Financial Services Bill

Debate between Lord Carlile of Berriew and Lord Sassoon

Tuesday 3rd July 2012 Lords Chamber

[Lord Sassoon]

My Lords, first, let us be clear that these amendments have very little to do with the Bill before us today. They are all about the Opposition’s misguided attempts to slow down what we need to do to deal with the consequences of the LIBOR scandal. We need rapidly to restore public confidence in the financial services industry, which the Government are pressing on with. We do not need to kick these very serious matters into the long grass, as the Opposition now propose. It is time for Parliament, as well as the Government, to take clear leadership on these matters. The events of recent days have highlighted that the culture of banking is badly broken. The Government are in the process of fixing the system, but we need to change the mindset of the profession and those working in it. This is about restoring banking to what it should be about: to be the most, and not the least, trusted profession.

The basic facts of the attempted LIBOR manipulation are clear. There have already been published reports from three regulators in the UK and the US. We do not need a judicial inquiry to tell us what the facts are. A judicial inquiry would be principally aimed at establishing the facts; it would likely take years to complete, might not be able to start until after prosecutions had been completed and would cost the taxpayer millions of pounds.

Now we need three things. First, we need the rapid prosecution of individuals who may have broken the criminal law. This is what the SFO and the Crown Office in Scotland are looking to do. Secondly, we need to look at how LIBOR cannot be fixed again, which is the subject of Martin Wheatley’s review. Thirdly, we need to look into the ethical and professional standards of the financial services industry and we need to do so urgently to ensure that the banking industry is serving the needs of the wider UK economy and the continued global competitiveness of London and the UK.

For this reason, the Government recommend that Parliament considers undertaking an urgent inquiry into the culture and ethics of the banking industry to help shape the urgent reform that is so much needed. The Government propose the establishment of a full parliamentary committee of inquiry, comprised of representatives from both Houses, and set up by a joint resolution of both Houses. The proposed terms of reference for the committee are building on the Treasury Select Committee’s work and drawing on the conclusions of UK and international regulatory and competition investigations into the LIBOR rate-setting process, consider what lessons are to be learnt in relation to transparency, conflicts of interest and the culture and professional standards of the, financial services industry, including the interaction of these with civil sanctions and criminal law. While I hear noble Lords seeking to paint this as a narrow inquiry, on any construction, these words will give the Joint Committee a very wide remit.

I am also glad that the Opposition now seem to support the creation of this committee. I have laid out what is required. We certainly do not require a proliferation and duplication of reviews that could go on for several years. We recommend that the inquiry should commence immediately and conclude by Christmas. As noble Lords are aware, the Government plan to introduce the banking Bill that will implement the recommendations of Sir John Vickers’s Independent Commission on Banking in January next year. This will bring far-reaching and lasting changes to the structure of British banks. The Government’s preferred timetable for the committee of inquiry would allow the Government to use the Bill to make any appropriate further changes needed to the standards of the banking industry and the criminal and civil powers needed to regulate it, and hold people to account for their behaviour.

The Joint Committee will do its work well and comprehensively and will report by Christmas. However, if, at that stage, this House or another place was not satisfied with the work of the Joint Committee, it will be possible for Parliament to press for a further inquiry. At that time, the inquiry proposed by this amendment would not even have started. The Government fully intend that Parliament should play a significant role in getting to the bottom of what happened and helping make the system more robust. It is surely highly desirable and consistent with many of our previous discussions in recent months that your Lordships’ House should be fully engaged in the process, bringing the full breadth of its expertise to bear from Peers of all the main parties and none.

This is already a big Bill, on which time is now being taken up by debating the merits of an inquiry—a debate that will not help noble Lords with the key business of the House today, namely scrutinising the detailed contents of the Financial Services Bill. It may help your Lordships to know that in another place on Thursday there will be debates on two Motions—one an opposition Motion, another a government Motion—to consider in detail the questions that we have debated at some length this afternoon. It is appropriate to leave another place to debate those Motions on Thursday so that we get on with and stick to the Committee’s core task today on the Financial Services Bill.

[Lord Carlile of Berriew]

I am grateful to my noble friend for his response. Will he confirm that, if there is to be an SFO-led inquiry into any criminality arising from the LIBOR incident, the SFO will not be expected to meet the cost of that inquiry from its existing budget but will be given the separate funding needed so that the inquiry can be full, complete and properly resourced?

[Lord Sassoon]

My Lords, as was in the Statement yesterday, I can confirm that the SFO is on the case, looking at all the possibilities for criminal prosecutions and that the Crown Office in Scotland is doing likewise. There has been no request of which I am aware from the SFO for additional resources. I assure my noble friend that, if there was such a request, it would be looked at sympathetically by the Government. It has been an important and lively debate because these are critical issues for the financial services industry and I hope that, with those further explanations, the noble Lord, Lord Eatwell, will withdraw his amendment.

Egypt: Mubarak Family Assets

Debate between Lord Carlile of Berriew and Lord Sassoon

Wednesday 16th February 2011 Lords Chamber

[Lord Sassoon]

My Lords, it would be wholly wrong to discuss individual cases. Indeed, it is a matter for the police and the Serious Organised Crime Agency, because in parallel to what I have described as the EU route is the principal relevant UK legislation, the Proceeds of Crime Act 2002. Under that Act, it is for the police and SOCA to initiate as they see fit, and not for the Government to direct, any action on criminal activity that relates to proceeds of crime or money laundering.

