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Lord Bach: I believe that Article 6.1 of the European Convention on Human Rights applies to all parts of the Bill. I shall be surprised if it does not.

Lord Kingsland: I am much obliged and thank the Minister for that reply.

Lord Elton: Before my noble friend replies, in speaking to Amendment No. 234YH the Minister sought to dissuade my noble friend from proceeding with his amendment on the grounds that--I think I quote his words exactly--"We are bringing forward amendments to provide generous rights of access". Can he tell us when that will be and where they will strike?

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Lord Bach: At Report stage, the noble Lord will be pleased to hear.

Lord Elton: I have to say I am pleased only for the sake of getting to bed earlier tonight. It would be better to have discussed them in Committee, unless they are entirely uncontroversial.

The Earl of Northesk: I am grateful to the Minister for his diligence in responding to this grouping. I apologise for my slight confusion at the start of this mini-debate. As the noble Lord pointed out, after all these hours in Committee, it is a happy coincidence that the stalwarts of the respective Front Benches have found themselves making their first forays into the lions' den.

I accept that the grouping is something of a miscellany, but it is an important one, not least because of the inclusion of Amendment No. 234Y. We shall want to reflect carefully on the Minister's comments, particularly as regards the amendments spoken to by my noble friend Lord Kingsland. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 234YA and 234YB not moved.]

Clause 156 agreed to.

Schedule 14 agreed to.

Clause 157 [Reports by skilled persons]:

[Amendment No. 234YC not moved.]

Clause 157 agreed to.

Clause 158 agreed to.

Clause 159 [Appointment of persons to carry out investigations in particular cases]:

[Amendments Nos. 234YD to 234YF not moved.]

Clauses 159 agreed to.

Clause 160 agreed to.

Clause 161 [Investigations: general]:

[Amendments Nos. 234YG and 234YH not moved.]

Clause 161 agreed to.

Clause 162 [Powers of persons appointed under section 158]:

[Amendment No. 234YJ not moved.]

Clause 162 agreed to.

Clause 163 [Additional power of persons appointed as a result of section 159(1)]:

[Amendments Nos. 234YK and 234YL not moved.]

Clause 163 agreed to.

Clause 164 [Powers of person appointed to investigate as a result of section 159(2)]:

[Amendments Nos. 234YM to 234YP not moved.]

Clause 164 agreed to.

Clause 165 [Admissibility of statements made to investigators]:

Lord Bach moved Amendment No 235:


    Page 81, line 42, leave out from second ("to") to end of line 1 on page 82 and insert ("action to be taken against a person under section 113--").

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The noble Lord said: Amendment No. 235 has already been debated with Amendment No. 219. However, I should like to make a point to the noble Lord, Lord Kingsland.

The noble Lord asked me a question concerning Article 6 of the ECHR. I was tempted into making a response that may yet prove to be correct. However, I have to tell the noble Lord that I do not yet know whether it is. I undertake to research the matter and I shall write to him with a view. I felt that it would be best to put this matter on the record straightaway.

On Question, amendment agreed to.

[Amendment No. 235A not moved.]

Clause 165, as amended, agreed to.

Clause 166 [Information and documents: supplemental provisions]:

Lord McIntosh of Haringey moved Amendments Nos. 236 and 237:


    Page 82, line 30, leave out from beginning to ("a") in line 32.


    Page 82, line 32, after ("required") insert ("under this Part").

The noble Lord said: Amendments Nos. 236 and 237 have already been spoken to with Amendment No. 89. I beg to move.

On Question, amendments agreed to.

Lord Boardman moved Amendment No. 237A:


    Page 82, line 33, at end insert--


("( ) Where confidential information is produced or disclosed to an investigating authority under this Part the investigating authority shall keep such information confidential unless it is necessary to disclose such information for the purposes of the proper performance of its functions under this Act.").

The noble Lord said: On behalf of my noble friend, I should like to move Amendment No. 237A. I am still concerned about these amendments and the replies which the Minister gave a few moments ago to other similar points that have been made as regards the breach of confidentiality that applies throughout this Bill.

