Financial Services (Banking Reform) Bill

Baroness Anelay of St Johns Excerpts

Tuesday 8th October 2013 Lords Chamber

[Lord Blackwell (Con)]

My Lords, since I was unable to speak at Second Reading, I should take this opportunity to declare my interests at the start of Committee stage. I am a non-executive director of Lloyds Banking Group and chairman of Scottish Widows group.

[Baroness Anelay of St Johns (Con)]

My Lords, I would be most grateful if colleagues could leave the Chamber quietly, particularly because my noble friend is taking the proper course of declaring an interest which must be correctly entered in Hansard.

[Lord Blackwell]

My Lords, before moving on to the amendment, and as I did not speak at Second Reading, I want to make it clear that I strongly support the principles of the Bill, and the principle of ring fencing in particular. My amendment is to deal with some of the practical issues of making that work in the financial institutions. The amendment deals with the situation where a financial services group that is primarily operating ring-fenced activities retains a small set of activities that may fall outside the ring-fence.

The consequence of the legislation as it stands is that where a group is primarily operating ring-fenced activities but retains some non-ring-fenced activities which may be excluded activities, it would be required to have a separate board for the ring-fenced subsidiary and a separate set of directors operating in it—that is, separate from the group board.

I can understand why having separate boards for a ring-fenced subsidiary may be seen as desirable where the group contains a large non-ring-fenced activity in investment banking or wholesale market activities in order to police the separation between the ring-fenced and the non-ring-fenced activities. The provisions of ring-fencing under the Bill should of course deal with that situation by specifying the amount of capital and requirements for security in the ring-fenced activity and its resolution, preventing the flow of dividends controlling the financing relationships between the ring-fenced activity in the group, but I can also understand that having an independent board for the ring-fenced activity where there are other significant activities in the group provides an added level of security to deal with potential conflicts of interest.

However, where the non-ring-fenced activities are of a very minor nature compared with those within the ring-fenced bank, it could potentially lead to a situation where the group board with responsibility to shareholders and to the public has virtually no control over the activities of the ring-fenced activity, despite the fact that the vast majority of the assets and capital are within the ring-fenced subsidiary. That would be a nonsensical situation. It would be poor governance and it would be difficult to operate such a group board in that situation.

The type of activities that I am talking about are those where the ring-fenced bank may feel that to serve its customers effectively it needs to retain some element of activities outside the ring-fence not engaging those as a principal part of its business but as part of achieving a proper level of service to its customers.

The amendment would explore that situation where the non-ring-fenced activities are a fairly minor part of the group. There are two ways in which this could be resolved in a common-sense way. The first way would be for the regulator to exercise discretion under new Section 142D to the FSMA to allow a small volume of otherwise excluded activities to be carried out within the ring-fence so long as the regulator is satisfied that including those activities within the ring-fenced subsidiary did not put at risk the solvency or ability to resolve the ring-fenced activities if there were situations that used the capital applied to the non-ring- fenced activities. So one solution would be to allow the ring-fenced bank to extend its activities. Of course, the regulator would also need to be assured in that situation that allowing the ring-fenced bank to operate those activities would not distort competition with non-ring-fenced banks operating in those markets without the ability to operate within the ring-fence.

The second way of resolving this, if the regulator does not feel that it can include those excluded activities within the ring-fenced subsidiary, would be for the regulator to use its discretion under new Section 142H(5)(d) to waive the requirement for separate board membership of the group and its subsidiary, again where the regulator is convinced that in so doing it does not put at risk the ability to resolve the ring-fenced bank where there was a threat to its solvency.

The amendment is probing in nature. The legislation as I have described it allows the regulator to exercise discretion, but I invite the Minister to provide clarity that where the legislation says that the separation of the boards should be “to a specified extent”, the regulator would have the freedom and indeed the expectation that it should exercise that discretion with due respect for the proportionality of the activities within the ring-fence and any activities that there may be within the group outside the ring-fence. That seems to me to be a common-sense solution. I beg to move.

EU: Domestic Growth

Baroness Anelay of St Johns Excerpts

Thursday 25th April 2013 Lords Chamber

Motion agreed.

[Baroness Anelay of St Johns]

My Lords, I beg to move that the House do now adjourn during pleasure until 3.15 pm, when the Royal Commissioners shall attend the House and prorogue Parliament.

Motion agreed.

Public Service Pensions Bill

Baroness Anelay of St Johns Excerpts

Tuesday 15th January 2013 Lords Chamber

[Lord Newby]

My Lords, this group of amendments is concerned with the recommendation of the noble Lord, Lord Hutton, that each public service pension scheme should have an advisory group.

