§
Lords amendment: No. 592, in page 229, leave out line 19 to 23 and insert—
("12.—(1)Once an EEA firm which is seeking to establish a branch in the United Kingdom in exercise of an EEA right satisfies the establishment conditions, it qualifies for authorisation
(2) Once an EEA firm which is seeking to provide services in the United Kingdom in exercise of an EEA right satisfies the service conditions, it")
§ Motion made, and question proposed, That this House agrees with the Lords in the said amendment.—[Miss Melanie Johnson.]
Mr. Deputy SpeakerWith this we may discuss Lords amendments Nos. 593, 594 and the amendment thereto, 595 to 603 and 606 to 615.
§ Mr. FlightWe come to a subject beloved at the Committee stage: the territory of European Union passporting. Our amendment relates to the use of the incoming single European passport by non-United Kingdom firms that are passporting into the UK under EU law, and schedule 3, which reflects that.
Amendment No. 594 as it stands is helpful, but we fear that it gives rise to some possible confusions, which our amendment seeks to prevent. Amendment No. 594 looks at the position of a European Economic Area firm that wants to do business under its passport, but that does not comply with the notification requirements imposed by schedule 3. The amendment tries to lessen the consequences of that failure by the passporting firm by providing that, although it is as a result unauthorised, its contracts will not be unenforceable, even though otherwise they would be. One of the reasons why we feel that it is desirable to be sensitive in this area and in the case of EEA firms using the passport where technical breaches are committed, is that the more aggressive our treatment of EEA firms here, the worse our firms are likely to find European regulators treat them about Europe.
Our amendment tries to prevent the confusion that is likely to arise from amendment No. 594. The question of enforceability arises under the sections listed in amendment No. 594 only if the firm is not authorised under the legislation. The policy, which is the same as the policy that we adopted in the Financial Services Act 1986, is that an authorised firm will not be committing a criminal offence if it acts outside its permitted business, although private investors who suffer as a result can sue the firm for compensation. Accordingly, the sections listed apply only in relation to a firm that is not authorised.
A firm can, however, be authorised under the legislation as a result of the normal authorisation process—getting permission under part IV—for some regulated activities, even though it wants to use the passport for others. Most firms may try to do that because the passport is by no means comprehensive. Therefore, the first change to Lords amendment No. 594 would ensure that the paragraph applies initially only to a firm that is not an authorised person, albeit in relation to non-passported activities.
129 The second change that we propose making to Lords amendment No. 594 is to provide that the disapplication of the unenforceability provision should apply only in relation to passported activities. The Lords amendment provides that the unenforceability provisions do not apply to an agreement entered into by the firm. The firm may enter into other agreements, and not only into agreements covered by the passport. The Lords amendment therefore provides that any agreement entered into by the firm is covered.
Accordingly, the unenforceability provisions would not apply even in the case of agreements that had nothing at all to do with the passport. Although we support the unenforceability provisions already made in the 1986 Act, we would not like what is admittedly a helpful amendment to have that potentially undesirable result.
The subject—like that of the EEA passporting territory—is extremely technical and obscure, and we had hoped that, by now, it had been entirely put to bed. However, if Ministers are not willing to accept our amendment to Lords amendment No. 594, an unsatisfactory situation will develop in a territory in which many British businesses are EU-EEA passported.
§ Miss Melanie JohnsonIn the course of our debates, we have given much further thought to the enforcement provisions, and we have made various amendments to meet the concerns expressed by Opposition Members and by their colleagues in another place. We have also reconsidered their application in this context, but concluded that their amendment is probably disproportionate and possibly discriminatory.
If an outgoing United Kingdom authorised person conducts activities covered by the relevant directive in another European economic area state without having gone through the relevant procedures, the Bill would not render unenforceable transactions effected by that person in the course of conducting those activities. Therefore, to apply the enforcement of agreements provisions to incoming firms that fail to follow the proper procedures might be discriminatory.
