Financial Services Bill

Debate between Lord Marlesford and Lord Sassoon

Monday 8th October 2012 Lords Chamber

[Lord Sassoon]

My Lords, I completely agree about the importance of such warnings and clarity about what compensation schemes apply to particular bank accounts, which is precisely why it is already covered in the FSA’s handbook. As the noble Lord, Lord Davies of Oldham, may not be aware, section “Comp 16” of the FSA handbook requires precisely what the noble Lord requires. Firms from the EEA passporting into the UK are required to inform customers that they are covered by their home state’s scheme. Firms from outside the EEA are required to be separately authorised in the UK, so that they are covered by the FSCS. We completely agree on the importance of this and of raising consumer awareness of it. Again, lots of good stuff went on in many areas during the summer and this is another one. If the noble Lord and the Committee generally want to look at the press release, it was put out on 31 August and sets out details of the FSCS awareness campaign. The notes to editors in it make clear the different health warnings that have to be put down for UK branches of EEA banks and the precise form of words. I do not happen to bank with one of those banks; I bank with a British bank which now adds an extra page—it is not great for the environment, but the extra page sets out the details of the coverage of the FSCS and EEA banks are now required to do something similar.

The noble Lord makes a very good point, but I believe that we should leave it to the FSCS and the regulators to do what they are already doing, rather than writing inflexible requirements into legislation. The advantage of the current approach, as I am sure he will acknowledge, is that the regulator and FSCS can adapt their approach over time, but it is a useful matter for us to have spent four minutes on and I hope that the noble Lord is able to withdraw his amendment.

[Lord Marlesford]

May I just make one very small point to my noble friend? I declare an interest straightaway as a modest customer of the national savings bank. Along with many other people, I suspect, I assumed that if one had money in the national savings bank there was no way in which one would not be paid, however much money one had in it, in the event of any sort of default. When it transpired a couple of years ago that the national savings bank had put most of its money into the Bank of Ireland, certain fears were raised. It then became clear that the rules on the limit of compensation applied to money deposited with the national savings bank, just as they did to anything else. There was an implicit guarantee by reputation, as it were, on money put in the national savings bank, and the noble Lord’s point underlines the need for implicit guarantees to be cancelled by explicit denials of obligation.

FSA Investigation into LIBOR

Debate between Lord Marlesford and Lord Sassoon

Monday 2nd July 2012 Lords Chamber

[Lord Sassoon]

My Lords, just to repeat: the SFO is actively and urgently considering the evidence to see what criminal charges can be brought. It expects to come to a conclusion by the end of this month. That is exactly where it should focus its efforts.

[Lord Marlesford]

My Lords, unlike the noble Lord, Lord Eatwell, I see much merit in a parliamentary inquiry, especially if, as has been suggested, it includes people of the talent and experience of my noble friend Lord Lawson. There are many from all sides in this House who can do this. It is an inquiry that needs, above all, practitioners and people from the financial world rather than lawyers, and it does not prevent further inquiries in due course.

However, four points of action were put forward by the Prime Minister under the heading of banking in his Statement. Three of them are quite clearly covered by the Chancellor’s Statement but one is not. That is a confusing matter and I would like enlightenment. In the four actions proposed by the Prime Minister, one was,

“increasing the taxes banks must pay”.

What was the Prime Minister referring to?

[Lord Sassoon]

I am grateful to my noble friend for confirming that a Joint Committee is the way to take this forward. We have already increased the tax on the banks by putting a special levy on them so that the big banks effectively do not take any advantage of the lowering of corporation tax, which other parts of industry have already benefited from. This tax on the banks is enduring and will raise far more than the one-off tax that the previous Government brought in. So we have already done that.

FSA Investigation into LIBOR

Debate between Lord Marlesford and Lord Sassoon

Thursday 28th June 2012 Lords Chamber

[Lord Sassoon]

My Lords, I think the issue here is that, whatever the law says about the way in which the banks have to operate, the behaviour that has been exposed in this case is that of naked greed, and that is completely unacceptable whatever the legal framework. It is at heart an ethical question as much as anything else, as I see it, and is quite independent of the legal framework around it. Whatever the requirements of the boards vis-à-vis shareholders and other parties, at the heart of this—as has been exposed very clearly by these extraordinary e-mails—were individuals behaving in a most extraordinary way.

[Lord Marlesford]

My Lords, is not one of the most serious aspects of this whole thing the potential economic consequences that are going to come from the reputational damage to the City of London, which is so important to the British economy? Would he agree that the only way of restoring reputation from malfeasance is to seek out and deal very publicly with those who are responsible? Does he remember—I remember all too well, as I declare myself to have been a victim of it—the malfeasance in Lloyd’s of London, which was never really sorted out because no one was held to book and certainly no one suffered any particular penalty that I can recollect. One thing that they seem to be able to do in the United States is to deal very severely with individuals who are found to have misbehaved from positions of great financial responsibility.

[Lord Sassoon]

My Lords, I completely agree with my noble friend Lord Marlesford that the reputational consequences here are very serious. I stress the point that this is not simply a London or a UK banks’ issue as it appears. The inquiries clearly cover other regulators and other banks and we will see where they go. However, it is precisely because of the significant reputational damage that the Chancellor has come forward immediately with his response, which I repeated this afternoon.

On the question of Lloyd’s of London, without repeating the tortured and difficult history there, it is worth saying that after a long and difficult period for that market, Lloyd’s of London is at the forefront again of the world’s specialist insurance market. It has a critical position and is, I believe, stronger than ever. While we certainly do not want to go through a long and difficult period, as Lloyd’s of London did, it does show that well-regulated markets in London are capable of leading the way in innovation and value-adding in financial markets.

