FINANCIAL SERVICES AND MARKETS BILL
Further Memorandum by HM Treasury
1. The Financial Services and Markets Bill was
brought from the House of Commons on 10 February 2000. The Treasury
submitted its memorandum on delegated legislative powers conferred
by the Bill on 11 February 2000. On 6 March 2000, the Treasury
submitted a further memorandum, giving its response to the recommendations
in the Committee's Seventh Report of 16 February 2000. The amendments
that the Government undertook to bring forward to meet the Committee's
recommendations have now been brought forward and incorporated
into the Bill.
2. The Treasury submitted further memoranda to
the Committee on 14 March 2000 and 10 April 2000 explaining new
and revised delegated powers proposed in its amendments at Committee
and Report Stages.
3. This further memorandum sets out and explains
a number of additional amendments that the Government intends
to make at Third Reading (and one that was amended slightly before
being made on Report). Many of the new or amended powers seek
to tidy up miscellaneous points in the Bill. The remainder seek
to address matters that have been raised in debate during the
Bill's passage through Parliament.
4. Unless stated otherwise, the clause references
are to the Third Reading print of the Bill.
PART II: REGULATED AND PROHIBITED ACTIVITIES
PART X: RULES AND GUIDANCE
PART XIII: INCOMING FIRMS: INTERVENTION BY THE
CLAUSES 18, 145 AND 197
5. In the light of Parliamentary debate, the
Government has reconsidered the different provisions in the Bill
dealing with rights of action where contraventions of requirements
such as those that may be imposed under Parts IV, X and XIII are
concerned. The aim is to enable the current pattern of rights
of action as provided for under clauses 62 and 62A of the Financial
Services Act 1986 to be reproduced as far as it is possible to
do so given the different structure of the Bill.
6. The Government will therefore bring forward
at Third Reading amendments to clauses 18, 145 and 197.
7. The amendments to clauses 18 and 197 will
confer on the Treasury a power to prescribe in regulations cases
in which a person may have a right of action as a result of a
breach of a permission which he has by virtue of the bill or as
a result of a breach of a requirement imposed under Part XIII.
8. "Private person" will be defined
by the Treasury in Regulations, in line with a recommendation
of the Committee when it considered the draft Bill. Part X currently
contains a further power for the Financial Services Authority
("the Authority") to specify in rules whether or not
a breach of a rule by an authorised person attracts rights of
action for private persons, and to specify that some classes of
rules attract rights for nonprivate persons.
9. The Government proposes to replace the Authority's
power to specify circumstances in which a right of action would
lie at the suit of a person other than a private person with a
power for the Treasury, by Regulations, to prescribe circumstances
in which a right of action that would be exercisable by a private
person can be exercised by a nonprivate person. This would,
for example, enable the Treasury to reproduce regulation 3 of
the Financial Services Act 1986 (Restriction of Right of Action)
10. The amendment to clause 145 will ensure that
there is internal consistency within the Bill by aligning the
power with the new provisions in clauses 18 and 197. The Government
also propose to make a similar amendment to clause 69 which would
enable the Treasury to prescribe circumstances where a contravention
of any of the duties under clauses 54(6), 57(1), and 57(2) is
actionable at the suit of a person who is not a private person,
subject to the usual defences to such an action.
11. The powers under clauses 18, 145 and 197,
and the proposed power under clause 69, will be exercisable by
statutory instrument subject to the negative resolution procedure.
PART VII: CONTROL OF BUSINESS TRANSFERS
NEW CLAUSE AFTER CLAUSE 113
12. Part VII of the Bill makes arrangements for
the regulatory control of business transfers that involve insurance
or deposit-taking business. These provisions are necessary to
ensure that consumers' interests are properly protected during
a corporate restructuring. However, they also enable the transfer
of certain rights and liabilities that would not otherwise ordinarily
be capable of being transferred.
13. On the Second day of Report Stage, the Opposition
tabled an amendment that would disapply the procedures for business
transfers in certain circumstances. The Government expressed concern
with the approach adopted in the amendment, which left the application
of the regulatory framework at the discretion of the authorised
person. The effect of the amendment could also have prevented
certain transfers from being able to proceed. However, the Government
also agreed that there could be circumstances in which it might
in future be necessary to disapply the whole of the Part or to
modify it in its application to transfers of a particular kind.
An example cited in debate was the case of the UK business of
an overseas firm that was merging with another overseas firm.
