Banking Reform

Earl of Caithness Excerpts

Thursday 17th June 2010 Lords Chamber

[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.

[The Earl of Caithness]

My Lords, this is my first opportunity to congratulate my noble friend on his appointment to the Front Bench. Whether or not his is a newly-minted position, it is still very good to see somebody in this House on the Treasury Bench. Does my noble friend agree that the current financial crisis started not with the bankers but with the banking system? All that the bankers have done is to use the banking system which was established by judicial review rather than by legislation. In order to combat debt and, as the Statement says,

“to get the best possible protection for consumers”,

can my noble friend update me on the current thinking of the Government about separating deposit and current accounts and returning ownership of a deposit to the depositor, rather than having it in the control of the bank?

[Lord Sassoon]

I am grateful to my noble friend Lord Caithness. This gives me an opportunity to pay tribute to him as, I think, my predecessor but one representing the Treasury on the Front Bench in this House—a job which he carried with distinction. He makes a very important point on the banking system, one on which we have not touched in detail this afternoon. It is fine and very important to have an appropriate regulatory system but we need to examine the structure of the banking system, something which the previous Government—for reasons that I genuinely fail to understand—did not want at all to look at. That is why we have, yesterday, established the banking commission. There will be many detailed and important points on which your Lordships will want to make direct representations to the commission; the structure of deposit and current accounting might will be one of them.