Committee stage in the Lords
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Lord NasebyConservative- Quote
- My Lords, I beg to move that the House do now resolve itself into Committee on this Bill. Moved accordingly, and, on Question, Motion agreed to. House in Committee accordingly. [The CHAIRMAN OF COMMITTEES in the Chair.] Clauses 1 and 2 agreed to. Clause 3 [Transfers to subsidiaries of other mutuals]:
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Lord Evans of Temple GuitingLabour- Quote
- moved Amendment No. 1:
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- Lord NasebyConservative
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- I am grateful to the Minister for making time to take this Committee stage and, more important, for having listened to the representations made in another place to see whether it was possible, given that we had already made considerable progress in helping the mutual movement, to go a little wider and look at the situation of mutuals in Europe. I would also like to place on record the appreciation of both Houses for Sir John Butterfill, who was primarily responsible for the Bill, although I should also mention the All-Party Building Societies and Financial Mutuals Group, which is one of the largest all-party groups in Parliament—I have the pleasure of being one of the founder members. We should not forget that 19 million people belong to mutuals throughout the United Kingdom. That is a huge number of people and it demonstrates the importance of the Bill. I have only two small questions. First, will the Minister, when he responds, confirm that the Treasury will consult on all secondary legislation that flows from the Bill? That is fundamental when there are some pretty open provisions on secondary legislation. My second question involves dipping into my memory bank—it is nice to see the noble Baroness here, with her experience of Europe. Hybridity is a sensitive area. I remember once, as Chairman of Ways and Means, being in charge of determining whether a Bill was a hybrid. Am I right in assuming that Amendment No. 1 has been included because we are dealing with EEA mutuals? If the Minister is not able to answer me this evening, perhaps he would be kind enough to write to me and place a copy of the letter in the Library. I understand that there might have to be provision to remove any question of hybridity in relation to an EEA mutual society, because that opens the door in relation to a UK society. Otherwise, we will be in a situation where others may cite this Bill as opening a Pandora’s box in relation to hybridity. I accept that this is rather a technical area and it may be specific to mutuals, but it relates to an important part of parliamentary procedure. Having said that, I greatly welcome the amendments. This is possibly one of the most dynamic things to have happened in the financial services world, because we are opening up the possibility of linkage between financial mutuals in the UK and their sister bodies throughout the EEA. That is greatly to be welcomed.
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- 19:45
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Baroness NoakesConservative- Quote
- I join my noble friend in paying tribute to Sir John Butterfill for introducing this Bill; we dealt with that at Second Reading but I would like to repeat it. I said to the Minister just before we started our proceedings that my only question was how the insurance provisions would be dealt with, so I was glad that he answered that in his introductory remarks. When I read the amendments, I could not see how insurance companies were being brought within the provisions. Following my noble friend’s comments, I have one question about hybridity. Is there any precedent for the new subsection contained in Amendment No. 1? Like my noble friend, I am concerned that we are creating a precedent with this Bill for disregarding hybridity, which is one of the lesser known but important areas of how we regulate our business.
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- 19:45
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Lord NewbyLiberal Democrat- Quote
- I join other noble Lords in congratulating Sir John Butterfill on getting the Bill to this stage and the Minister on setting out so clearly an extremely technical set of amendments. One of the interesting and positive things about this Bill is that it seeks to deal with future developments rather than past wrongs. The amendments today deal with mergers within the EEA. That is a positive and potentially dynamic development and we on these Benches are extremely supportive of the amendments.
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- 19:45
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- Lord Evans of Temple GuitingLabour
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- I am extremely grateful to noble Lords who have commented on the amendments. Given the sheaf of notes that I have on hybridity, I will take advantage of the offer of the noble Lord, Lord Naseby, and write a full letter to him and other noble Lords who have taken part.
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- 19:45
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- Baroness NoakesConservative
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- I am grateful to the Minister for saying that, but we will be invited to pass these amendments. Passing them would rule out any possibility of our considering whether this is so unique and unprecedented that we may wish to think again.
