§ Dr. Cable
I beg to move amendment No. 1, in page 239, line 5 at end insert—7A. In section 13 (control of subsidiaries and other bodies corporate),—
- (a) in subsection (2)(a) for 'of the activities specified in Schedule 7 to this Act' substitute 'activities authorised by the Commission'; and
- (b) omit subsection (8).7B. In section 52 (applications to court), in subsection (2)(d) for `mentioned in Schedule 7 to' substitute 'authorised by virtue of section 13(2)(a) of'.7C. Omit Schedule 7 (activities which may be carried on by a subsidiary of or body jointly controlled by an incorporated friendly society).".
Mr. Deputy Speaker
With this it will be convenient to discuss the following amendments: No. 2, in schedule 17, page 241, line 24, column 3, at beginning insert "Section 13 (8).".
No. 3, in page 241, line 24, column 3, at end insert "Schedule 7.".
§ Dr. Cable
The amendment can be dealt with in seconds rather than minutes. It is a probing amendment, which reflects the interest in the problems of friendly societies expressed at an earlier stage of the Bill's progress by my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir R. Smith). He is on 355 paternity leave and cannot speak to the amendment this evening. [Interruption.] I seem to have triggered some interest in that issue.
Friendly societies are distinctive financial institutions; they are mutually owned and non-profit-making. We must be sensitive to the impact of regulation on such institutions. As my hon. Friend pointed out, many of them are small, thus the regulatory costs would be disproportionately high.
The purpose of the amendment is to ask the Government whether, while tidying up the schedule and bringing together earlier legislation on friendly societies, they have properly consulted the societies. Does the measure give friendly societies sufficient scope to develop their business and maintain an expanding part of the financial sector? Could the measure be technically improved by the inclusion of these small, technical amendments?
§ Mr. Flight
I support the amendment. Friendly societies are governed by the Friendly Societies Act 1992—schedule 7 of which sets out what business they can undertake. To change that, they must submit to the cumbersome mechanism of going to the Friendly Society Commission and the Treasury and then obtaining a statutory instrument. They have found problems in changing their activities according to circumstances. They will now be regulated by the FSA.
The Minister told us that the Government intend to repeal schedule 7 of the 1992 Act and there has already been movement in relation to the insurance activities of friendly societies. There can be no argument against getting rid of schedule 7, so that the activities of the societies can be governed by their FSA regulator.
§ Miss Melanie Johnson
As hon. Members will be aware—especially those who were members of the Standing Committee—the Government tries hard to please all Members. On this occasion, I trust that we shall succeed. Broadly speaking, I agree with the probing amendments tabled by the hon. Member for Twickenham (Dr. Cable).
I confirm that we intend not only to repeal schedule 7 of the Friendly Societies Act 1992, but to amend section 13 of the Act. Together, those provisions limit the purposes for which subsidiaries and jointly controlled bodies of an incorporated friendly society may exist.
The supervisory functions of the Friendly Societies Commission under the 1992 Act will be replaced by the functions of the FSA under the Bill. The commission's other functions will, for the most part, be transferred to the FSA. After the proposed repeal of schedule 7 and the necessary amendment of section 13, the FSA will impose any future restrictions to the extent necessary to protect the interests of policyholders of the friendly societies concerned.
I very much hope that the change to the regulatory regime for incorporated friendly societies will enhance their ability to provide services to the community, and I am sure that everyone hopes for that. We intend appropriate drafting to be inserted into schedules 15 and 17 when we are in a position to make the changes to which I have just referred. I hope that the hon. Member 356 for Twickenham will not press his amendment, because I assure him that the Government will introduce changes to meet the point that he has made.
§ Amendment, by leave, withdrawn.