Banks: Money-laundering

Debate between Lord Sassoon and Lord Oakeshott of Seagrove Bay

Tuesday 18th December 2012 Lords Chamber

[Lord Sassoon]

My Lords, I certainly accept that there is unfinished business to be done around the whole “know your customer” and opening bank accounts regime. Many of us know what difficulty that causes, whether on our own account or on that of our children. This is something that we discussed during the passage of the Financial Services Bill. It is interesting that some banks require less detail and paperwork than others. I wish they would all make this process as easy as possible for their customers, consistent with the regulations that apply.

[Lord Oakeshott of Seagrove Bay]

My Lords, on that topic, I wonder whether the noble Lord and other noble Lords bank with HSBC. I have done so for the past 30 years. Last week I was rather surprised to be asked by bank staff to show them my passport and a utility bill. I am not sure whether noble Lords realise but we are all politically exposed persons in regulator-speak; some of us may be more so than others. But, honestly, is this not mindless box-ticking? Do they really need to check our passports to know the difference between a British baron and a Mexican drugs baron? Is not the reality that these monster banks such as HSBC and RBS are, as the Minister touched on, frankly, not just too big to fail but too big to regulate and too big for any single board to control?

[Lord Sassoon]

My Lords, on the first of my noble friend’s points, I certainly agree that the banks need to get much more intelligent about this matter. I have met in the Treasury senior bankers on the retail or wealth management side of these banks to make precisely my noble friend’s point: namely, that they need to be intelligent about this matter. This must not be a box-ticking exercise. I have made the same point to the chairman of the FSA. My noble friend raises a very important point.

Financial Services Bill

Debate between Lord Sassoon and Lord Oakeshott of Seagrove Bay

Monday 15th October 2012 Lords Chamber

[Lord Sassoon]

For the reasons that I have given, I am not absolutely convinced that it would have been helpful against the background of complacency of the bank auditors at the time of the crisis. Having said that, I agree with the Committee that there is something here that we need to look at further, so I want to see whether the Bill can and should go further to require the regulator to make the most of the expertise that auditors can undoubtedly offer. I am happy to take this issue away and consider whether there is an amendment that I can bring back at Report that recognises the important role of auditors without cutting across the role of the regulator in the way that I believe this particular amendment may do. I will look at it and come back to the House with something that addresses this area. On that basis I hope—

[Lord Oakeshott of Seagrove Bay]

It sounds as though the Minister is encouraging the regulator to ask the auditors more questions. If we have complacent auditors, surely it is even more important that they sign something, that their complacency is questioned and that they take more responsibility for their work.

[Lord Sassoon]

I certainly agree that if we can get more value out of the auditors we should do so. It should be on the basis of something that helps people—I am not sure whether that is the regulator or directly the public—towards a better understanding of the risks embedded in bank accounts. On that basis, as I say, I will take the issue away. I ask my noble friend to withdraw her amendment, which would, of course—I should say for the benefit of my noble friend Lord Marlesford, who asked me to mention credit card debt—wrap up credit card debt and many other things if we can get this right.

Egypt: Mubarak Family Assets

Debate between Lord Sassoon and Lord Oakeshott of Seagrove Bay

Wednesday 16th February 2011 Lords Chamber

[Lord Oakeshott of Seagrove Bay]

My Lords, with the permission of the House and at the request of my noble friend Lady Williams, who is attending a funeral, I beg leave to ask the Question standing in her name on the Order Paper.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, for well established operational reasons, the Government cannot comment on individual asset-freezing cases. The Government have received a request from the Egyptian Government to freeze the assets of several former Egyptian officials. We will of course co-operate with this request, working with EU and international partners as we have done in the case of Tunisia. If there is any evidence of illegality or misuse of state assets, we will take firm and prompt action.

[Lord Oakeshott of Seagrove Bay]

My Lords, I accept the point about individual cases, but will the Minister say how long he would expect SOCA normally to take to assess and approve a request of this kind? In particular, will the firm and prompt action that the Foreign Secretary has promised in this case be firmer and prompter than in the disgraceful case of President Daniel arap Moi of Kenya, who looted hundreds of millions from his people, and indeed of British taxpayers’ aid, left a lot of it in London banks, and eight years on has still not had to pay back a penny?