Such cases would require detailed legislation to ensure that jurisdiction
of appropriate overseas authorities was respected while ensuring
It may also be the case that experience will show
that there are other circumstances in which it is unnecessary
to apply the full procedures under Part VII to a business transfer
scheme and so as a deregulatory measure the Treasury might wish
to relax certain of the controls under this Part.
14. The new powers to be introduced by the new
clause after clause 113 would enable the Treasury to make regulations
which would modify the application of Part VII in particular cases
or to amend it so as to ensure it operates more effectively.
15. Paragraph 13 above gives examples of when
such changes might be desirable or necessary. It is thought that
not only will a power to make Regulations give a greater degree
of flexibility to respond to difficulties that may emerge over
time, but also that the level of detail that may be needed to
deal with certain issues that might arise would be more appropriately
set out in secondary legislation. It should also be noted that
while these arrangements are well established for transfers of
insurance business, the extension to banking business transfers
is new and may need to be adapted in the light of operational
16. In all cases, the Treasury propose that the
negative resolution procedure should apply to the exercise of
the powers to make Regulations under this new clause. This is
because the changes introduced by these powers will, in practice,
be technical and limited in their scope.
PART X: RULES AND GUIDANCE
CLAUSE 142: CONTROL OF INFORMATION RULES
17. The Bill was amended at Report stage in the
Lords in order to give the Authority the power to make control
of information rules with regard to authorised persons. These
rules are commonly known as "Chinese walls rules". Chinese
walls are barriers in the form of procedures, systems, management
and physical separation which firms may employ in order to ensure
that information obtained by one part of a firm is not communicated
in inappropriate circumstances to another part of the firm (for
example, where it would advantage one client at the expense of
18. The purpose of these rules is to protect
investors from potentially harmful conflicts of interest and to
protect firms by allowing them to deal with multiple clients without
breaching regulatory or fiduciary obligations they may otherwise
have to disclose information. This power is broadly in line with
that currently contained in section 48(2)(h) of the Financial
Services Act 1986.
19. As clause 142 currently stands, the Authority
may only make rules requiring an authorised person to withhold
information from a person for or with whom he does business in
the course of carrying on any regulated or other activity. The
Government's amendments to clause 142 will enable the Authority
to make rules about the withholding of information by an authorised
person (rather than limited to rules which will require information
to be withheld). This power may be used in particular to make
rules specifying circumstances in which an authorised person may
withhold information which he would otherwise have to disclose
to his clients.
20. These amendments bring the clause into closer
alignment with section 48(2)(h) of the 1986 Act, which provides
a power to make rules enabling or requiring the withholding of
information in the circumstances outlined in that subsection.
Clause 142 (as amended) will then allow the Authority to make
rules which are similar in effect to rules currently adopted under
21. Other minor adjustments are contemplated.
We aim to address a problem that clause 142(3) would cause as
well as make a technical clarifying amendment to subsection (2)(a).
Neither of these amendments, however, affect the scope of the
PART XV: THE FINANCIAL SERVICES COMPENSATION SCHEME
CLAUSES 208, 209 AND 219
22. Part XV makes provision about the establishment
and operation of a single compensation scheme to replace a number
of existing schemes organised on sectoral lines. The purpose of
the scheme is to pay compensation to consumers in the event of
an authorised person being unable, or likely to be unable, to
meet its liabilities.
23. The scheme will be compulsory for authorised
persons carrying on regulated activities. However, clause 208(10)
provides that EEA firms exercising passporting rights in accordance
with Schedule 3 need not participate in the scheme unless they
elect to do so under clause 209(5). Clauses 208(10) and 209(5)
are intended to ensure that the scheme complies with EC Directive
requirements. The Investor Compensation Directive and the Deposit
Guarantee Directive provide that EEA firms that participate in
deposit and investor compensation schemes in their home State
cannot be required to join a compensation scheme in another member
State, but that they should have the option of joining such schemes
on a voluntary basis for the business carried on in that State.
24. However, the Directives only deal with certain
types of product and service, essentially deposit taking and certain
categories of investment. Notably, there is no Directive requirement
for member States to have compensation arrangements for insurance
and the existing arrangements under the Policyholder Protection
Acts therefore require incoming firms to participate in the UK
scheme. It is intended that such protection should continue under
the new scheme. However, the exclusion for EEA firms under clause
208(10) currently applies to all passported firms, including those
not covered by relevant directives. This could mean that some
consumers - including third-party and beneficiaries of insurance
policies, who will have no say in the choice of the insurer on
which they will rely - would have no protection in the event of
a failure by an authorised person.
