The notes state that article 4.4 of the directive requires that takeover supervisory authorities and financial services regulators provide reasonable assistance to other such authorities within the EEA for the purposes of the directive. Hon. Friends have highlighted potential concerns over the release of documentation, which we have just debated.
That leads me to the scope of the duty of co-operation provision. It would be helpful if the Minister explained the scope of the clause, provided some practical examples of its use and explained whether he considers that requests for such assistance are likely to grow as a result of the Bill or for other reasons.
Subsection (2) seems somewhat bizarre. Why is it necessary? Is it only to show that co-operation may not include showing information that the panel is prevented from disclosing? Is that not how it would normally be versed? I should be interested to hear the Solicitor-General’s views.
Article 4.4 of the takeovers directive requires that the takeover supervisory authorities and financial services regulators provide reasonable assistance to other authorities within the European economic area for the purposes of the directive. In implementing the directive, clause 650 is designed to give effect to that requirement by obliging the panel to co-operate with the overseas takeover and financial services regulatory authorities.
The form and manner of co-operation will be as the panel considers appropriate in the light of the circumstances, in particular its power to require documents and information may be exercised to support such an authority, and may include sharing information which the panel is not prevented from disclosing. Essentially, that is the provision in subsection (2), which says what it means. It states:
“Co-operation may include...sharing...information that the Panel is not prevented from disclosing.”
I thank the Solicitor-General for his explanation so far. It would be helpful if he would give us a reason why this measure is needed. What will it be used for in practice?
This is a requirement of the takeovers directive, and it is a matter for the panel to decide how it is used. The panel is broadly supportive of the provisions. They give the panel the ability to make decisions where it thinks they are appropriate. It is not for us to set out in the Bill the circumstances in which the panel can do various things. The panel has operated quite successfully since 1968, and we are enabling it to continue to do so. Broadly, in these circumstances, we can trust it to make the appropriate decisions.
I should be interested to hear a little more on what would happen if European co-operation was needed at the moment, and on how this proposal is likely to improve matters.
The panel can co-operate, in so far as it feels appropriate, with any other appropriate regulatory authority. The hon. Gentleman knows that it has been a wish not only of the current Government but of his party when it was in Government back in 1989 that the other European countries should set up similar authorities. They are obliged to do so under the directive, and they are setting up such authorities. I understand that it was the wish of his party’s Government and the Labour Government when they came into office that a level of greater co-operation should now be possible between the various bodies that have been set up.
I rise briefly to obtain clarification on a few items. We note that under clause 650 the panel must take steps to co-operate with the relevant agencies and bodies that are specified. We have obviously debated subsection (2) in that regard. It states:
“Co-operation may include the sharing of information that the Panel is not prevented from disclosing.”
I want to probe those last words a little more, and I hope that the Solicitor-General may be able to provide some guidance on them.
From my understanding of what clause 648 says about the general authority to disclose, the panel has the ability to disclose things for
“the purpose of facilitating the carrying out by the Panel of any of its functions”.
Does “functions” cover the language in clause 650(1)? I am slightly confused about the circumstances in which the panel may be prevented from disclosing, because clause 648 would suggest there is no impediment to its disclosing, given that it would appear to be part of its functions to co-operate with those agencies. Therefore, clause 648 itself seems to give the panel the permission to disclose. That might be a misreading in my interpretation of the interaction between the two clauses. It would be helpful for me to understand the interrelationship between them and the circumstances in which the panel might be prevented from disclosing, given that clause 648 would seem to allow it in any circumstances in which it facilitates carrying out its duties.
My second query relates to article 4.4, which referred to being within the EEA. Clause 650(1)(c) is much broader in its aspect in not being limited to the EEA and I should be grateful for clarification of the Solicitor-General’s thoughts on that point. Perhaps he will say why the broader ambit was considered appropriate. I suspect that it is to facilitate good regulation across markets throughout the world. I can see the sense in broadening it beyond the EEA, given that we have capital markets in the far east and the United States and sharing information between those two markets might be appropriate, but some clarification would be appreciated.
“take such steps as it considers appropriate to co-operate with other persons” sharing similar functions to those of the authority, language that is reflected in clause 650. Section 354 also states that that should be in relation to the prevention or detection of financial crime as defined within the Financial Services and Markets Act, and that the FSA has the ability, and almost an obligation, to co-operate with criminal authorities.
Although the Solicitor-General may say that in part that may be captured by the ambit of schedule 2 and the operation of clause 648, I want to confirm that the phrasing of the proposal will be wide enough to capture co-operation to prevent financial crime from occurring. I entirely see the merit in ensuring that agencies work together to crack down on financial crime, and the thought processes involved in incorporating that type of language within clause 354 of the Financial Services and Markets Act but not incorporating a similar type of approach in clause 650, as the Solicitor-General himself indicated that there is a broad equivalence between the two provisions for the FSA on the one hand and the panel on the other.
The process is that the panel is restricted from disclosing confidential information. However, gateways are available to it to disclose information in particular circumstances. It has a general obligation to co-operate with various other outside and non-UK agencies as it considers appropriate. The most important words in the clause are in subsection (1), which states:
“The Panel must take such steps as it considers appropriate to co-operate”.
That gives the panel great discretion and enables it to make whatever decision it feels is appropriate in particular circumstances. The clause goes wider than Europe; it applies to regulators outside Europe. Clause 652 simply makes it clear that as part of the co-operation process, the panel can disclose information if it considers it appropriate.
Under section 354 of the FSMA the panel is able to disclose information outside the EU, and clause 652 enables a similar level of disclosure. However, financial crime is not the main part of the panel’s remit, unlike that of the Financial Services Authority. The provision is thus adapted to the role of the panel; it does not create obligations in relation to crime because that is not an obligation on the panel. It uses the format of section 354 to ensure the existence of a similar provision, with a similar ability to co-operate.
Going beyond Europe enables the panel to take a view about appropriate levels of co-operation with non-EEA agencies, if it feels that it is right and proper to do so.
Briefly, the Solicitor-General’s words are helpful. He is right to say that the panel does not have a prescribed role in financial crime in the same way as the FSA, perhaps. I am sure that in practice the panel would co-operate in such circumstances as far as it could.
I have a concern that I would like satisfied: given the information on takeovers that the panel will have, if an agency concerned with financial crime contacted the panel, would the latter co-operate, even if that is not specified in the Bill? In practice, I am sure that it would, but I would be grateful for any further comments that the Solicitor-General may make.