Financial Services Bill

Debate between Lord Hodgson of Astley Abbotts and Lord Barnett

Wednesday 28th November 2012 Lords Chamber

[Lord Hodgson of Astley Abbotts]

My Lords, it is greatly to the credit of the noble Lord, Lord Mitchell, that he has not ducked the challenge of balancing the accessibility and availability of credit with its affordability and the terms on which it is made available. A number of noble Lords have made it clear, as indeed has the noble Baroness, that the availability and accessibility of credit is important. My noble friend on the Front Bench made a powerful intervention; he indicated a number of ways in which the amendment could be got around because of the gaps in it. It is important that we get this right and make it bullet-proof. For example, some of his thoughts about—if I heard him right—making a contract unenforceable under certain circumstances would add a great deal of power to this. I hope very much that we will be able to have a period of reflection and ensure that the unintended consequences that could come about, as evidenced by my noble friend’s speech, are avoided and we get something that stands the test of time.

[Lord Barnett]

My Lords, I have a couple of points. Throughout the Bill, my noble friend Lord Peston and I have constantly raised the question of “may” and “must”. That question arises in this amendment, too. The amendment, moved so wonderfully by my noble friend, states:

“The FCA may make rules”.

That could be “must” because the amendment is already constrained by the end of that sentence,

“on terms that the FCA judge to cause consumer detriment”.

That is why it is so important, as my noble friend Lord Peston said, that we see the Minister’s amendment as soon as possible. I am not a lawyer but I do not distrust them; however, the lawyers who advise Governments can make mistakes, which are usually resolved by lawyers on both sides eventually having an argument, at great cost to everyone including the courts, until someone decides in court who was right. On this occasion we have to try to get it absolutely right. I regard what the Minister said as very helpful.

My noble friend said that we must see the amendments as soon as possible. However, nothing is built in stone. No law states that we have to have Third Reading next Wednesday. If necessary it could be delayed a little. The important thing is to get it right. I hope that the noble Lord, Lord Sassoon, will consider having a discussion with the authorities, or with the Leader of the House or whoever, about whether, if we do not get sight of the amendments as soon as possible, we should delay Third Reading until we are sure that we have got it right. That is crucial. I hope that the noble Lord, Lord Sassoon, can inform us that he will do that.

Financial Services Bill

Debate between Lord Hodgson of Astley Abbotts and Lord Barnett

Monday 12th November 2012 Lords Chamber

[Lord Barnett]

The noble Lord makes a good point. He should perhaps have talked to some of his friends on the last group of amendments, when they all voted with the Government. I wonder what they might do this time. Has he convinced them, I wonder? We will have to wait and see. I was surprised by the proposed new section to which he referred because I thought I had understood the “may” or “must” argument. Those words are used profusely throughout the Bill. Indeed, the noble Lord, Lord Sassoon, told us that he had asked officials to go through the whole Bill and work out which of them they should keep. What I had not appreciated—this is a point drawn to our attention by the noble Lord, Lord Phillips—is that on page 20 we have, in new Section 1B(4), another method of having “must” or “may”. We have a qualified must:

“must, so far as is compatible”,

with the later words. In practice, it is not “must” at all. The noble Lord wants to strengthen it, and I agree. We need to strengthen the arm of regulators everywhere. That is why I voted for the previous amendment.

We may be told that we should wait for the banking Bill, which we have in draft. We cannot be sure that that Bill will appear in that form. I know that at least one noble Lord on the Opposition Benches wants to insert in it something that the Government do not have in mind to insert; namely, a Glass-Steagall amendment. The Minister will know what I mean. I do not know whether he has committed himself or the Government to the draft Bill appearing in the new year. I think he said that we will have it in the new year. Perhaps he will confirm that. We clearly need a banking Bill.

I understand when the Minister says that the Government will take into careful consideration what the banking commission says, but he has not committed himself on that either. What exactly are the Government committing themselves to? They have set up this very high-powered commission, of which colleagues on all sides of the House are Members, and I understand that they are doing a first-class job, but we have been told only that he may, after serous consideration, introduce what the commission recommends. Will he firm that up this afternoon? Will we definitely have a Bill early in the new year, based to a large extent on the work of this high-powered commission, that will deal with some of the points that have rightly been raised about integrity and care? All these matters could be in a banking Bill as well as in this Bill but, for the moment, we have only this Bill. I support my noble friend Lady Hayter and the noble Lord, Lord Phillips. I will support him when he moves his amendment, and I hope his colleagues on the Liberal Democrat Benches will do the same.

[Lord Hodgson of Astley Abbotts]

My noble friend Lord Phillips is quite right to draw attention to the importance of integrity. Integrity lies at the heart of confidence in the financial services system, indeed, in any commercial activity. In Amendment 26D, the noble Lord seeks to insert an additional requirement about,

“the fairness and integrity of policy and conduct of those directing or operating in the financial markets”.

He needs to be aware that the significant influence function committee already checks everybody who is undertaking the sorts of roles that he considers important—which are indeed important—and does so very thoroughly. It has done so with increasing pressure and difficulty in recent years, so much so that people are now ceasing to wish to undertake these roles. They are starting to ask whether they need all the hassle, the problems and the dangers of adverse publicity from people like the noble Lord, Lord Phillips. Powers exist to give authorisation to the people who will set the tone and the philosophy that he seeks to achieve, which all of us who work in the City feel are essential and which, as he rightly pointed out, have not always been present in the past. I say to the House, and to the noble Baroness, Lady Hayter, that we must get the philosophy right. The creation of codes and more regulations will not necessarily produce the right people. We are looking for people with judgment. We rely on judgment, not on process, and as we do this we are in danger of moving more and more to a process-driven system that does not allow the exercise of judgment that will lead to the desirable results that my noble friend indicated in his remarks.

Financial Services Bill

Debate between Lord Hodgson of Astley Abbotts and Lord Barnett

Monday 15th October 2012 Lords Chamber

[Lord Hodgson of Astley Abbotts]

Before the Minister replies, I add my request to him to explain the issue of the level playing field. We have a very complicated piece of legislation here. In Amendment 176D we are looking at an additional power to direct UK clearing houses, and in Amendment 193G there is an application to UK clearing houses. I would like the Minister’s reassurance that this is not going to lead to differential treatment, because it will be extremely confusing if that is the case, and that the basic conditions, as the noble Baroness said, are going to be the same and that we are not going to find ourselves at sixes and sevens because it depends on which part of the Banking Act or FiSMA is applicable in a particular case. I realise that this is a technical point, but it is important that we try to get as much clarity and as much of a level playing field as possible.

[Lord Barnett]

My Lords, I would like some clarification. New Clause 296A in Amendment 176D says that the Bank of England “may” direct, not “must”, even though it has regard to the public interest, while new Clause 296A(2) says that the direction “may” specify various things. The direction is then enforceable only on the application by the Bank by an injunction or by other complicated means. Why should it not be “must” if it is in the national public interest? I do not understand why the word “may” is there rather than “must”.