THE THRESHOLD CONDITIONS (Hansard, 1 February 2000)

§ Mr. Timms
I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker
With this it will be convenient to discuss Government amendments Nos. 85 to 88, 92, 93, 96, 105, 122 to 124, 157, 178 and 179.

§ Mr. Timms
This group of amendments rationalises the current references in clauses 37(3), 38(2), 39(2), 40(2) and case A, 157(2) and 158(2)(c) to the qualifying conditions in schedule 6.
974 The amendments are intended to make it clear that the requirement for the FSA to be satisfied that an authorised person meets the conditions for authorisation in schedule 6 applies at all times. This was a point that the hon. Member for East Worthing and Shoreham (Mr. Loughton) sought to clarify through amendments in Committee, and the Government undertook to make the position clearer. This is our response to the hon. Gentleman's point.
New clause 7 requires the FSA to satisfy itself, in giving or varying permission or imposing or varying any requirement, that the person will satisfy the threshold conditions—formerly the qualifying conditions—set out in schedule 6 in relation to all the regulated activities covered by his permission. However, the amendments also make it clear that this does not prevent the FSA from taking such steps in relation to an authorised person as it considers necessary to secure its regulatory objective of the protection of consumers.
The threshold conditions are conditions which should be met at all times, and they are constant points of reference for the FSA. Important though meeting the conditions always is, however, maintaining constant strict adherence may be temporarily subordinated in the interest of consumers.
For instance, the FSA could permit an authorised insurance company which no longer met the conditions to continue to carry on some limited insurance activities in order to protect the position of existing policyholders, but at the same time might prevent it from engaging in new business. The end result would still need to be either that the company met the conditions again for the activity it had permission to carry on, or that the permission was withdrawn and authorisation ended.
The remaining Government amendments are consequential. Amendment No. 86 also simplifies the provision for requirements under clause 38(1) so that the FSA may impose such requirements as it considers appropriate without making a firm's permission conditional on compliance with those requirements.
Amendment No. 179 amends the legal status condition in schedule 6 to ensure that registered friendly societies, which are not incorporated bodies, may nevertheless carry on insurance activities. It also ensures that if insurance intermediaries were to be brought within the scope of regulation, they would not be required to be bodies corporate. However, I should make it clear that we have no such plans.

§ Mr. Heathcoat-Amory
This group of amendments is reasonably innocuous, and I will not challenge the Minister too profoundly about what he is attempting to do. However, I have some definitional questions, particularly about what he means by consumers.
New clause 7 refers to the need to protect consumers, and the Bill could deny someone the application to have an authorisation removed in the interest of consumers—the thinking being presumably that if someone is in business and dealing with consumers, those consumers need protection even after the person concerned wishes to end the business. One can understand that the FSA must make a judgment about whether an authorisation must continue in order to protect consumers.
My question to the Minister is this: how are those consumers defined? There are a number of definitions in the Bill as it stands. For instance, clause 9(7) has one 975 definition, and a slightly different definition appears in clause 3(3). They are fairly minor differences, but they are significant because they appear in one or two cases to restrict the definition of consumers. That may well be desirable.
In Committee, the Economic Secretary agreed to look at this matter again after it was raised by myself and by my hon. Friend the Member for Chichester (Mr. Tyrie). The hon. Lady said: We intend to consider the definition of 'consumer' in the Bill at a later stage, and that is the best way forward."—[Official Report, Standing Committee A, 21 October 1999; c. 483.] On that basis, we have left the matter. The Minister owes us an explanation because, as he will appreciate, when one hears remarks like that in Committee, it is really code for saying that the Government will table amendments on Report.
Throughout our proceedings, we have been trying to achieve certainty for the outside world. Sometimes Ministers suppose that people will be able to look at a raft of secondary legislation, consultation documents, rules and regulations to find out exactly what their rights and responsibilities are. In fact, most people—even many lawyers—rely on an Act of Parliament. This is a source document, and if things are not properly set out and defined in primary legislation, it will go against what the Government have said at other times—that the Bill is aimed at giving clarity to the outside world.
The Government want to make financial regulation not simply a specialist matter, but a matter that is understandable to customers and consumers. We know that it is a specialist area of law, but if we are trying to create a system that is comprehensible and has aims that ordinary customers and participants in the industry can understand, we must set out the definitions in the Bill—and preferably only one definition per Bill. It is confusing to have several. Perhaps the Minister could state what he would settle on to give clarity in the question of who he is talking about when he refers loosely to consumers.

§ Mr. Timms
The definition that is appropriate here is the definition in clause 5, to which the new clause refers indirectly in subsection (3). The right hon. Member for Wells (Mr. Heathcoat-Amory) is right to draw our attention to the exchange on this issue in Committee, during which the Economic Secretary made the point that the definition of the consumer panel in clause 9 was narrower than those elsewhere. The right hon. Gentleman is also right to point out that we undertook to consider further the definitions of the term "consumer" in the Bill. The commitment given in Committee stands, and we will come back to the issue in the other place.
Question put and agreed to.
Clause read a Second time, and added to the Bill.