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I am aware that people want to make good progress this morning, so I shall do my best to accommodate them.
I wish to say a few words about the clause and the repeal of the special competition rules that makes redundant chapter 2 of the Financial Services and Markets Acts 2000 as well as chapter 3 on exclusion from the Competition Act 1998. Instead of those provisions, section 290A of FSMA means the appropriate regulator has the power to refuse a recognition order if the applicant has existing or proposed regulatory provisions that might have excessive implications for a person who is affected directly or indirectly by it.
Does the Minister believe that there would be scope to require the recognised body to make changes to its regulatory provisions, if an application were being refused solely on the basis of that particular regulatory provision? There seems no obvious sign that subsequent changes to the regulatory provisions of recognised bodies will be monitored by the relevant body. Can the hon. Gentleman give me an assurance on that matter?
Which body have the Government decided will be responsible for such issues going forward? Will it be the Financial Conduct Authority, given that it has a competition objective, or will it be the Office of Fair Trading? I shall not go through all the information about the duties and functions of the OFT because the hon. Gentleman will be aware of it, but will he provide some clarity and say which agency is most suitable for monitoring competition?
It is a pleasure to serve under your chairmanship on this bright and sunny morning, Mr Leigh.
The clause repeals the special competition regime. That regime is now considered redundant, particularly since the coming into force of the Investment Exchanges and Clearing Houses Act 2006, an Act that was sped through the House at the direction of the then Minister with responsibility for the City, the right hon. Member for Morley and Outwood (Ed Balls), the now shadow Chancellor. The Act amended FSMA to introduce a new regime under which the regulator could disallow proposed changes to a recognised body’s own rules on the grounds that the proposed regulatory provision was excessive. The regulator may also reject applications for recognition on the grounds that the applicant’s regulatory provision is excessive.
The new regime provides what is effectively a system of real-time scrutiny of recognised bodies’ regulatory provision. It can therefore replace the system under chapter 2 of part 18 of the Financial Services and Markets Act 2000, which provides for detailed OFT and Competition Commission scrutiny of applications for recognition, and for the OFT to keep the regulatory provision on recognised bodies under review.
We are also repealing chapter 3 of part 18, which provides an exclusion from scrutiny under competition law generally for the rules of recognised bodies. It would not be appropriate to keep that in place now that chapter 2 has been replaced. Of course, it is of limited benefit as competition authorities can always take action under European Union competition law, whether or not they are excluded from doing so under domestic law. We are now seeing ongoing scrutiny by the relevant regulator of either a recognised investment exchange or a recognised clearing house. The body responsible is the FCA for recognised investment exchanges, but the Bank has responsibility for recognised clearing houses.
I thank the Minister for his clarification of those issues, some of which we covered earlier. Given the number of times that we see references under the Bill to the relevant regulator or the relevant authority, for the purpose of clarity it is useful to have such matters on the record. I do not intend to press the clause to a Division.