[Lord Carlile of Berriew]

My Lords, given the many assertions that the Mubarak family and their acolytes are the ultimate beneficiaries of substantial funds that are now held by British financial institutions, does my noble friend agree that it might be timely to remind those financial institutions and their compliance officers of their obligations to report suspected money laundering so that those institutions might fully exercise their part in ensuring that any criminal funds are found and released in the appropriate way?

[Lord Sassoon]

I am grateful to my noble friend. I have explained two parts of the construct: the EU angle and the Proceeds of Crime Act. Of course, it is highly relevant that banks are obliged under their normal reporting rules to file relevant reports if they see any suspicious activities. That relates particularly to any engagement and due diligence that is necessary in relation to politically exposed persons. This is a good opportunity, prompted by my noble friend, to remind the banks of their obligations under those ongoing rules, which I know the banks take extremely seriously.

Individual Savings Accounts

Debate between Lord Carlile of Berriew and Lord Sassoon

Monday 20th December 2010 Lords Chamber

[Lord Sassoon]

I am sorry to shut the door on this one, but the Government have considered this issue since we came into office, just as no doubt the previous Government had plenty of advice since they introduced ISAs in 1999. We have looked at it again and I am sorry to say to both the noble Lord, Lord Barnett, and my noble friend Lord Lee that I cannot hold out any other prospect. The AIM market continues to thrive. At the moment, almost 1,200 companies are quoted on it, 974 of which are UK companies, and the market is quoted at £67.6 billion, so it continues to be in good health in what I recognise are challenging investment conditions.

[Lord Carlile of Berriew]

My Lords, I, too, declare an interest as a director of an AIM-listed company. What tests are not applied to AIM-listed companies that are applied to full exchange-listed companies? Does the Minister accept that the boards of AIM-listed companies feel that they are subject—indeed, they are subject—to the same accounting rigour as FTSE-listed companies and that it is therefore now completely illogical to maintain this distinction?

[Lord Sassoon]

My Lords, without wishing at all to cast aspersions on the quality of AIM companies, it is nevertheless the fact that you can come to the AIM market without a trading record and with no minimum number of shares in public hands. Also, the UK Listing Authority does not usually vet the prospectus of AIM-listed companies and there is no minimum capitalisation requirement. Therefore, there are different requirements and obligations on AIM companies from those that apply to listed companies.

Terrorist Asset-Freezing etc. Bill [HL]

Debate between Lord Carlile of Berriew and Lord Sassoon

Monday 25th October 2010 Lords Chamber

[Lord Sassoon]

Under Clause 1, people anywhere in the world can be designated. To repeat myself again, the prohibitions, on the other hand, apply only within UK jurisdictions; that is, to assets either held in the UK or held by UK persons such as banks overseas. That is about as clear as I can be on the Government’s understanding of the scope of Clause 1. The people overseas who are subject to asset freezes are operating in environments where it is not possible to charge or to convict them clearly of terrorist offences, but where it is necessary in order to disrupt their actual or potential—

[Lord Carlile of Berriew]

Perhaps I may tempt the Minister into a more direct answer to the question posed by the noble and learned Lord, Lord Lloyd. Surely what he is saying amounts to no; it does not have extra-territorial effect. A clear answer to that effect might be helpful for future purposes.

[Lord Sassoon]

Not being a lawyer, I was trying to give a clear statement of what effect Clause 1 has in relation to the underlying reality of where it bites. As to whether this does or does not mean that it has extra-territorial effect, I will leave that to lawyers to sort out. However, I am now given advice which says that Clause 33 sets out the extra-territorial application of the offences. Perhaps that will help on this point.

Bank of England: Economic Forecast

Debate between Lord Carlile of Berriew and Lord Sassoon

Wednesday 6th October 2010 Lords Chamber

[Lord Sassoon]

I am not sure I agree with much of the noble Lord’s analysis of the situation, other than that a very necessary rebalancing of the economy has to take place. Within 50 days, my right honourable friend the Chancellor came forward with a radical, necessary and tough Budget. There will be painful adjustments as the private sector takes up the slack from the overbloated public sector. That is fully built into the Budget forecasts and the details of the spending cuts will be revealed on 20 October. The great range of forecasters, including the independent Office for Budget Responsibility, expect growth to continue quarter by quarter, with unemployment falling and employment going up.

[Lord Carlile of Berriew]

Does the noble Lord agree that there is an unhappy contrast to be drawn between, on the one hand, the reluctance of the banks to lend money to small and medium-sized businesses and, on the other, their enthusiasm for paying bonuses for profits? Would the situation not be far more acceptable if bonuses were paid for actions that bring stimulus to the economy and not merely profit to the banks?

[Lord Sassoon]

The critical question is about how we can see credit continue to flow to UK business, particularly small and medium-sized enterprises which cannot access the bond markets. Therefore it is encouraging that in the latest September data for August, credit conditions continue to improve modestly. That is critical. When it comes to bankers’ bonuses, there is unfinished business by both the Financial Services Authority and the Government to see what further action—whether that is disclosure or other measures—is appropriate to make sure that we get a proper balance in this area.