[Lord Sassoon]

My Lords, there are a number of potential courses of action, but the principal one now is working with our EU partners, following a similar route to the one that was adopted in relation to Tunisia. My right honourable friend the Chancellor discussed the issue with his colleagues in the context of the ECOFIN meetings earlier this week. EU diplomats are discussing the issue this week and it will be on the agenda of the Foreign Affairs Council meeting on Monday 21 February. It could decide to request the Commission to draw up a regulation similar to the one that was drawn up on Tunisia, which would be enforceable in all EU member states.

Banking: Royal Bank of Scotland

Debate between Lord Sassoon and Lord Oakeshott of Seagrove Bay

Tuesday 1st February 2011 Lords Chamber

[Lord Sassoon]

My Lords, indeed those numbers for the marginal rates of tax are correct. And that is not the only tax we extract from the banks—far from it. This Government have put in place a bank levy which will, when it comes into full force, raise an additional £2.5 billion out of the banking sector; a larger amount of money than was taken from the banks in the previous Government’s bonus tax.

[Lord Oakeshott of Seagrove Bay]

My Lords, can I encourage the Minister to use the full resources of the Treasury to try to find a way of untying his hands? I cannot believe that there is not a way around this. Is the Minister aware that Sir Philip Hampton, the chairman of RBS, a year ago told us that over 100 Royal Bank of Scotland bankers collected £1 million? What does the Minister expect the figure to be this year? Is he aware that I and the overwhelming majority of taxpayers, who are having to pay £828,000 of every £1 million paid out to RBS bankers, believe that we are entitled to see the names on the cheques?

[Lord Sassoon]

My Lords, the Royal Bank of Scotland is due to announce its results on 24 February. It normally makes its remuneration disclosures on or around that date, so we will have to wait. I have no knowledge of the number of bankers who might or might not be getting particular levels of bonus. Our relationship with the Royal Bank of Scotland is managed on a commercial, arm’s-length basis through UK Financial Investments.

Banking: Bonuses

Debate between Lord Sassoon and Lord Oakeshott of Seagrove Bay

Tuesday 11th January 2011 Lords Chamber

[Lord Oakeshott of Seagrove Bay]

My Lords, I thank the Minister for the Statement. I do not know whether he has read it lately, but I have here an excellent document, The Coalition: Our Programme for Government, in which Nick Clegg and David Cameron promised,

“radical plans to reform our broken banking system”.

Item 1 said on banking:

“We will bring forward detailed proposals for robust action to tackle unacceptable bonuses in the financial sector … We want the banking system to serve business, not the other way round”.

There is not much sign in the briefing that has been coming from No. 10 and the Treasury that they are very aware of those commitments. Can the Minister assure us that he will draw those commitments to the attention of the people in the Treasury who are working on these schemes, because frankly the messages that are coming out are not right when we are trying to do a serious negotiation with the banks to improve their behaviour?

Specifically on the Royal Bank of Scotland, what possible justification is there for Mr Hester, who is one of the highest-paid public sector workers in the country, to get any bonus at all when his bank has missed its legally binding mortgage and business lending targets by a mile?

[Lord Sassoon]

My Lords, I am always grateful to my noble friend Lord Oakeshott for reminding us of what is in the coalition agreement, which is always at the heart of what we do. I am sure that my colleagues in the Treasury will need absolutely no reminder of what the coalition agreement says in this area, because it is precisely because we are guided by the coalition agreement that we now have a package that, as I have explained, means that 2,500 banks as opposed to 25 are caught by the code. For all their talk, the previous Government had not actually brought in any new remuneration code. We now have one in place. We are continuing, as I said, to urge our European partners to work with us on a common set of banding disclosures. The current discussions are precisely to make sure that bonuses are lower than they would otherwise have been and that lending is higher.