The new paragraph that we propose to insert after paragraph 15 therefore disapplies clauses 24, 25 and 27 in relation to any agreement entered into by an EEA firm in the course of, or any agreement entered into by an authorised person as a result of, regulated activity conducted without the relevant procedures having been completed.
Conversely, the Opposition amendment would apply the non-enforcement provisions of those clauses in most circumstances. Although I am not sure that that is the intention, use of the term "permitted activity" might be intended to narrow the paragraph's effect to activities covered by the directives, rather than to any regulated activity. However, if that is the intention, it does not work.
The definitions of "permitted activity" in paragraphs 13 and 14 are related to the activities specified in the "consent notices" provided for in those paragraphs. A "permitted activity" is therefore only an activity for which notification has been received by the FSA from the home state regulator or the firm concerned. The effect of the Opposition amendment would be to disapply the non-enforcement clauses only when the home state regulator or the firm concerned has begun the procedure which leads up to the firm qualifying for authorisation. 130 However, it is just as necessary to cover cases in which that first step has not been taken as well as cases in which it has been taken.
Additionally, the Opposition amendment simply would not work in certain cases. A credit institution, for example, that wishes to do business on a services basis only has to give a notice of intention. Once it has given such a notice, it qualifies for authorisation. The Opposition amendment would apply to a credit institution that has not given a notice of intention, but would define that institution's "permitted activities" in terms that depend upon it having given a notice of intention. That does not make sense.
The Opposition amendment—for reasons that I do not quite understand—also fails to deal with the effect of the provisions of clause 27. As I explained, we believe that the amendments made in another place are necessary if the UK is not to be open to charges of discrimination. We also believe that the Opposition's amendment is inconsistent with that and is defective in any event. For that reason, I hope that they will withdraw it, but if they do not, I urge the House to vote against it.
§ It being Eleven o'clock, MR. DEPUTY SPEAKER put the remaining Questions required to be put at that hour, pursuant to Order [this day].
§ Lords amendment No. 592 agreed to.
§ Question put, That this House agrees with the Lords in the remaining Lords amendments:—
§ The House divided: Ayes 287, Noes 114.
133| Division No. 216] | [11.1 pm |
| AYES | |
| Adams, Mrs Irene (Paisley N) | Cann, Jamie |
| Ainger, Nick | Caplin, Ivor |
| Allen, Graham | Casale, Roger |
| Anderson, Janet (Rossendale) | Caton, Martin |
| Atherton, Ms Candy | Chapman, Ben (Wirral S) |
