Financial Services and Markets Bill

Part of the debate – in the House of Lords at 6:30 pm on 16 March 2000.

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Photo of Lord Sharman Lord Sharman Liberal Democrat 6:30, 16 March 2000

I rise to support the amendments as set out and to speak briefly to Amendment No. 15. As the noble Lord, Lord Saatchi, said, these amendments aim to clarify on the face of the Bill the functions already performed by the non-executive members of the putative FSA. I feel that the authority should be required to meet the principles of good corporate governance.

I am much troubled by the way in which some Members of the Committee have waived the application of corporate governance. I have spent a career trying to persuade people to exercise that. It would be helpful to have some support. All we have are the Cadbury recommendations; there is nothing else. This has been arrived at through a considerable body of opinion, a considerable amount of work, and through much time spent looking at what goes on around the world and deciding what is best. I feel that we should take it into account.

As non-executive members of the corporate body, they should be responsible for advising the FSA executive regarding the management of the authority. More importantly, if they are properly to discharge their functions as directors of a company, they must be involved in establishing policy and reviewing its application.

At present, the executive restricts the role largely to budgetary items and efficiency. Although my professional background would lead Members of the Committee to believe that I consider this to be very important, I recognise that the issues of strategy and of overall supervision are equally important. It is interesting to compare this with the model of the responsibilities for the Bank of England's Court of Directors. The Bank of England Act 1998 provides for a sub-committee of directors of the Bank. It provides for them to keep under review the Bank's performance in relation to the objectives and strategy determined by the Court of Directors of the Bank. That is what we propose in these amendments.