25. The amendment to clause 208 therefore allows
the Treasury to prescribe in regulations the scope of the exclusion
under subsection (10), so that it can properly reflect the coverage
of Directive arrangements. The amendments to clause 209 allow
corresponding changes to be made, again through regulations made
by the Treasury, to the scope of the provision under which such
firms will be able to opt back into the UK scheme. Defining the
scope of the exclusion and the opt-in through regulations will
ensure that they can be made to adapt appropriately in the event
of changes to EC Directive requirements.
26. Clause 219 confers on the scheme manager
powers to inspect certain documents held by the Official Receiver
where they relate to an authorised person in financial difficulties.
The amendment to clause 219(4) would enable the Treasury by regulations
to specify the extent to which that provision applies to EEA firms.
This is consequential on the powers conferred on the Treasury
by the amendments to clauses 208 and 209.
27. The exercise of the powers under clause 208(10),
209(5), and 219(4) will be subject to the negative resolution
procedure. The amended provisions will make it clear that the
exemption can only be made in relation to firms that qualify for
authorisation under Schedule 3. It is anticipated that the categories
of person prescribed under the powers in clause 208(10), 209(5)
and 219(4) will usually be the same.
PART XVIII: RECOGNISED INVESTMENT EXCHANGES AND
NEW CLAUSE AFTER CLAUSE 294
28. Part XIII of the Bill establishes the Financial
Services and Markets Tribunal ("the Tribunal") to consider
regulatory action that the Authority proposes to take against
authorised firms and other members of the regulatory community.
29. This new clause creates a power for the Treasury
by order to extend the jurisdiction of the Tribunal to cover certain
types of disciplinary proceedings brought by recognised investment
exchanges or recognised clearing houses. It has been brought in
response to points raised in debate at report stage.
30. The general policy underlying the regime
created for recognised investment exchanges and clearing houses
is to allow them a good deal of discretion as to how they organise
internal affairs, and carry out their day to day activities. This
discretion extends to their disciplinary arrangements. These arrangements
will of course need to be both effective and fair; and it is intended
that the recognition requirements which will be set by regulations
made by the Treasury under clause 281 should address this issue.
Nevertheless, recognised bodies will still be left with a degree
31. While the Treasury do not see a role for
the Tribunal in many of the types of disciplinary case that may
arise, there is one possible exception, which this new clause
is intended to deal with. This concerns those cases where a member
of an exchange or clearing house engages in behaviour which is
alleged to amount to both
a) market abuse (for which the Authority has
responsibility under clause 114) and
b) a breach of the rules of the recognised body
concerned (for which the relevant recognised body has enforcement
32. In such a case, the FSA would have to make
a choice between taking market abuse proceedings against the person
in question, or leaving the matter to be dealt with internally,
as a breach of the rules, by the recognised exchange or clearing
house concerned. So far as the individual involved was concerned,
in the former case he would have the right to refer the matter
to the Financial Services and Markets Tribunal, but in the latter
he would not.
33. The key concern therefore is that misbehaviour
could be dealt with by one of two different procedures. Clearly
it is desirable that there should be consistency between these
procedures, and it may be that this will in practice prove to
be the case. If, however, experience shows that there is a danger
that there would be an inappropriate degree of inconsistency in
approach, the power introduced by this clause would enable the
Treasury by order to provide for any disciplinary cases of this
kind to be considered by the Tribunal.
34. The power to make orders under this new clause
will be subject to the negative resolution procedure.
PART XIX: LLOYD'S
35. Paragraphs 12 to 16 above describe certain
powers to be taken in relation to the control of transfers of
insurance business under Part VII of the Bill. The new clause
to be inserted after clause 316 confers on the Treasury a power,
by order, to apply those arrangements to insurance business underwritten
at Lloyd's. This will enable the Treasury to give full effect
to the relevant requirements of the EC insurance directives as
they relate to Lloyd's underwriting.
36. The Treasury do not propose a radical change
to the arrangements that should apply to transfers of Lloyd's
underwriting compared with the present position under section
85 of the Insurance Companies Act 1982. Those arrangements differ
from the arrangements for insurance companies since they confer
certain powers on the Council of Lloyd's to exercise control over
such transfers. This is necessary because of the potential implications
for the Society as a whole, and particularly for its central fund
which underpins the security of Lloyd's policies, when business
is transferred from one of its members (or former members). The
Treasury do however propose a small change so that the control
of business transfer arrangements will extend to transfers between
members. The effect of this will be to permit intra-member transfers.