| Austin, John | Clapham, Michael |
| Battle, John | Clark, Rt Hon Dr David (S Shields) |
| Bayley, Hugh | Clark, Paul (Gillingham) |
| Beard, Nigel | Clarke, Charles (Norwich S) |
| Begg, Miss Anne | Clarke, Eric (Midlothian) |
| Benn, Hilary (Leeds C) | Clarke, Rt Hon Tom (Coatbridge) |
| Benn, Rt Hon Tony (Chesterfield) | |
| Clarke, Tony (Northampton S) | |
| Bennett, Andrew F | Clelland, David |
| Benton, Joe | Clwyd, Ann |
| Bermingham, Gerald | Coffey, Ms Ann |
| Berry, Roger | Coleman, lain |
| Best, Harold | Connarty, Michael |
| Blackman, Liz | Cook, Frank (Stockton N) |
| Blears, Ms Hazel | Corbett, Robin |
| Blizzard, Bob | Corbyn, Jeremy |
| Boateng, Rt Hon Paul | Cotter, Brian |
| Borrow, David | Cousins, Jim |
| Bradley, Keith (Withington) | Crausby, David |
| Bradley, Peter (The Wrekin) | Cryer, Mrs Ann (Keighley) |
| Bradshaw, Ben | Cryer, John (Hornchurch) |
| Brand, Dr Peter | Cummings, John |
| Brinton, Mrs Helen | Cunningham, Rt Hon Dr Jack (Copeland) |
| Brown, Russell (Dumfries) | |
| Buck, Ms Karen | Cunningham, Jim (Cov'try S) |
| Burgon, Colin | Darvill, Keith |
| Burstow, Paul | Davey, Valerie (Bristol W) |
| Butler, Mrs Christine | Davidson, Ian |
| Byers, Rt Hon Stephen | Davies, Rt Hon Denzil (Llanelli) |
| Cabom, Rt Hon Richard | Davies, Geraint (Croydon C) |
| Campbell, Rt Hon Menzies (NE Fife) | Dawson, Hilton |
| Dean, Mrs Janet | |
| Campbell—Savours, Dale | Denham, John |
| Dismore, Andrew | King, Ms Oona (Bethnal Green) |
| Dobbin, Jim | Kirkwood, Archy |
| Donohoe, Brian H | Ladyman, Dr Stephen |
| Doran, Frank | Lawrence, Mrs Jackie |
| Dowd, Jim | Laxton, Bob |
| Drew, David | Lepper, David |
| Eagle, Maria (L'pool Garston) | Leslie, Christopher |
| Edwards, Huw | Levitt, Tom |
| Efford, Clive | Lewis, Ivan (Bury S) |
| Ellman, Mrs Louise | Linton, Martin |
| Ennis, Jeff | Llwyd, Elfyn |
| Feam, Ronnie | Lock, David |
| Field, Rt Hon Frank | Love, Andrew |
| Fisher, Mark | McAvoy, Thomas |
| Fitzpatrick, Jim | McCabe, Steve |
| Foster, Michael J (Worcester) | McCartney, Rt Hon Ian (Makerfield) |
| Foulkes, George | |
| Galloway, George | McDonagh, Siobhain |
| Gardiner, Barry | Macdonald, Calum |
| Gerrard, Neil | McDonnell, John |
| Gibson, Dr Ian | McGuire, Mrs Anne |
| Gilroy, Mrs Linda | McIsaac, Shona |
| Godman, Dr Norman A | McKenna, Mrs Rosemary |
| Godsiff, Roger | McNamara, Kevin |
| Goggins, Paul | McNulty, Tony |
| Golding, Mrs Llin | MacShane, Denis |
| Gordon, Mrs Eileen | Mactaggart, Fiona |
| Griffiths, Jane (Reading E) | McWilliam, John |
| Griffiths, Nigel (Edinburgh S) | Mahon, Mrs Alice |
| Grocott, Bruce | Marsden, Gordon (Blackpool S) |
| Grogan, John | Marsden, Paul (Shrewsbury) |
| Hain, Peter | Martlew, Eric |
| Hall, Mike (Weaver Vale) | Maxton, John |
| Hall, Patrick (Bedford) | Meacher, Rt Hon Michael |
| Hamilton, Fabian (Leeds NE) | Michael, Rt Hon Alun |
| Hanson, David | Michie, Bill (Shef'ld Heeley) |
| Heal, Mrs Sylvia | Miller, Andrew |
