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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.