§ 7. Mr. Cash
asked the Secretary of State for Trade and Industry if he has received any representations concerning the Securities and Investments Board's application to be the designated regulatory body for the financial services sector referred to in his answer on 10 February, Official Report, column 165, to the hon. Member for Chichester (Mr. Nelson).
§ 10. Mr. Hanley
asked the Secretary of State for Trade and Industry, pursuant to his answer to the hon. Member for Chichester (Mr. Nelson) on 10 February, Official Report, column 165, if he is now in a position to make a statement on progress on his consideration of the Securities and Investments Board's application to be considered as the designated agency for the regulation of the financial services sector.
§ The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Michael Howard)
My right hon. Friend received the SIB's request for transfer of powers on 10 259 February. As required by the Financial Services Act, my right hon. Friend has sent to the Director General of Fair Trading a copy of the material submitted by the SIB. My right hon. Friend and I have received a number of letters concerning the SIB's proposals, which will be fully considered. If, after considering the Director General's report and any other points put to him, my right hon. Friend is satisfied that the requirements of the Act have been met, he will lay the necessary order as soon as possible.
§ Mr. Cash
Will my hon. and learned Friend confirm that important questions on competition arise in relation to these rules? Will he confirm that it is the intention that the smaller bodies, those which do not necessarily come within the more recognised activities but which nevertheless are important, should be maintained and need to have a fair opportunity to get into the financial services sector? Does my hon. and learned Friend agree that we should do nothing that would in any way discriminate against those bodies and that we should make sure that they have a fair deal together with everybody else?
§ Mr. Howard
Yes. These are matters which, no doubt, the Director General of Fair Trading will look at in the context of competition. My right hon. Friend the Secretary of State will consider his report carefully, paying particular attention to the considerations to which my hon. Friend has referred.
§ Mr. Campbell-Savours
How does the Minister distinguish between the powers of the Securities and Investments Board, the powers of Department of Trade and Industry inspectors and the powers of the fraud squad? Why does the hon. and learned Gentleman not let the fraud squad go into Guinness to sort it out? Is it that the Government are deliberately trying to duck a full investigation into what is going on in that company?
§ Mr. Howard
It is difficult to see how this matter arises out of the Securities and Investments Board's proposals. The position on Guinness is that, as soon as it is appropriate for the fraud squad to be involved in criminal aspects of the investigation, it will be.
§ Mr. Hanley
Does my hon. and learned Friend agree with the article in The Guardian on 9 February to the effect that the SEC's embarrassment over the Boesky affair shows that no matter what form of legal framework one has, and no matter what sort of sophisticated computers one uses, what is needed is not that sort of framework but political will? Does my hon. and learned Friend agree that the Financial Services Act contains that political will? Will he assure the House that the Act will be implemented as quickly as possible?
§ Mr. Howard
I entirely agree with my hon. Friend. I can certainly give him that assurance. The article in The Guardian to which he referred was particularly interesting. After an analysis of the differences between our system and the SEC, it concluded:None of this seems terribly encouraging for advocates in Britain of an SEC.
§ Mr. Nelson
I welcome the proposal to transfer these powers to the SIB. Will my hon. and learned Friend confirm that all the additional powers which were enabled to be transferred to the SIB will, in fact, be transferred and that the SIB will be a watchdog that is able to bite as well as to bark? In particular, following the whingeing of some 260 of the major banks about how they will be prejudicially affected by the polarisation issues, will my hon. and learned Friend give an assurance, as requested by my hon. Friend the Member for Stafford (Mr. Cash), that the smaller entrants, especially the independent intermediaries, will not be prejudicially affected by any such order?
§ Mr. Howard
My right hon. Friend the Secretary of State will, of course, carefully consider all the applications which have been made by the SIB for the transfer of particular powers in the Act. Of course, my right hon. Friend will have full regard to the interests of the intermediaries, to which my hon. Friend referred, in the light of such considerations as may be drawn to his attention by the Director General of Fair Trading.
§ Mr. Robin Cook
Does the Minister never read the business pages? Against the background of the City scandals which have dominated those pages, does the hon. and learned Gentleman really intend to ask the House to approve the desgination of a board which will not comprise public servants, the only formal status of which is as a private company limited by guarantee, whose only income will be from the City that it is supposed to police, and which will have no powers over the takeover panel or Lloyd's insurance, where the worst scandals have occurred? Why do the Government now insist that trade unions need an independent statutory commission, but say that regulation of the City can be left to self-regulation by their friends there? Why do the Government not accept that the City needs a system of supervision at least as tough as the system that they are imposing on the trade union movement?
§ Mr. Howard
The hon. Gentleman knows perfectly well that to characterise the system under the Financial Services Act 1986 as self-regulation is a gross misnomer. He knows that a firm and tough statutory framework is provided by the Act. When I invited the hon. Gentleman in the last debate that we had on this matter in the House to identify a single power that resided in the SEC that was not in the possession of the SIB, the only power that he rose to mention was a power that the SEC does not possess.