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Lord Boardman: My Lords, I support my noble and learned friend's amendment. The clause is important because it relates to the conduct of the authority. Surely, a Bill which provides so many regulations about what everyone does should require that, as regards the conduct of the authority, the principles which it intends to follow in the process of its monitoring should be under "shall". It is not a question that the authority "may" want to do so, but that it "shall" do so. I strongly support my noble and learned friend and hope that the Minister will accept his amendment.
Lord Peyton of Yeovil: My Lords, I support my noble and learned friend. In doing so, perhaps I may express my gratitude to him for his support and friendly sympathy. Although, naturally, I am bruised by the savage attack which he thought the Minister directed at me, I have reasonable confidence that I shall in due course recover.
I entirely agree with my noble friend Lord Boardman. I always dislike giving authorities discretions. I believe that their duty should be clear. I do not like the idea that they should be free to decide whether or not something suits them, depending on which officials are handling the matter, and so on. I would much rather see something definite in the Bill. I hope that the noble Lord will go along with that and see fit to accept the amendment.
Lord Kingsland: My Lords, I wish to speak to Amendment No. 115A to Clause 63 and to Amendment No. 115B to Clause 64. As your Lordships are well aware, Clause 63 enables the authority to issue statements of principle on the conduct of approved persons. Subsection (2) requires the authority to issue a code of practice to help to determine whether a person's conduct complies with a statement of principle.
That is a particularly important power because subsection (7) provides that a code of practice can be relied upon as tending to establish whether the individual's conduct complies with a statement of principle. As presently drafted, subsection (3) enables the authority's code of practice to specify compliant conduct or non-compliant conduct or factors to be taken into account in determining compliance.
As I understand it, there is no requirement on the authority to issue all three categories of guidance. In consequence, the current draft, which is contained in consultation paper No. 26, contains only examples of non-compliant conduct. Moreover, the examples refer mainly to situations which people would automatically recognise as being non-compliant. As the Minister is well aware, the principles themselves are very broadly drafted. An authorised individual who breaches a rule will necessarily breach principle 2, while a manager who fails to run his section properly will probably be in breach of principles 5 to 7.
Clause 64 requires the authority to consult before it issues a statement or code with regard to the conduct of approved persons. Subsection (7) disapplies the consultation procedure if the authority considers that the delay would be prejudicial to the interests of consumers. However, that is no reason why the authority should not consult at the same time as the urgent statement or code is issued, and then proceed to make amendments if the representations are persuasive. Indeed, one could well argue that where material is issued urgently, and perhaps without full consideration of the consequences, there is a greater rather than a lesser need to consult and review the action that must be taken.
Lord McIntosh of Haringey: My Lords, in response to the accusations of an intemperate attack, I would say only, "Cet animal est mechant; quand on l'attaque, il se defend", and I do not make any distinction between myself and the Government in this matter.
So far as concerns the specific amendments of the noble and learned Lord, Lord Fraser, I am grateful to him for setting out with some clarity what he intended because it was not entirely clear to us when we read them this morning. In our view, Amendment No. 115YA would not have any effect. He asks whether under Clause 63(1) the FSA can issue no statement of principle. At the minimum, the Bill provides that an approved person is guilty of misconduct if knowingly concerned in a breach of rules by the firm. Whether or not further statements of principle are required is properly a matter for the authority. We know that it intends to make such statements.
I believe that in this matter we are returning to the old issue of "may" and "shall". No doubt the noble and learned Lord and I have debated that on many occasions. Since the noble Lord, Lord Peyton, reminded me of my time in opposition, he will recall that on many occasions I used to use "shall" instead of "may". I was always told by the government that lawyers say that "may" means "shall". That always sounded quite implausible to me. However, that is what the Conservative government used to say to the Labour opposition, and I shall rest my case with that. If I can add to it, I shall of course write to the noble and learned Lord, Lord Fraser.