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- 19:45
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- Lord Evans of Temple GuitingLabour
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- In that case, I will spend the next 20 minutes going through the question that the noble Lord asked. The Government think that the amendment is necessary because an order under Clause 3 could make provisions giving members of a transferring mutual membership and other rights in the holding mutual. That could require changes to the constitution of the holding mutual. Where the holding mutual has a unique legal form—a private Act of Parliament, for example—that could raise an issue of hybridity. The amendment excludes the hybrid instrument procedure so avoiding unnecessary delay and complications in making the instrument. It could also affect domestic mutuals—the Wesleyan Assurance Society, for example. I hope that that short answer satisfies the noble Baroness. I will be able to write with more detail within the next day or so. On the noble Lord’s first question, yes, the Treasury will publicly consult on the provisions before they come into effect. With the commitment that a letter will be written to all noble Lords who have taken part in this debate and put in the Library, I hope that the amendments will be agreed to. On Question, amendment agreed to.
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- 19:45
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- Lord Evans of Temple GuitingLabour
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- moved Amendments Nos. 2 and 3:
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- 19:45
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- Lord Evans of Temple GuitingLabour
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- moved Amendment No. 4:
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- 19:45
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- Lord NasebyConservative
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- This is helpful. It clarifies the position, and I support the amendment. On Question, amendment agreed to.
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- 19:45
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- Lord Evans of Temple GuitingLabour
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- moved Amendment No. 5:
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- 19:45
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- Lord Evans of Temple GuitingLabour
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- moved Amendment No. 6:
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- 19:45
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- Lord NasebyConservative
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- I understand why the amendment is here, and of course we accept it. However, one notes that the FSA is currently running a surplus on its income, all of which has arisen from fees charged from varying transactions. Secondly, many of the mutuals are very small organisations and one encouraging feature of the Bill is that it will allow small and medium-sized mutuals to work together and amalgamate in one way or the other in the UK or across the UK and the EEA. I hope, therefore, that when the FSA comes to provide its fee structure, it will recognise that these are small mutuals, entirely there for the benefit of the membership that has joined together, and that it will not provide for—as it attempted when the Financial Services and Markets Act 2000 was passed—a de minimis fee structure. I hope that the Government and the Minister speaking for the Treasury will recognise that this is a different kettle of fish and that while there is to be a fee structure—and it is understood that there has to be one—nevertheless the message will go to the FSA that normal fee structures are not always appropriate to small mutuals.
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- 20:00
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- Baroness NoakesConservative
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- I completely understand where my noble friend is coming from, but I am a firm believer in fee structures being reflective of costs so that there are not cross-subsidies between different parts of the sector that is regulated by the Financial Services Authority. I understand that there may in some cases be public policy reasons for cross-subsidy, but I do not think that we should offer a blanket encouragement at this stage of our proceedings for such cross-subsidy.
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- 20:00
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- Lord Evans of Temple GuitingLabour
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- I am most grateful to the noble Baroness, Lady Noakes, for helping me out. I completely agree with everything that she said. At the same time, the noble Lord, Lord Naseby, made two valuable points. He has them on the record and I am sure that the FSA will read Hansard and take note. On Question, amendment agreed to. Clause 3, as amended, agreed to. Clause 4 agreed to.
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- 20:00
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- Lord Evans of Temple GuitingLabour
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- moved Amendment No. 7:
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- 20:00
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- Lord NasebyConservative
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- I totally agree with the amendment, but I should be grateful if the Minister would put on record the answer to the question that I asked him right at the beginning, on the commitment from the Treasury that there will be consultation on all secondary legislation in relation to this and the other clauses.
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- 20:00
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- Lord Evans of Temple GuitingLabour
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- I can confirm that that is the case. On Question, amendment agreed to. Clause 5 agreed to. House resumed: Bill reported with amendments.
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- 20:00
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Lord Bassam of BrightonLabour- Quote
- My Lords, I beg to move that the House do now adjourn during pleasure until 8.40 pm. Moved accordingly, and, on Question, Motion agreed to. [The Sitting was suspended from 8.06 to 8.40 pm.]
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- 20:00
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