HL Deb 19 April 1993 vol 544 cc1242-3

2.44 p.m.

Lord Spens asked Her Majesty's Government:

How many financial service businesses have been suspended by their regulating authorities under the various provisions of the Financial Services Act 1986 since inception and whether they consider it necessary to improve further the system of regulating authorities.

The Minister of State, Department of Transport (The Earl of Caithness)

My Lords, according to the Securities and Investments Board's latest annual report, by the end of March 1992, 1,045 interventions to restrict or stop firms from transacting investment business had been made by regulators under the Financial Services Act. We keep the operation of the Act under review. The chairman of the SIB has been asked to carry out a review of the way it carries out its responsibilities. His report is expected in the next few weeks.

Lord Spens

My Lords, I thank the noble Earl for that reply. Is he aware that outside the confines of the City the Financial Services Act is causing considerable problems to people who have been put out of business and for whom there is no proper legal redress? Its effect has been to create a web of financial patronage, probably exemplified by the Bank of England's action recently in bailing out a few of its friends and not some others. That has not been seen in this country for many a year. Do the Government propose to do anything about the absence of any proper, total, legal redress?

The Earl of Caithness

My Lords, we know that the implementation of the regulatory standards of the Act need to be strengthened. That is why the chairman, Mr. Large, of the SIB, is carrying out his review. We look forward to receiving his report. I take issue with the noble Lord on the question of redress. As he knows, there is an appeals procedure.

Lord Richard

My Lords, perhaps the noble Earl can help us a little more. The new proposed personal investment authority, which, as I understand it, will provide greater consumer representation and will be insisting on higher standards, is to be welcomed as a step in the right direction in the more effective regulation of financial services. Can he say when the new personal investment authority will be ready to take over as the only regulator to have a say in retail finance?

The Earl of Caithness

My Lords, we believe that there could be important advantages for investor protection if the PIA were established to regulate private investor business with support from those firms who do business in that sector. The progress made to date is to be welcomed, but I cannot give the noble Lord a date at this time.

Lord Ezra

My Lords, those of us who took part in the lengthy debates on the Financial Services Bill were concerned about the complexity of the measure and the diversity of institutions to which it gave rise. Can the noble Earl say whether the Government, after this lapse of time, are considering reviewing the overall operation of that Act?

The Earl of Caithness

My Lords, as I said, we keep the whole of the Act under review. We await with interest the report from the chairman of the SIB.