EXEMPTION ORDERS (Hansard, 9 February 2000)

§ Mr. Flight
I beg to move amendment No. 199, in page 15, line 14, at end insert— (5) No exemption order to which subsection (7) applies may be made unless a draft of the order has been laid before Parliament and approved by a resolution of each House. (6) An exemption order to which subsection (7) does not apply shall be subject to annulment in pursuance of a resolution of either House of Parliament. (7) This subsection applies to an exemption order which:

(a) is the first order to be made under this section in respect of a particular person; or

(b) varies an order previously made so as to vary or remove an exemption."

§ Mr. Deputy Speaker
With this it will be convenient to discuss the following: Government amendments Nos. 427 and 428.
Amendment No. 53, in clause 374, page 195, line 3, after "section", insert "110(6A), 111(6),".
Government amendments Nos. 430 to 436.

§ Mr. Flight
This is a ragbag group of amendments. Amendment No. 199 requires that Treasury exemption orders in respect of people requiring to be authorised persons should be laid before both Houses, both for any initial exemption and for any variation. Amendment No.53 would add two territories of orders requiring the positive affirmation of both Houses and relates back to points that we stressed earlier about limiting the FSA's powers to regulate non-regulated activities and the activities of regulated UK businesses overseas. In essence, the amendments would require affirmative resolutions of both Houses for any new rules made that related to restrictions on businesses or marketing outside the UK and to any extension of non-regulated activities.
Government amendment No. 427 would grant the Lord Chancellor powers to make rules in respect of the tribunal by statutory instrument. As I understand it, the rest are consequential. The remaining Government amendments would require a draft of regulations to be put before both Houses for affirmative order, and we would certainly support those proposals.

§ Miss Melanie Johnson
Amendment No. 199 proposes that an exemption order under clause 34 should be made subject to affirmative resolution procedure when it is first made and thereafter when it is replaced and certain exemptions are removed. Clearly, there is a parallel with what is provided for in amendment No. 199 and the provision in the Bill for making the first regulated activities order under clause 20 and subsequently adding to the scope of regulated activities. That is to say that both work together to define the scope of regulation under the Bill. However, the parallel is far from exact.
The effect of the regulated activities order under clause 20 will define the scope of regulation. The effect, therefore, will be to bring within the FSA's remit a wide range of activities and firms. An exemption order will be different. Our intention is to exempt only narrow categories of person whose activities are not generally such as to give rise to risk to consumers. On the one hand there will be bodies such as the Crown and the Bank of 291 England, who because of their nature, have never been serious candidates for regulation under the financial services legislation.
On the other hand, there will be a series of bodies that do not carry on regulated activities within the normal sense but which do things that just might qualify at the margins as regulated activities. A good example is an organisation such as a trade union or a charitable organisation that raises and invests money for the indirect benefit of its members. The purpose of the exemption in those cases is to make it absolutely clear that they can continue to do those things without fear of committing an offence.
Even to the extent that the activities of such bodies might qualify as regulated activities for the purposes of the Bill, it would happen in a way where there was no potential for consumer detriment. For example, with trade union funds, members contribute to the organisation for a number of reasons, but they do not contribute to make a return on those contributions. Any such benefits would be seen as a bonus.
I am sure that no one would wish to object to our proposals for exemptions in such cases. Regulation is really not necessary. Of course, were a trade union or charity to establish a high street bank as a side line, their exemption would need to be reviewed—and most likely would be withdrawn—in order to ensure the protection of potential depositors.
In my view, the negative resolution procedure provided for in the Bill is the most appropriate for an order of that kind. The Delegated Powers and Deregulation Committee in the other place considered the powers in a draft of the Bill at the same time the Committee chaired by Lord Burns considered the draft more generally. The Delegated Powers and Deregulation Committee did not recommend a different procedure and I therefore propose not to accept this amendment. I hope that the hon. Member for Arundel and South Downs (Mr. Flight) will withdraw his amendment.
The Government amendments in this group, to clauses 373 and 374 are largely technical. The hon. Gentleman raised a point about one particular Government amendment, but I have forgotten which one. If he wishes me to make a response, I would be grateful if he alerted me to which one it was.

§ Mr. Flight
We did not require a specific response to any of the Government amendments. We are happy to withdraw amendment No. 199, although the territory is tricky and could be subject to further discussion in the other place. I beg to ask leave to withdraw the amendment.