Privileges and Conduct

Earl of Courtown Excerpts

Thursday 15th November 2018 Lords Chamber

[Lord Foulkes of Cumnock (Lab)]

Many of us do not live in London and we have to get to other parts of the United Kingdom. We are hearing the same arguments again and again. Surely it is about time that we went to the vote.

[The Earl of Courtown (Con)]

My Lords, for the convenience of the House, I suggest that we hear from my noble friends Lord Hodgson and Lady Shackleton, and then we move on to the noble Lord, Lord McFall.

[Lord Hodgson of Astley Abbotts]

I want to draw the attention of the House to my experiences as a director of a major self-regulatory authority, the Securities and Futures Authority, which used to regulate a major part of the financial community of the City of London. When you are investigating things like the collapse of Barings Bank, issues of money and reputation rank very high indeed. There are some lessons which can be read across to the difficult, problematic and painful case that we are discussing today.

I should make it clear that I am not a lawyer and I do not know the noble Lord, Lord Lester of Herne Hill, although obviously I have seen him in action in your Lordships’ House. I know of his reputation both here and in the wider judicial field. I have played no part in any of the committees that have looked into this case. I want to focus on the process and, following up on the point made by the noble Baroness, Lady Meacher, draw on the experience of the Securities and Futures Authority when it was trying to regulate the City of London. Before the Financial Services and Markets Act 2000 was passed and we got the statutory framework that we now have, there was a self-regulatory framework in which practitioners made up the governing body. Given that, we felt particular stresses and strains, some of which we are seeing reflected in the contributions to this debate in your Lordships’ House.

As a body, we always struggled with the accusation that we were too close to the people we regulated. As newspapers would put it very disobligingly, we let our friends off over lunch. To fend off those accusations, we ensured that independent individuals with no links to the financial services community formed part of our panels and our body. One of them was the noble Lord, Lord Eatwell, a distinguished Member of your Lordships’ House on the Benches opposite, but he is not in his place today.

The issue that was always put to us by our legal advisers was that in a disciplinary case, we could never change the rules. The rules were the rules. They might have needed updating and they might even have been inadequate, but they could not and must not be changed in midstream because of course the authority, which made its own rules, would inevitably suffer a stupendous loss of public confidence if an “unpopular” decision was being reached and the rules were subsequently changed, perhaps to achieve a different result.

My question for the noble Lord, Lord McFall, when he comes to wind up the debate, is this. Can he assure the House that the rules now in play were followed to the letter and that no potential avenue which might have advantaged the case for the noble Lord, Lord Lester, was denied to him? If he can give that undertaking, I will have to say to the noble Lord, Lord Pannick, that while I understand his case for change and I have read his article in the Times, and I acknowledge how powerfully he and others have argued their case in this debate, that surely must be a discussion for another day. If we were to accept the amendment and therefore put aside our rules in this case, it is all too easy to see the accusation that we, too, are letting off our friends over lunch.