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Lord Kingsland: My Lords, I am most grateful to the Minister for that helpful explanation.

On Question, amendment agreed to.

Lord McIntosh of Haringey moved Amendments Nos. 203 to 206:



(c) that he acted or engaged in the conduct in conformity with control of information rules").


    Page 211, line 14, after ("2") insert ("(except paragraphs 25 and 26)").

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    Page 211, line 14, leave out ("subsection (9)") and insert ("subsections (8) and (9)").


    Page 211, line 15, leave out ("that subsection") and insert ("each of those subsections").


    Page 211, line 17, after ("subsection") insert ("(8) or").

On Question, amendments agreed to.

Clause 395 [Offences by bodies corporate etc.]:

Lord McIntosh of Haringey moved Amendment No. 207:


    Page 212, line 5, leave out subsection (3).

The noble Lord said: My Lords, in moving Amendment No. 207, I should like to speak also to Amendments Nos. 208 to 211. When we debated this clause in Committee, the noble Lord, Lord Kingsland, drew attention to a possible ambiguity in the wording. As he pointed out, it was not clear whether in referring to offences committed by partnerships in England or Scotland what was being referred to was the jurisdiction in which the offence was committed or the jurisdiction in which the partnership was formed. I said that the Government were aware of that and would address it in due course. We have managed to do so as part of an improvement to the clause to achieve fairness.

The purpose of the clause is to enable persons in positions of managerial responsibility within businesses to be prosecuted alongside the business itself if that business has committed an offence which they have connived at or consented to, or which is the result of the neglect of their duties. That must be right. At the moment, company directors and officers, and members of partnerships constituted under the law of Scotland, are treated differently from members of partnerships constituted under the law of England and Wales or the law of Northern Ireland. While directors and Scottish partners commit an offence only if they are actively involved in the wrongdoing, or let it arise through their own neglect, English, Welsh and Northern Irish partners are effectively deemed to have been involved in any offence under the Bill committed by their partnership, unless they can show that they did not know it was being committed or that they took reasonable steps to prevent it.

We have reviewed the matter and believe that the position is unfair. Amendments Nos. 207 and 208 make it clear that all partners are to be treated in the same way as company directors and officers. In doing this, the amendments remove any need to refer in the clause to the nationality of individual partners because all partnerships are now covered by the provisions of subsection (4). They also, coincidentally, rectify the ambiguity identified by the noble Lord, Lord Kingsland, earlier.

Amendments Nos. 209, 210 and 211 are intended to ensure that this clause covers not only corporate bodies and partnerships but also unincorporated associations, and they substantially reproduce the equivalent provisions in the Financial Services Act 1986. I beg to move.

Lord Kingsland: My Lords, I am most grateful to the noble Lord the Minister for at least reflecting on one of the things we said in relation to this clause.

9 May 2000 : Column 1546

On Question, amendment agreed to.

Lord McIntosh of Haringey moved Amendments Nos. 208 to 210 inclusive:


    Page 212, line 10, leave out ("in Scotland").


    Page 212, line 23, at end insert--


("( ) If an offence under this Act committed by an unincorporated association (other than a partnership) is shown--
(a) to have been committed with the consent or connivance of an officer of the association or a member of its governing body, or
(b) to be attributable to any neglect on the part of such an officer or member,
that officer or member as well as the association is guilty of the offence and liable to be proceeded against and punished accordingly.").


    Page 212, line 26, after ("unincorporated") insert ("association").

The noble Lord said: My Lords, I beg to move these amendments en bloc.

On Question, amendments agreed to.

Lord McIntosh of Haringey moved Amendment No. 211:


    After Clause 397, insert the following new clause--

JURISDICTION AND PROCEDURE IN RESPECT OF OFFENCES

(" .--(1) A fine imposed on an unincorporated association on its conviction of an offence is to be paid out of the funds of the association.
(2) Proceedings for an offence alleged to have been committed by an unincorporated association must be brought in the name of the association (and not in that of any of its members).
(3) Rules of court relating to the service of documents are to have effect as if the association were a body corporate.
(4) In proceedings for an offence brought against an unincorporated association--
(a) section 33 of the Criminal Justice Act 1925 and Schedule 3 to the Magistrates' Courts Act 1980 (procedure) apply as they do in relation to a body corporate;
(b) section 70 of the Criminal Procedure (Scotland) Act 1995 (procedure) applies as if the association were a body corporate;
(c) section 18 of the Criminal Justice (Northern Ireland) Act 1945 and Schedule 4 to the Magistrates' Courts Northern Ireland) Order 1981 (procedure) apply as they do in relation to a body corporate.
(5) Summary proceedings for an offence may be taken--
(a) against a body corporate or unincorporated association at any place at which it has a place of business;
(b) against an individual at any place where he is for the time being.

