§ Mr. RedwoodI beg to move amendment No. 249, in page 180, line 17, after 'not' insert 'of itself.
The amendment clarifies the rights of action of investors in the event that the breach of a principle promulgated by the SIB also involves a breach of the common law.
It is clear that some matters that may be coverred by principles might already have legal consequences under the common law, such as actions for negligence or breach of trust. However, the principles stated in new section 47A(3) are not to give rise to any right of action on the part of an investor or other person affected, nor to invalidate any transaction. It has been pointed out that the clause as currently drafted might be held to extinguish such rights as already existed. That was not the intention, so the amendment makes it clear that any rights that an investor might have at common law in respect of matters covered by these principles are not extinguished.
§ Amendment agreed to.
§ Sir William ClarkI beg to move amendment No. 289, in, page 181, line 2, after 'any person' insert,
'subject to the approval of the Secretary of State'.
§ Mr. Deputy Speaker (Sir Paul Dean)With this, it will he convenient to consider amendment No. 290, in page 181, line 13 after 'authority', insert
'and the Secretary of State'.
§ Sir William ClarkIt is essential that recognised professional bodies avoid any charge of second-class regulation. The misguided attempt to relieve RPBs of the responsibility of complying with the core rules laid down by the SIB give weight to that charge.
I know that RPBs are bound by statute and royal charters, but they must use their best endeavours to comply with the standards sensibly laid down and adopted by self-regulating organisations, and the amendments aim to achieve that.
We must take care, because it would be illogical if some financial advisers were subject to some rules while others were subject to other rules. I hope that my hon. Friend the 1246 Minister will consider the amendments sympathetically, because I believe that the Government should do something about this.
§ Mr. RedwoodI recognise the genuine concerns that have persuaded my hon. Friend to move the amendments, but I hope to be able to convince him that the action that we propose will meet his concerns.
New section 47A of the Financial Services Act 1986 will give the Secretary of State a power, which it is intended should be transferred to the SIB, to promulgate statements of principle on the conduct required of investment businesses. A breach of such a statement of principle could lead to disciplinary action. New section 47B gives the SIB and SROs a limited power to waive the application of the principles in a particular case if its application would be unduly onerous and if it could be waived without undue risk to investors.
The purpose of the clause is to provide more flexibility in the operation of the Financial Services Act by allowing regulators scope to make provision, the legal effect of which is appropriate for the mischief that they are seeking to control. The clause does not set out the level of detail for which the statements of principle should provide. Under this power, it would be possible for the SIB to make statements of principle which deal in some detail with matters that are currently dealt with in rules under section 48.
If the powers were to be used in that way, I am sure that my hon. Friend would agree that there should be appropriate flexibility to provide for waivers in the closely defined circumstances set out in the clause. However, the board has said that it does not, for the foreseeable future, propose to use the power in this way. It proposes to use it to promulgate up to 12 general principles which are of such a fundamental nature that the use of the waiver would not be appropriate in any circumstances. In the light of that, the Government have decided not to commence new section 47B while the principles take that form.
I hope that my hon. Friend agrees that this is a satisfactory way of dealing with the important problem which he has raised. I understand that the SIB is content with this approach, which is important. I should be grateful if my hon. Friend would withdraw his amendment.
§ Sir William ClarkGiven that reply, for which I am grateful, I beg to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.