Banking Reform

Baroness Noakes Excerpts

Thursday 17th June 2010 Lords Chamber

[Lord Sassoon]

I am grateful to my noble friend Lord Higgins for asking that question. Since I carry the newly-minted title of Commercial Secretary, I can try and explain that my responsibilities straddle both the financial services sector and wider business interests. My friend in the other place, the Financial Secretary to the Treasury, bears the primary responsibility in most areas of financial services policy. If my noble friend would like to look at the Treasury website, he will see a much clearer explanation of the split of ministerial responsibilities. I would be happy to send him a copy.

[Baroness Noakes]

My Lords, I welcome this Statement and I am sure that the City will welcome the clear directional steer that it was given yesterday. In particular, the staff at the FSA who have been very concerned about what the future would hold for them can now see a clear path forward. The suggestion made by the Benches opposite about pre-legislative scrutiny needs to be looked at very carefully. The Financial Services and Markets Bill indeed underwent pre-legislative scrutiny, but that Bill was a much more complicated matter, bringing together a large number of bodies into a completely new body whereas, as I understand them, my noble friend’s proposals are that the existing FSA will be split into a number of pieces and put into different places.

In addition, notwithstanding that that Bill had pre-legislative scrutiny it did not, as far as I am told by those who bear the scars, save one single minute of time in Committee when all the arguments that went on in pre-legislative scrutiny were re-run on the Floor of the House. I am not at all sure that doing that is a good use of time, but that question is above my pay grade—and, doubtless, above my noble friend’s pay grade.

I have two questions for my noble friend. First, what is to happen to the financial stability committee in the Bank of England, which was created in the Banking Act 2009? It seems to me that we are accumulating rather a lot of committees all over the place with a lot of cross-membership. I wonder whether it will have the same purpose once the financial policy committee is created. Can he also say what is to happen to the UK Listing Authority, one of the functions of the FSA which I do not think was covered in his Statement?

[Lord Sassoon]

I am grateful to my noble friend Lady Noakes for letting me off from answering her first observation, but I take the point. There are others better equipped than I to know what will be the appropriate way to take this particular legislation through. On the financial stability committee, that was of course introduced by the previous Government as part of their sticking-plaster job, trying to put together something out of the wreckage of the tripartite system. That will fall away when the new structure gets into place. As I have already stressed, the financial policy committee will be up and running in shadow form. It is also important to note that through the transitional period, the Chancellor, the Governor of the Bank of England and the chairman of the FSA will need to be in close discussion regularly. Concerning the UKLA, the Treasury will be bringing forward proposals prior to the Summer Recess on its future, along with the significant number of other matters on which we will consult.