[The Deputy Chairman of Committees (Baroness Anelay of St Johns)]

My Lords, we are joined seamlessly at the hip—my noble friend Lord Forsyth will be pleased. On this occasion, I hope that noble Lords will feel it right to leave the Chamber quietly so that the aficionados of the pensions Bill can continue with their work.

[Lord Newby]

My Lords, as I was saying, this group of amendments is concerned with the recommendation of the noble Lord, Lord Hutton, that each public service pension scheme should have an advisory group. Although these have always been dealt with administratively, we have listened to concerns raised in another place and proposals from stakeholders. As a result, we have decided to make these groups plain on the face of the Bill.

Amendment 45 introduces a new clause to require scheme regulations to establish a scheme advisory board. The central purpose of the scheme advisory board will be to consider and advise on the desirability of future changes to the schemes. The board will advise the responsible authority on any matter that it asks the board to consider, whether wide-ranging or focused on a single issue. The board’s role will supplement, rather than replace, the role of other persons and bodies in responding to consultations under Clauses 11, 19 or 20.

The scheme advisory boards may play an additional role in the locally administered police, fire and local government schemes. In those schemes, the board may also advise the scheme managers and pension boards when such advice is requested or on their own initiative. Subsection (2) provides that the board can advise them on the effective and efficient administration of the scheme, any connected scheme and any pension fund that relates to them.

This amendment is in light of proposals that employer and employee representatives have put forward in respect of the local government scheme in England and Wales. While the precise role will be a matter for scheme regulations, we envisage that the locally administered schemes will want to provide for the advisory board to offer central support to scheme managers. That advice is likely to cover matters such as best practice and ensuring consistent approaches to the management of the schemes.

The advisory board will identify policy and operational issues that need to be resolved, either by better practices at a local authority level or perhaps through changes to scheme regulations or guidance. In turn, the advisory board will be able to advise the relevant parties on how changes should be made to improve the management and administration of the schemes and their pension funds. For example, there will almost certainly be an advisory board role to agree and advise on the interpretation of the legislative requirements—potentially around co-commissioning of expert advice and systems—and the co-ordination and co-commissioning of services. It is likely that, for the funded local government scheme, it will monitor fund performance across the pension funds. The employer and employee representatives in that scheme envisage a role to support scheme managers and pension boards to improve fund management across the scheme. These amendments allow for that.

The scheme advisory board will not have a separate role in advising the scheme managers and pension boards in the nationally administered schemes. That is not needed in those schemes. Unlike the locally administered schemes, the scheme manager and responsible authority will be the same person. Importantly, the amendments maintain a clear separation between the advisory board’s policy role and the scheme manager and pension boards’ responsibilities for the management, administration and governance of the scheme. The noble Lord, Lord Hutton, highlighted the importance of this separation of roles in his report.

Finally, the amendment requires that scheme advisory board members must not have a conflict of interest that could prejudice the way they undertake their role. This does not prevent a scheme member, or an employer or employee representative, being a board member. Those are not interests that would prejudice the way they undertake the role—indeed, they are instead interests that support such an undertaking. I commend these amendments to the Committee.

Financial Services Bill

Baroness Anelay of St Johns Excerpts

Monday 12th November 2012 Lords Chamber

25A: Clause 6, page 20, line 37, at end insert—
“(5A) In discharging its general functions the FCA must have regard to the desirability of not requiring the persons whom it regulates to observe any principles, rules or requirements that extend beyond those directly arising under the requirements of the EU single market legislation and of any other EU obligation (as defined in the European Communities Act 1972) or any directly applicable EU legislation, or of any related technical standards or guidance.”

[Baroness Anelay of St Johns]

My Lords, perhaps I may remind noble Lords who are seeking to leave the Chamber rather than listen to my noble friend Lord Flight that it is a courtesy of this House that they do not walk in front of him as they are leaving. I mean my own colleagues on my left.

Financial Services Bill

Baroness Anelay of St Johns Excerpts

Wednesday 18th July 2012 Lords Chamber

[Baroness Hayter of Kentish Town]

My Lords, I am impressed that I will be standing opposite an immaculate Whip, which I am sure will make for a good day’s work on the Bill.

The amendments in the first group—

[Baroness Anelay of St Johns]

My Lords, I hesitate to interrupt the noble Baroness who is carefully moving her amendment, but I remind noble Lords that a substantial number of Peers wish to take part in the Committee stage of the Bill. Will noble Lords please leave the Chamber a little more quietly so that we can hear the noble Baroness?

[Baroness Hayter of Kentish Town]

I thank the noble Baroness for that assistance.

The amendments would raise the standards of professionalism in the financial industry; partly by adding professional standards to the definition of integrity, partly by introducing a code of conduct and partly by mandating a training and competence regime. That is only what other professions expect: training, a code, a qualification, CPD and proof of competence.

