AUTHORISATION IN OTHER MEMBER STATE (Hansard, 12 June 1986)

§ Mr. Howard
I beg to move amendment No. 53, in page 19, line 13, after 'question', insert '(a)'.

Mr. Deputy Speaker
With this it may be convenient to consider Government amendments Nos. 54 to 56 and 170.

§ Mr. Howard
The purpose of these amendments is to remove some of the uncertainty about the circumstances in which the provisions of the clause conferring authorisation on certain member state nationals have effect.
I should recall at the outset that clause 30 reflects an existing right under the EEC treaty. The central principle is that a national of any member state is allowed under the treaty to provide services in any member state without being made subject to restrictions which cannot be justified on the basis of certain principles. The ones which are relevant are that the requirements must be objectively necessary and proportionate to the ends to be achieved and that requirements must not duplicate requirements in the member state of establishment which provide substantially the same safeguards. In other words, the law must take account of the safeguards afforded by other member states. That is why clause 30 confers authorisation on persons authorised in other member states whose authorisation procedures provide safeguards equivalent to those provided under the Bill.
The application of this last principle means that the clause must apply whenever, as a matter of fact, there is equivalence between the regimes in question—a matter which can ultimately be decided only by the courts. However, I accept that such a provision could give rise to unwelcome uncertainty, and the purpose of these amendments is to reduce this uncertainty.
The first area of uncertainty concerns harmonised regimes such as exist in the case of life insurance. The whole purpose of harmonised regimes is to allow the products in question to be sold throughout the Community, regardless of their member state of origin. The purpose of the new subsection (3)(d) is to make it clear that the authorisation conferred by the clause applies to a person who is authorised in another member state under a harmonised regime. By virtue of the new subsection (5), to take advantage of this authorisation a person must possess a certificate issued by his home 568 authorities confirming that the relevant provisions of the law in that state conform to the relevant harmonisation directive.
The second leg of the main amendment provides for the Secretary of State to issue a certificate to the effect that the provisions of the law of another member state satisfy the equivalence criterion. The existence of such a certificate would be conclusive proof that the equivalence criterion was satisfied and that a person authorised under the relevant provisions was authorised in the United Kingdom. The power to issue such a certificate would not be transferable to the designated agency. In view of the international implications of the exercise of the power I think that it should he reserved to the Secretary of State.
The amendments would not remove all the uncertainty about clause 30. For the reasons I have explained, the absence of a certificate issued by the Secretary of State could not be conclusive proof' that the equivalence requirement was not satisfied. A person authorised under some other provisions might still be authorised under clause 30 to carry on investment business in the United Kingdom. This possibility must be kept open if we are to comply with our Community obligations. However, I believe that the amendments would have the effect of clarifying considerably the application of clause 30.
Because of this remaining uncertainty, and to meet some of the concern expressed in Committee, we have provided that the notice required under clause 31 must be given at least seven days before a person authorised by virtue of clause 30 begins to carry on investment business in the United Kingdom. This will allow the Secretary of State or designated agency time to consider the notice and to seek an injunction restraining the person from carrying on investment business if he or it believes that the person is not in fact authorised under clause 30, or to use the intervention powers if the notice suggests that the person is intending to carry on investment activities not covered by his home state authorisation and it would not be in the interests of investors to allow him to do so.

§ Mr. Gould
We welcome these amendments, but the Minister will recall that one of the matters arising under clause 30 which concerned the Committee was that the clause appeared, at least on our reading, to be wider in effect than was actually required by our EEC treaty obligations. The Minister will recall that we were exercised by the example of a person authorised to act as art insurance broker in Greece who thereby authorised to act for all investment business purposes in this country. Will the Minister confirm that he has studied that question but has decided to do nothing about it?

§ Mr. Howard
After I studied that question, I came to the conclusion that it was not appropriate to take action, for the reasons I expressed when the matter was debated in Committee.