Clause 17 - Primary information providers

Financial Services Bill – in a Public Bill Committee at 9:30 am on 8th March 2012.

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

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

The clause relates to something called primary information providers. It is sometimes difficult to step back from the language we use in such statutory descriptions and properly to understand what we are  talking about. There are individuals who are issuers of financial instruments, and that is obviously a broad category. There are, therefore, approved persons—individuals—whom the FCA will check to make sure their bona fides are in order. They will be regarded as persons who supply information about the processes set out in the Bill.

The clause is also about the way in which the FCA will be able to monitor the behaviour of those information providers, to ensure that there are good disciplinary powers available in the event of abuse of those arrangements.

I am sure that the Minister is aware of concerns that were expressed during consultation, in the draft Bill process. I do not necessarily share the views in question, which were to do with the costs involved in appointing skilled persons—primary information providers. Organisations that may have conducted such business previously are worried that a series of onerous tests and hurdles will be put before them, and the costs may be passed on to consumers, and so forth.

I think it is entirely proportionate to require the meeting of thresholds in standards and tests by individuals who are fortunate enough to be categorised as regulated, or who are the persons referred to in the Bill for the purposes set out. However, it is important to establish that the costs will not be so onerous that they will crowd out those who want to carry out the business in a professional way, to high standards.

What regulatory assessment has been made of the costs that are likely to be involved? Will the Minister give us a sense of the typical costs to a typical issuer of financial instruments, given the change of circumstances under the Bill?

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

The clause relates to the regulation of primary information providers. There are a number of new services that enable information about financial instruments to be disseminated broadly. While that is primarily the responsibility of the issuers, they use those additional channels to get the information out.

The hon. Member for Nottingham East was right to highlight concern about skilled persons. That is why, as a result of the consultation process, we have dropped the relevant requirement from the clause.

At the moment the information services are not regulated by the FSA. The Financial Services and Markets Act 2000 does not permit that; but there is a list of criteria that someone must satisfy to be such an information provider. The clause will put that in a more formal setting, so that the service is now approved. The clause includes rules to enable that to happen. In a sense, what is happening is the formalisation of the process that applies already, and giving the FCA some sanctions to apply where one of the information providers breaches the rules.

I think that the regime is proportionate. A lot of reliance is placed on the services in question, to provide accurate and timely information, and the approach is the right one. The hon. Gentleman raised the matter of cost-benefit analysis, and the cost-benefit analysis rules always apply to the listing process as well, so we need to make sure a proportionate regime is in place. I hope that that will reassure the hon. Gentleman.

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

That is very helpful. It is important that the Minister has said that provisions in the Bill about proportionality and burden will also apply to clause 17. As I have said, I do not feel concerned about the matter, but I thought that those who are following the proceedings might want that point to be made. I am content with the clause as it stands.

Question put and agreed to.

Clause 17 accordingly ordered to stand part of the Bill.