Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No. 2) Order 2009

I am grateful to the Minister for setting out the provisions of the order and, like the noble Baroness, we are content with it. I, too, have one or two questions about how it will work in practice. Picking up the point made by the noble Baroness, it is now six months since the Bill received Royal Assent and, as far as I can tell from the documentation, which is silent on the point, no real progress has been made in establishing a reclaim fund. Some had doubts about how enthusiastic the banks really were about that initiative. One can imagine that, especially at the moment, they would prefer to hang on to as much money as they can for as long as possible. Anything that the Minister can say about the timetable for the establishment of the reclaim fund will be extremely welcome. One provision of the regulation is that the Financial Services Compensation Scheme will come into play in the unlikely event of the reclaim fund becoming insolvent. When we discussed that as the Bill was passing, we raised that possibility. The Government's response at that point was that the fund could borrow to make up any short-term shortfall—because, of course, there will be a constant flow of funds into the reclaim fund. Even if the reclaim fund had been overgenerous in passing money across to the lottery, it would be naturally replenishing its resources over a period, as more funding came in. I wonder why we need that belt-and-braces approach. I have a sense that if we reached the situation where the Financial Services Compensation Scheme was called into play, the whole basis of the scheme would be so fatally undermined that we would have almost to start again. I thought that the way that the reclaim fund had been established meant that that just was not a possibility and that it could borrow to deal with any short-term shortfall. I greatly enjoyed reading the assessment of the effect of the fund, because on virtually every piece of information that could have been given, the answer is either "no" or "not applicable". However, there was some information about costs, and I would be grateful if the Minister could explain a couple of things. It states that, ""the FSA proposes to meet its set up costs through an increase of 0.4% in the annual fees paid by banks and building societies eligible to participate in the scheme"." How much is that? It seems to me that the cost to the FSA of setting up its regulatory function under the order should be extremely small. I do not know what 0.4 per cent amounts to be, but it could be quite a significant sum. The FSA then plans to charge a £25,000 authorisation fee on top of that. I wonder why that is necessary if it is meeting the costs through the levy. It then estimates incremental compliance costs as being up to 5 per cent of the total cost of running the scheme. That seems to me to be quite a lot, because this is a simple scheme. Anything that the Minister could say to explain those costs would be gratefully received. However, subject to those comments we support the order.