My Lords, in trying to take my role seriously I staggered my way through the Explanatory Memorandum to try to understand this SI. It all seemed pretty straightforward. Basically, at the moment if you have a prospectus approved by an EEA regulator, it can be used in the UK. We are foolishly—no, that is not the party line, is it?—considering crashing out of the EU and we need some substitute regulation. It seems that the bulk of this statutory instrument is saying that whereas before you would have it approved anywhere in Europe, now if you want to market it in the UK it has to be approved in the UK. That seems to be a consequence of leaving the club. I regret that we have not had the level of consultation that Members would have liked but I find it extraordinarily difficult to believe that the alternative—not approving this SI—is anything like as consequential as the intrinsic costs. No matter how much consulting we did, we would still have come to the conclusion that we should approve the SI.
As ever, I tried to look at the Explanatory Memorandum in the context of the basic assumption of the withdrawal Act: everything is transferred and no new concepts are introduced. The one area where I have some questions is on a very narrow point, which is the exemption for certain government and local authority securities. The memorandum says:
“Under the current Prospectus Directive rules, certain public bodies are exempt from the requirement to produce a prospectus when they undertake to offer securities to the public or request the admission of securities to trading on a regulated market. This includes EEA States, EEA local authorities, EEA central banks, and public international bodies of which one or more EEA States are a member”.
The dilemma is whether we continue that exemption. There is an argument that we should, but in order not to recognise EEA states, there then becomes the decision to extend that exemption.
There are two ways that that exemption is described. In the third bullet point of paragraph 2.5 of the Explanatory Memorandum:
“Extending the existing exemption from the requirement to produce a prospectus and certain exemptions under the Transparency Directive that currently apply to certain EEA public bodies, to certain third country public bodies”.
That would seem to be a controlled extension of the exemption, which took account of the countries to which the exemption was applied, whereas in paragraph 7.22 it says:
“To address this deficiency, the government will extend these types of public bodies exemptions to the same types of public sector bodies of all third countries”.
I think Venezuela is a third country, and the idea that the public offers of securities in Venezuela should be treated the same as those in other EEA states would seem somewhat anomalous.
I would value, if the Minister can get something from the Box in time, a couple of assurances. The first is that the criteria for approval of prospectuses by the FCA remain substantially identical to the present EU states’ regulations. Secondly, the extension of the public bodies exemption to certain or all non-EEA states seems a significant policy shift. Could he explain why this is desirable or even allowable under the European Union (Withdrawal) Act?