Clause 226
Banking Bill
3:00 pm
Angela Eagle (Parliamentary Secretary, HM Treasury; Wallasey, Labour)
The amendment undermines the effect of clause 226, which is to clarify the provisions of section 45(1)(c) of the Financial Services and Markets Act 2000. The clause is technical in nature and is designed purely to clarify existing legislation. It is expressly drafted to clarify the provisions laid out in the Financial Services and Markets Act. By restricting the provisions of clause 226 to the Banking Bill, the amendment would render the clause meaningless. It may be useful to clarify the intent of the clause as it stands.
Section 45 of the Financial Services and Markets Act gives the FSA power to vary or cancel on its initiative a commission it has granted to allow the carrying out of regulated activities. The power to vary permission, in effect to stop firms carrying out particular activities, is a core power of the FSA and the Government want to ensure that there is clarity about how it is used.
Section 45 allows the FSA to exercise its power in a number of circumstances, such as when the person with permission is failing or is likely to fail to satisfy the threshold conditions or has failed within the last 12 months to carry out the activity to which the permission relates. Section 45 also allows the FSA to exercise that power where desirable in order to protect the interests of consumers or potential consumers. In the Financial Services and Markets Act a reference to consumers usually means consumers generally, not just those of a particular firm, so this is the better interpretation of section 45. Recent events have shown that we need to consider the interests of consumers generally, not only on a firm-by-firm basis, so clause 226 will amend section 45 to make it clear beyond any doubt that the reference to consumers includes consumers generally.
The proposed amendment, by making the clause refer only to duties under the Banking Bill, would effectively disapply it in many circumstances and in a way that leaves the FSA’s decision-making process more complex and cumbersome. I hope that, with that explanation, the Opposition will not press the amendment to a vote.