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Lord Jenkin of Roding: While the noble Lord is considering how he will reply to my noble friend Lord Elton--I understand that he might like a moment or two before that happens--perhaps he will take the trouble to explain why it is proposed, in Amendment No. 275B, to leave out the words in Clause 376, "or not

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to take". That amendment is grouped with Amendment No. 241N and it is not immediately clear from the comments of the noble Lord, Lord Bach, why it is proposed to omit those words.

Lord Fraser of Carmyllie: If I have properly understood the Minister's response and the import of the new clauses, I will join him in voting that Clause 202 should not stand part. It seems appropriate, given the amendments, for that clause to be withdrawn.

If I understood the Minister correctly, under his Amendment No. 275K if the authority resolved to discontinue any action against an authorised person, a notice of discontinuance might be issued. Under subsection (2) of the proposed new clause, the person to whom the notice is given must consent before it is placed in the public domain. If that is so, I am not sure how subsection (5) comes into play, for it provides that:


    "the Authority may not publish information under this section if publication of it would, in its opinion, be unfair to the person with respect to whom the action was taken or prejudicial to the interests of consumers".

I am not sure whether that is a second or supplementary test. Even if the individual consents to a notice of discontinuance, is the authority under a duty to look at the matter afresh and reach a decision--notwithstanding the consent of the authorised person? In our view, that would be unfair to the authorised person. It is obvious that if the individual did not see it as unfair to himself, there should be no bar on publication.

Lord Bach: The noble Lord, Lord Jenkin, asked why the words "or not to take" are to be removed by Amendment No. 275B. A decision not to proceed with action will now be the subject of the new notice of discontinuance. Notice will be given only where the decision is to maintain a proposal set out in the warning notice. So those words--to use an expression commonly used in the Committee last Monday--are otiose.

In reply to the noble Lord, Lord Elton, Amendments Nos. 275H, 275J and 275K in the Marshalled List set out the new clauses. Some of the clauses that are to be opposed will hopefully be opposed formally on Report--apart from Clause 202, which I hope will be opposed today. These improvements are brought forward in light of lengthy debate in another place.

To answer the noble and learned Lord, Lord Fraser, a notice of discontinuance should not normally be published unless the person consents. Subsection (5) only allows the authority not to publish--so it does not override the consent of the person concerned.

Lord Boardman: The Minister referred to alterations to Clause 124, which I understand have already been

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discussed in this House. Does the noble Lord propose tabling further alterations on Report? If so, what impact will they have on other provisions?

Lord Bach: I have made it clear that we intend to return to that matter on Report. I hope that I am safe in saying that it will not have a great impact on other of the Bill's provisions.

Lord Fraser of Carymyllie: I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 202 negatived.

Clause 203 [Publication]:

Lord McIntosh of Haringey moved Amendment No. 241P:


    Page 102, line 20, leave out ("376(2)") and insert ("(Third party rights)(4)").

On Question, amendment agreed to.

Lord McIntosh of Haringey moved Amendment No. 241Q:


    Page 102, line 21, leave out subsections (2) and (3).

On Question, amendment agreed to.

Clause 203, as amended, agreed to.

Clauses 204 to 208 agreed to.

Clause 209 [Rights of the scheme in relevant person's insolvency]:

Lord Bach moved Amendment No. 242:


    Page 106, line 27, after ("who") insert ("or an entity which").

The noble Lord said: Amendments Nos. 242 and 243 are truly technical, to ensure that Clause 209 properly reflects legal arrangements in Scotland. The clause gives the compensation scheme manager rights in insolvency proceedings. Subsections (5) and (7) contain the provisions relevant to bankruptcy proceedings. As they stand, the subsections refer only to individuals. That is satisfactory for England, Wales and Northern Ireland--where it is only possible to take bankruptcy proceedings against individuals. In Scotland, it is possible to take bankruptcy proceedings against other entities, such as partnerships. The amendments adjust Clause 209 to take account of that difference. I beg to move.

On Question, amendment agreed to.

Lord Bach moved Amendment No. 243:


    Page 106, line 38, at end insert ("; or


( ) under section 6 of the 1985 Act for the sequestration of the estate belonging to or held for or jointly by the members of an entity mentioned in subsection (1) of that section.").

On Question, amendment agreed to.

Clause 209, as amended, agreed to.

Clauses 210 to 212 agreed to.

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Clause 213 [Scheme manager's power to require information]:

Lord McIntosh of Haringey moved Amendment 244:


    Page 109, line 37, leave out subsection (6).

On Question, amendment agreed to.

Clause 213, as amended, agreed to.

Clause 214 [Scheme manager's power to inspect information held by liquidator etc]:

Lord McIntosh of Haringey moved Amendment No. 245:


    Page 110, line 15, leave out subsection (4).

