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Lord McIntosh of Haringey: My Lords, I was perhaps nodding to myself. It does have power.

Lord Kingsland: My Lords, that brings me back to my main point. If it does have that power but it is not

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expressed in the Bill, why not express it and make it clear to everyone? That in itself would be a market confidence enhancing act by the Government.

Lord McIntosh of Haringey: My Lords, the provision is in the Bill. I spent some time explaining how the matter is covered by the market confidence objective and the protection of consumers objective and why, therefore, it is undesirable to restrict the provision in the way in which the amendment does.

Lord Kingsland: My Lords, I have heard what the Minister has said. I shall look carefully at his remarks in Hansard and I may return to the matter at Third Reading. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 33 and 34 not moved.]

Clause 5 [The protection of consumers]:

Lord Newby moved Amendment No. 35:


    Page 3, line 15, at end insert ("; and


(e) the interests of--
(i) individuals who are disabled or chronically sick;
(ii) individuals who are of pensionable age;
(iii) individuals with low incomes; and
(iv) individuals residing in rural areas,
but that is not to be taken as implying that regard may not be had to the interests of other descriptions of consumer").

The noble Lord said: My Lords, this amendment deals with the situation of disadvantaged consumers. We raised the issue in Committee and I make no apologies for returning to it.

It is the case by common consent that financial products are particularly difficult for most lay men and women to understand. They are difficult for all of us to understand, but they are particularly difficult for a raft of disadvantaged groups within society whose level of financial literacy is known to be low. The amendment would simply require the FSA to have regard to the interests of a number of groups of disadvantaged consumers in the way in which it conducts its activities.

When we discussed the matter previously, this seemed a self-evidently sensible provision to place on the face of the Bill. The Minister said in response that it would at best muddy the waters and at worst lead to an unfair focus on the needs of particular groups. I have never before heard a Labour Minister say that taking particular account of the disadvantaged would be an unfair focus. I should have thought it would be a precisely fair focus. The Minister went on to say, when I pointed out that this exact provision had already found its way into the Utilities Bill which was proceeding through the Commons, that he had learnt not to look at Commons Bills until they had finished their passage because they tended to be changed, and the Utilities Bill was in many respects a case in point.

However, given the widespread support on the issue in another place, it was difficult to see why the Government might want to change the Utilities Bill and withdraw the reference to disadvantaged

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consumers. If the Government believe the matter to be worthy of express consideration on the face of the Utilities Bill, frankly, why should it not be on the face of this Bill?

Arguably, those in the disadvantaged groups referred to in the amendment find financial products more difficult to cope with than consumers of some of the products referred to in the Utilities Bill. It seems illogical and unfortunate that the Government have not been consistent in the two Bills. I simply urge the Minister at this stage to bring consistency and fairness for disadvantaged people to the face of the Bill. I beg to move.

Lord Donaldson of Lymington: My Lords, from the sidelines, as always, I venture to criticise the amendment. Clause 5(2)(b) already contains a requirement for the authority to have regard to,


    "the differing degrees of experience and expertise that different consumers may have in relation to different kinds of regulated activity".

That is plainly right. But the disadvantaged consumers are not within the categories set out in the amendment. One has only to look round this Chamber to see that individuals of pensionable age are not necessarily financial illiterates. The fact that someone is disabled does make that person financially illiterate; nor does the fact that he or she has a low income--it may be bad luck. Certainly, the fact that someone lives in a rural area has no bearing on the matter. The noble Lord has selected the wrong groups. They are the right groups in relation to utilities: if one lives in a rural area the question of getting electricity, gas or whatever to one's door may be a very relevant factor to take into consideration, but I cannot see why the noble Lord wants to go further than the provision in Clause 5(2)(b). Indeed, I believe that the amendment goes in the wrong direction as compared with the provision in the Bill as drafted.

Lord McIntosh of Haringey: My Lords, I am most grateful to the noble and learned Lord, who says it so much better and, as the noble Lord, Lord Kingsland, would put it, telegraphically than I can. I shall try to cut out almost all of what I intended to say. The noble and learned Lord is quite right that if one looks at Clause 5 the FSA is already required to have regard to the full range of consumers' needs in pursuing its regulatory objective. To go further, the public awareness objective is aimed specifically at helping the public to understand products in this sector. The action of the FSA will inevitably, and properly, be directed at where there is greatest need.

