Letter to the Clerk of the Joint Committee from the
Lord Chancellor's Department
(FINSMAT) RULES (S.I. 2001/2476)CONSULTATION
1. You have asked for information about the consultation
on the FINSMAT Rules. This follows correspondence that you have
received from Sir Adam Ridley of the City Liaison Group. As you
know, the Department is of the view that, in strict terms, your
request goes beyond the Joint Committee's terms of reference since
it impinges on the policy behind the Rules. However, we are more
than happy to provide this information to you under the Open Government
FINSMAT Rules and the Code of Practice on Written
2. You ask why the consultation on FINSMAT Rules
should not have been subject to the Cabinet Office Code of Practice
on Written Consultation, which came into effect on 1 January 2001.
The FINSMAT Rules were issued for consultation on 5 January 2001.
The covering letter that accompanied the Rules explained that
the consultation was a limited one, and not subject to the Code
of Practice. The Code of Practice makes it clear that the Code
is directed at national consultations where views are sought from
the public. The Code goes on to state that parts of it may be
relevant to more limited consultations. Our view was that the
subject matter of the consultationthe FINSMAT Ruleswas
of a technical nature and likely to be of interest only to a narrow
target audience. However, where we decide a consultation is "limited",
the Department's policy is still to follow as far as possible
the principles of the Codethis will be explained below.
3. Another factor is that the setting up of the Financial
Services and Markets Tribunal formed one aspect of Treasury's
wider proposals for the reform of the regulation of the financial
services industry. At the time we issued the Rules for consultation
there had already been significant consultation by the Treasury
on their proposalsfor example, the Treasury consultation
paper that was issued in 1998, prior to the introduction of the
Financial Services and Markets Bill, referred to the plans to
set up the new Tribunal.
4. You ask in what respect the consultation fell
short of the ideals set out in the Code. I set out below the seven
consultation criteria set out in the Code, and explain to what
extent consultation on the FINSMAT Rules met the criteria. Criteria
1-5 relate to pre-consultation and the drafting of the document,
criterion 6 relates to post-consultation, and criterion 7 deals
with the monitoring and evaluation of all consultations.
1. Timing of consultation
should be built into the planning process for a policy (including
legislation) or service from the start, so that it has the best
prospect of improving the proposals concerned, and so that sufficient
time is left for it at each stage.
5. The Department considers that this was met. The
FINSMAT Rules were issued for consultation on 5 January 2001 and
consultation ended on 30 March 2001. The Rules were made on 9
July 2001. I confirm that there was sufficient time between the
end of consultation and the making of the Rules for consultation
responses to be properly considered, and for appropriate and satisfactory
consideration to be given to the completion of the Rules.
2. It should be clear who
is being consulted, about what questions, in what timescale and
fro what purpose.
3. A consultation document should be as simple
and concise as possible. It should include a summary in two pages,
at most, of the main questions it seeks views on. It should make
it as easy as possible for readers to respond, make contact or
6. I attach copies of the documents that we issued
for consultation [not printed]: draft FINSMAT Rules, explanatory
note, and covering letter. I consider that taken altogether the
consultation documents were sufficiently clear on the above issues,
and went a long way towards meeting the above two sets of criteria.
4. Documents should be made
widely available, with the fullest use of electronic means (though
not to the exclusion of others), and effectively drawn to the
attention of all interest groups and individuals.
7. Hard copies of the consultation documents were
sent to members of the judiciary, other departments, the Council
of Tribunals and other interested organisations whom we had
identified as having a particular interest in the rulesI
attach a copy of our consultation list. Further, the consultation
documents were placed on the LCD Website, to which the Treasury
Website had a link. Also, the Treasury bulletin, which is seen
by many in the City, referred to the consultation documents.
5. Sufficient time should
be allowed for considered responses from all groups with an interest.
Twelve weeks should be the standard minimum period for a consultation.
8. This was fully met as twelve weeks were allowed
6. Responses should be carefully
and open-mindedly analysed, and the results made widely available,
with an account of the views expressed and reasons for decisions
9. This touches upon further points you raise in
your letter concerning any changes that were made to the draft
Rules following consultation, and the reasons for such changes.
I will address these points under this heading.
10. I attach a summary setting out the main changes
to the Rules following consultation [not printed]. There
were a number of issues upon which we specifically sought views
from consultees, e.g. ex parte applications, and so some changes
should be seen in the context of responses from consultees. Some
changes were made for policy reasons whilst others were for drafting
technical reasons. In some cases, we had to ensure that changes
made were in line with other provisions in the Rules, and to draft
11. I also attach for your information a copy of
those consultation responses not marked as confidential (we have
previously sent these to Sir Adam Ridley) [not printed].
We are about to write to all those that responded (copy of our
letter attached [not printed], to bring them up to date
with the current position, and to offer to provide a summary of
the consultation responses, upon request. As I explained on the
telephone, there was a great deal of correspondence about these
rules up to the time they were laid, and subsequently a motion
was brought calling upon the Government to withdraw the rules.
This is why we are only now responding to the consultees.
7. Departments should monitor
and evaluate consultations, designating a consultation co-ordinator
who will ensure the lessons are disseminated.
12. The Department is required to produce an annual
report on all the consultations it carries out, both limited and
those covered by the Code, and the FINSMAT consultation will form
part of the considerations of the report.
13. I think it fair to say that although we took
the view that the consultation on the FINSMAT Rules was a technical
one and of interest to only a very limited audience, and therefore
not subject to the Code, we followed the spirit of the Code very
closely. The steps we took did not differ to any significant extent
from those which we would have followed for a full national public
consultation. Significantly, we would not have expected responses
to the Rules to have been any different to those that we received,
nor for the outcome to be different.
5 November 2001