§ 207 Clause 125, page 133, line 41, leave out 'to 141' and insert `to 136, (Powers of Secretary of State to give directions),
1056§ (Application to determine whether default proceedings to be taken), 138 to 140, (Certain money market institutions) and (Settlement arrangements provided by the Bank of England)'.
§ Lord TrefgarneMy Lords, I beg to move that the House do agree with the Commons in their Amendment No. 207. In speaking to the amendment, which makes a consequential change to cross-references in Clause 125, I shall speak also to Amendments Nos. 210 to 212 and 237 to 241. The amendments make mainly minor or clarifying changes relating to the functions of the Secretary of State or the Securities and Investments Board and to the application or modification of provisions of the Financial Services Act for the purposes of Part VII.
The new clauses which Amendment No. 237 substitutes for Clause 137 modify and clarify the provisions relating to powers to give directions and applications by office-holders to determine whether default proceedings are to be taken. Those are currently treated together in Clause 137. The new clauses treat the two matters separately and thus more clearly.
The other amendments are generally in the nature of drafting or tidying up amendments but I should mention in particular Amendment No. 241, which provides for a modification to the competition test set out in Section 119 of the Financial Services Act. We think it most unlikely in practice that a recognised investment exchange or recognised clearing house would need to have for the purposes of Part VII a rule which would not fall within the scope of the existing competition test. However, although we think it unlikely in practice, it is theoretically conceivable that such a rule might be necessary.
With that in mind, we believe it is necessary to cater for the possibility that the existing competition test might prove inadequate for the purpose of Part VII. However, in keeping with our view that rules which cannot meet the existing test should not in practice be necessary, we do not propose to commence the provision for the time being. We would only consider commencing it if it became clear at some stage that the purposes of Part VII could only be achieved by means of one or more rules which could not satisfy the existing competition test.
Moved, That the House do agree with the Commons in the said amendment. —(Lord Trefgarne.)
§ Lord Williams of ElvelMy Lords, perhaps I may address myself to Amendment No. 237, which, as the noble Lord said when introducing Amendment No. 207, is a substantive amendment. It is a new clause and I have two questions about it. First, do I take it from what the noble Lord said, and as I understand the Financial Services Act, that the powers in the new Clause 137, if that is what it is to be, can be delegated to the Securities and Investments Board? In other words, the Secretary of State would have the principal power but that is part of the delegation order. I imagine that that is so.
1057 Secondly, if that is so, subsection (2)(b) states that the Securities and Investments Board, if that is possible, or the Secretary of State may direct an exchange or clearing house not to take certain action, if it decides to do so, after consultation. Is that what the Government intend —to stop exchange or clearing houses taking action which they deem to be appropriate? I understood that the idea was to encourage people to take action. To stop regulatory bodies from taking action seems to go beyond the Financial Services Act as I have known it. I should be grateful if the noble Lord could clarify whether that is the intention.
§ Lord TrefgarneMy Lords, as I understand it, the answer is yes in relation to both exchanges.
On Question, Motion agreed to.