I am justly rebuked by the noble Lord, Lord Newby, mainly for saying that I did not read Bills until they emerged from the Commons. The noble Lord is quite correct to say that this provision will survive in the Utilities and Postal Services Bills. But the noble and learned Lord has made clear the difference between the kinds of consumers who are affected by where they live, how much money they have and whether they are disabled or disadvantaged in other ways under that

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legislation and consumers here where the disadvantage is properly expressed. Clause 5(2)(b) makes reference to,


    "the differing degrees of experience and expertise that different consumers may have",

and Clause 5(2)(c) refers to,


    "the needs that consumers may have for advice and accurate information".

Therefore, the analogy between this Bill and the Utilities and Postal Services Bills breaks down rapidly.

I said in Committee, very unkindly, that the form of this amendment would give priority to the needs of a financial adviser who had just retired to a rural area. He would qualify under the second criterion. It is not satisfactory for the amendment to go on to say that,


    "that is not to be taken as implying that regard may not be had to the interests of other descriptions of consumer".

I am afraid that that weakens the amendment beyond the point where any useful purpose is served.

Lord Newby: My Lords, when I moved this relatively modest amendment I had not reckoned with a broadside from the noble and learned Lord, Lord Donaldson. Therefore, I am required to muster all my strength even to stand up after such an onslaught. I am, however, grateful for the response of the Minister. He has gone further than he did at Committee stage in stressing the priority that the FSA would give to considering the problems faced by those with low levels of financial literacy. In the light of that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 7 [The Authority's general duty to consult]:

[Amendment No. 36 not moved.]

Clause 8 [The Practitioner Panel]:

[Amendments Nos. 37 and 38 not moved.]

Clause 9 [The Consumer Panel]:

[Amendments Nos. 39 and 40 not moved.]

7.15 p.m.

Lord Saatchi moved Amendment No. 41:


    Page 5, line 2, leave out ("may") and insert ("must on the second anniversary of the day on which section 1 comes into force and every two years thereafter").

The noble Lord said: My Lords, Amendments Nos. 41 to 46 seek to amend Clauses 10 and 11 of the Bill which relate to reviews of the FSA. One would have thought that to have a definite review of the FSA was a reasonable suggestion and something to which everyone could look forward. Extraordinarily, there is no provision for it in the Bill. The Bill provides that the Treasury may appoint an independent person to conduct a review. On the other hand, it may decide not to conduct a review; it is up to the Treasury. Therefore, the clause is, so I am told, an enabling provision. Any doubt about that is removed by the Explanatory Notes which state that,


    "the Treasury can commission independent reviews".

The fact is that the Treasury can do just about what it likes under the clause. Not only can it decide whether to have a review under subsection (1), but in subsection

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(2) it can decide to limit the scope of the review. Subsection (3) specifically excludes the opportunity for a fundamental review. Nor is the independence of the reviewer guaranteed. The Treasury can also decide what "independent" means. Subsection (7) states,


    "'Independent' means appearing to the Treasury to be independent of the Authority".

We believe that the Bill hands too much power to the Treasury. The enabling provision leaves an unacceptable amount of discretion in the hands of the Treasury, and we should like to find ways to limit it. I hope that the Minister will concede that to leave the scope of the review of the FSA entirely in the hands of the Treasury cannot be satisfactory. Our amendments propose that the Comptroller and Auditor General of the National Audit Office should take on that role. The NAO is, and has been seen to be on many occasions, unimpeachably independent. Only in the last week it reported persuasively on the operation of the Rail Regulator. The NAO has power to produce reports which go to the Public Accounts Committee and can provide a more thorough and detailed form of parliamentary scrutiny than the proposed system. The NAO already conducts reviews of other public bodies which include the principal regulators, such as those for the electricity, gas, rail, telecom and water industries.

The Government have in the past argued that the FSA does not receive public funds and so should not be scrutinised as a public body and subjected to such a review. But who can argue with the fact that Parliament is entitled to ask for a full and independent review of a body in which it places so much power and public trust? That is what this group of amendments seeks to achieve. I beg to move.


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