These clauses provide for a free-for-all supply of information from those sources that are essentially looked upon as being confidential; namely, bankers, lawyers and the like. While I understand the need to get hold of such information, I am still concerned at the inclusion in the Bill of phrases such as,


    "such information as is necessary",

without any controls and breaching every established rule of confidentiality. I worry tremendously.

One safeguard that helps to maintain the rule of law is that people who have doubts about their affairs are prepared to take advice. I believe that there is an advantage to be had when individuals can, as it were, put their head on someone else's shoulder, speak of their troubles and receive appropriate advice. That established the convention of confidentiality between lawyers and their clients. The same applies to a great extent to bankers.

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I deplore the way in which breach of confidentiality is incorporated into the Bill whenever someone thinks that it is right that such confidentiality should be breached. It is a great pity that this should be allowed to pass without any form of scrutiny. I beg to move.

Lord McIntosh of Haringey: I take it that the noble Lord, Lord Boardman, is moving the amendment tabled in the names of the noble Lords, Lord Saatchi and Lord Kingsland. I had thought that this amendment was not going to be moved on the basis that the matter has already been debated. These amendments have been spoken to by the noble Lord who moved the whole group, and have already been replied to by my noble friend Lord Bach.

Lord Boardman: These amendments were not grouped with the amendments to which my noble friend spoke and the noble Lord, Lord Bach, replied. I know my noble friend touched on the subject many times, but he did not speak to these amendments. I refrained from entering into the debate at the time because I thought that we would come to them later. They are quite separate amendments from those which my noble friend moved and to which the Minister replied.

Lord McIntosh of Haringey: Clearly I am ultimately responsible for the groupings that come before the Committee. If I have made a mistake, I apologise. My firm understanding was that we proposed to Members of the Committee opposite a grouping for the amendments which included Amendments Nos. 237A to C. I know that my noble friend Lord Bach responded specifically to those amendments. If I am wrong, I apologise to the noble Lord, Lord Boardman. Perhaps my noble friend could write to him amplifying his responses.

In case there is any suggestion that we may have been breaching well established rules of confidentiality, let me say that we inserted into this Bill, in the form of amendments last week, firm protection for legal confidentiality. We shall have to think about whether there is any analogy with banking confidentiality which ought to be enshrined in the Bill.

Lord Kingsland: I apologise to my noble friend Lord Boardman. I ought to have come back to the noble Lord, Lord Bach, who replied and said something further on the question of confidentiality, if only to warn the noble Lord that the Opposition intend to return to it on Report.

This point is linked with the issue of privileged communications in Clause 401, which we have not yet reached. I recognise that Members of the Committee opposite have given some consideration to this matter, but I share my noble friend's anxiety as to what happens to information given to the investigators once it is in their hands, particularly in relation to other authorities. This was a vexed problem at the time we debated the Competition Bill and I should like to go back and look at the solution there in order to inform myself as to what the solution should be here.

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There is a linked issue with privileged communications and when we reach Clause 401--I intend to table an amendment to that--we ought to be able to reopen this topic. To that extent I can reassure my noble friend and at the same time let the Government know, roughly speaking, what my position is.

Lord McIntosh of Haringey: That is fair. We are happy to debate this when we reach Clause 401 in Committee or indeed on Report if Members of the Committee prefer.

Lord Boardman: In view of those assurances that we will come to this matter in the future--confidentiality is a matter of considerable importance and must be preserved--I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 237B and 237C not moved.]

Clause 166, as amended, agreed to.

Clause 167 [Entry of premises under warrant]:

[Amendments Nos. 237D and 237E not moved.]

Clause 167 agreed to.

Clause 168 agreed to.

Clause 169 [Obligation to notify the Authority]:

10 p.m.

Lord Kingsland moved Amendment No. 237F:


    Page 85, leave out lines 32 and 33 and insert ("A person may not acquire--").

