Banking: Financial Crime

Debate between Lord Flight and Lord Bridges of Headley

Wednesday 2nd December 2015 Lords Chamber

[Lord Bridges of Headley]

The Bill does not change any existing obligations on individuals working in the financial services industry to report wrongdoing whether within their own firm, to regulators or to other authorities. To address the noble Lord’s question directly, the FCA published in October a package of rules designed to encourage a culture in banks where individuals feel able to raise concerns and challenge poor practice and behaviour. Those rules will also constitute non-binding guidance for other financial services firms.

[Lord Flight (Con)]

My Lords, does the Minister agree that the new senior managers regime imposes extremely detailed requirements for dealing with both accountability and responsibility—it is virtually micromanaged and reported on—and that the suggestion that the new arrangements have gone soft is completely wrong?

[Lord Bridges of Headley]

I entirely agree with the noble Lord. The new system will be robust and proportionate.

Bank of England and Financial Services Bill [HL]

Debate between Lord Flight and Lord Bridges of Headley

Monday 9th November 2015 Lords Chamber

[Lord Flight (Con)]

My Lords, when the Bill was published, I wrote to the Economic Secretary to the Treasury on this territory, because I could not really understand how the reorganisation of the Bank was intended to operate, or what it intended to achieve. Part of the reply I got was:

“The Governor has said that: ‘Our strategy will be to conduct supervision as an integrated part of the central bank and not as a standalone supervisory agency that happens to be attached to a central bank’. De-subsidiarisation, together with the organisational changes being put in place by the Bank as part of its ‘One Bank’ strategy, is an important element of this, and will help to break down any remaining barriers that could stand in the way of a unified culture and impede flexible and coordinated working across the Bank”.

I thought about this and looked at the structure. In answer to the points raised by the noble Lord, Lord Eatwell, what struck me was that “the Bank” actually means “the Governor”.

[The Parliamentary Secretary, Cabinet Office (Lord Bridges of Headley) (Con)]

I begin by thanking noble Lords who have spared the time to meet and discuss aspects of the Bill. I am grateful to the noble Lord, Lord Tunnicliffe, for his kind words, but it was clear that some of my epistles have caused more confusion than I would wish. I will try and address that, and the points made by the noble Lord, Lord Eatwell. I am conscious that the noble Lord, Lord Eatwell, like so many others in your Lordships’ House, has a lot more experience in this, so bear with me as I set out the Government’s case on this specific point.

It is a good point to start with because we are, as a Committee, seeking to answer the question, which the noble Lord posed very eloquently, of “What is the Bank of England?”—which is a good place to start with in a Bank of England Bill. As he rightly said, during Second Reading he worried that this definition might be an amorphous entity and I completely agree that a full answer to his question is overdue. Let me try to answer it.

The noble Lord referred to the 1998 Act. The Bank of England is defined in the Interpretation Act 1978, which tells us:

“Bank of England means, as the context requires, the Governor and Company of the Bank of England or the bank of the Governor and Company of the Bank of England”.

Acts amended by this Bill either refer to “the Bank” and define that expression as “the Bank of England”, or refer initially to “the Bank of England”, so that it is clear what the subsequent references to “the Bank” mean.

This is all well and good for making sure that the corpus of legislation functions neatly, but I know that it does not quite get to the nub of the noble Lord’s question, which is: what does it mean when legislation such as this Bill names “the Bank”, who does the work and, as the noble Lord rightly said, who is responsible? Legislation generally confers powers and duties on the Bank of England in two ways: either directly on the Bank or on a statutory committee of the Bank. Sometimes legislation grants roles directly to court, and we will get on to what that means when we discuss Clause 5.

However, for now I want to focus on the question of what it means when powers and duties are conferred on the Bank. Who is responsible for the Bank in relation to these powers and duties? The answer is: the court is. As the governing body of the Bank, the court is responsible for deciding how powers given to the Bank should be exercised and ensuring that the Bank fulfils its duties. Powers and duties granted to the Bank include, as the noble Lord said, those in relation to note issuance, resolution and supervision of financial infrastructures. As he rightly said, he should take the first letter he received as the position on this.

The court may delegate these powers and duties within the Bank as it deems fit, a situation the noble Lord’s amendment would try to replicate. However—this is the heart of the matter—the court remains responsible for that delegation, and where it decides to delegate powers and duties the court still retains ultimate responsibility for the exercise of those powers and duties. I hope that gives some shape to what the Bank is and who is responsible within the Bank for determining how it fulfils the responsibilities conferred on it.

Some powers and duties are not conferred on the Bank but on statutory committees. Powers and duties conferred on a statutory committee are for that committee to exercise according to the terms of its legislation. The court cannot exercise the powers conferred on a statutory committee. That said, even when powers and duties are conferred on a statutory committee, the court still has responsibilities. As the governing body of the Bank, the court is responsible for ensuring that the statutory committees exercise their statutory roles and responsibilities effectively, including that they are adequately resourced and supported to do so.

The Bill reinforces this role of court by making the oversight functions the responsibility of the whole court, a point we will come on to. For example, the oversight functions include keeping under review the Bank’s performance in relation to the duty of the FPC.

I am conscious that the noble Lord may have further questions in regard to what I have said. Let me pick up on one point. He asked about the FPC and who is doing the consulting. It is for the court to approve changes to the code of practice for, I think it is, the MPC because it is responsible for managing the affairs of the Bank. I hope that addresses his point.

Taxation: Capital Gains Tax

Debate between Lord Flight and Lord Bridges of Headley

Tuesday 7th July 2015 Lords Chamber

[Lord Bridges of Headley]

The noble Baroness makes an interesting point. As noble Lords know, this Government are intent on helping working people. Last year, we cut income tax for more than 26 million people, took more than 3 million out of income tax altogether and created more than 1,000 jobs every single day. This Government intend to do better still.

[Lord Flight (Con)]

My Lords, I recollect that, for an asset which has been held for a long time, the base value can be uprated to that which applied in, I think, 1983. However, inflation has made a nonsense of that. Will the Government look at changing the date at which long-held assets are rebased for cost purposes?

[Lord Bridges of Headley]

I hear what my noble friend is saying. However, I tread with extreme trepidation and say that decisions on that matter are for the Chancellor to announce at the Budget.