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Hoban rejects TSC appeal for FSMA rewrite

Treasury financial secretary Mark Hoban has dismissed Treasury select committee concerns that Government plans to amend the Financial Services and Markets Act rather than rewrite it could leave flaws in the new regulatory structure.

The TSC’s February report on the new regulatory framework called for the FSMA 2000 legislation to be revisited in its entirety to ensure the change is “right, not rushed”.

The Treasury has since decided to instead amend the existing FSMA legislation.

Speaking at Cicero Consulting’s Treasury ministers’ question time event in London this week, Hoban said the plans have been developed with extensive collaboration and scrutiny.

He said: “We have had two consultation documents, there will be pre-legislative scrutiny, which Labour called for and we acceded to, then there will be line-by-line scrutiny at the committee stage. This is one of the best thought-through and consensual pieces of legislation relating to financial services in recent years.”

Speaking at the same event, shadow Treasury financial secretary Chris Leslie said: “This approach will make it more difficult for people to follow the scrutiny of some fundamental changes through Parliament.”

Facts and Figures managing director Simon Webster says the FSMA should be rewritten from scratch.

He says: “The Government is reorganising the whole structure at great cost but this hotchpotch approach is not the right way to do it.”


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There are 6 comments at the moment, we would love to hear your opinion too.

  1. Adviser Alliance has been calling for a total overhaul of FSMA.

    The 1999/2000 FSMA drafting is responsible for the ease with which the FSA is enabled to cock a snook at both the industry and parliament and Hector Sants conceded to the TSC that changing the law was the only way that the RDR could be curtailed.

    Parliament needs to reconsider FSMA in its entirety, not just an occasional re-write of bits and pieces.

    FSMA also enables the FOS to exist outside the law and allows it to override advisers human rights.

    Everybody in financial services, bar the theorists and empire builders, knows that FSMA is poorly considered, badly constructed and thoughtlessly offered as proof that parliament has understood the ramifications and fall-out of the Act.

  2. IFA Defence Union 12th May 2011 at 2:25 pm

    The FSMA 2000 went through 1200 amendments before a clause was added at the last minute.

    Mr. Andrew Tyrie (Chichester): This is a quite extraordinary clause. I should be grateful if Labour Members would have a look at it, rather than doing their correspondence.
    The Vice-Chamberlain of Her Majesty’s Household (Mr. Graham Allen): It is a bit late for that.
    Mr. Tyrie: I agree with the hon. Gentleman’s comment; it is a very late clause. It means that we have all been wasting our time. A clause that just said “Let’s have some financial regulation”, followed by the clause that we are considering, would have done the trick very nicely, coupled with an explanatory note about the Government’s intentions. The clause gives the Treasury powers virtually to rewrite the Bill from top to bottom. It goes far too wide and our amendments only scratch the surface of what is required. I believe that the Committee has accepted 440 amendments, six of which were tabled by the Opposition. That was out of a total of 970 amendments that were tabled, as well as 18 new clauses. We have had 35 sittings and 100 hours work on the Bill. On no fewer than 63 occasions—I counted—Ministers have agreed to give further attention to other parts of the Bill, in addition to the amendments that I have mentioned. Why on earth have we been doing all this work if, whenever the Treasury feels like it, it can just alter the Bill at will?
    The first thing that I felt I needed to discover in response to the clause was whether such a provision existed in the Financial Services Act 1986. After all, if the Government and previous Administrations have carried on in this way in the past, perhaps I should not be so concerned about it. Incidentally, lest any hon. Member should feel that I am over-egging things, it is important to read the clause. It states that the Treasury may “by order”—that is by negative resolution—
    “make such incidental, consequential, transitional or supplemental provision as they consider necessary or expedient for the general purposes, or any particular purpose, of this Act”.
    Not content with that, in subsection (4) we find:—
    “No other provision of this Act restricts the powers conferred by this section.”
    In other words, the licence is to do exactly what the Treasury wishes. That is why it is worth examining the 1986 Act.
    The 1986 Act also enables the Treasury to vary the provisions, but it is far more tightly circumscribed than what is before us in the Bill.
    4.45 pm
    Sir Nicholas Lyell (North-East Bedfordshire): I do not know, Mr. O’Brien, whether you ever met Henry VIII, but this is one of his clauses. They may not be familiar now, but I have a nasty feeling that they might become so. I doubt whether the Minister will be able to enlighten us, but I am sure that these Henry VIII clauses exist on a word processor somewhere in the office of the Treasury or the parliamentary draftsman. All it takes to put such a clause into a Bill is one tap on one key and in it goes. The ghost of Henry Vlll may be stalking the Chamber, but one does not need ghosts. If anyone wants to know what ukase means, it is how Boris Yeltsin governments in Russia. It simply means diktat or decree.
    The clause would enable the Treasury by order—one might as well say by ukase, diktat or decree—to change the Bill at will if it regards it as expedient for the general purposes or any particular purpose of the Bill. Do the Government really intend to hand the Treasury the power to alter this carefully crafted legislation—or so they would have us believe—immediately, simply by laying an order before the House?
    Subsection (4) states:—
    “No other provision of this Act restricts the powers conferred by this section.”

    The clause is an extraordinarily wide Henry VIII clause, and the points that I raised should be addressed before we can agree to it.

  3. SIMON MANSELL 12th May 2011 at 3:35 pm

    Advice by Lord Lester of Herne Hill QC and Monica Carss-Frisk on the legitimacy of FSMA 2000 – given 1999:

    In our view, the Principles are so widely and vaguely drafted, that the conviction of a person of a disciplinary offence on the basis of an alleged breach of a Principle, where the conduct in question does not fall within a rule, evidential provision or guidance, would amount to a breach of the requirement of legal certainty in Article 7 of the ECHR.

    7 April 1999
    Blackstone Chambers
    Blackstone House
    London EC4Y 9BW

  4. Julian Stevens 12th May 2011 at 11:00 pm

    Fuirther proof, if any were needed, that Hoban is the FSA’s man in the House, despite Hector Sants’ claim that the FSA is independent of government.

  5. As far as I can see the FSA Principles are based on an oxymoron – “market confidence” and “consumer protection.” For years market confidence and the use of Section 348 of the FSMA 2000 has allowed the FSA to act like secret squirrel and hide all the things the public should know in the interests of consumer protection. And the most recent and most amazing example of course is the complete sham the FSA made of the RBS report – or rather the £7.7M non report. Oh that the public could get the kind of protection RBS and it’s ex chief Fred Goodwin have been afforded by the FSA using FSMA 2000.
    As any consumer dealing with the FSA will know to their cost, you would get more information and protection from the KGB. It really is time for a complete change and rewrite of the FSMA 2000 – unless we want another and more damaging credit crunch. You would think Mr Hoban would be looking to change this dangerous document immediately.

  6. Of course he does.He is a useful idiot employed by the fsa. When it all goes wrong, as it surely will, he will be the one they turn on..
    A MacDonalds employee could have made a better attempt at drafting FSMA.
    In case of any doubt on Hobans part, that is definitely a compliment to all MacDonalds staff.
    I’m lovin it.

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