Banking: Regulation

Lord Barnett Excerpts

Monday 10th December 2012 Lords Chamber

Asked By

[Lord Barnett]

To ask Her Majesty’s Government what action they propose with regard to the regulation of the banking industry.

[Lord Newby]

My Lords, Her Majesty’s Government have committed to fundamental reform of financial regulation in the United Kingdom through the Financial Services Bill, which received its Third Reading in the House last week. Further regulation of the banking industry will be contained in the Banking Reform Bill, which is currently the subject of pre-legislative scrutiny by the Parliamentary Commission on Banking Standards.

[Lord Barnett]

Has the noble Lord seen what was said by the present Governor of the Bank of England last week that this can be dealt with without even bothering with regulation? First he criticised the banks for hiding £60 billion of debts and then he went on to suggest that banks should increase their capital reserves immediately. Does the Minister agree with that, or does he agree with the banks that say that if they increase the capital reserves they cannot also lend as the Chancellor has suggested? Which one of those does the Minister agree with?

[Lord Newby]

My Lords, the fact that the governor can make statements at the moment that are aspirations and have no direct impact shows why the new regulatory architecture, particularly the Financial Policy Committee, which is a new body designed specifically to look at these things, is so important. I am sure that they are reflecting on his views and will be opining on them very shortly.