§ Mr. TimmsI beg to move amendment No. 115, in page 24, line 15, leave out from beginning to "may" in line 16 and insert
An applicant who is aggrieved by the determination of an application made under this Part".
§ Mr. Deputy SpeakerWith this it will be convenient to discuss the following amendments: No. 222, in page 24, line 16, at end insert—
(1A) The Authority shall give notice of its decision to refuse an application to the applicant and the provisions of sections 350 and 351 shall apply as if the notice was a decision notice.".No. 223, in page 24, line 17, leave out from "person" to end of line 18 and insert—who is or may be affected may refer to the Tribunal any decision of the Authority to use its own-initiative power.".No. 56, in schedule 11, page 227, leave out lines 14 to 21 and insert—(a) is a judge of the High Court; or(b) is a judge of the Court of Session.".No. 57, in page 227, line 34, leave out "seven" and insert "ten".No. 58, in page 227, line 36, leave out "seven" and insert "ten".
No. 59, in page 227, line 38, leave out "seven" and insert "ten".
No. 60, in page 227, line 41, leave out "seven" and insert "ten".
No. 61, in page 227, line 41, at end insert—
(d) he is a judge of the High Court or of the Court of Session.".No. 62, in page 227, line 42, after "is", inserta judge of the Court of Session or".No. 63, in page 228, line 11, leave out from "The" to "determine" in line 15 and insert—Secretary of State shall pay—952
- (a) the members of the panel of chairmen who are not judges of the High Court or Court of Session;
- (b) the members of the lay panel; and
- (c) any person appointed under paragraph 7(4),
such remuneration and such travelling and other allowances as he may, with the approval of the Treasury,".No. 64, in page 230, line 21, after "unreasonable", insert—or based on an ill founded view".
§ Mr. TimmsWe shall be debating procedures more generally when we come to a later group of amendments, but we agree that there is a need to rationalise the procedures for FSA decisions in the same way as we have aligned its consultation procedures. That is why we have tabled amendment No. 115, which will extend the right to refer matters to the tribunal in clause 52 to any applicant who is aggrieved by the determination of his application, such as in cases in which the FSA has granted an application but imposed a limitation or requirement.
At the same time, it is important to distinguish between the essentially prudential and protective nature of the provisions in part IV and the different nature of other provisions in the Bill, such as those relating to market abuse, discipline and restitution. On amendment No. 223, therefore, it is not necessarily correct to extend the right to go to the tribunal to anyone who is merely affected—perhaps positively—or who may be affected by the FSA's use of its own initiative power.
We do, however, accept the need to consider further the procedures that should apply, and to align them as far as we can, and the Government will table further amendments when the Bill is considered in another place. On that basis, I hope that Opposition Members will not feel the need to press amendments Nos. 222 and 223.
Amendment No. 56 would require the Lord Chancellor to appoint a president or deputy president who is a judge of the High Court or Court of Session. Amendment No. 61 would enable the Lord Chancellor to appoint judges of the High Court or Court of Session to be members of the panel of chairmen for the tribunal, in addition to appointing lawyers of suitable standing. Amendment No. 62 is consequential to that, and expands the present requirement for the panel of chairmen to include at least one Scottish lawyer, so that that member could be a judge of the Court of Session.
As hon. Members are aware, the Lord Chancellor must appoint the members of the panel of chairmen, and from that panel, the president and deputy president of the tribunal. The current provisions for those appointments, in paragraphs 2(5) and 3(2) of schedule 11, are sufficient for the proposed new tribunal and are in line with appointments for other tribunals. The president of the tribunal must have a 10-year legal qualification.
Of course we want the tribunal to have a high level of expertise and authority. The Bill leaves it open to the Lord Chancellor to make appointments with greater seniority if a case is made out for doing so. However, the expected character and volume of the tribunal's work load does not, at present, warrant taking the unusual step of making such an appointment.
The amendment would impose too much inflexibility on the appointment of the president. It would, for example, appear to prevent at a future date the appointment of a retired High Court judge or even a more senior judge, should it be found that the work load justified such an appointment. The Bill provides an appropriate framework for appointments to the tribunal, which allows common sense and practice to inform the appointment process.
953 Amendment No. 57 would require the members of the panel of chairmen to have a 10-year legal qualification as opposed to a seven-year qualification. The Bill's provisions for appointing the panel of chairmen will ensure that suitable people are appointed to the tribunal and have the necessary qualifications to deal with the cases that will arise. Those provisions do not need to be changed as the amendment suggests. It is normal practice for other tribunals to appoint people with a seven-year legal qualification to the panel of chairmen. Examples include the VAT and duties tribunal, employment tribunals and transport tribunals.
