Under this group of new clauses, professionals will require authorisation only when they perform investment business as their mainstream activity. The Government hope that that approach will avoid the need for precautionary authorisation—meeting the concerns of the Burns committee, and of course others—while enabling the professions to provide an all-round service for their clients in appropriate cases.

We therefore propose that the authority will retain the power to ban individuals who are not fit and proper persons to carry out regulated investment activities or to cut the exemption in relation to a class of person more generally.

The authority will also be required to monitor operation of the new arrangements, which will involve monitoring the effectiveness of the complaints and redress arrangements of the designated professional bodies. The authority will also be able to make rules requiring persons who benefit from the exemption to disclose to their clients that they are not authorised persons.

New Clause 35 obliges the authority to keep itself informed about the way in which designated professional bodies supervise and regulate the carrying on of exempt regulated activities by their members, and the way in which the members, who benefit from the exemption, carry on regulated activities. It also requires the professional bodies to co-operate with the authority, to enable the authority to fulfil its duty of oversight.

New clause 36 gives the Treasury the power to designate bodies for the purpose of new clause 35. Bodies will be designated only when they actively regulate their members' provision of financial services.

New clause 37 sets out the requirements that have to be met for a professional to qualify for the exemption. They include: that the person concerned must be a member of a professional body that is designated by the Treasury; that the person concerned must not receive a commission from a third party in respect of the regulated activities unless he accounts to his client for it; that the regulated activities must be provided incidentally to the provision of professional—for example, legal, actuarial or accountancy—services; and that regulated activities must not relate to sensitive products, such as life insurance.

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What amounts to a sensitive product is to be specified by the Treasury, and the regulated activities must be provided in accordance with the rules of the relevant professional body which require the activity to be complementary, and effectively subordinate, to the provision of professional services to a particular client. Those rules must be approved by the authority.

Under new clause 38, the authority may direct that the exemption from the general prohibition is not to apply to certain classes of professional. The authority may only exercise this power, however, where it is satisfied that it is desirable to do so in the interests of clients.

New clause 39 enables the authority to make an order which would have the effect of banning specified persons who are not fit and proper to carry on regulated activities, taking them outside the scope of this new part's provisions. This power complements the authority's power to make prohibition orders under clause 53 of the Bill. It will enable the authority to prohibit particular firms from continuing to carry on relevant regulated activities under the proposed new part.

New clause 42 allows the authority to make rules requiring exempt professionals to disclose to their clients that they are not authorised. Subsection (3) also requires the professional bodies to make rules which are designed to ensure that members who benefit from the exemption only carry on regulated activities which arise from or are complementary to providing professional services to a particular client. If a member of a profession breaches those rules, he will be carrying on particular regulated activities in breach of the general prohibition, and therefore committing a criminal offence. Rules made by a professional bodies under subsection (3) must be approved by the authority.

Amendment No. 455 amends clause 374 so that, in all cases, orders have to be dealt with by affirmative resolution. I commend the new clauses to the House, as they are in line with the changes that I indicated in Committee that we would make.