Independent Commission on Banking

Lord McFall of Alcluith Excerpts

Monday 19th December 2011 Lords Chamber

[Lord Sassoon]

My Lords, I well recognise the consistency, firmness and clarity with which my noble friend has held his views on separation from very early on in this debate; we discussed it three years ago. However, the Government agree with the ICB that full separation is not the route to go down. I say to him that having independent directors on the boards of the ring-fenced banks will go a long way towards making up for, as he puts it, possible deficiencies of top management and their ability to get around these things. Having independent directors of ring-fenced subsidiaries is a model that has worked well in utility companies. As he says, it is right that the Bank of England will be watching this in its new role of supervising the system.

[Lord McFall of Alcluith]

My Lords, when Sir John Vickers appeared before the Draft Financial Services Bill Joint Committee, it was clear that his report would not solve the “too big to fail” issue. What was required was a good regulatory structure, and no regulator globally succeeded in that.

In the draft Financial Services Bill report there were a number of issues relating to the governance of the Bank of England, and I should like an assurance from the Minister that the Government will take these all-party proposals very seriously. As a previous speaker said, culture is more important than architecture. I think that will be one of the main recommendations of our report.

The Minister mentioned the issue of switching current accounts. Will he accept that the portability of current account numbers is the key? That revolutionised the mobile phone industry. Only with the portability of current account numbers will we see a revolution in switching accounts in the banking industry.

[Lord Sassoon]

My Lords, I can confirm to the noble Lord, Lord McFall of Alcluith, that the Joint Committee’s report, which was published only today, will be taken very seriously on governance and all the other matters that are contained in it. As to switching accounts, I hear what he says about number portability, which is not at all an easy issue, as he well knows. All I would say is that the ability for seven-day switching, including all direct debits, credits and standing orders—which we now have the banks’ agreement will be implemented by September 2013—is a significant advance that will help millions of consumers.