HL Deb 14 March 1988 vol 494 cc899-900

Lord Campbell of Croy asked Her Majesty's Government:

Whether they are satisfied that the relevant self-regulatory organisations (SROs) are equipped to handle effectively the expected quantity of applications for registration before the final date in April for authorisation to transact investment business.

Lord Beaverbrook

My Lords, it is not necessary for the recognised self-regulating organisations to process every application for membership before the Financial Services Act comes into force in April. Any business which made a valid application for membership before 27th February will receive interim authorisation until such time as its application is determined. I know that the self-regulating organisations are eager to ensure that applications are processed as speedily as possible consistent with the requirements of the Act.

Lord Campbell of Croy

My Lords, I thank my noble friend for that Answer. I feel reassured by the confidence which he has exhibited. Nonetheless, do the Government recognise that, because some rules and other edicts have not appeared until very recently, an unduly high proportion of applications are likely to be made at the last minute?

Lord Beaverbrook

My Lords, firms have known since last summer that the key provisions of the Financial Services Act would be introduced in April. They have had plenty of time and opportunity to apply for authorisation.

Lord Williams of Elvel

My Lords, how will the Government ensure that the public are aware of which firms may not do business after 1st April?

Lord Beaverbrook

My Lords, I recommend that members of the public should be sure to ask any firm with whom they are doing business whether that firm is registered with the relevant self-regulating organisation. The Financial Services Act is now becoming widely known. I believe that any sensible investor must specifically ask that question of those who look after his money.

Lord Morris

My Lords, surely it is incumbent on regulatory authorities or indeed on businesses themselves to demonstrate the fact that they are registered, rather than placing the onus on members of the public.

Lord Beaverbrook

My Lords, there are considerable penalties involved for firms who undertake investment business without being registered with the relevant SRO. However, the important point is that from April all investors will have a regulator to whom they can turn in the event of a complaint. That will be true in some areas for the first time.

Lord Diamond

My Lords, does the noble Lord believe that the best method of coping with the congestion of business which was bound to arise at this time was to get rid of the chairman of the SIB?

Lord Beaverbrook

My Lords, I pay tribute to the achievements of Sir Kenneth Berrill. I am not prepared to go into the background involved in that change of chairman. However, I am sure that the new chairman will do an excellent job.

Lord Campbell of Croy

My Lords, the terms of the Financial Services Act have been known for some time. However, will my noble friend agree that there has been little time in some cases? Perhaps the House will excuse my use of an acronym in giving an example, but I understand that LAUTRO did not promulgate its rules until last month.

Lord Beaverbrook

My Lords, my noble friend is correct. There are problems with LAUTRO. However, any firm that would normally have LAUTRO as its SRO will find that for the time being other arrangements have been made so that it may carry on investment business.

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