Part of the reason that we trust lawyers and doctors, architects and surveyors, is that they meet these requirements with proof of competence. That is why we trust them with our wills, our conveyancing, our divorces and our lives. A code of conduct enables us to know what is expected of them in terms of behaviour, ethics and integrity, as well as in particular skills and standards.

Let me quote from just one such code—that for solicitors. It reads:

“You must: …act with integrity ….act in the best interests of each client … provide a proper standard of service to your clients”—

—although, having checked lots of codes of conduct, I find that surveyors have to,

“always provide a high standard of service”,

so perhaps we could have some trading up there.

So you have to act in the best interests of clients, provide a good standard of service to your clients and not behave in a way that is likely to diminish the trust that the public places in you or the profession. If only bankers and the rest of the industry had signed up to that and it had been enforced by their professional body or regulator. Sadly, we have learnt the hard way that the culture and behavioural traits of those working in the financial services sector have not been sufficient with regard to professionalism, integrity and competence.

Financial Services Bill

Baroness Anelay of St Johns Excerpts

Tuesday 26th June 2012 Lords Chamber

[Lord De Mauley]

My Lords, I beg to move that the House do now resume.

[Baroness Anelay of St Johns]

My Lords, it may be convenient at this point if I explain why the House is resuming and will adjourn before we have reached the agreed target, which was agreed in the usual channels this morning, of Amendment 32. It has been agreed after constructive discussions in the usual channels this evening that we should finish as close to 10 o’clock as possible, even if, as I understand from my noble friend the Minister, the next group of amendments might take only a matter of a few minutes. But we came to an agreement, and I stick by my agreements, as I know that the noble Lord, Lord Eatwell, sticks by his—and that is valued.

The understanding between the usual channels is that, after two days in Committee, the opposition Chief Whip’s office will sit down and work with the Bill team to provide accurate guidance for Back-Benchers as to which subjects will be dealt with in the remaining days in Committee. Overall, all of us have a care to ensure that those on the Back Benches, who are playing an important part in this Bill, know which amendments may be taken on which days and roughly at what time of day, because that is how the House works well. I am aware from what my noble friends have said today that those who have worked in Committee today have taken care to give proper scrutiny to the Bill. I am sure that the discussions that we have had in the usual channels tonight will enable that to take place again in future days.

House resumed.

Banking: Government Shares

Baroness Anelay of St Johns Excerpts

Monday 13th June 2011 Lords Chamber

[Lord Peston]

No.

[Baroness Anelay of St Johns]

My Lords, it is a courtesy. The Question was posed from the Labour Benches. It might be helpful to hear from a different Bench, just for the moment.

[Lord Newby]

My Lords, given that all UK citizens have, to a greater or lesser extent, had to bear some of the costs of the Government bailing out the banks, can the Minister confirm that the Treasury is giving serious consideration to the distribution of the state-owned shares in RBS and Lloyds Banking Group to the UK population as a whole?

Budget Responsibility and National Audit Bill [HL]

Baroness Anelay of St Johns Excerpts

Monday 7th February 2011 Lords Chamber

[Baroness Anelay of St Johns]

My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Budget Responsibility and National Audit Bill, has consented to place her prerogative, so far as it is affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

A privilege amendment was made.

Comprehensive Spending Review

Baroness Anelay of St Johns Excerpts

Monday 1st November 2010 Lords Chamber

[Baroness Turner of Camden]

My Lords, I want to concentrate on what I believe to be the general direction of government policy, as revealed by the review, and its possible effect on all of us as individuals. To put it simply, the Government’s approach seems to be based on the perception “public bad, private good”. Hence the emphasis on privatisation, which was also a feature of the previous Government of which some of us were critical. Yet the present coalition is taking this much, much further. Hence the so-called reform of the welfare state, although, as the shadow Work and Pensions Secretary has pointed out in the other place, welfare reform and welfare cuts are quite different. It looks as though we are mostly going to get cuts.

First, there will be public sector unemployment, which the Government’s own figures indicate will be almost half a million lost jobs. Secondly, there will be a decline in welfare benefits, on which many of our fellow citizens depend. I believe that, in both instances, the impact on women will be disproportionate and certainly not fair. The unemployment resulting from the public sector cuts is likely to be mostly of women, as a large number of women are employed in the public sector. I have already had letters from women working in the public sector who are scared that they will lose employment in areas where alternative employment is virtually non-existent. We heard some explanations today from my noble friend Lady Hollis of exactly why that is.

