Financial Services Bill

Lord Sharkey Excerpts

Monday 15th October 2012 Lords Chamber

[Lord Sharkey]

Will the Minister clarify a point in sub-paragraph (3)(b) of paragraph 28 in Schedule 9, which would survive whether or not the amendments of the noble Baroness, Lady Hayter, were accepted? The sub-paragraph adds to the sentence in FiSMA the words,

“, or by 2 or more persons who include a person not directly involved in establishing that evidence”.

The whole paragraph now reads:

“That procedure must be designed to secure, among other things, that the decision which gives rise to the obligation to give any such notice is taken by a person not directly involved in establishing the evidence on which that decision is based, or by 2 or more persons who include a person not directly involved in establishing that evidence”.

FiSMA already permits a procedure that allows, in certain circumstances, the decision to issue a notice to be made solely by a person directly involved in establishing the evidence on which that decision is based. Why has the Minister felt it necessary to change this? Why, in particular, regularly allow the decision to issue a notice to be made by a person directly involved in establishing the evidence for the notice if he or she can persuade just one other person to agree? Does he have a particular type of case or set of circumstances in mind that would make this desirable or necessary, or is there some now apparent defect in the current regime as exemplified within the FSA by the Regulatory Decisions Committee?

[Lord Deben]

I hesitate to return to the previous discussion, but I just remark to the Minister that his whole list of examples of what this might have prevented of course misses the point. My point was that we could have done all those things with the RDC. The real question is: who makes that decision? I have never had an explanation of why it is necessary to have a power that is never referred to any independent group. That is all I am interested in and I feel very strongly about it. We have recently been trying to complete a very valuable thing called “treating customers fairly”. I want all customers to be treated fairly, and I entirely agree with the speech of the noble Baroness, Lady Hayter, who is absolutely right.

I say to the Minister very personally and directly that when one of those most likely to be a senior regulator tells the industry that he intends to shoot first and ask questions later, he should understand why the industry has some concerns. That is all I say. All I am asking is that before such a decision is made, there should be reference to an independent body, and I think that the proposals put forward—albeit, as the noble Baroness rightly said, that they might need a little tweaking here and there—would seem to everyone to be fair.

We have the same situation—parallels have often been drawn—in police prosecution when someone outside asks whether this is a proper circumstance and whether it is likely to stand up. That is all that is necessary. Do that and most of us, I think, would be perfectly happy. Our issue is that, without making things more difficult in these debates, there are too many examples of decisions made that appeared to be hasty and when people have not looked too carefully at the details. This would make sure that they do.

All I say to the Minister is that he would have pretty overwhelming support for the changes that he wants if he were prepared to do what the noble Baroness has put forward. I would certainly be happy to argue that. If he does not do that, this will be difficult to support, and I am interested in the point that my noble friend has just made that there seems to have been an attempt to move even further away from what we should have.

I have one other point. The key thing is that the murmurings that somehow the RDC will disappear would be overcome by having this measure in the Bill. It is not unreasonable to have the concerns that people have, and I have not yet seen why introducing this measure would make things more difficult or less transparent. I would be happy to take the risk of people being warned and turning out to be guiltless, if it were done with this degree of protection. Then the Minister would have us all on his side.