The noble Lord said: In moving Amendment No. 237F, I shall speak also to a long list of other amendments connected to it by the grouping.

Amendments Nos. 237F to 237H should be read together. Their purpose is to tighten up the current drafting in Clause 169 which is concerned with the acquisition of control, additional kinds of control or increases in relevant kinds of control over a United Kingdom authorised person. Failure to comply with Clause 169(1) is a criminal offence. That fact can be gleaned from Clause 182. Therefore it is particularly important that persons seeking to acquire control or to increase control over a UK authorised person should know exactly where they stand.

The present wording in Clause 166(1), which refers to a step which a person proposes to take, is not particularly satisfactory. What kind of step would result in acquiring the relevant control? Is it when the managing director of the acquirer decides to make the acquisition, or when his board endorses the decision, or at some later stage? Moreover, the use of the word "step" is confusing in this context because it has a particular meaning in Clauses 171(2) and 172(2).

These amendments would make the position clear beyond doubt and also mirror the corresponding provisions in Regulation 41 of the Investment Services Regulations 1995 which implement the Investment Services Directive in United Kingdom law. The amendments are also consistent with the relevant provisions of the Investment Services Directive.

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Neither the directive nor the regulations refer to "steps" that a person proposes to take. The requirement in the directive and in the regulations is straightforward and clear; namely, a person cannot acquire control (or increase control) of an authorised person unless he has first notified the competent authorities. As I have already mentioned, the criminal sanction for breach of Clause 169(1) requires a clear procedure with no room for uncertainty.

Amendments Nos. 241A and 241B deal with the corresponding case of where a person ceases to have control, or reduces his control, of a UK authorised person. Again, there is a requirement to notify the authority before taking the relevant action. Under Clause 182, failing to give notice is a criminal offence. For the same reasons given in relation to Amendments No. 237F to 237H, greater certainty is required. These amendments follow precisely the same approach as the amendments to Clause 169. Amendments Nos. 241C and 241D are consequential.

Amendments Nos. 241E and 241F and I believe Amendment No. 254L all relate to the same point. Clause 247(2)(e) and (h) refer to persons "exercising influence over" other persons. There is an extended definition of "controller" in Clause 397. It would be more satisfactory to use this defined term rather than the somewhat vague expression of persons "exercising influence over".

Amendment No. 278A is a technical but very important amendment. Clause 397 defines who is to be a controller, which is important, for example, in relation to the whole of Part XII--the part concerned with control over authorised persons. The proposed amendment relates to one of the definitions of "associate", which is to found in subsection (4)(g) of the clause. This is a crucial term because, when determining whether a person does acquire control, it is important to look at that "person's associates", as is clear from subsection (3). Subsection (4)(g) is far wider than I think is needed, or required, by the Disclosure of Major Shareholdings Directive, which is used to define who acquires control, so that the acquisition can be regulated under the directive.

Paragraph (g) is far too wide, as, in effect, it requires even more than double counting the shares or other interests where a certain Mr X owns those shares or other interests but uses a broker to buy or sell them for him or a nominee to hold them. The broker's or nominee's own holdings have to be aggregated with those of Mr X. I understand that the Department of Trade and Industry has accepted that the nominee would not hold a disclosable interest for the purposes of the disclosure provisions of Section 198 of the Companies Act (which is also based on the definitions in the Major Shareholdings Directive) where the nominee cannot exercise or control the exercise of voting rights otherwise than at the direction of Mr X. This is clear from Section 109.

It is also important to persuade the Treasury to agree to this proposal. We are aware of a particular instance where a leading merchant bank was told by its lawyers that it would have to aggregate, for the

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purposes of the present "acquisition of control" provisions in the third life assurance directive, all the holdings of its nominee, whoever the nominee was holding for, even if the nominee could not vote in its own discretion; and also had to aggregate all of the holdings of the stockbroker that it used to acquire the shares--again, whoever the stockbroker had been acting for. I believe that I have spoken to all the amendments in the group. I beg to move.


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