In respect of the Royal Bank of Scotland, as I said in the Statement, we found ourselves having inherited a most extraordinary agreement negotiated by the previous Government that put absolutely no restrictions on RBS’s payments and bonuses this year. We want to see RBS now not as a front-runner, which seemed to be where it was encouraged to be under the previous Government’s agreement, but as a back-marker when it comes to its bonus payments for this year.

Budget Responsibility and National Audit Bill [HL]

Debate between Lord Sassoon and Lord Oakeshott of Seagrove Bay

Monday 29th November 2010 Grand Committee

[Lord Oakeshott of Seagrove Bay]

My Lords, I listened at considerable length to the Minister reading out his brief in response to the amendments but I wondered whether, by any chance, he could do me the courtesy of answering my question, which I thought was fairly simple and clear. Why are we having just the word “intergenerational” with fairness? He has said that he does not want a Bible. I am suggesting that he might make it shorter, but why “intergenerational”? Why not any other sort of fairness? The document says that these are:

“The Treasury’s objectives for fiscal policy”.

This is a government document, so could the Minister please address the question that I raised?

[Lord Sassoon]

I was not meaning to be at all discourteous to my noble friend. I thought that I had explained that a lot of things could be set out in a full description of the policy frameworks but that the objective is to have a short encapsulation of fiscal policy objectives as a background to the specific mandate for fiscal policy. As I also said, this is of course a draft charter. I am listening to that and other comments that are being made on the charter. I absolutely confirm that. I fully understand that there are other aspects of fairness; indeed, I read out another formulation of the coalition policy approach to broader economic policy-making, so I am absolutely listening to my noble friend’s point. Fairness, without any specific reference to “intergenerational” or any other kind, is indeed central to the economic policy objectives of the coalition Government.

[Lord Oakeshott of Seagrove Bay]

I am glad that we are starting to get the matter addressed, but this is Committee stage and it is no good, if I may say so, taking a Civil Service attitude of, “We’ll think about anything that comes in”. This is Committee stage. I have made a proposal and suggested the document should be shorter, not longer. I know that it is a draft. I have said that, if the Minister cannot explain why intergenerational is the one bit of fairness that is picked out, why not leave out “intergenerational” and just say “fairness”? Could we actually engage here, please? What is the answer?

[Lord Higgins]

Before my noble friend replies to that, perhaps I may delay the Committee for a moment or two more. First, I apologise to the noble Lord, Lord Eatwell. His reference in the amendment to the lines in the Bill is correct. I was working on the original version of the Bill, which the Treasury has subsequently corrected. I just hope that the Public Bill Office has sorted out all my numbering; otherwise, I will have a lot of work ahead of me.

We should be extremely grateful to the Minister for providing the draft charter; otherwise, we would be relying purely on what is in the Bill, which leaves a large number of questions unanswered. Perhaps I may pursue the point raised by the Minister with regard to the fiscal mandate. There is no initial capital letter in “mandate” in the draft charter, which perhaps there should be. It states that the mandate is,

“a forward-looking target to achieve cyclically-adjusted current balance by the end of the rolling, five-year forecast period”.

That is an extremely important statement. My problem is that there are shades of Gordon Brown, rather like Banquo’s ghost, in the reference to “cyclically-adjusted”, because Gordon Brown was a master at changing the dates of when the cycle began. If the mandate is to mean anything at all, we need to know when the Government think that the cycle began. If my noble friend cannot answer now, perhaps he might come back to it later.

--- Later in debate ---

[Lord Oakeshott of Seagrove Bay]

It is not just under this Government that that has been happening; it is a problem with the Treasury generally, although it has been happening particularly under this Government. If the Treasury made a bit more effort to answer Questions honestly and fully the first time, we would not need to ask them two or three times. It is a bad problem.