If there is a case that raises particularly complex or ground-breaking legal issues, the tribunal may appoint one or more experts to provide assistance. It can also bring in additional members of the panel of chairmen with expertise relevant to the case in question. I suggest that the current arrangements for appointing the members of the panel of chairmen are sufficient for the purposes of the tribunal.
The tribunal's independence is certainly important. Amendment No. 63, which would give the Secretary of State and the Treasury responsibility for paying tribunal members' expenses, could be seen as undermining that independence. As the Lord Chancellor's Department will be running the tribunal, it makes sense for the Lord Chancellor to pay its expenses, thus reinforcing its independence.
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Amendment No. 64 is designed to widen the circumstances in which the FSA may be liable to pay the costs of the other party. Currently, the Bill allows the tribunal to award costs if it considers that the FSA decision giving rise to the reference was "unreasonable". Inserting the words
or based on an ill founded viewafter "unreasonable" adds nothing, but might instead muddy the waters. Were the FSA, based on the facts available, to reach a decision that subsequently proved to be incorrect, would its position bebased on an ill founded view",even though it had taken all reasonable steps to establish the correct facts? The wording of the amendment reflects no other statutory provision of which I am aware; its meaning is unclear. The Council on Tribunals agrees that the "unreasonable" test is appropriate for the purposes of the tribunal. Given that explanation, and on the basis that the current drafting provides a practical consequence for any unreasonable exercise of powers by the FSA, I hope that the Opposition will not press amendment No. 64.
§ Mr. FlightThe Government will be aware that, under the current regime, the issue of applications being turned down in whole or in part is troublesome. We welcome Government amendment No. 115, which enables an appeal to the tribunal where an application is turned down in part. We remain of the view that amendment No. 222, which would require the decision notice procedure to apply in the case of a refusal of permission, and amendment No. 223, which would extend to an authorized 954 person who is or may be affected the right to refer matters to the tribunal, are desirable and would solve current practical problems.
The amendments relating to the tribunal would make provisions that are not as demanding as those covering the employment appeals tribunal. Requiring the Secretary of State to be responsible for pay and rations is a practical step. If the Financial Secretary had consulted candidates for appointment to the tribunal, he might have heard many express the view that they would not receive reasonable remuneration were the Lord Chancellor's Department responsible. In our view, it is crucial that the tribunal be staffed with top calibre people. Our amendments both provide for top calibre appointments to be made and solve a practical problem. The Government would be advised to give their attention to such problems before the Bill is considered in the other place.
Amendment No. 64 is, to some extent, a probing amendment. As the Financial Secretary said, the tribunal can award costs against the FSA when it regards the FSA as having acted unreasonably. The amendment addresses the complex question of how people can defend themselves. A positive step has been taken in allowing costs to be awarded against the FSA in certain circumstances, and in ensuring that the tribunal will not award costs against those who have brought cases to it, unless they have acted vexatiously, frivolously or unreasonably. However, we regard the term "unreasonable" as slightly vague.
What if the FSA is wrong, or brings a case that the tribunal finds does not stand up? The FSA might have acted perfectly reasonably in such circumstances; it might have thought that it was right. However, if someone has been prosecuted wrongly, it strikes us as fair in law that that person should get his or her costs paid. It is also necessary under the provisions of the European convention on human rights relating to people's ability adequately to defend themselves.
We have therefore tabled what I acknowledge to be a not especially well worded amendment, the intent of which is to ensure that the Government consider whether the word "unreasonable" is sufficient, or whether costs should be able to be awarded against the FSA if the authority loses in a case that it has referred to the tribunal.
§ Mr. LoughtonI rise to support my hon. Friend the Member for Arundel and South Downs (Mr. Flight). We do not dispute Government amendment No. 115, which enhances the rights of the applicant.
My concern focuses on the practical workings of the tribunal. Having spent so much effort during the sittings of the Burns committee on the key proposal that there should be an independent tribunal, we think it essential that the tribunal's workings be absolutely right and that it be seen to do its job properly and efficiently. We believe that further improvements are possible—hence our amendments on the appointments to be made to the tribunal.
A submission has been received from the law reform committee of the General Council of the Bar, in which the learned people who produced a report on the Bill express the view that the qualification requirements for those who preside over the tribunal are "not very demanding". On that basis, we tabled our amendments to give the tribunal greater status by beefing up the standards and the service requirements of those who are to be 955 members of it. My hon. Friend is right to say that, even with those additional provisions, the requirements do not equal those of the employment appeals tribunal. On that tribunal, all the permanent legal appointees must be High Court judges or judges of the Court of Session.
