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Lord Bach moved Amendment No. 278E:


On Question, amendment agreed to.

Lord Bach moved Amendment No. 278F:


    Page 214, line 22, after ("(4)") insert ("or (4A)").

The noble Lord said: The Government have tabled amendments in response to one of the recommendations of the Delegated Powers and Deregulation Committee. Clause 36 confers on the Treasury a power by order to exempt persons from the general prohibition under Clause 17. An exempt person would not, therefore, need to be authorised to carry on regulated activities.

The Bill as it stands would make an order under Clause 36 subject to the negative resolution procedure. The effect of the amendments is to require an affirmative resolution procedure in one of two cases. The first case is the first order made under the powers in Clause 36. This will ensure that there is opportunity for a proper debate on the persons who are to be exempted from regulation at the time the Bill is brought into force. A second case, which was not a matter that the Delegated Powers and Deregulation Committee addressed, is when the Treasury makes a further order under Clause 36, the effect of which is to remove an exemption. We believe that an affirmative resolution procedure should additionally apply in that case because the effect of such an order is to extend the scope of regulation.

The proposals therefore parallel the procedures that would apply to the making of the first order, defining "regulated activities" under Clause 20, and subsequent orders which add new activities. We thank the Delegated Powers and Deregulation Committee for the valuable role it has played in scrutinising the delegated legislative powers conferred by the Bill. That committee made a number of helpful recommendations which the Government were pleased to accept. I beg to move.

On Question, amendment agreed to.

Lord Bach moved Amendment No. 278G:


    Page 214, line 35, at end insert--


("(4A) This subsection applies to an order under section 36 if--

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(a) it is the first order to be made, or to contain provisions made, under that section; or
(b) it contains provisions restricting or removing an exemption provided by an earlier order made under that section.").

On Question, amendment agreed to.

Clause 404, as amended, agreed to.

[Amendment No. 279 not moved.]

Clauses 405 and 406 agreed to.

Clause 407 [Minor and consequential amendments, transitional provisions and repeals]:

Lord Bach moved Amendment No. 280:


    Page 215, line 16, at end insert--


("( ) Schedule 18A makes transitional provisions.").

The noble Lord said: Amendments Nos. 280 and 281 are the first of the transitional provisions that we have introduced to the Bill. Amendment No. 280 is a paving provision to introduce new Schedule 18A regarding transitional provisions. Amendment No. 281 is the start of the transitionals schedule. It inserts into the Bill provisions which deal with the transition from the current regulatory structure under the Financial Services Act 1986 to those to be established under the Bill.

Under the 1986 Act, the authority has responsibility for recognising the self-regulating organisations for the purposes of Section 8 of the Act and Schedule 11 to the Act in relation to friendly societies. It also has a continuing responsibility in relation to the supervision of organisations which are recognised under those provisions. Firms are able to carry on investment business on the basis of an authorisation conferred by the 1986 Act on persons who are members of an SRO recognised under the Act.

The transition to the new regulator is, of course, well under way. Responsibility for banking supervision was transferred to the authority in 1998. Responsibility for the supervision of insurance was transferred in 1982 and has been contracted out to the authority by the Treasury. Similarly, the authority is supporting the Building Societies Commission, the Friendly Societies Commission and the Registry of Friendly Societies in relation to credit unions in performing their statutory functions, again, on a contractual basis. The authority has also entered into arrangements with the three self-regulating organisations--PIA, IMRO and SFA--for which it performs many functions, also under contract. The staff of those organisations have already transferred, for the most part, to the FSA.

The need for a transition provision of this kind is particular to the recognised SROs. To a large degree, it is a result of the legal status of those organisations. Provision is needed because they are self-regulating organisations, the members of which are the regulated community. As the date for the commencement of the Bill approaches, there will be an increasing need for the authority to be able to exercise close control over the affairs of those organisations so as to ensure the smooth handling of the final stages of the transition. The authority will need to be able to do that

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consistently with the provisions of the 1986 Act, which currently do not envisage the kind of relationship that will be required. It is also important that the directors of the SROs do not do anything that puts them in breach of their statutory obligations; for example, under the Companies Acts.

This provision will help to achieve what is needed. It will, for example, with the consent of the SROs, allow the authority to begin to appoint directors to those companies so that it can better co-ordinate the transition from the old system to the new. I beg to move.

On Question, amendment agreed to.

Clause 407, as amended, agreed to.

Schedule 18 agreed to.

Lord Bach moved Amendment No. 281:


    After Schedule 18, insert the following new schedule--

("SCHEDULE 18A
TRANSITIONAL PROVISIONS AND SAVINGS
Self-regulating organisations

1.--(1) No new application under section 9 of the 1986 Act (application for recognition) may be entertained.
(2) No outstanding application made under that section before the passing of this Act may continue to be entertained.
(3) After the date which is the designated date for a recognised self-regulating organisation--
(a) the recognition order for that organisation may not be revoked under section 11 of the 1986 Act (revocation of recognition);
(b) no application may be made to the court under section 12 of the 1986 Act (compliance orders) with respect to that organisation.
(4) The powers conferred by section 13 of the 1986 Act (alteration of rules for protection of investors) may not be exercised.
(5) "Designated date" means such date as the Treasury may by order designate.
(6) Sub-paragraph (3) does not apply to a recognised self-regulating organisation in respect of which a notice of intention to revoke its recognition order was given under section 11(3) of the 1986 Act before the passing of this Act if that notice has not been withdrawn.
(7) Expenditure incurred by the Authority in connection with the winding up of any body which was, immediately before the passing of this Act, a recognised self-regulating organisation is to be treated as having been incurred in connection with the discharge by the Authority of functions under this Act.
(8) "Recognised self-regulating organisation" means an organisation which, immediately before the passing of this Act, was such an organisation for the purposes of the 1986 Act.
(9) "The 1986 Act" means the Financial Services Act 1986.
Self-regulating organisations for friendly societies

2.--(1) No new application under paragraph 2 of Schedule 11 to the 1986 Act (application for recognition) may be entertained.
(2) No outstanding application made under that paragraph before the passing of this Act may continue to be entertained.
(3) After the date which is the designated date for a recognised self-regulating organisation for friendly societies--
(a) the recognition order for that organisation may not be revoked under paragraph 5 of Schedule 11 to the 1986 Act (revocation of recognition);

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(b) no application may be made to the court under paragraph 6 of that Schedule (compliance orders) with respect to that organisation.
(4) "Designated date" means such date as the Treasury may by order designate.
(5) Sub-paragraph (3) does not apply to a recognised self-regulating organisation for friendly societies in respect of which a notice of intention to revoke its recognition order was given under section 11(3) of the 1986 Act (as applied by paragraph 5(2) of that Schedule) before the passing of this Act if that notice has not been withdrawn.
(6) Expenditure incurred by the Authority in connection with the winding up of any body which was, immediately before the passing of this Act, a recognised self-regulating organisation for friendly societies is to be treated as having been incurred in connection with the discharge by the Authority of functions under this Act.
(7) "Recognised self-regulating organisation for friendly societies" means an organisation which, immediately before the passing of this Act, was such an organisation for the purposes of the 1986 Act.
(8) "The 1986 Act" means the Financial Services Act 1986.").

On Question, amendment agreed to.

Schedule 19 [Repeals]:


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