Financial Services and Markets Act 2000 (Exemption) (Amendment No. 2) Order 2011
(13 years ago)
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Lord Sassoon
That the draft order laid before the House on 5 September be approved.
Relevant documents: 28th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 17 October.
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, I beg to move the Motion standing in my name on the Order Paper.
Lord Eatwell
My Lords, I am afraid that this may take a little longer than expected, the order having been considered previously in Grand Committee. Unfortunately, at the time of the Grand Committee consideration, noble Lords did not have available to them the results of the consultation on the order and consequently were not then able to give the order the scrutiny it deserved.
I would be grateful if the Minister could answer a couple of points raised in the consultation that the Government have not addressed. First, given the peculiar importance of credit unions in Northern Ireland, are the Government intending to address the issue raised in the consultation of whether an office of the FSA or a successor organisation should be established in Northern Ireland? This is clearly a sensitive issue in the Province, and it ill behoves the Government simply to ignore it, as they do in this document.
Secondly, I am unclear about the Government’s position on question 2(a) of the consultation on whether the Northern Ireland Assembly would retain legislative control of credit unions in Northern Ireland. As the Government acknowledge, considerable concern was expressed about the loss of Northern Ireland influence over an aspect of financial life that is very important in the Province but less so in the rest of the UK. Could the Minister please clarify the Government’s position? Again, in the consultation document the question was simply ignored. As a corollary to this last point, what are the Government doing to ensure that no adverse effects are felt in Northern Ireland from the legislation on credit unions passed in this House on Thursday, 20 October? That legislation allowed businesses to assume up to 10 per cent of the share of the capital of a credit union and eliminated the role of the common bond as the basis of a credit union.
How will the Government ensure that credit unions in Northern Ireland do not, in some cases, become dominated by local business members, with the potentially unfortunate impact on investment decisions, particularly when the credit union considers investment in the local community? How do the Government intend to monitor the impact of the loss of the common bond in Northern Ireland credit unions, when it is evident that the common bond has played an important role in the unique character of the credit union movement in the Province?
Lord Sassoon
My Lords, for the benefit of noble Lords who did not take part in the discussion in Grand Committee on 17 October, it is perhaps worth explaining that this statutory instrument transfers responsibility for regulation of Northern Ireland credit unions to the Financial Services Authority. It implements a policy decision of the previous Government announced in March 2010—which has the support of all three main parties—the outline of which is the subject of this statutory instrument. There will be further instruments dealing with the detail of the transfer and a number of the consequentials arising from that.
It is unfortunate that the consultation issued by the previous Government in March 2010, having said that the decision had been taken that regulation would transfer to the Financial Services Authority, slipped into a consultation about how this is best achieved and what other associated action should take place. Those matters will be the subject of further statutory instruments in due course and it is unfortunate that there was one somewhat confusing question that could have been taken as touching on the statutory instrument before us today. I regret that. Had I known that that question was there, we could have had the consultation responses out earlier, even though it was not intended that the previous Government’s consultation should have anything to do with the business before us today.
On the issues raised by the noble Lord, Lord Eatwell, the question of the FSA and the allocation of its resources to offices is a matter for it. The responses on this point were linked to concerns about what the regulatory regime was going to entail and the FSA has worked hard to address those concerns by carrying out visits to Northern Ireland and answering questions from the credit unions.
As to the common bond and possible domination of local businesses, as we discussed in Grand Committee, the credit unions do not feel that this issue will be a threat. Of course, along with seeing how the credit unions sector generally across the United Kingdom develops—it is prospering and the Government wish to see it do so—it is one of the many factors that the Government will continue to have in view. The matter does not touch directly on this instrument, but it is relevant to the whole of the credit unions sector across the United Kingdom.
The other points will be the subject of ongoing work by the FSA following another consultation that the FSA and the Treasury had issued, which closed last week and which will be the subject of further statutory instruments in due course.
Lord Sassoon
This instrument deals with the basic decision, announced jointly by the noble Lord’s Government and the Department of Enterprise, Trade and Investment in Northern Ireland, that regulation, which is the subject of this instrument, should pass from the DETI to the FSA. That is what this does. It does not relate to any matters other than that. The decision had already been taken in advance of the consultation the noble Lord is questioning.
Lord Myners
My Lords, the Minister used the word “discussion” to describe Grand Committee on 17 October. That is rather stretching the definition of that word. It was a tetchy performance by the Minister, who was clearly deeply embarrassed that a consultation which had been initiated in March 2010 and completed several months ago—indeed, before the summer break—was actually published only on the morning of Grand Committee, and no efforts were made at all to ensure that those noble Lords who take an interest in Treasury Affairs were aware of the existence of this document before we discussed the order.
Lord Sassoon
My Lords, I really do not accept the construction of the noble Lord, Lord Myners, over this. If the previous Government had not published a rather confused consultation in March 2010, which slipped in a question that they said in the introduction to that consultation was already decided policy, none of this confusion and this opportunity to create some great mountain out of a procedural molehill would have arisen. We had a vigorous debate. We looked at all the key matters in Grand Committee in the proper way—all the matters I expected to be raised were properly covered in the discussion. A sequence of statutory instruments is due to come forward in the coming month. We needed this one out of the way. There is another consultation, as I have already explained, which closed last week that will inform the other statutory instruments. They will come forward under the normal procedure that is appropriate to them. An enormous amount is being made of next to nothing. If I had been aware of the confusion that had been laid in the previous Government’s consultation on this, of course I would have ensured that the responses were out. I regret they were not. Nothing was held back.