| Healey, John | Moffatt, Laura |
| Heath, David (Somerton & Frome) | Moonie, Dr Lewis |
| Henderson, Ivan (Harwich) | Moran, Ms Margaret |
| Heppell, John | Morley, Elliot |
| Hinchliffe, David | Mountford, Kali |
| Hodge, Ms Margaret | Mowlam, Rt Hon Marjorie |
| Hoey, Kate | Mudie, George |
| Hoon, Rt Hon Geoffrey | Mullin, Chris |
| Hope, Phil | Murphy, Jim (Eastwood) |
| Hopkins, Kelvin | Murphy, Rt Hon Paul (Torfaen) |
| Howarth, George (Knowsley N) | Naysmith, Dr Doug |
| Howells, Dr Kim | O'Brien, Mike (N Warks) |
| Hughes, Kevin (Doncaster N) | Olner, Bill |
| Humble, Mrs Joan | Organ, Mrs Diana |
| Hurst, Alan | Palmer, Dr Nick |
| Hutton, John | Pearson, Ian |
| Iddon, Dr Brian | Pendry, Tom |
| Illsley, Eric | Perham, Ms Linda |
| Ingram, Rt Hon Adam | Pickthall, Colin |
| Jackson, Ms Glenda (Hampstead) | Pike, Peter L |
| Jackson, Helen (Hillsborough) | Plaskitt, James |
| Jamieson, David | Pollard, Kerry |
| Jenkins, Brian | Pond, Chris |
| Johnson, Alan (Hull W & Hessle) | Pope, Greg |
| Johnson, Miss Melanie (Welwyn Hatfield) | Pound, Stephen |
| Prentice, Ms Bridget (Lewisham E) | |
| Jones, Rt Hon Barry (Alyn) | Prentice, Gordon (Pendle) |
| Jones, Jon Owen (Cardiff C) | Prescott, Rt Hon John |
| Jones, Dr Lynne (Selly Oak) | Purchase, Ken |
| Jones, Martyn (Clwyd S) | Quinn, Lawrie |
| Keeble, Ms Sally | Radice, Rt Hon Giles |
| Keen, Alan (Feltham & Heston) | Reed, Andrew (Loughborough) |
| Keen, Ann (Brentford & Isleworth) | Reid, Rt Hon Dr John (Hamilton N) |
| Keetch, Paul | Rendel, David |
| Kemp, Fraser | Roche, Mrs Barbara |
| Khabra, Piara S | Rooker, Rt Hon Jeff |
| Kidney, David | Rooney, Terry |
| Kilfoyle, Peter | Ross, Ernie (Dundee W) |
| King, Andy (Rugby & Kenilworth) | Rowlands, Ted |
| Roy, Frank | Thomas, Gareth R (Harrow W) |
| Ruddock, Joan | Thomas, Simon (Ceredigion) |
| Russell, Bob (Colchester) | Timms, Stephen |
| Russell, Ms Christine (Chester) | Tipping, Paddy |
| Ryan, Ms Joan | Todd, Mark |
| Salter, Martin | Touhig, Don |
| Sanders, Adrian | Trickett, Jon |
| Sarwar, Mohammad | Turner, Dennis (Wolverh'ton SE) |
| Savidge, Malcolm | Turner, Dr Desmond (Kemptown) |
| Sawford, Phil | Turner, Dr George (NW Norfolk) |
| Sedgemore, Brian | Turner, Neil (Wigan) |
| Shaw, Jonathan | Twigg, Derek (Halton) |
| Simpson, Alan (Nottingham S) | Twigg, Stephen (Enfield) |
| Singh, Marsha | Tyler, Paul |
| Skinner, Dennis | Tynan, Bill |
| Smith, Rt Hon Andrew (Oxford E) | Walley, Ms Joan |
| Smith, Angela (Basildon) | Ward, Ms Claire |
| Smith, John (Glamorgan) | Wareing, Robert N |
| Smith, Llew (Blaenau Gwent) | White, Brian |
| Soley Clive | Whitehead, Dr Alan |
| Southworth, Ms Helen | Williams, Rt Hon Alan (Swansea W) |
| Spellar John | |
| Steinberg, Gerry | Williams, Alan W (E Carmarthen) |
| Stewart, Ian (Eccles) | Williams, Mrs Betty (Conwy) |
| Stoate, Dr Howard | Wills, Michael |
| Strang, Rt Hon Dr Gavin | Winnick, David |
| Stringer, Graham | Winterton, Ms Rosie (Doncaster C) |