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(6) Subsection (5) does not affect any jurisdiction exercisable apart from this section.
(7) "Offence" means an offence under this Act.").

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

On Question, amendment agreed to.

Lord McIntosh of Haringey moved Amendment No. 212:


    Before Clause 398, insert the following new clause--

SCHEMES FOR REVIEWING PAST BUSINESS

(" .--(1) Subsection (2) applies if the Treasury are satisfied that there is evidence suggesting--
(a) that there has been a widespread or regular failure on the part of authorised persons to comply with rules relating to a particular kind of activity; and
(b) that, as a result, private persons have suffered (or will suffer) loss in respect of which authorised persons are (or will be) liable to make payments ("compensation payments").
(2) The Treasury may by order ("a scheme order") authorise the Authority to establish and operate a scheme for--
(a) determining the nature and extent of the failure;
(b) establishing the liability of authorised persons to make compensation payments; and
(c) determining the amounts payable by way of compensation payments.
(3) An authorised scheme must be made so as to comply with specified requirements.
(4) A scheme order may be made only if--
(a) the Authority has given the Treasury a report about the alleged failure and asked them to make a scheme order;
(b) the report contains details of the scheme which the Authority propose to make; and
(c) the Treasury are satisfied that the proposed scheme is an appropriate way of dealing with the failure.
(5) A scheme order may provide for specified provisions of or made under this Act to apply in relation to any provision of, or determination made under, the resulting authorised scheme subject to such modifications (if any) as may be specified.
(6) For the purposes of this Act, failure on the part of an authorised person to comply with any provision of an authorised scheme is to be treated (subject to any provision made by the scheme order concerned) as a failure on his part to comply with rules.
(7) This section applies whenever the failure in question occurred.
(8) "Authorised scheme" means a scheme authorised by a scheme order.
(9) "Private person" has such meaning as may be prescribed.
(10) "Specified" means specified in a scheme order.").

The noble Lord said: My Lords, I referred to this amendment and to Amendment No. 222, which is grouped with it, much earlier in our debates on this Bill. Amendment 212 allows the Treasury, by order, to authorise the FSA to establish and operate a scheme requiring firms to review their past business and, where appropriate, make restitution where retail customers have suffered loss.

This is an important power, as illustrated by the cases of mis-selling which have come to light in recent years, particularly cases of personal pensions, under which the value of redress offered and accepted

9 May 2000 : Column 1548

already amounts to over £3 billion. In this sort of case experience has shown that it is expedient to require all firms which have conducted a certain class of business to check their past business, even though the regulator cannot know that every one of those firms will turn out to have failed to comply with the rules. However, this is not a power we envisage being used regularly.

The amendment reflects a commitment given in Committee by the Economic Secretary to the Treasury. It also, I believe, meets the concerns raised by my noble friend Lady Turner when tabling her Amendment No. 167 in Committee. At that time I promised my noble friend a Government amendment to Part X but we have looked at it again and it does not really fit in there. It does not sit comfortably with the Part XXV restitution powers. The nature of the exercise carried out in the unusual circumstances in which a review will be required is such that it involves a combination of mapping out the matters that fall to be dealt with under the scheme, detailed provisions to determine how the scheme will operate and the making of payments in an appropriate case.

So we have created a specific power for the creation of schemes under secondary legislation. The Treasury will, by order under the Bill, authorise the FSA to establish and operate the scheme: it will be set up under the order. The Delegated Powers and Deregulation Committee have considered our approach and raised no concern.

Amendment No. 222 specifies that the Treasury orders under this clause must be made by affirmative resolution of both Houses of Parliament. This will ensure that any such arrangements must be subject to debate. This will be informed by the report and other details that must be provided before the Treasury can make an order under the power. I beg to move.

On Question, amendment agreed to.

Clause 400 [Consequences of a direction under section 398]:


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