Financial Services and Markets Act 2000 (Exemption) (Amendment No. 2) Order 2011

Lord Knight of Weymouth Excerpts

Monday 17th October 2011 Grand Committee

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, there is perhaps some confusion about what we are doing here today and what else needs to be done in connection with this order from the Joint Committee on Statutory Instruments.

Let me start by explaining the situation we are in, because it is complicated. The previous Government in March 2010 made a decision—a joint decision of Treasury Ministers and Ministers of the Department of Enterprise, Trade and Investment in Northern Ireland—that credit unions in Northern Ireland should no longer be exempt from regulation under the Financial Services and Markets Act 2000 and that responsibility for their regulation should transfer from the Department of Enterprise, Trade and Investment to the Financial Services Authority. That decision was taken by the previous Government and we are considering the order today. As the Deputy Chairman reminded us, the formal business is moved on the Floor of the House. We are considering the statutory instrument that puts into place a decision by the previous Government.

The running consultation is about consequential provisions relating to the details of the transfer, the transitional arrangements, grandfathering, temporary powers for the FSA, how information will transfer between the department and the FSA, and consequential issues to do with money laundering and terrorist financing. Those will all be dealt with—to the extent they need to be—in the appropriate way through instruments or regulation. Therefore, what is being consulted at the moment is nothing that should detain us from putting in place a decision by the previous Government with which this Government completely agree. In our view, it is about time that we got on with the enabling instrument and there is no reason not to allow the consultation on the “how” of the transfer to carry on in the normal way.

The Treasury is publishing today responses to the original policy proposals in principle. However, the decision was originally taken and announced in a joint document by the UK Government and the Northern Ireland department in March 2010. I think we should turn to the substance of the order.

[Lord Knight of Weymouth]

I am grateful to the Minister for giving way, but given my noble friend Lord Eatwell’s comments and the confusion that the Minister alleges my noble friend had, would it not have been easier to wait? Is there any reason why the Minister wants to move this Motion now, given that it would have been easier to consider the two orders together for the sake of clarity?

[Lord Sassoon]

I am not alleging any confusion other than that this is a complicated series of manoeuvres that has to be gone through to effect the transfer. It is quite right that we should consult on the how. It is for this Committee to decide the simple and important issue of principle as to whether the people of Northern Ireland, 50 per cent of whose population have their money invested in credit unions, are given the proper and full protection which FSA regulation would give them. Of course it is important that the how of the transfer is properly considered, which is what the current consultation is all about, but it might be sensible if we considered the arguments—which I think are extremely clear cut; there is nothing between the previous Government and the present Government on this—that we need to get on and give those in Northern Ireland, a very significant number of people, the protection afforded to those who put deposits in banks in the whole of the United Kingdom and currently put deposits in credit unions in Great Britain.