On Question, amendment agreed to.

Clause 214, as amended, agreed to.

Clause 215 [Powers of court where information required]:

On Question, Whether Clause 215 shall stand part of the Bill?

Lord Elton: I should like to seek clarification on one matter, which perhaps should have occurred to me earlier. Can the Minister say why it has been decided that a person who fails to comply with a requirement imposed under Clause 213 should be dealt with as if he is in contempt of court rather than being subject to some stated penalty?

Lord Bach: The intention behind the provision is to avoid, as far as possible, the use of the criminal law in this part of the Bill. Therefore, contempt proceedings, which are civil but also often apply in criminal cases, are thought to be a more appropriate way to deal with the issue. I do not believe that that is the only example in the Bill.

Clause 215 agreed to.

4 p.m.

Clause 216 [Statutory immunity]:

Lord Taverne moved Amendment No. 246:


    Page 110, line 41, after ("faith") insert ("or reckless").

The noble Lord said: This is my first appearance in the Committee stage of the Bill. I apologise for having been unavoidably absent throughout the previous stages. I owe a particular apology to my noble friends on these Benches who have carried the burden. Having carefully read the Official Report, I must say that my noble friends have done so admirably. I do not intend to move the amendment because the matter has already been discussed. However, before sitting down I should like to refer to one matter.

Lord Elton: I apologise for intervening. The noble Lord can speak only to a Motion. Therefore, he may withdraw his Motion after it has been put to the Committee but not before.

Lord Taverne: I stand corrected. I beg to move the amendment before I withdraw it. The only matter to

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which I draw the attention of the Committee is a report in today's Financial Times to the effect that Conservative and Liberal Democrat Peers have accused the Government of botching the Financial Services and Markets Bill and have united in fighting against it. I make it quite clear to the Committee that that report has no foundation and is incorrect.

By and large, we on this side of the Committee believe that this is a good Bill and we support it. We have argued, and will continue to argue, that parts of it can be improved. So far we have not supported the issues on which the Conservative opposition have called a Division. In time we may move amendments and hope that others from both sides of the Committee will support them. If we agree with an amendment moved by the Conservatives we may well support it. However, I make it absolutely clear that we have not joined forces against the Bill. Such a comment is unhelpful and wrong. I now beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 216 agreed to.

Clauses 217 to 219 agreed to.

Schedule 16 [The Ombudsman Scheme]:

Lord Sharman moved Amendment No. 247:


    Page 258, line 23, after ("Authority") insert ("and the Treasury").

The noble Lord said: In rising to move Amendment No. 247 I should like to speak also to Amendments Nos. 248 and 249. This group of amendments concerns the establishment of the ombudsman scheme. Earlier this week the Minister told us that when he awoke in the middle of the night he frequently searched for words or phrases to improve the Bill. He may wish to know that when I wake in the middle of the night thinking about the Bill I am frequently confronted by images from "Jurassic Park". For those members of the Committee who are unfamiliar with "Jurassic Park", the film is about the re-creation of dinosaurs by a group of scientists. The security system to contain those dinosaurs is adequate as long as the people who are there at the moment remain. Once one has a change in personnel or a disgruntled personality the system breaks down and chaos ensues.

The reason for the analogy is that, as has been said on many occasions in this Chamber, this Bill creates an organisation of unparalleled size and power. The legislation is itself huge. The system of checks and balances which surrounds that organisation is absolutely vital, and that is the reason why we on these Benches have paid so much attention to it. The ombudsman scheme to be set up under the Bill is just another part of the system of checks and balances. For it to be effective, and for the marketplace to have confidence in it, the scheme must be independent and be seen to be independent.

It is worth pausing for one moment to consider the scale of the scheme. What is proposed is that eight ombudsmen be merged into one. There will be a budget of some £20 million and more than 400 employees. It is anticipated that they will deal

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with 200,000 telephone complaints and 30,000 written complaints annually. As the Bill stands, I do not believe that the scheme will meet the test of market confidence. The ombudsman scheme is just another part of the FSA. Schedule 16 provides that the FSA shall establish the scheme, appoint the ombudsman and receive its report. There is a total absence of any other party to the process.

The question one asks is: why bother? Why not simply provide that there should be another department of the FSA called "the ombudsman"? Amendment No. 247 provides that both the authority and the Treasury are to establish the scheme. Amendment No. 248 provides that both the authority and the Treasury are required to ensure that the ombudsman does the job properly. Amendment No. 249 requires the Treasury to lay before Parliament the reports which it receives. I believe that that is the minimum required for a sensible, independent ombudsman scheme which enjoys the necessary confidence of the market in the carrying out of its duties. I beg to move.


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