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Lord Jenkin of Roding: My Lords--

Lord McIntosh of Haringey: My Lords, no.

Lord Jenkin of Roding: My Lords, but I was just going to comment on what the Minister said.

Lord McIntosh of Haringey: My Lords, this is Report stage. The order of business is that the mover speaks; any other noble Lord who wishes to speak speaks; the Minister replies; and no other speeches are taken other than that of the mover of the amendment. That is the rule and has been for many years.

Lord Kingsland: My Lords, I am extremely grateful to hear that the Minister is prepared to entertain my amendment. I look forward to seeing the fruits of that undertaking on Third Reading. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Kingsland moved Amendment No. 62:


On Question, amendment agreed to.

Clause 25 [Agreements made through unauthorised persons]:

[Amendment No. 63 not moved.]

Lord Kingsland moved Amendment No. 64:


    Page 11, line 18, leave out ("purchaser") and insert ("other party").

On Question, amendment agreed to.

Clause 26 [Agreements made unenforceable by section 24 or 25]:

Lord McIntosh of Haringey moved Amendments Nos. 65 to 69:


    Page 11, line 35, leave out ("the enforcement conditions are met,") and insert ("it is just and equitable in the circumstances of the case,").


    Page 11, line 40, leave out from beginning to second ("the") and insert ("In considering whether to allow").


    Page 11, line 41, leave out ("for").


    Page 11, line 42, leave out from ("retained") to first ("the") in line 43 and insert ("the court must--


(a) if the case arises as a result of section 24, have regard to the issue mentioned in subsection (4A); or
(b) if the case arises as a result of section 25, have regard to the issue mentioned in subsection (4B).
(4A) The issue is whether").


    Page 11, line 45, leave out from ("agreement") to second ("that") in line 1 on page 12, and insert--


("(4B) The issue is whether the provider knew").

18 Apr 2000 : Column 586

The noble Lord said: My Lords, I beg to move.

Lord Jenkin of Roding: My Lords, perhaps I may make my point at this stage. It is only brief but it is rather important. I am sure that the House will have in mind the extremely unfortunate circumstances which took place some years ago when a local authority, engaging in interest-swap transactions involving very large sums of money with a number of banks, both foreign and British, was held to have acted ultra vires. The effect of that was to void all the transactions. I must say that it did not redound to the advantage of this country as a centre for financial services. The solution that has been found, incorporating the government amendments, seems to go a long way to avoid any repetition of what was, in terms of the financial reputation of this country, an extremely unhappy chapter.

On Question, amendments agreed to.

Lord Kingsland moved Amendment No. 70:


    Page 12, line 4, leave out ("purchaser") and insert ("other party").

On Question, amendment agreed to.

Clause 27 [Deposit-taking in breach of general prohibition]:

Lord McIntosh of Haringey moved Amendment No. 71:


    Page 12, line 25, leave out ("and


(b)") and insert (", having regard to the issue mentioned in subsection (3A).
(3A) The issue is whether").

On Question, amendment agreed to.

[Amendment No. 72 not moved.]

Clause 28 [Enforceability of agreements resulting from unlawful communications]:

Lord McIntosh of Haringey moved Amendments Nos. 73 to 79:


    Page 13, line 15, leave out from ("that") to ("it") in line 16.


    Page 13, line 16, leave out ("for") and insert ("in the circumstances of the case.


(5A) In considering whether to allow").


    Page 13, line 17, leave out ("for").


    Page 13, line 18, leave out ("and--


(a)") and insert ("the court must have regard to the issues mentioned in subsections (5B) and (5C).
(5B)").


    Page 13, line 19, leave out ("that") and insert ("the issue is whether").


    Page 13, line 21, leave out ("or


(b)") and insert ("(5C)").


    Page 13, line 22, leave out ("that he did not know") and insert ("the issue is whether he knew").

On Question, amendments agreed to.

18 Apr 2000 : Column 587

Schedule 3 [EEA Passport Rights]:

Lord McIntosh of Haringey moved Amendment No. 80:


    Page 241, leave out lines 19 to 23 and insert--


("12.--(1) Once an EEA firm which is seeking to establish a branch in the United Kingdom in exercise of an EEA right satisfies the establishment conditions, it qualifies for authorisation.
(2) Once an EEA firm which is seeking to provide services in the United Kingdom in exercise of an EEA right satisfies the service conditions, it").

The noble Lord said: My Lords, I shall speak first to Amendments Nos. 80 and 86, which make it clear that the key question as to whether an European Economic Area firm qualifies for authorisation is whether it has met the establishment or service conditions. As the Bill stands, it appears that an EEA firm qualifies for authorisation only when it is seeking to establish a branch or to provide services and not when it is already doing so by virtue of the schedule.

