Opposition peers say they are confident of defeating the Government today when the House of Lords votes on the issue of splitting the role of chairman and chief executive of the Financial Services Authority, the unified City watchdog.
Lord Saatchi, the Opposition Treasury spokesman in the House of Lords, said yesterday that while he held Howard Davies, the current chairman, in high regard, he wanted the Bill to be changed so that there was a presumption in favour of splitting the roles when the time came for him to be replaced.
Lord Saatchi said he thought it was unacceptable that a regulator which sought to enforce the correct procedures of corporate governance should be in breach of what most people see as the most fundamental tenet of the Cadbury code and other corporate governance codes in combining the two job roles.
The Government is under pressure to get the Bill through the House of Lords in order to meet its pledge to the City to have the legal underpinnings for the FSA on the statute book by the summer.
The chairman-chief executive issue is one of several on which Opposition peers have highlighted concerns ahead of the report stage of the Financial Services and Markets Bill, which begins today.
Liberal Democrat peers have agreed to back the Conservatives on this issue and on a number of other amendments.
Lord Saatchi insisted that the Opposition did not want to wreck the Bill. "We do support the concept of a single regulator," he said. But he added: "Bringing together nine separate regulators, you will create the most powerful regulator in the world. It is important that we get this right."
Opposition peers are also seeking to remove the FSA's legal immunity where it can be proved that the regulator has acted "recklessly". They believe that the regulator should be subject to an independent investigator able to make ex-gratia payments where the FSA has exceeded its authority. They are also demanding more public scrutiny of the FSA.
Lord Strathclyde, the leader of the Opposition in the House of Lords, said that far from being the very good bill that Melanie Johnson, the Treasury minister responsible, was claiming, the fact that it had been subject to 500 amendments from the Government was undermining confidence in the piece of legislation. "If that is what getting it right is, I would hate to see what getting it wrong is," Lord Strathclyde said.
The Government has already said that it would consider splitting the roles of chairman and chief executive in the future. Officials at the Treasury maintained yesterday that all the issues raised by the Opposition had been tackled before.
"The Bill has been subject to an unprecedented amount of scrutiny. It has had extensive debate. The number of amendments tabled reflects the willingness of the Government to make improvements where it is satisfied that they are necessary. We believe the Bill will make it on to the statute book on time," a Treasury spokesman said.
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