We sometimes forget just how women’s rights were improved in the last century. At the beginning, women really were second-class citizens with no right to vote, limited access to jobs and limited access to higher education. There was widespread discrimination. If women had jobs, they were expected to leave when they got married. In many large companies, women were employed only in non-career jobs and were not included in pension schemes until they were over 30 and presumed to be “on the shelf”—that is, unmarried. There was widespread discrimination in unequal pay and, of course, a lack of promotion opportunities in employment. The widespread discrimination that existed has now disappeared, although some complaints can still justifiably be voiced nowadays. Those improvements were achieved as a result of a continuous campaign by previous generations of women. It is sometimes not appreciated just how much was due to women’s access to the job market and to equality legislation, for which Labour Governments were largely responsible. That meant that women achieved independence. They did not have to stay in relationships that were impossible for them.

The spending review, with its impact on women’s employment, could put at risk the achievements of past generations. The Government believe that the private sector will create alternative jobs. In fact, the loss of jobs in the public sector could result in further job losses in the private sector. A number of speakers have explained that today. Many experts do not think it credible that the private sector will be able to create jobs on the scale that will be needed.

As to the review’s proposal on public services, local government has been threatened with cuts and some councils are already responding by cutting staff. Services likely to be at risk involve the provision of social care for elderly people. This is already a problem in many areas and, again, an area where the impact is most likely to be felt by women. Many of the elderly will be older women, whose carers, if they have them, are also likely to be women. I remember when, during a previous employment crisis, those seeking work were famously told by the noble Lord, Lord Tebbit, to get on their bikes and look for work. Well, many did, with the result that family members often do not live close to one another any more; they no longer live round the corner and some even live abroad, hence Age UK’s current campaign on behalf of older people living alone.

Perhaps the Government think that all necessary social services will in future be provided by volunteers in the so-called big society. We should greatly respect those who volunteer to help others, but caring for elderly and disabled people is a service that should be provided regularly in any civilised and developed society. I shall perhaps be told that the review provides for social care some £2 billion from 2014-2015. I welcome that, but it is some years ahead and the need exists now. Moreover, local government will, presumably, be responsible for administering it along with other services and is already suffering from cuts in income. Will this new money be ring-fenced? Other services under threat, including the provision of social houses, have already received much attention and will, no doubt, be further debated in this House.

I believe that the spending review is ideologically motivated. It is presented to the public as if there is no alternative and as if it is all the fault of the previous Government. Yet alternatives have been suggested by many experts, including a number who have spoken from this side of the House in this debate. What is being proposed could disrupt many lives, mostly of poorer people.

I find it ironically amusing that the talk of the big society often refers to a variety of voluntary organisations, when one of the largest voluntary organisations in this country—with a leadership elected by its membership—is the trade union movement. But unions do not get a mention—oh no. They are apparently not part of the big society as far as the Government are concerned. It is the job of unions to represent their members—many thousands of ordinary workers—and we can expect that they will endeavour to do so. As a former union official, I hope that they will succeed.

The welfare state was created after the Second World War because no one wanted to return to the poverty of the 1930s. The policy direction outlined in the spending review is neither fair nor just and puts at risk some of the achievements of previous generations.

[Baroness Anelay of St Johns]

My Lords, following inquiries from many of those taking part in this important debate and discussions with the opposition Chief Whip, it may be helpful if I advise the House that, at the current rate of progress, with speeches of around eight to 10 minutes, the House is likely to rise after midnight.

--- Later in debate ---

[Lord Knight of Weymouth]

My Lords—

[Baroness Anelay of St Johns]

My Lords, I remind the House that it is a courtesy for a Minister to give way during the debate to answer questions. It is not a courtesy then to interrupt repeatedly. The House has had a long and testing debate and I am sure that we will return to these issues in detail in departmental debates.

[Noble Lords]

Oh!

[Baroness Anelay of St Johns]

I do not need to protect my Minister. My Minister is here to protect the economy of this country.

[Lord Sassoon]

My Lords, I have got all night. I am very grateful to my noble friend. It is late, and we will have an opportunity to come back to these matters again. Specific funding for 16 to 19 year-old learning will be announced in the statement of priorities for the Department for Education later this year, so we will have opportunities to come back to that.

I move on briefly to one or two further points on reforms to our public services. We will leave no stone unturned in our search for waste, while we devolve power and funding away from Whitehall. I was very struck by the contributions by my noble friends Lady Browning and Lord Newby, who reminded us just how much more we can get from Government by better procurement and cutting waste. It is in those ways that we will be able to target expenditure going forward on those who need it—whether that is for 16 to 19 year-old education or those with disabilities. We have to remember at all times that the attack on waste continues to be a high priority.

Rightly, concerns have been expressed about the transitional effects of the job losses from the public sector. The Government are also very concerned about easing the transition, which is why we have announced the initiative such as the £1.4 billion regional growth fund.

I conclude today’s debate by saying that the decisions that we have taken have restored credibility to our public finances and stability to our economy. When we came to power, this coalition Government did face the worse economic inheritance in modern history. We have had to make tough choices—