[Lord Sassoon]

I had not intended to go down this interesting byway, but there has been a singlehanded contribution by the noble Lord, Lord Myners, to a considerable increase in the number of Written Questions. I am very happy to give him the figures, although I do not have them to hand. The number of Questions for Written Answer that the Treasury has had to deal with in the past six months has been significantly above the figure that previous Ministers in the Treasury—principally the noble Lord himself—have had to face. Nevertheless, our record on answering Questions on time has improved dramatically, and I am very happy to supply the noble Lord with the data. I am conscious that we are scheduled to go on for only another 35 minutes, so perhaps we should go back to the Bill. However, with regard to answering Treasury Questions, I am happy to discuss the relative performance of this Parliament compared with the previous one if it would interest the noble Lord, although I shall do so on another occasion.

We want plenty of scrutiny in this House. Clauses 1(4), 1(6), 2(3) and 8(2)(b) all confirm that the OBR’s reports will be presented to the whole of Parliament, not just to another place. I will return specifically to the question of committee scrutiny, but it is important that the Economic Affairs Committee of your Lordships’ House should have, and will have, responsibility for whatever it thinks appropriate in considering economic and fiscal issues, including those that relate to the OBR. However, I do not believe that any of the amendments in this group are necessary to achieve that.

When it comes to the relatively narrow but important point on formal approval of the charter, perhaps this will not surprise noble Lords, but I very much lean towards the argument of my noble friend Lady Noakes, because, critically, the charter contains the fiscal mandate, which I believe should be properly considered in another place, rather than here.

Housing: Mortgages

Debate between Lord Sassoon and Lord Oakeshott of Seagrove Bay

Wednesday 10th November 2010 Lords Chamber

[Lord Sassoon]

My Lords, I certainly agree with the noble Lord that questions of affordability should be addressed, which is why the FSA is carrying out the consultation. The consultation is due to close shortly and forms an important part of the FSA’s ongoing work to ensure a sustainable mortgage market for the medium term.

[Lord Oakeshott of Seagrove Bay]

My Lords, I am sure that I misheard the Minister, but he seemed to imply that it was inevitable that mortgage lending is so low at this stage of the cycle. There is nothing inevitable about it. The fact is that the banks are not lending as they should and they are demanding 30 per cent and 40 per cent deposits from people with good prospects. What does the Minister think is a fair deposit for a bank to ask a creditworthy borrower to put down to get a fair and affordable interest rate? The banks are not doing it at the moment.

[Lord Sassoon]

My Lords, it is certainly not for government to make judgments about the right terms on which mortgages should be advanced by individual banks. There is a rebalancing going on from an excessive household leverage which built up in the past decade. There is also a necessity for the banks to price all their products, including mortgage products, at an appropriate margin, because it was quite clear that they were extending a whole range of credit products, including mortgages, at submarket rates before the crisis. The Government’s interest is to make sure that we have a sustainable balance, which means that people, including first-time buyers, can get mortgages on appropriate terms, but also that it is sustainable and does not lead to another bubble. We are following very keenly the work of the FSA in this regard.

Taxation: Avoidance

Debate between Lord Sassoon and Lord Oakeshott of Seagrove Bay

Wednesday 20th October 2010 Lords Chamber

[Lord Sassoon]

My Lords, I could trade names of Members all round the House but I am not going to stoop to that. The critical issue is indeed, as the noble Lord says, that tax avoidance as opposed to tax evasion is legal, but we want to make sure that taxpayers pay what is due. In that connection, we will take a broad, strategic approach to reduce the complexity of the tax system, to make sure that the tax code is legally robust and to make sure that we attack and challenge unreasonable avoidance in a focused and expert way.

[Lord Oakeshott of Seagrove Bay]

My Lords, non-dom tax status is an enormous open invitation to tax avoidance, as we know only too well from our battles to deal with non-doms in this House. Is the Minister aware of the Liberal Democrat tax manifesto pledge to make non-doms pay their full British tax after seven years? Will he also tell us when and how the Treasury will report on the promised review of non-dom tax status?

[Lord Sassoon]

My Lords, I remind my noble friend that the coalition Government’s policy in this area is that we will make every effort to tackle tax avoidance, including detailed development of Liberal Democrat policy. The policies that were in my noble friend’s party manifesto at the election are indeed getting detailed consideration. In particular, as he knows, the general anti-avoidance rule, which was the linchpin of those policies, has been the subject of recent consultation.