EU: Euro Area Crisis

Debate between Lord Marlesford and Lord Sassoon

Thursday 24th May 2012 Lords Chamber

[Lord Sassoon]

My Lords, the key issue about Germany in relation to this Question is that we should be grateful that the German economy continues to grow. About 9% of the UK’s exports go to Germany. It is a very important market for us and it is critical both for us and for the eurozone that Germany and its economy continue to perform relatively strongly.

[Lord Marlesford]

My Lords, does my noble friend agree that countries which, for one reason or another, have to leave the euro area could well continue to use the euro as their currency rather than inventing a new currency, like perhaps the drachma, in which markets might have little or no confidence?

[Lord Sassoon]

My Lords, many people have been painting scenarios of which my noble friend sketches out one. This is not the time to talk about different scenarios. We want to see an early resolution of the Greek uncertainty, the ring-fencing of other vulnerable economies, the recapitalisation of the banks and work on European growth. That has to be the priority for the moment.

EU: Budget

Debate between Lord Marlesford and Lord Sassoon

Thursday 28th April 2011 Lords Chamber

[Lord Marlesford]

My Lords, did not my noble friend’s earlier answer, when he described how information was not available, give a bit of a clue as to one way in which we can make progress? Would it not be much more satisfactory if there were full details of any failure properly to account for national expenditures in the EU budget? In that way we would at least know who was not doing things properly, by how much and when, and that shaming could have some role in getting people to behave better.

[Lord Sassoon]

Again, I completely agree. That is precisely why the other two of the three key points made in the joint statement at the February ECOFIN were about greater member state responsibility for items of expenditure and greater transparency. Therefore, I think that we have already identified the three key areas where improvement needs to be made and needs to be made quickly.

Finance (No. 2) Bill

Debate between Lord Marlesford and Lord Sassoon

Monday 22nd November 2010 Lords Chamber

[Lord Sassoon]

My Lords, as I said, a Question has been tabled and I shall answer it then. I have already referred the House to the two meanings in the Oxford English Dictionary first edition of 1888, which I think explains it very well. We had a reference to PIMCO earlier in the debate from my noble friend Lord Ryder of Wensum. I refer the noble Lord to the comments of the founder of PIMCO a few months before the election when he talked about the toxic pile. He may or may not have been front-running a position, but when the largest bondholder in the world talks about UK debt in toxic terms, the point is well understood. The critical question that arises from all of this—

[Lord Marlesford]

My Lords, perhaps I may help my noble friend by giving an example of a very dangerous toxic situation that was certainly inherited from the previous Government and of which the noble Lord, Lord Myners, is extremely aware: that is, the level of credit card debt in this country on which interest is being paid—I am not talking about the ordinary stuff that we pay off each month. That has not decreased. According to the Bank of England’s September figures, the level of credit that has been overrun is currently at £58 billion and interest is being paid at more than 15 per cent, which is £9 billion of interest due each year. The noble Lord, Lord Myners, was kind enough to write to all the banks asking them for details of what value they had on their books. Only one answered, and that was Barclays Bank—and I felt that it prevaricated in its answer. Does my noble friend agree that that is an example of the reservoir of potential toxicity that can make people very apprehensive about the fundamentals of Britain's economic situation?

[Lord Sassoon]

I am grateful to my noble friend Lord Marlesford for pointing that out; I absolutely agree. Any country that has total debt—he is talking about wider debt—of 400 per cent of GDP, as this country has, is indeed skating on very thin ice.

EU: Economic Governance

Debate between Lord Marlesford and Lord Sassoon

Wednesday 27th October 2010 Lords Chamber

[Lord Sassoon]

Indeed, my Lords, that is the position. It is worth reminding ourselves that since my noble friend Lady Thatcher won that rebate at Fontainebleau it has saved Britain £88 billion. That is what tough negotiations in Europe achieved. The previous Government agreed to significant changes to those arrangements, which mean that the abatement has come down very significantly. However, my right honourable friend the Chancellor said after the ECOFIN meeting on 8 September that we will make it clear from the start that:

“We are not going to give way on the rebate. No doubt others will want to put it into the mix but they’ll be wasting their time. People better know that at the beginning of the process or they are certainly going to discover it at the end”.

Noble Lords can see that my right honourable friend the Chancellor will be in the robust tradition set for us by my noble friend Lady Thatcher on these matters.

[Lord Marlesford]

My Lords—

--- Later in debate ---

[Lord Marlesford]

Does Britain have the power to veto any increase in the EU budget?

[Lord Sassoon]

My Lords, as I understand it, the financial framework and perspective have to be agreed unanimously. Discussions are starting on the framework that will cover the years 2014 to 2021.

Government: Savings

Debate between Lord Marlesford and Lord Sassoon

Thursday 24th June 2010 Lords Chamber

[Lord Sassoon]

I thank the right reverend Prelate for that question. I would stress that by having a target of a one-third reduction in administration costs, which we hope to exceed, we will be able to target the expenditure on where it really matters, including in the ways that he has described.

[Lord Marlesford]

My Lords, given that the cost of compliance with government regulations by the business sector is tax-deductible and therefore a net cost to the Exchequer, will my noble friend seek to bring under better control some of the quangos whose regulatory functions appear to lack both proportionality and common sense? Will he ensure that if they are to continue at all, they are brought under much tighter discipline?

[Lord Sassoon]

I simply confirm that that will be done, in line with my noble friend’s suggestions.