Clause 10

Financial Services Bill – in a Public Bill Committee at 4:00 pm on 7th January 2010.

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Executives’ remuneration reports: supplementary

Question proposed, That the clause stand part of the Bill.

Photo of Mark Hoban Mark Hoban Shadow Minister (Treasury)

I want to raise a question about the meaning of subsection (2)(b). It reads that the

“remuneration report includes...information comparing the remuneration of relevant executives of an authorised person with  the remuneration of employees of the authorised person who fall within a prescribed description.”

I suspect that the disclosure is trying to establish the proportion of remuneration that goes to the higher earners in the firm. I should have thought that once the table or the disclosure that the Minister referred to in the discussion on clause 9 had been produced, it would be relatively easy, given that total remuneration for the firm is disclosed in the company’s accounts, to work out what is left and, therefore, to whom it is paid. It would be helpful if the Minister would clarify what is meant by clause 10(2)(b).

Photo of Ian Pearson Ian Pearson Economic Secretary, HM Treasury

Clause 10 builds on powers provided in clause 9, which, as we have discussed, gives the Treasury the power to make regulations requiring the preparation of a report that discloses information on remuneration paid to officers and employees of any organisation within the definition of that authorised person under FSMA; or a prescribed class of authorised person and others with a specified connection to the authorised person.

Clause 10 details supplementary provisions related to the powers provided. Specifically, subsection (2) clarifies that the Government can require the inclusion of any information in an executives’ remuneration report that could be required for inclusion in a directors’ remuneration report. That does not limit the information that may be required to be included in an executives’ remuneration report. The subsection also provides for the Government to call for comparative statistics, such as the ratio between the highest and lowest earners, to be included in the executives’ remuneration report. Subsection (3) states that the Government can require that executives’ remuneration reports are filed with the registrar of the company in question, or the FSA. The Government may also provide that the FSA may publish reports filed with it. With reference to the hon. Gentleman’s specific query with regard to subsection (2), additional clarification is provided by indicating that comparative statistics such as the ratio between the highest and lowest earners can be included in the remuneration report. Those statistics can also be called for for inclusion in the directors’ remuneration report, under the provision of the Companies Act 2006. If there is any further information that I can provide to answer the hon. Gentleman, I will be happy to write to him.

Question put and agreed to.

Clause 10 accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned.—(Mr. Mudie.)

Adjourned till Tuesday 12 January at half-past Ten o’clock.