Financial Services Bill

Debate between Lord Northbrook and Lord Flight

Tuesday 20th November 2012 Lords Chamber

[Lord Flight]

My Lords, Amendments 78A and 79A are supported by the Listing Authority Advisory Committee to the FSA, which is an external committee appointed by the FSA. The amendments have the objective of permitting the FCA going forward as the listing authority to have regard to the international character of capital markets and the desirability of maintaining the competitive position of the UK in international capital markets.

The advisory committee is concerned that without the amendment the FCA, when regulating, will not have the power to consider UK competitiveness in international capital markets and could in fact be challenged for doing so unless the issue is specifically covered. Under current legislation, the listing authority is separately set out in FiSMA, while most legislation under FiSMA is about the regulation of those conducting various forms of standard financial services businesses. The listing function is a very different role, though; it is about setting the rules for and regulating listed companies as the issuers of securities, both debt and equity, where issuers obviously have choices as to the markets in which they opt to access capital. Hong Kong in particular has become an even more important financial capital than London, which also faces great competition from New York.

At present, under Section 73 of FiSMA, the FSA is obliged to have regard to market competitiveness and the UK’s position in carrying out this function. These two amendments would leave the listings authority’s role and function substantially aligned with the rest of the FCA but would reflect the fact that this part of the FCA’s function is about regulating listed companies, not the financial services industry. It is different and should have competitiveness not as an objective but simply as a matter to which the FCA should have regard.

This may sound a slightly obscure point but the chairman of the Listing Authority Advisory Committee is concerned that unless this particular, slightly different responsibility of the FCA going forward is given at least the steer to have regard to international competitiveness, it will not be covered by the wider parts of the Bill requiring the FCA to have competitiveness as an objective. I hope that the Minister will be able to give comfort that the wider competitive objective covers the particular listing authority context of the FCA. If not, I hope the Government might consider this somewhat offbeat territory. I beg to move.

[Lord Northbrook]

I support my noble friend Lord Flight’s amendment. It is important that in this area the FCA should have regard to the international character of capital markets and the desirability of maintaining the competitive position of the United Kingdom.

Financial Services Bill

Debate between Lord Northbrook and Lord Flight

Tuesday 26th June 2012 Lords Chamber

[Lord Flight]

My Lords, I also support the amendment tabled by the noble Baroness, Lady Wheatcroft, for essentially the reasons given by the noble Lord, Lord Burns, and as part of the process of restoring the court to being a proper board.

I want to comment on Amendment 5. I have mixed views, but I think it is quite healthy that someone being appointed to such an important role should be subject to vetting in the same sort of way that occurs typically in the United States and that it probably is the Treasury Select Committee that is equipped to handle that vetting.

If I may digress, the present Governor of the Bank of England studied economics at the same university as me at the same time, and anyone that knew that knew that the teaching of economics at that time at that university was appallingly bad. That illustrates that it takes some effort to assess the sort of mind that someone being appointed to that job has got. The absence of any form of politically accountable examination is probably wrong in today’s world. Therefore Amendment 5 is worthy of serious consideration.

[Lord Northbrook]

My Lords, I disagree with Amendment 5. It gives the Treasury Select Committee too much power. As I understand it, the Treasury Select Committee already holds pre-commencement hearings with those who have been selected to become governors and deputy governors. Furthermore, as I understand it, the Government have no powers to remove a Governor of the Bank of England; rather the Treasury must give its consent if the Bank decides the governor has met the criteria for removal. It is the Bank’s decision to make. The pre-commencement hearings provide the right balance between giving Parliament an opportunity to question the new appointee on their views and qualifications without bringing into question or placing doubts over the appointment itself.