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Lord Kingsland: I should like to deal with Amendment No. 35 which is another amendment in the group that the Committee is considering. That amendment seeks to add two further categories to paragraph 10(2) of Schedule 1.
The first category would be reports by the practitioner panel and the consumer panel. The value of those reports would be greatly enhanced if the Minister were to accept some later amendments connected with the powers of both those panels to express their views on the various codes and guidelines to be produced by the FSA. Having a summary every year of the views of those two panels about the quality of legislation produced by the FSA would have enormous advantages for whichever parliamentary committee will consider the annual report.
The second category relates to a report from the independent complaints investigator. I place, as the noble Lord is already aware, great importance on the work of the independent complaints investigator in view of the absence of any recourse of a regulated party to the courts.
Lord McIntosh of Haringey: I am grateful to noble Lords for what they said about the amendments. The annual report is an important part of the FSA's accountability to consumers, practitioners and the Treasury.
Paragraph 10 of Schedule 1 already requires wide-ranging information to be in the report: the discharge by the FSA of its functions; the extent to which the regulatory objectives have been met; following amendment in another place, consideration of the principles--proportionality, the UK's competitive position, and so on--to which the FSA must have regard; and other matters as directed by the Treasury. Moreover, the annual report must be accompanied by the report of the non-executive committee and other reports or information as directed by the Treasury. So paragraph 10 is already quite prescriptive.
Amendments Nos. 33 and 35--the latter has been spoken to by the noble Lord, Lord Kingsland--would require the FSA to produce the following in its annual report: the costs and expenses incurred by the FSA; the fees paid to the FSA under paragraph 17 of Schedule 1; a review of costs incurred by the FSA compared with costs of regulators in other jurisdictions; compliance costs both compared with previous years and with other jurisdictions; the work of the complaints investigator; a report by the investigator, and any action taken by the FSA in response to criticisms by the investigator; the operation of the penalties scheme; and any report which the practitioner and consumer panel wish to include. Amendment No. 36 would require a response by the FSA to recommendations by the consumer and practitioner panels. The noble Lord,
The last annual report of the FSA, in July 1999, already included some of this information: for example, on costs and reports by the equivalents of the complaints investigator. In its press release of 6th July 1999 which accompanied the annual report, the FSA has already committed itself to providing substantial information in its future annual report, taking account of the Joint Committee's recommendations. This includes fees and expenditure for the current and prior year, and responses to reports by the complaints investigator and the practitioner and consumer panels, meeting, I hope, the aim of Amendment No. 36.
I have the press release in front of me. The main contents proposed for annual reports in the future are under the headings: statutory objectives, policy, rule making, consultation, cost benefit analysis, regulatory issues, and accounts of authorisation of firms and approval of individuals, supervision and monitoring, enforcement action including policing the perimeter of regulated activities, cases settled or determined by the tribunal, fines and costs, significant judgments by the tribunal, work with customers to include initiatives and criteria used to assess the public awareness objective, international work and implementation of EC directives, work with other authorities, including overseas regulators, the Treasury/ Bank of England/FSA standing committee, and investigation of enforcement agencies, complaints, responses to reports by the independent complaints commissioner, the ombudsman scheme, the compensation scheme, the consumer panel, the practitioner panel, and any value for money reports produced by the Treasury, publications, information on major publications during the year, statutory accounts, of course, the report of the non-executive committee of the FSA, an assessment of regulatory burdens and compliance costs of UK markets compared with overseas jurisdictions, and changes over the year in question, operations (including human resources), and IT issues. That is quite a list. It encompasses everything included in the amendment, and quite a lot more. It will be a very hefty annual report.
For that reason, I have no objection whatsoever to the detail of the amendments proposed. They are generally well founded. But we said in response to the Joint Committee that we do not want to prescribe in legislation too much of the report's contents in case other priorities emerge in the future, and, if anything were by any chance left out and they were a few pages short of the 1,000 pages to which I imagine the report will run, since the Treasury can in any case direct the content of the report should it fail to meet users' requirements, I hope that the amendment will not be pressed. I think that we have more than met the objectives underlying the amendments.
Amendment No. 34 would have the effect of removing the Treasury's power to direct the FSA on the contents of its annual report. I do not think that that would be desirable. It would restrict Ministers' rights over what information was in the FSA's main
The amendment calls for a report on the operations of the penalty scheme referred to in paragraph 16. When I first began to read this monumental work, I had thought that with the statutory base to the FSA we should find that most market misconduct and the like was dealt with by the FSA under the terms of paragraph 16. It is a perfectly splendid paragraph; I am thoroughly in favour of it. However, it has now come to my notice that that will not happen. Only in cases where recognised investment exchanges have no jurisdiction will the FSA come in. The real question will be the extent to which the FSA, in one way or another, can require those bodies to comply with the standards imposed by Parliament on the FSA itself.
Lord Saatchi: The Minister responded warmly to the proposed amendments. I am grateful. However, have I understood correctly that he thinks it too prescriptive to put in the Bill that the revenue and the costs of the FSA should be detailed in its annual report?
Lord McIntosh of Haringey: I have indicated my support for the FSA's proposals set out in its press release of 6th July 1999 and I have indicated my opposition to any attempt to take away from the Treasury its power to prescribe what shall be in the annual report.
If anything which was in the July press release, including the matters to which the noble Lord referred, were to be excluded, the Treasury would use its powers to ensure that it was included. I think that we win on that both coming and going. We provided a reserve power for the Treasury to insist on the inclusion of all issues which Members of the Committee and I want to have included, yet we have left it without too much prescription.
Lord McIntosh of Haringey: I believe that the noble Baroness and I should discuss that away from the ears of officials. In such circumstances, the electorate would be entitled to vote the Government out of office.
I shall not go on any longer in case I bore the Committee on this point, but a strong theme is emerging in our discussions. I am happy to leave the matter to the Report stage and beg leave to withdraw the amendment.