The effect of the relevant provisions of the 1982 Act is that
members may only transfer business to insurers outside Lloyd's.
Internal "transfers" can only be achieved by way of
37. The Treasury is concerned that the rapid
rate of recent development in the way business is conducted at
Lloyd's, particularly the shift from private to corporate capital,
may give rise to a need to make changes in the way Part VII arrangements
are applied to Lloyd's in the future. Taking an enabling power
to provide for such flexibility is consistent with the approach
to Part XIX of the Bill generally which has be structured in such
a way as to accommodate developments in the market.
38. The power to make orders under this clause
would be subject to the negative resolution procedure.
PART XXI: MUTUAL SOCIETIES
CLAUSES 327 TO 332
39. Clauses 327 to 332 confer a number of powers
on the Treasury, by Order, to transfer functions from the bodies
responsible for the regulation of mutual societies to the Financial
Services Authority or the Treasury. Those clauses also confer
powers to provide for the dissolution of the relevant statutory
authorities, and also the Building Societies Investor Protection
Board (which will be replaced by the Financial Services Compensation
Scheme). These powers were explained in some detail in the Treasury's
memorandum dated 11 February 2000.
40. The Government has brought forward a number
of amendments to these order-making powers with a view to clarifying
the way in which they may be used. The amendment to clause 327
and the similar amendments to clauses 328, 329 and 330 are intended
to make it clear that a dissolution order may make provision for
the dissolution to be triggered by an event specified in the order.
The purpose for this change is to enable the Treasury to require
the relevant regulatory bodies to produce and lay before Parliament
a final report of their activities and to enable the dissolution
of the body to take place on the day after the report is submitted.
41. The various enactments relating to mutual
societies (listed in the provisions of Part XXI) refer in different
ways to the Registry of Friendly Societies. They may for example
confer functions on the Chief Registrar, one of the assistant
registrars or the central office. The remaining amendments to
clause 328 seek to make it clear that the functions of the office
of assistant registrar for the central area (England and Wales,
and in some cases Northern Ireland, the Isle of Man and the Channel
Islands) may be transferred and that the office may be abolished.
42. Clause 332 confers supplemental powers on
the Treasury when making an order under clauses 327 to 331. The
amendment to clause 332(1) is intended to make it clear that supplemental
provision may be made where a function is conferred on an employee
or agent of one of the relevant bodies or office holders specified
in Part XXI. This will ensure that it is possible to transfer
such functions. The amendments to clause 332(2) ensure that there
is power, when dissolving a body or office under this Part, to
make adequate transitional provision in relation to the completion
of proceedings, investigations or other things under way at the
time of dissolution, or for bodies other than the Authority or
the Treasury (for example the compensation scheme) to be substituted.
43. The final amendment to clause 332 inserts
a new subsection to make it clear that the Treasury may make a
further order making supplemental, incidental, transitional and
consequential provision after a transfer of functions or dissolution
order has been made. This would enable the Treasury to deal with
any difficulties that might arise after the transfer or dissolution
had taken place. This could be necessary if a provision in other
legislation had been overlooked at the time the original order
44. These amendments to the powers under Part
XXI therefore tidy the provisions to ensure that they are capable
of delivering effective arrangements for the necessary transfers
of functions and the dissolution of the appropriate bodies.
PART XXIV: INSOLVENCY
CLAUSE 348: INTERPRETATION
45. The Government is bringing forward a number
of amendments that will replace a number of insurance related
terms. They will substitute for references in Part XXIV to bodies
carrying on insurance business.
46. The existing provisions in the 1982 Act cover
both authorised and unauthorised insurers and the definition of
"insurance company" in that Act covers not just bodies
corporate but also individuals and unincorporated associations.
It would also potentially cover friendly societies, which are
separately excluded from the relevant provisions of the Act. The
proposed power to make regulations in the definition of insurer
to be introduced to clause 348 is necessary to allow the Treasury
to clarify in the case of each relevant provision of Part XXIV
the kind of body to which that provision relates.
