Clause 16

Part of Financial Services Bill – in a Public Bill Committee at 4:15 pm on 15 December 2009.

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Photo of Ian Pearson Ian Pearson Economic Secretary, HM Treasury 4:15, 15 December 2009

We could obviously have a wider debate about “comply with” and “have regard to”. Amendment 13 refers to the need to “comply with”, rather than “have regard to”, the statement of policy in relation to the level of fines imposed on non-approved persons performing controlled functions. I appreciate the sentiment behind the amendment expressed by the hon. Member for Fareham, which is to ensure that the FSA applies the standards set out in its statement of policy. However, again referring to a point I made earlier, the language he proposes would not be consistent with that of other policy statements on penalties that the FSA is required to produce, as set out in FSMA. Again I would refer him to sections 69, 124 and 210 of FSMA, all of which refer to the need for the FSA to have regard to its policy statements.

The current language fulfils a specific purpose. Policy statements are intended as guidance and the term “have regard” is the usual way in which public authorities are required to take guidance into account. There may be exceptional circumstances where it is appropriate for the FSA to depart from its policy and the expression “have regard” enables it to do that. The FSA would, however, need a good reason for doing so. In practice, the amendment would achieve very little. In order to ensure that it could in all cases comply with its statement, the FSA would almost certainly resort to publishing a very high-level statement, which would be of little use to the entities it regulates. That would have the result of making the FSA’s published policy less clear. I want to reassure the Committee that drawing attention to the FSA’s duty to act reasonably and proportionately in all cases provides additional safeguards to how that is interpreted. Put simply, that is common practice when agencies are producing policy statements. They would have regard to them and only depart from them with very good reason. It is established that this is the right sort of expression to use and I hope that the hon. Member for Fareham will be persuaded of the appropriate terminology.