Clause 16 - Open-ended investment companies
Finance Bill
6:45 pm
Ivan Lewis (Economic Secretary, HM Treasury; Bury South, Labour)
The hon. Member for Cities of London and Westminster asked: why now? Why are we rewriting the regime in this Finance Bill? It is important that we do because we must respond to recent regulatory changes for authorised investment funds. In the circumstances, it makes sense to rationalise the existing regime at the same time.
The Financial Services Authority updated the rules governing authorised investment funds in April 2004. In subsequent consultations to ensure that tax does not hinder the wider investment strategies now permitted by the FSA, a number of respondents mentioned the difficulties of dealing with two separate bodies of legislation—one in primary and the other in secondary legislation. In response to those concerns, the details of the rules applicable to both AUTs and OEICs will in future be in regulations. That will also allow a quicker and easier response to any future changes introduced by the regulator.
It is important not to go over old ground in the REIT debate. We had a long debate on the Floor of the House about REITs. We made clear our intention, if we are able to resolve the technical problems, to introduce proposals in the Finance Bill of 2006. It would be entirely wrong to bring forward now proposals on REITs that we were not happy with and that might lead to an unsatisfactory outcome. We are actively working with stakeholders and specialists to ensure that the proposals that we make on REITs are appropriate. If we introduced measures that ended in unintended and undesirable consequences, we would be subjecting ourselves to considerable and justified criticism.
I accept that it is important that we get the REIT issues resolved, but it is also important that we recognise that serious outstanding obstacles have to be tacked. That is accepted by the experts in the field.