PART XXVIII: MISCELLANEOUS
CLAUSE 397: REVIEWS OF PAST BUSINESS
47. Clause 397 allows the Treasury by Order to
require firms to review past business and where appropriate make
compensation. Such schemes would, in prescribed circumstances,
provide an alternative mechanism for redress to rights of action
for damages by private persons who suffer a loss as a result of
a regulatory contravention by an authorised person. This clause
was explained in greater detail in the Treasury's memorandum of
10 April 2000.
48. The amendment to clause 397 will allow the
Treasury to prescribe in regulations circumstances in which losses
suffered by a nonprivate person acting in a fiduciary or
other prescribed capacity will be treated as having been suffered
by a private person. The amendment will ensure that the arrangements
for reviews of past business could also extend to cover certain
losses suffered by a person who is acting on behalf of a private
person (such as a trustee acting for a trust beneficiary). The
amendment to clause 397 therefore maintains consistency with the
arrangements for rights of action.
CLAUSE 402: GIBRALTAR
49. Clause 402 enables the Treasury, by order,
to extend the "passport" arrangements for authorisation
of EEA firms to firms based in Gibraltar whose authorisation in
Gibraltar falls within the scope of the single market directives
in banking, investment services and insurance.
50. The UK Government has responsibility for
monitoring Gibraltar's compliance with European law generally.
Under the clause, the Treasury's responsibilities include assessing
Gibraltar legislation in relation to collective investment schemes.
51. As the Bill stands, clause 402(4)(b) defines
the collective investment schemes on which passporting rights
may be conferred by an order made by Treasury by reference to
an assessment by the Authority of whether the provisions of Gibraltar
law give effective to Council Directive 85/116/EEC (on the coordination
of laws, regulations and administrative provisions relating to
undertakings collective investment in transferable securities).
The proposed amendment would ensure that it would be for the Treasury
rather than the Authority to assess the question of compliance
with European law, in line with the United Kingdom's international
obligations. This is consistent with the position under existing
NEW CLAUSE AFTER CLAUSE 408: REPEAL OF ENACTMENTS
RELATING TO INDUSTRIAL ASSURANCE AND CERTAIN OTHER ENACTMENTS
52. The new clause will provide for certain legislation
- namely enactments relating to industrial assurance and the Insurance
Brokers (Registration) Act 1977 - to cease to have effect. The
clause also provides for the dissolution of certain bodies listed
in subsection (2). Express provision is needed for these changes
because, while they are part of the wide package of regulatory
reform, they are not technically consequential upon it. The powers
under clause 418 would not therefore be adequate to achieve the
effects of this clause.
53. Subsection (3) of the new clause confers
on the Treasury a power needed to make further provision by order
in consequence of the repeals and dissolutions brought about by
54. The Industrial Assurance Acts confer certain
rights on policyholders. Once those acts have been repealed, the
terms of future industrial assurance policies will be a contractual
matter between the insurer and the customer. However, it will
be necessary to make provision to protect existing statutory rights
of existing policyholders.
55. While subsection (2) provides for the dissolution
of the bodies mentioned in it, further provision will be needed
to provide for the orderly disposal or transfer of the assets
and liabilities of those bodies. In defining the scope of the
power conferred, subsection (3) makes express reference to the
powers under clause 332 of the Bill which makes supplemental provision
for the changes to the arrangements for regulation of mutual societies.
Many of the issues that are likely to arise in dissolving the
bodies in subsection (2) of the new clause will be paralleled
in the dissolution of bodies such as the Building Societies Commission.
For convenience, therefore, subsection (3) therefore makes it
clear that the power under the clause includes power to do anything
that would be permitted in an order under clause 332. The Committee
has already considered the scope of those powers, subject to the
modifications outlined in paragraphs 39 to 45 above.
PART XXIX: INTERPRETATION
AFTER CLAUSE 415: INSURANCE
56. The Government has tabled a number of amendments
at Third Reading to excise from the Bill insurance terminology
that relies on definitions contained in the Insurance Companies
Act 1982 and instead to describe concepts using terminology that
fits more neatly with fundamental concepts used in the Bill. Those
terms will be defined by reference to the order made under clause
20(1) of the Bill that will prescribe regulated activities for
the purposes of the Bill.
57. However, there are some concepts ("policy"
and "policyholder") on which the Bill must rely which
cannot be defined by reference to the order made under clause
20(1), though their meaning will often derive from the relevant
meanings as prescribed in that order. It will be necessary to
ensure that those definitions track the definition of "insurance"
under the order under clause 20(1). The clause therefore provides
for the Treasury to define those terms in regulations.