Amendments Nos. 81 to 85 are the first of a number of groups which include amendments to complete the Government's rationalisation of the decision-making procedures in the Bill announced at Second Reading. The House will recall that we introduced a number of amendments in Committee and circulated further draft amendments to the early parts of the Bill to ensure that your Lordships would not only have the opportunity to discuss those changes in Committee and on Report, but also to ensure that the whole picture could be seen and understood. Amendments Nos. 81 to 85 are part of that group. They were all circulated to interested noble Lords when we tabled our amendments for Committee stage. They deal with the procedures under Part III of Schedule 3 for the FSA giving or withholding consent for UK firms to establish new places of business in, or to provide cross-border services into other EEA member states.

As with the Government's other amendments, they provide for a simple written notice procedure for granting requests and applications. That ensures a minimum of bureaucracy and hold-up where a firm is being granted consent for what it wishes to do. Even where the consent is not as broad as that sought, there is no reason for there to be any delay in the firm's ability to benefit from it. To the extent that the application is granted in part, that will have immediate effect. Thus, Amendments Nos. 81 to 84 are drafting amendments which require formal written notice to be given to a UK firm by the FSA, rather than the FSA simply informing the firm, when granting consent for that firm to establish a branch in another EEA state, or to provide cross-border services into another EEA state. On the other hand, the warning and decision notice procedure will apply for refusals and part-refusals.

Amendment No. 85 makes it clear that the decision by the FSA to refuse consent for a UK firm to change the details of its activities or establishments in other member states and, therefore, to issue a decision notice, is not the final determination of the matter. Heading 20(3)(b), which Amendment No. 85 amends, gives the firm a right to refer the matter to the tribunal. The refusal does not become effective until the period

18 Apr 2000 : Column 588

for referring the matter to the tribunal has expired without a reference, or if a reference is made, until the tribunal and, where appropriate, the higher courts have determined the matter. At that point a final notice under Clause 385 will be issued.

Paragraph 5(1) of Schedule 4 makes it an offence for a treaty firm to carry on a regulated activity in the United Kingdom before the expiry of the period of seven days beginning with the day on which it gave the FSA notice of its intention to do so. Amendments Nos. 87, 88 and 90 to 92 correct an unintended effect of that by making it clear that a treaty firm that is already authorised by virtue of holding a Part IV permission, or having notified under Schedule 3 or 4, is not required to cease the regulated activity it may be carrying on already in the UK by virtue of its existing permission.

Thus, Amendments Nos. 87 and 88 ensure that a treaty firm which is already authorised by virtue of Schedule 4 should not have to cease for seven days its existing regulated activity when it wishes to expand the range of regulated activities it carries on in the UK. Equally, Amendment No. 87 makes it clear that, although paragraph 4(3) of the schedule deals with the case in which a treaty firm already has a Part IV permission, the firm will not commit an offence if it carries on the activity for which it has the Part IV permission during the seven-day period. Amendments Nos. 90 to 92 are consequential amendments.

Amendment No. 89 is also a technical change. The existing sub-paragraph (2) of paragraph 5 applies various parts of Clause 49, which applies to applications under Part IV of the Bill, to a notice given to the FSA under that paragraph. Sub-paragraph (2) requires the notice to state the regulated activities to be carried on and to give an official UK address for the service of notices, and allows the FSA otherwise to direct the manner and content of the application, and to require verification of information contained in it. Amendment No. 89 removes the incorrect reference to subsection (4) of Clause 49, which would enable the FSA to require additional information. Given that the person's right is exercisable at the end of the seven-day period without FSA approval, that reference is redundant. Such further information as is required by the FSA to fulfil its ongoing supervisory functions as host state regulator can be obtained through rules and the exercise of powers under Part XI. I beg to move.

4.45 p.m.

Lord Stewartby: My Lords, perhaps I may ask the Minister to explain a point relating to the consequences of Amendment No. 80, which replaces paragraph 12 of Part II of the schedule. Sub-paragraph (1) refers to establishment conditions. In that case, the overseas regulator will have given the firm consent to establish a branch in the UK and so it will then satisfy the establishment conditions. That is perfectly straightforward. The service conditions are listed under subparagraphs (a), (b) and (c) of paragraph 14, but it is not clear to me that, if the firm

18 Apr 2000 : Column 589

concerned wishes to provide different services in the UK from the ones that it provides in its home state, it would really be properly authorised.

Amendment No. 80 sets out that once a firm satisfies the service conditions, it automatically qualifies for authorisation, but the service conditions as set out appear to relate to any services in the firm's home state for which it may have authorisation, whereas it may want to do something else in the United Kingdom. It may be that I have misunderstood that point, but I read it through once or twice and I still do not find it easy to see what protection there is against a firm which might want to do something different. Technically, it might qualify automatically, even if the home state regulator said that it did not authorise it in respect of those particular services and that it would not indeed do so.


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