Pledge to keep Takeover Panel

By THIS IS MONEY
Updated:

 

The Government has pledged to preserve the Takeover Panel as a cornerstone of the City. Treasury Financial Secretary Melanie Johnson said: 'We see the Panel as a valuable part of the new regulatory mechanism.'

The House of Commons is today debating the Lords amendments to the Financial Services and Markets Bill, which Johnson is responsible for.

The future of the Takeover Panel has become one of the hardest sticking points for Opposition peers and MPs. So the Government has clearly decided to be as magnanimous as possible without abandoning its insistence that the Panel should not be given parity with Howard Davies's Financial Services Authority in deciding cases of market abuse.

Lord Saatchi forced through an amendment that takeover contestants should be given 'safe harbour' from charges of market abuse if they could show that they had complied with the City Takeover Code drawn up by merchant banks in 1968. But the Treasury sees that as giving the Panel too much power.

Last week Johnson, MP for Welwyn Hatfield, tried to appease Liberal Democrats by inserting a provision that the FSA must have regard to 'the way the Panel administers and interprets' the code. She explained: 'I expect the panel and the FSA to work closely together under a memorandum of understanding, just as the FSA will have with the Bank of England.'

However, Johnson was adamant that the FSA had to be dominant. 'We need a single clear definition of market abuse under a single authority,' she declared. 'Otherwise there would be a danger that you could be guilty of market abuse under one regime and not another, which would not be tenable. We are talking about very fine divisions of opinion, but this is an important issue of principle that the FSA, not the Panel, should be responsible for regulating market abuse.'

Although the Government's Commons majority will ensure it prevails, Johnson does not want another mauling when the re-amended Bill goes back to the House of Lords for final approval. 'I expect the Conservatives to fight their corner on this,' Johnson said, 'but we are determined to have a single regulator that will be a world leader in terms of low cost, flexibility and efficiency. The FSA is already being studied by several other countries as a possible model for regulating their own financial services industries. That suggests that we are getting the right sort of balance into our new regulatory regime.'

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