendments to Part XI which we are now discussing are intended to redress this balance.

Clause 161(3)(a) deals with the powers of investigators appointed by the FSA or the Secretary of State. Normally the investigating authority must give written notice for the appointment of an investigator to the person who is the subject of the investigation. However, this requirement does not apply in certain circumstances, including where the investigating authority believes that the notice would be likely to result in the investigation being frustrated. Our amendment would require the belief to be "on reasonable grounds".

Amendment No. 234YH concerns Clause 161(6) of the Bill. Here the investigator must make a report of his investigation to the investigating authority. This amendment would require the investigator to provide also a copy of such a report, not unreasonably, to the person subject to the investigation.

Amendment No. 234YJ covers the same point. When a person is required to attend upon an investigator, to answer questions or to provide other information, the investigator should give that person a notice which specifies the provisions under which the investigator was appointed and which states the reasons for his appointment.

Amendment No. 234YK is similar to the amendments above and inserts the words "on reasonable grounds" to Clause 163(3). Clause 163(2) refers to the powers of the investigator to require a person, who is neither the subject of the investigation nor a person connected with him, to attend before the investigator to answer questions or otherwise provide information. The amendment would require the investigator to be satisfied "on reasonable grounds" that the requirement imposed on the person concerned was necessary or expedient for the purposes of the investigation.

Amendment No. 234YL makes the same amendment to Clause 164(3). Again, Amendment No. 234YM adds a "reasonable grounds" qualification when the investigator considers the matters in Clause 164(1).

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Amendment No. 234YN amends Clause 164 so that its provisions are consistent with Clause 162. It is not clear why the provisions of these two clauses differ, given that they cover the same point--an investigator requiring a person to attend before him to answer questions or otherwise provide information.

Amendment No. 237A is, I say candidly, a probing amendment. It is intended to raise the issue of the status of confidential information which is produced or disclosed to an investigating authority under Part XI. It is not clear under what obligation the investigating authority will be when, in the course of an investigation or in other circumstances, a person, whether an authorised person or not, produces documents or other information to the regulators. Is the authority under any obligation to keep that information confidential, or can it pass it on to other regulators, either in the United Kingdom or abroad? To what extent can the authority make the information publicly available?

Amendment No. 237B refers to Clause 166(6), which contains a specific provision to protect a person engaged in the banking business to take into account the duty of confidentiality owed by the bank to the customer. The amendment would extend the protections to others; for example, solicitors and persons acting as agents who owed duties of confidentiality as a result of acting in a fiduciary capacity.

Amendment No. 237C mirrors Amendment No. 234YA and provides that a "Relevant person" in Clause 166(8) means a person who, within the previous six years, has been a director, controller, auditor or another similar party, as set out in paragraphs (a) to (d) of Clause 166(8).

Finally, Amendment No. 237D makes it absolutely clear that the person upon whom an information requirement has been imposed has a reasonable period in which to comply with the information request. I shall have to reflect on Amendment No. 257D and come back to your Lordships.

Lord Grabiner: Perhaps I may comment on the fasciculus of amendments tabled by the noble Lord, Lord Kingsland, which are conveniently gathered together under Clause 159, Amendments Nos. 234YD to 234YF, and under Clause 161, Amendment No. 234YG. The import of the proposed amendments is essentially to delete the expression, "circumstances suggesting", and substitute, "reasonable grounds for suspecting".

The structure of Clause 159 in its bare essentials is subjectively worded; it provides that,


    "if it appears to the Authority that there are circumstances suggesting that",

and there follows a whole series of matters that would give cause for concern to the regulatory body. In those circumstances, under subsection (3) the authority is empowered to,


    "appoint one or more competent persons to conduct an investigation on its behalf".

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I am not sure what the relevance of "competent" is; one would assume that only competent persons would be appointed. However, we shall see that there is some origin to the provision, which has to do with necessary expertise rather than ability. There are a number of legislative examples. There is a good record for the use of that language.

First, it is suggested by the noble Lord, Lord Kingsland, that the object of the exercise is to secure, so far as possible, some basis for introducing the application of the judicial review process. That is the purpose of the amendment.

First, if it does not "appear to the authority", that would be eminently judicially reviewable. If there are no "circumstances suggesting", again that would be eminently judicially reviewable. Therefore, I respectfully suggest that the amendment adds nothing to the debate because, under the Bill as currently drafted, all would be eminently and properly the subject of judicial review, or would be in an appropriate circumstance.

The only other point of principle that I make is that there is a great deal of relevant legislative history relating to this problem. This afternoon I dug out quite quickly some working examples. One appears in Section 177 of the Financial Services Act 1986, which provides:


    "If it appears to the Secretary of State that there are circumstances suggesting that an offence under Part V of the Criminal Justice Act 1993 (insider dealing) may have been committed, he may appoint one or more competent inspectors"--

one sees the familiar expression--


    "to carry out such investigations as are requisite to establish whether or not any such offence had been committed and to report the results of their investigations to him".

That is an example where the investigation could in due course lead to a criminal prosecution. Precisely the same formula is used in that Act as appears in the drafting of this Bill which the noble Lord seeks to amend.

Another example is to be found in Section 432(2) of the Companies Act 1985:


    "The Secretary of State may make such an appointment [of competent inspectors] if it appears to him that there are circumstances suggesting",

that an investigation should be conducted.

The final example is to be found in the Fair Trading Act 1973. Sections 50 and 51 give power respectively to the Director General of Fair Trading and the Secretary of State, or the Secretary of State and any other Minister, to make a monopoly reference where it appears to him or them that a monopoly exists, or may exist. In that legislation the reference is to the Monopolies and Mergers Commission, now the Competition Commission. However, that legislation is unaffected by the introduction of the Competition Act 1998.

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Very similar provisions are to be found in Section 64(1)(a) of the 1973 Act in respect of a merger reference:


    "A merger reference may be made to the Commission by the Secretary of State where it appears to him that it is or may be the fact that two or more enterprises ... have ... ceased to be distinct enterprises".

Similarly, in Section 75(1) provision is made for a reference in anticipation of a merger.

All of those examples turn upon the subjective judgment of the person who is charged with the duty to make the necessary appointment. Some of the examples can lead to criminal proceedings; others can lead to an expensive and complex inquiry by the Competition Commission. None of those examples incorporates the kind of language which the amendments suggest. I respectfully suggest that these amendments are entirely unnecessary and, if anything, indicate a little over-lawyering on the part of those who advise noble Lords opposite.

9.15 p.m.

Lord Kingsland: I believe I said, when I dealt with these amendments, that their object was not to convert matters which were not judicially reviewable into matters which were but to make them more easily judicially reviewable. The noble Lord, Lord Borrie, will recall that two years ago when we debated the Competition Bill--not at exactly the same length as this Bill but almost--an issue arose as to the investigatory powers of the director-general.

My memory may not serve me well and therefore I cannot claim certainty in this regard. I recall that in that Bill, in regard to the director-general, a similar form of words indicating subjectivity was used, but that in the course of the debate it was accepted by the Minister that the word "reasonably" could be incorporated into the text. In other words, that word impliedly qualified the discretion of the authority. If tonight the Minister is prepared to go as far as the Minister did in the context of the Competition Bill I shall be perfectly content. If not, I believe that my form of words makes it easier. I see the noble Lord, Lord Grabiner, nodding.


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