Amendment No. 115ZA addresses the question of the fee that may be charged when the authority issues statements and codes under this section. The provision, as drafted, is permissive. Within limits, it enables the authority to charge for a copy of the statement and code. That is provided because the authority will issue copies of the code to persons other than those to whom its fee-raising powers under
I turn now to the amendments moved by the noble Lord, Lord Kingsland. Amendment No. 115A raises a technical drafting point--again, in relation to "may" and "shall". However, in our view, the Bill is correct as it stands. Clause 63(1) confers power on the FSA to issue statements of principle with respect to the conduct expected of approved persons. Clause 63(2) then provides that if the authority issues a statement of principle, it must also issue a code of practice for the purpose of helping to determine whether or not a person's conduct complies with the statement of principle. Therefore, the authority cannot issue a statement of principle unless it also issues a code of practice which supplements that statement of principle.
Clause 63(3) sets out certain matters which the authority may include in a code. Its purpose is to make it clear that a code may make provision in those matters. The amendment would oblige the authority to include the matters mentioned in Clause 63(3) in every code of practice that it issues. However, that cannot be right. The contents must depend on the nature of the statement of principle which it supplements. The sole purpose of a code is to help a person to determine what he must do in order to comply with a particular principle. Although in many cases factors such as those set out in Clause 63(3) will be relevant, it is not possible to say with certainty that they will be relevant in all cases. Therefore, in a case in which those factors are not relevant, the effect of the amendment would be to require the authority to engage in some kind of work of fiction. I do not believe that that can be right.
Amendment No. 115B questions the Bill's arrangements for consultation on the FSA's proposals to exercise its delegated legislative powers under the Bill. I must remind the House that the Government brought forward a significant number of amendments to the Bill's consultation procedures at Report stage in another place. Those amendments sought to reinforce the procedures in the light of concerns expressed by the Opposition in Committee. The amendments also sought as far as possible to introduce consistency between the procedures for exercising the different delegated legislative powers under the Bill.
As currently drafted, when the authority proposes to make rules or issue statements and codes, including statements and codes under Clause 64, the Bill requires it to publish a consultation draft of the proposed rule, statement or code; to accompany the draft with a cost-benefit analysis; to provide a period for representations to be made; and to produce a feedback statement on the consultation. However, in each case, we have made provision which removes the need for the authority to follow those procedures where the need to make the rules, statements or codes is urgent. I am not sure that Amendment No. 115B, as drafted, would work because, if an issue had to be addressed so urgently, I would not expect the authority to be able to
However, perhaps I can offer some reassurance to the noble Lord, Lord Kingsland, that will enable him to agree that the amendment is not necessary. The Bill allows the authority not to follow the usual procedures where the circumstances require the authority to act urgently. We do not believe that the authority would be able to avoid the procedures frequently. The noble Lord, Lord Kingsland, may have noticed that the period for consultation in Clause 64(2)(b) is expressed in a way that would give the authority flexibility to carry out a short consultation if that were practicable. I am sure that if it were, the FSA would do so. The point the amendment seeks to address will be something that arises only very rarely in relation to any kind of delegated legislative provision, and quite exceptionally in the case of a statement or code under Clause 63.
On these rare occasions where a change has to be made urgently it may be somewhat academic as to whether or not a provision to the effect of the amendment is introduced. The amended rule, statement or code will be in the public domain and those affected by it will be free to express their concerns and make representations, whether or not it is in the Bill. The practitioner and consumer panels will, of course, be able to make representations at any time.
Last Thursday I said that the Government would consider further the amendments tabled by the Opposition on the role of the panels and bring forward amendments to improve the feedback arrangements. I am sure that they would help in this case.
When the Authority makes rules of any kind, whether under the routine or the urgent procedure, it will be bound by the objectives and principles under Clause 2 and the Director-General of Fair Trading will have responsibility for ensuring that the requirements do not have an unduly adverse effect on competition.
There are plenty of safeguards in the Bill as it stands. I believe that imposing another requirement for consultation, cost-benefit analysis and feedback statements after the event, in cases where the FSA has had to act urgently in response to some unexpected circumstance, would be excessive.
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