58. Subsection (3) of the clause deals with the
law applicable to contracts of insurance and is intended to carry
forward the effect of section 94B of, and Schedule 3A to, the
Insurance Companies Act 1982. Different provisions apply depending
on whether the contract is one of general insurance or long term
PART XXX: SUPPLEMENTAL
CLAUSE 418: CONSEQUENTIAL AND SUPPLEMENTAL PROVISION
59. Schedule 19 contains certain consequential
amendments. In addition clause 418 confers a general power for
the Treasury by order to make incidental, consequential, transitional
or supplemental provision. It therefore includes power to make
such consequential amendments as they consider necessary or expedient
for the giving full effect to the Bill.
60. The Government proposes to make a small number
of amendment to clause 418 to ensure that any necessary provision
can be made under the clause. In particular, the amendments would
enable other Government Departments to make certain consequential
amendments to legislation within their responsibility. The new
clause is intended in particular to enable other legislation to
be amended on a case by case basis where that legislation depends
on terms that are defined in one of the financial regulatory enactments
that are to be repealed. For example, "insurance company"
has different meanings in different contexts. In some cases, it
is material to the application of the relevant provision whether
the company is authorised to do insurance business. In other cases,
"company" may need to include bodies - such as an industrial
and provident society - established other than under the Companies
Acts. The precise meaning depends therefore on the context and
a simple substitution of the expression "a company with permission
to effect and carry out contracts of insurance for the purposes
of the Financial Services and Markets Act 2000" may not produce
the desired result in every case. Similar issues arise with the
definition of terms such as "bank" (as to whether or
not it should include a building society or credit union) and
investments that are defined by reference to Schedule 1 of the
Financial Services Act 1982.
61. The Treasury has concluded that this issue
should be addressed by providing for the possibility of other
relevant Departments amending their own legislation so as to provide
the appropriate meaning in the context of each particular case.
This would also enable those Departments to update definitions
from time to time. While the effect of the amendment is to confer
on Ministers of the Crown the full range of powers conferred on
the Treasury by clause 418, in practice the scope of the powers
conferred on them is limited by the context in which they may
be exercised. This will ensure that the power can only be used
by other Ministers of the Crown to make amendments to the legislation
for which they are responsible and which arise directly out of
the specific concepts which underpin the Bill (such as the meaning
of "investment" or "accepting deposits").
62. While the effect of the amendment is to confer
on Ministers of the Crown the full range of powers conferred on
the Treasury by clause 418, in practice the scope of the powers
conferred on them will be limited by the context in which they
may be exercised.
63. The powers will be exercisable subject to
the negative resolution procedure, whether they are exercised
by the Treasury or Ministers of the Crown.
CLAUSE 419: TRANSITIONAL PROVISIONS
64. In its memorandum dated 10 April 2000, the
Treasury gave details of a new clause (Transitional Provisions)
to be inserted into Part XXX of the Bill at Report Stage. The
purpose of the provision (now clause 419) was to enable the Treasury
by order to specify transitional arrangements that would apply
when the Bill was brought into force.
65. The Treasury substituted the original new
clause, following the submission of the memorandum, so as to extend
slightly its coverage. In particular the clause now enables an
order under that clause to include transitional arrangements for
the establishment of the single compensation scheme and ombudsman
scheme under the Bill. It will for example be necessary to ensure
that the new schemes will be able to deal with claims and complaints
that would otherwise have fallen to their predecessor schemes.
CLAUSE 422: EXTENT
66. Some legislation that will be affected by
the Bill currently extends outside the United Kingdom. For example,
the Industrial Assurance Acts 1923-48, which it is proposed should
be largely repealed, apply also to the Isle of Man and the Channel
Islands. In addition, the legislation relating to the formation
and registration of mutual societies in some cases also applies
to those islands.
67. The territorial extent of the relevant legislation
will have implications for the Bill and provision to be made under
it. We need to ensure that the effect of the Bill when it is brought
into force works for the Islands. This could involve retaining
certain legislation in force as it relates to the Islands, even
if the equivalent legislation is amended or repealed for the United
Kingdom. In other cases, repeals and amendments will need to have
the same effect in those territories as they do in the United
Kingdom. The outcome in each case will depend on the proposals
and the difficulties that may be raised for the relevant islands,
and the solution may not be the same in every case.
68. The new powers introduced by the amendment
of clause 419 are therefore intended to enable necessary or desirable
changes to be made by Order in Council. Clearly such orders will
only be prepared and the powers will only be exercised after appropriate
consultation and agreement with the respective Island governments.
11 May 2000