§ 15. Mr. McAvoy
To ask the Chancellor of the Duchy of Lancaster what representations he has received on the workings of the Financial Services Act.
§ Mr. Kenneth Clarke
My Department has received a large number of inquiries and comments about the Financial Services Act in the 18 months since Royal Assent.
§ Mr. McAvoy
I thank the Minister for his answer. Will he tell the House how many hundreds, if not thousands, of firms are operating under the Act with only interim authorisation? Given the recent scandal of EYAS Securities, which had to be prevented from trading only a few days after the Act came into operation, what steps is he taking to ensure that the consumer is properly protected?
§ Mr. Clarke
It is true that at the moment quite a number of firms are operating with provisional approval. However, even those that have interim authorisation will be subject to much more effective regulation than hitherto. They will be required to observe conduct of business rules which give better protection to investors than that currently available.
§ Mr. Robert Banks
Does my right hon. and learned Friend agree that it is highly regrettable that the Financial Services Act does not contain any provisions which would frustrate the attempt by a Swiss company to take over a company such as Rowntree, bearing in mind that the share structure of that company is such that the vital voting shares can be held only by those whom the company agrees can hold them, and that this would militate seriously against any company being able to take over Nestle, which might by that time have swallowed up Rowntree? Is he aware, furthermore, that Rowntree is a very old company established in 1725 and is vital to the industry in York and the surrounding areas?
§ Mr. Clarke
By one means or another I am being subjected to a number of questions about the state of Swiss law. Personally, I do not approve of the state of Swiss law, and if I were Swiss I would improve it and make sure that Swiss management was exposed to the same commercial pressures as our own. The fact that it is not, as I have said, in some circumstances can be relevant when considering a merger application. However, we have to consider the wider public interest. I know of the concern in my hon. Friend's constituency in Yorkshire, and I can assure him that we will be confirming this as quickly as possible when we have the advice of the Director General of Fair Trading.
§ Mr. Campbell-Savours
Following the closure of IDB last year and Afcor Investments a week and a half ago both—events that I predicted last year would happen, as investors drew my attention to their loss of hundreds of thousands of pounds in over-the-counter shares—is it not quite clear that many fraudsters and swindlers operate in the over-the-counter market? Is it not about time that the Government intervened to protect the public by making the investor protection legislation work? People cannot continue losing money on that scale.
§ Mr. Clarke
I do not know whether that was another notable figure confessing to the use of soothsayers, but the 317 hon. Gentleman was obviously very prescient if he gave that advice to his constituents. He is making a case for the provisions of the Financial Services Act, and I can assure him that they will provide much more stringent protection for the private investor in this country in future. Certainly we are determined to ensure that they do that.