§ Mr. Tim SmithI beg to move amendment No. 308, in page 190, line 31, at end insert
`such rules taken together with the general professional rules of the body which apply to all kinds of business undertaken 1249 by its members must provide their clients with no less effective protection than that provided for the same purposes by the rules of self-regulating organisations under this Act.'.The core rules are not to apply to the recognised professional bodies. We discussed this issue in Committee, where I proposed an amendment similar to, but not the same as, this one. The amendment tries to ensure that, even though the core rules are not to apply, investors who deal with members of recognised professional bodies will get no less effective protection than that afforded to those who invest through members of SROs.In response to the amendment that I proposed in Committee, my hon. Friend the Minister's predecessor said:
There is a difficulty with amendment (a). It risks locking the recognition tests for professional bodies to their investment business rules. That is unnecessary because in some respects—for example, solicitors and clients' money—adequate protection can be achieved by relying on the general rules of the body."—[Official Report, Standing Committee D, 29 June 1989; c. 643.]I have redrafted my amendment to take his point into account. The amendment now refers not just to the investment business rules of the recognised professional body, but to the general rules that apply to all the business that the member of an RPB undertakes. For a solicitor who is a member of the Law Society, there are client account rules which apply to all his business. Now that I have modified my amendment to take account of the objection of my hon. Friend's predecessor, I hope that it will be acceptable.
§ Mr RedwoodI am grateful to my hon. Friend the Member for Beaconsfield (Mr Smith) for recasting his amendment, but I am afraid that I still have problems with it. I hope to convince him that the effect that he hopes to achieve can already be achieved by the Bill.
The Government have often made it clear that it is not intended that regulation of our recognised professional bodies should or could be regarded as a soft option. That is why, in the Bill, as in the original Act, the test that self-regulating organisations and professional bodies have to satisfy is, when it comes to the protection provided to investors, identical—which is what I said in response to the previous debate. When these new provisions come into force, SROs and RPBs will have to satisfy the SIB that their rules provide an adequate level of investor protection. They will not all achieve that level of investor protection in exactly the same way.
It is one of the main strengths of a practitioner-based system that, within the overall requirement of providing adequate protection for investors—which is what the debate is about—it is for the regulator concerned to devise the best way of regulating its members. There is no compromise on the level of investor protection. In every case, the SIB will have to be satisfied that it is adequate. My hon. Friend's amendment could turn out to be not only unnecessary, but harmful.
§ Mr. Tim SmithIs there a parity between all RPBs and the SROs in terms of admission to the body concerned and, therefore, competence to give investment advice? That was a point raised in Committee.
§ Mr. RedwoodAs I have just explained, the bottom line is what kind of protection is offered to investors. The adequacy test is the same for both categories. There are different routes to achieve that.
1250 The amendment could be difficult. My hon. Friend will recall that one reason why we are amending the recognition test for the SROs and RPBs is that the original equivalence test was widely interpreted as requiring a close textual comparison of different sets of rules, rather than a comparison of their effects and we should be interested in the effects, I fear that, by reintroducing a formal comparison between the rules of an SRO and the rules of an RPB, the amendment would lead to a similar approach being adopted in the future. I urge the House to reject the amendment.
§ Mr. Tim SmithI am disappointed, and it is noticeable that the Government have changed their ground. I sought to cater for the objection put up to my original amendment, yet we now have a completely different objection, which was not even mentioned in Committee. As three months have passed since that debate, I thought that I would ask a few of the RPBs whether they would mind if the core rules were applied to them. The other day, I went to the Insurance Brokers Registration Council, about which I was fairly critical in Committee. The council members are clearly not the people who are responsible for this failure of the core rules to apply to the RPBs. The council, which is an RPB, told me that it would be happy for the core rules to apply to its members. Will my hon. Friend the Minister tell me who objects?
§ Amendment negatived.