Regulatory and Banking Reform

David Nuttall Excerpts

Thursday 16th June 2011 Commons Chamber

[Mr Hoban]

The Bank of England and the FSA published a couple of weeks ago a document setting out the new regulatory approach that the PRA will set. They were clear that, rather than waiting for a bubble to burst and for problems to emerge, they will intervene earlier to force firms to take action to correct problems, and that shift in style—from waiting for a problem to happen to trying to pre-empt its creation—is absolutely vital. We are reliant on the judgment and the discretion of the regulators in following through that new regulatory approach, but rather than waiting until it is all too late, as happened in so many different examples over the past 10 years, giving the regulator the power to intervene early will have a significant benefit on outcomes for our constituents.

[Mr David Nuttall (Bury North) (Con)]

I welcome the Minister’s statement. Does he agree that the best way to protect consumers is to have a fully functioning and competitive free market, and that the best way for the free market to work efficiently is, ultimately, for all companies, including banks, to be allowed to fail?

[Mr Hoban]

My hon. Friend makes an important point, which goes back to the point that my hon. Friend the Member for Wycombe (Steve Baker) made about exit from the financial system. That is why it is important that resolution tools are in place to enable firms to be wound up in an orderly fashion, rather than being reliant on taxpayers’ money to keep them going.