This brings us to a new part of the Bill relating to the regulation and the work of the professions and the professional bodies. The general phrase used in clause 43 is “members of the professions”, but it is not defined until we get to this schedule. The existing provisions of the Financial Services and Markets Act provide that members of a profession may, subject to certain conditions, carry on a regulated activity without authorisation, but where the activity is incidental to the provision of professional services, which are supervised and regulated by a professional body recognised by the Treasury. This is a broadly sensible provision making sure that there is not duplication where professional bodies have certain capabilities and jurisdictions. We already discussed this in a tangential way in relation to actuaries and auditors in an earlier part of the Bill. Those professional organisations can undertake certain functions. My question to the Minister relates to the threshold at which the FCA takes over the role from the professional bodies. He made a point earlier in respect of the auditor and actuary bodies under the auspices of the Financial Reporting Council. He said that in those circumstances, those bodies did not have the resources and capabilities to undertake particular enforcement, and at that point the FCA kicked in. I want a sense from the Minister of the point at which incidental activities become services that should be regulated directly by the FCA, rather than by designated professional bodies.
Do we anywhere have references, guidelines, memorandums of understanding to set out clearly when the FCA will take over certain activities and when the professional bodies will do so? That is the gist of my points. What are the threshold conditions we are looking at? With those areas that can sometimes fall into both professional body and FCA regulation, when do those issues stop being blurred? Is there any way of setting out whether they are black or white? I will be grateful if the Minister will elaborate on that point.
This is an area where there is not a clear threshold. Members of a profession may, subject to conditions, carry on certain regulated activities without authorisation in cases where the activity is incidental to the provision of professional services, which are supervised and regulated by a professional body designated by the Treasury. There are no strict criteria or memorandum of understanding I can point to. If I were a chartered accountant—which I am—providing investment management advice, and that was my sole task, I suspect I would cease to be regulated for that purpose by the Institute of Chartered Accountants, but would be regulated by the FCA. Because the remit of regulation can be quite broad in some respects, there may be some things that an accountant does—maybe advising a business man on general tax affairs—that leak out into a bit of investment advice or advice on finance. Clearly the amount of advice that has been given is incidental to the provision of a regulated professional service. I do not think there is a hard and fast rule. If the hon. Gentleman has a specific concern, perhaps he could write to me and I will respond in more detail.
I do not know that we need to enter into correspondence on these matters; it would be better to deal with them in Committee. I was looking for light to be shone on how the respective roles of the professional bodies and the FCA are likely to co-exist. There is a rather broad-ranging responsibility on the FCA to keep itself informed of the work of the professional bodies. What does the Minister expect the FCA to do to fulfil that responsibility to keep itself informed? Is it going to have regular monthly or quarterly discussions with the professional bodies? What sort of relationship are we talking about? Is an extra memorandum of understanding being generated? What costs would be involved?
The FCA will have to determine how frequently it speaks to the professional bodies. It is up to the FCA to decide the appropriate nature of the relationship in order to keep them properly informed. To disappoint the hon. Gentleman, there is not an MOU on this. I do not have a great deal to add. I reassure the Committee that there are certain functions that clearly people cannot do without authorisation by the FCA, even if they are a member of a recognised professional body. That includes insurance and taking deposits, so constraints do apply.