If the tribunal is to work properly, those who serve on it should be properly remunerated—hence our tabling of amendment No. 63. Putting the matter in the hands of the Secretary of State would provide a better guarantee of funding, to ensure that the tribunal works properly.
With amendment No. 64, we come again to our old friend "reasonableness"—a term that featured heavily in the Committee debates. This time, the Opposition argue that reasonableness is not enough and that we must improve on it if we are to preserve the checks and balances surrounding submissions to the tribunal—a complex matter, as my hon. Friend rightly said.
Our amendment is designed to respond to criticism that those who are prosecuted by the FSA would be put off appealing to the tribunal for fear of costs being awarded against them. If the tribunal is to be a proper adjudicator of the workings of the FSA and if those who have had action taken against them by the FSA are to be given equality of arms, individuals must not be deterred from taking a case to the tribunal for fear of excessive costs being awarded against them.
That is why we wanted to add to the conditions of action taken "vexatiously, frivolously or unreasonably" that of action taken without justification. My hon. Friend has acknowledged that we have phrased it slightly awkwardly, by referring to cases
based on an ill founded view".It is essential that we make it clear when the intent of the FSA in prosecuting someone is a wrong intent. I support the amendments and hope that they will find sympathy with the Minister.
§ Mr. David Ruffley (Bury St. Edmunds)I rise to support my colleagues' remarks about the amendments. I shall focus on amendment No. 56.
The schedule as drafted provides that the Lord Chancellor shall appoint as president or deputy president of the tribunal only persons who are qualified lawyers of 10 years' standing in one of the jurisdictions of Northern Ireland, England and Wales and Scotland.
We have tabled amendment No. 56 because we do not believe that someone with the great responsibility of being president or deputy president should merely be a lawyer of 10 years' standing. That is why the amendment suggests that the individual should be a High Court judge or a judge of the Court of Session.
I have a particular reason for considering this matter important, and it turns on the nature of the appeal process. Decisions on points of law that are taken by the tribunal are appealable. That is not on interlocutory matters that the tribunal may decide, but a final decision on points of law is appealable to the Court of Appeal. Leave is given either by the tribunal or by the Court of Appeal. That is fair enough.
We run a real risk in saying, "Well, points of law can be appealed." We do not want mistakes to be made in the first place by possibly under-qualified members of the tribunal. If we are to stop unnecessary litigation and unnecessary time-consuming appeals on points of law to 956 the Court of Appeal, and perhaps upwards to the House of Lords, we need the very best legally qualified individuals on the panel following the most rigorous legal strictures. For that to happen, we need a High Court judge or a judge of the Court of Session to be the top man who runs the tribunal.
As my hon. Friend the Member for Arundel and South Downs (Mr. Flight) has observed, it is not enough to be a lawyer of 10 years' standing to run the employment appeals tribunal. If the Bill is designed to make the tribunal independent and efficient and to reduce the necessity for appeals on points of law to the Court of Appeal, we need to ensure that it gets things right the first time. The purpose behind amendment No. 56 is to achieve that.
I understand that the president or deputy president will not be deciding points of law. A chairman in any particular case will be doing that. However, a High Court judge or a judge of the Court of Session would be of such eminence and of such legal stature that he or she would be able to set the tone for the way in which the tribunal carried out its business, especially in cases where points of law were disputed or potentially appealable. Chairmen would not be particularly well qualified. They would have to be lawyers of only seven years' standing. Amendments Nos. 59 and 60 address that point; we suggest that they should be of 10 years' standing.
The chairmen may need to be instructed that they can adjourn proceedings of the tribunal, perhaps to seek guidance from the deputy president or president. Who better to do that and to decide points of law so that they do not become justiciable and the subject of litigation further down the road?
If our amendments are not taken on board, we can see individuals and authorised persons mired in the Royal Courts of Justice on the Strand. There will be great expense incurred by businesses and big pay days for lawyers. As a former solicitor, I realise how onerous the burdens that law firms place on clients can be. Such a situation is not one that an efficient and competitive financial services industry needs. For these reasons I urge Ministers to take seriously the points of principle that are raised by the amendments.
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§ Sir Nicholas LyellI support the thrust of what my hon. Friends have said, but the situation is more serious and more dangerous than I realised until very recently. It has come to my notice that the tribunal may be created on the cheap. There is a nasty rumour that the Lord Chancellor's Department, which does not have much money, hopes to roll in the tribunal with the VAT and duties tribunals. That would be a terrible mistake. If anyone in or around government is thinking in that direction, I hope that he will think again.
