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Building Societies (Funding) and Mutual Societies (Transfers) Bill

We are getting into some tricky territory relating to drafting and how the clauses interact. I would be concerned if amendment No. 3 overrode subsection (9) such that credit unions, which we agreed were outside the scope of the Bill, could be brought in by virtue of the definition of an EEA mutual. I am sure that the Minister will clarify that eloquently when she chooses to speak in the debate. Extraterritoriality, whereby a Government seek to regulate activities that take place in other states, is a thorny issue in the financial services industry. I am a little concerned that the way in which amendment No. 3 interacts with clause 3(1) and (2) gives rise to the accusation of extraterritoriality. I am sure that the Minister is also wary of other states trying to regulate extraterritorially in the UK, and we would not want to be accused of introducing the same vice in the Bill. Clause 3(1) gives the Treasury the power to modify transfer provisions as it thinks appropriate, to facilitate the transfer of business between mutual societies. Subsection (2) indicates the extent to which the Treasury can intervene by referring to membership rights and so on. Will the Treasury be able to stipulate conditions about membership of a new pan-European financial mutual, when an EEA financial mutual acquires a UK financial mutual? The excellent explanatory notes, in reference to Lords amendment No. 6 and the justification of the charging by the FSA, state:"““The extension of clause 3 to EEA mutuals will require certain safeguards to be in place, equivalent to those applicable to domestic mutuals, regarding membership rights in the holding mutual and further demutualization.””" Amendment No. 3 would therefore appear to give the Treasury power to stipulate the future activities of a pan-European financial mutual. I suspect that it would enable the Treasury to say that such a mutual could not demutualise. In the event of further mergers, the Treasury, because of its earlier stipulations on mergers, might be able to restrict the commercial freedom of a mutual as it develops and grows.