With this it will be convenient to discuss the following:
‘(5A) Any direction under subsection (5) must be laid before Parliament and published.’.
Amendment 195, in clause 74, page 145, line 42, at end insert—
‘(6A) Any direction under subsection (5) or (6) must be laid before Parliament and published.’.
Amendment 139, in clause 77, page 146, leave out line 39 to line 25 on page 147 and insert—
‘(2) The Treasury may publish the whole, or any part, of the report and may do so in such manner as it considers appropriate.
(3) The Treasury must prevent publication of any part of the report which it considers may contain material—
(a) which relates to the affairs of a particular person whose interests would, in the opinion of the Treasury, be seriously prejudiced by publication of the material; or
(b) the disclosure of which would be incompatible with an international obligation of the United Kingdom.
(4) The Treasury must lay before each House of Parliament a copy of any report or part of a report published under subsection (2) subject to the provisions of subsection (3).’.
These simple amendments relate to directions that can be given to investigations by Her Majesty’s Treasury and the fact that it can tell the FCA and the PRA that certain investigations are required. I do not see sufficient provisions to ensure that those directions are laid before Parliament and published. Although those issues are slightly separate, if directions are given, I would have thought it both sensible and in the public interest for those matters to be at least made public, and potentially laid before Parliament. The Minister will understand why I am making those points and I will not press them further. However, if he could concede to look at publishing such directions, it would be tremendously helpful.
There is no reason why we will not, or cannot, publish the directions. We should bear it in mind that in some circumstances, publication would not be appropriate. We might envisage a situation in which the trigger for an investigation had been met, but launching an investigation could have unintended consequences. For example, it could undermine the orderly resolution of a firm or lead to consumer detriment if firms were rapidly to withdraw a product from the market. Alternatively, there may be operational reasons for the Treasury’s direction; for example, if an enforcement action, or other supervisory or regulatory action is under way, that should not be undermined by the commencement of an inquiry. Therefore, our broad intention is to publish those directions, but there may be good reason why doing so would be unhelpful, if uncertainty is created elsewhere.
The hon. Gentleman did not refer to amendment 139, which he tabled along with the hon. Member for Rutherglen and Hamilton West. That amendment would weaken the requirement to publish, set out in clause 77, because it downgrades what is now a “must” to a “may”. I do not think that would be helpful.
I am grateful to the Minister for speaking to amendment 139 before I have mentioned it. On reflection, that amendment could be improved, but we tabled it to take account of the particular circumstances that he spoke of, in relation to public interest reasons for not disclosing those particular directions. It was a consequential amendment to the key points that we made in the earlier amendments.
The Minister’s general commitment to the publication of those directions is sufficient. Obviously, in certain circumstances, publication might not be desirable, but the assurance he has given is enough, and I beg to ask leave to withdraw the amendment.
This is a mildly important clause, relating to the FCA’s ability to investigate and report on possible regulatory failure. I have a simple set of questions, because this is almost about drafting legislation to include the concept of near misses. For example, we could imagine circumstances in which aeroplanes pass one another and the Civil Aviation Authority conducts an inquiry into what might have occurred had they been closer. In a sense, I read the power to mean that there could be investigations into potential or possible regulatory failure, even though no harm necessarily came of it. Have I interpreted the clause correctly?
Presumably, such inquiries would also be conducted by an independent authority, rather than the FCA itself. I would be slightly worried if we ended up with the FCA solely undertaking inquiries into its own good activities or failings. It will sometimes be necessary to have an independent body to scrutinise whether the FCA has fulfilled is obligations. I therefore have two questions. Is my understanding correct about near misses, and would it be possible to have a greater degree of independence in the scrutiny of the FCA’s regulatory objectives in respect of clause 69?
What we are talking about is, in a way, a near-miss type of situation. The phraseology in clause 69(1)(a)(ii) and (iii) is
“had or could have had”,
so there does not necessarily have to have been a significant adverse effect, but there could have been. That is quite helpful in terms of ensuring that a broad range of matters is covered.
The hon. Member for Nottingham East asked whether this was an independent or internal inquiry. Subsection (3) states:
“The FCA must carry out an investigation”.
That is why we have kept in the old section 14 powers under FSMA—I suppose they will now be section 64 powers—to have an independent inquiry. If we do not feel that it is appropriate for the FCA to hold its own, internal inquiry into what has happened, the Treasury is in a position to appoint an independent person to undertake the inquiry. That provides an important backstop to ensure that, where appropriate, there is independent scrutiny of a regulatory failure.