The tribunal requires a president, whether he be a judge or someone of considerable legal and financial experience, who is of the highest calibre and who can be relied upon to lead a team that will do justice to the enormous powers that are being given to, and that will be exercised by, the Financial Services Authority.
The amendments focus on the requirements for the tribunal. I do not have particular difficulty with the concept of a lawyer of 10 years' standing. I think that that is the same requirement for a High Court judge. Of course 957 it is not adequate in itself. There are many lawyers of 10 years' standing who would be entirely unfitted, but it is a long-standing test. So long as it is 10 years' standing and so long as the individual who is chosen has the necessary acumen, background and status, fine. The vital feature is that we set up a tribunal that will command respect nationally and internationally and will do justice in the cases that come forward, which may be very sensitive and difficult.
It would not be fair to load this responsibility on to quasi-judicial and judicial figures in other administrative areas who sit on other tribunals, with the great technicalities with which they have to deal. We should not lump on to them the huge responsibilities that we are creating. I hope to have an assurance from the Minister that that will not happen. If he cannot give such an assurance because thinking is at too embryonic a stage, I hope that he will take to heart the points that have been raised.
§ Mr. TimmsI welcome the support that has been expressed by Opposition Members for amendment No. 115. There is a consensus that it is a good step forward.
I hope that I can reassure right hon. and hon. Members about the importance that we attach to the tribunal. I entirely agree with what has been said about the importance of its commanding the widest possible respect. That is an objective that we can all share. I think that the steps that we have in hand will lead to it doing so.
There are about 70 tribunals, and tribunal appointments do not normally include judges from the High Court Bench or from the Court of Session. There are a few instances where senior judges sit on tribunals. A tribunal may have a High Court judge when particularly sensitive information is involved or when the cases that come before it are especially sensitive in nature. For example, there are the special immigration appeals commissions. There is also a batch of security tribunals, each of which is headed by a High Court judge or another senior judge.
The employment appeals tribunal has been referred to, as has the Immigration Appeal Tribunal. Both have a High Court judge as president because of their particular circumstances. I think that we are all aware that the Immigration Appeal Tribunal has faced acute work-load pressures. A High Court judge was appointed as president to strengthen its operation.
It is normal practice for other tribunals to appoint people with a seven-year legal qualification to the panel of chairmen—for example, the VAT and duties tribunals and the transport tribunals. The provisions will ensure that the tribunal will command the widest possible respect, as the House rightly seeks.
The hon. Member for Arundel and South Downs (Mr. Flight) suggested that the FSA should pay costs if a case is overturned by the tribunal. Costs are not usually awarded in cases brought before tribunals. There will be scope to award costs, but only if either party has acted unreasonably, vexatiously or frivolously. That is the test supported by the independent Council on Tribunals, and it is in line with the thinking of the Burns committee, which specifically recommended that we should give consideration to the council's views. Those views are reflected in the provision.
958 We can certainly agree about the importance of the tribunal and the need to make sure that it commands the widest possible respect. I am confident that our proposals will deliver—
§ Sir Nicholas LyellI am grateful to the Minister for giving way. Does he accept that the Government must put up some money in connection with the tribunals? The industry has been required to put up the legal aid money and it covers most costs, but the Government's contribution must come out of the public purse. Can the Minister give an assurance that the exigencies of the public purse will not short-change what is properly required for the status and efficiency of the tribunal?
§ Mr. TimmsI can give the right hon. and learned Gentleman an assurance that it is the Government's objective to meet the expenditure necessary to deliver a tribunal with the stature that he described earlier. I am satisfied that we will be able to provide that.
§ Mr. FlightOur amendments focus on three practical issues. They will need to be discussed further when the Bill reaches its Committee stage in the other place. Although the amendments do not relate to matters of high principle on which we would want to vote—and we shall therefore withdraw them—they all deal with practical issues on which our investigations and conversations with those concerned lead us to the conclusion that the Bill is not entirely satisfactory.
The issue of costs is in a different category, and I take note of the Minister's comments regarding the Burns committee. There is a wider issue still to be addressed—the ability of individuals fully to defend themselves, lest the legislation be undone as the result of a ruling by the European Court of Human Rights.
The crucial point is that the tribunal should be of top quality and adequately remunerated. Notwithstanding the Minister's comforting remarks, we have a genuine practical concern that the present arrangements may not provide for that. In anticipation of these matters being considered further in another place, I beg to ask leave to withdraw the amendments.
§ Mr. Deputy Speaker (Mr. Michael J. Martin)The question of withdrawing amendments does not arise. The only amendment that has been moved is Government amendment No. 115. The other amendments have been grouped with it for the purposes of debate.
Amendment agreed to.