| Stunell, Andrew | Wood, Mike |
| Sutcliffe, Gerry | Woodward, Shaun |
| Swinney, John | Woolas, Phil |
| Taylor, Rt Hon Mrs Ann (Dewsbury) | Worthington, Tony |
| Wright, Anthony D (Gt Yarmouth) | |
| Taylor, Ms Dari (Stockton S) | Tellers for the Ayes: |
| Taylor, David (NW Leics) | Mr. Robert Ainsworth and |
| Temple-Morris, Peter | Mr. Clive Betts. |
| NOES | |
| Ainsworth, Peter (E Surrey) | Grieve, Dominic |
| Amess, David | Hammond, Philip |
| Arbuthnot, Rt Hon James | Hawkins, Nick |
| Baldry, Tony | Heald, Oliver |
| Bercow, John | Heathcoat-Amory, Rt Hon David |
| Beresford, Sir Paul | Hogg, Rt Hon Douglas |
| Blunt, Crispin | Horam, John |
| Boswell, Tim | Howard, Rt Hon Michael |
| Bottomley, Peter (Worthing W) | Howarth, Gerald (Aldershot) |
| Bottomley, Rt Hon Mrs Virginia | Jack, Rt Hon Michael |
| Brady, Graham | Jenkin, Bernard |
| Brazier, Julian | Key, Robert |
| Brooke, Rt Hon Peter | King, Rt Hon Tom (Bridgwater) |
| Browning, Mrs Angela | Laing, Mrs Eleanor |
| Bruce, Ian (S Dorset) | Lansley, Andrew |
| Bums, Simon | Leigh, Edward |
| Butterfill, John | Letwin, Oliver |
| Cash, William | Lewis, Dr Julian (New Forest E) |
| Clappison, James | Lidington, David |
| Collins, Tim | Lloyd, Rt Hon Sir Peter (Fareham) |
| Cran, James | Loughton, Tim |
| Davies, Quentin (Grantham) | Luff, Peter |
| Day, Stephen | Lyell, Rt Hon Sir Nicholas |
| Duncan Smith, lain | MacGregor, Rt Hon John |
| Evans, Nigel | Mclntosh, Miss Anne |
| Faber, David | Maclean, Rt Hon David |
| Fabricant, Michael | McLoughlin, Patrick |
| Fallon, Michael | Madel, Sir David |
| Flight, Howard | Mates, Michael |
| Forth, Rt Hon Eric | Maude, Rt Hon Francis |
| Fowler, Rt Hon Sir Norman | Mawhinney, Rt Hon Sir Brian |
| Fox, Dr Liam | May, Mrs Theresa |
| Fraser, Christopher | Moss, Malcolm |
| Gale, Roger | Nicholls, Patrick |
| Gill, Christopher | Norman, Archie |
| Gillan, Mrs Cheryl | O'Brien, Stephen (Eddisbury) |
| Gray, James | Ottaway, Richard |
| Greenway, John | Page, Richard |
| Paice, James | Taylor, Ian (Esher & Walton) |
| Paterson, Owen | Taylor, John M (Solihull) |
| Pickles, Eric | Taylor, Sir Teddy |
| Portillo, Rt Hon Michael | Tredinnick, David |
| Redwood, Rt Hon John | Trend, Michael |
| Robathan, Andrew | Tyrie, Andrew |
| Robertson, Laurence | Viggers, Peter |
| Roe, Mrs Marion (Broxbourne) | Walter, Robert |
| Ruffley, David | Wells, Bowen |
| Shepherd, Rt Hon Mrs Gillian | Whitney, Sir Raymond |
| Shepherd, Richard | Whittingdale, John |
| Simpson, Keith (Mid-Norfolk) | Widdecombe, Rt Hon Miss Ann |
| Soames, Nicholas | Willetts, David |
| Spelman, Mrs Caroline | Winterton, Mrs Ann (Congleton) |
| Spicer, Sir Michael | Winterton, Nicholas (Macclesfield) |
| Spring, Richard | Yeo, Tim |
| Stanley, Rt Hon Sir John | Young, Rt Hon Sir George |
| Steen, Anthony | Tellers for the Noes: |
| Swayne, Desmond | Mr. Geoffrey Clifton-Brown |
| Syms, Robert | and |
| Tapsell, Sir Peter | Mr. John Randall. |
§ Question accordingly agreed to.