§ Mr. Nelsonasked the Secretary of State for Trade and Industry whether he has received representations concerning the provisions of the Financial Services Bill relating to recognised professional bodies; and if he will make a statement.
§ Mr. HowardI have received a number of representations from interested parties on this subject.
As a result I have concluded that the Bill should be amended so as to confer authorisation to carry on investment business on corporate practices, partnerships or members of recognised professional bodies practising the profession on their own account. A business will be authorised for the purposes of the Bill if it holds an appropriate certificate issued by the body concerned. This provision will replace that now included in the Bill which confers automatic authorisation on individual members of recognised bodies.
It is the intention that recognised professional bodies should only supervise investment business which is incidental to the practice of the profession concerned. It will be a condition of recognition that a body satisfies the Secretary of State or designated agency that it has arrangements for ensuring that certificates are issued only to businesses whose main business is the practice of the relevant profession. Recognised professional bodies will also be required to have rules limiting the kinds of investment business which may be carried on and the circumstances in which such business is to be regarded as carried on in the course of practising the profession. This requirement will be in addition to the existing requirement in the Bill to have and enforce rules which provide a level of investor protection at least equivalent to that provided by rules under chapter V of part I of the Bill.
I have also decided that in the light of the limited kind and scale of investment business which will be regulated by recognised professional bodies it will not be necessary to give the Secretary of State or designated agency a power to change their rules, as I am proposing in the case of recognised self-regulating organisations. The Secretary of State or designated agency will, however, be able to apply to the courts for a compliance order if any of the recognition requirements are not complied with, as is currently provided for in the case of recognised self-regulating organisations by clause 12 of the Bill.
On the same grounds I have decided that it would not be appropriate to extend to recognised professional bodies the same immunity from suit for damages as I shall be proposing for recognised self-regulating organisations.