Bank of England and Financial Services Bill [HL]

Lord Davies of Oldham Excerpts

Tuesday 19th January 2016 Lords Chamber

[Lord Bridges of Headley]

My Lords, the amendments in this group make minor and technical changes to correct oversights in the Bill. Amendments 3 to 6 deal with the use of the terms “institution” and “group entity” in the new Section 57B inserted by Clause 32. This section requires the Bank to provide information related to resolution plans for institutions and group entities. Subsection (5), which allows the Treasury to direct the Bank not to provide this information in relation to specified institutions, omits group entities. These changes correct this and make consequential amendments to the rest of the clause.

Amendment 7 alters Schedule 2 to ensure that the definition of “banking group company”, found in Section 189(1B) of the Financial Services and Markets Act 2000, applies to the use of that term in the new subsection (1ZB) of that section, which is inserted by this part of the Bill, and not just to its use in subsection (1A), as is the case now.

On Amendment 8, as we are ending the PRA’s status as a subsidiary of the Bank, Schedule 2 of the Bill removes a series of requirements in existing legislation for consultation between the Bank and the PRA that are no longer necessary. One such requirement, in Section 129A of the Banking Act 2009, was overlooked, and this amendment removes it.

Amendment 8 also reinstates a requirement for the Bank and the FCA to inform each other that they are satisfied that the conditions for application for a bank insolvency order for which they are respectively responsible are satisfied before either can make such an application. The amendment made by paragraph 56 of Schedule 2 to the Bill to Section 96 of the Banking Act 2009 inadvertently removed this requirement.

Finally, Amendment 9 corrects the reference to the Financial Services (Banking Reform) Act 2013 in paragraph 69 of Schedule 2. I beg to move.

[Lord Davies of Oldham (Lab)]

My Lords, I am grateful to the Minister for explaining these amendments, which he has assured the Opposition are purely technical. I would not doubt the word of a Minister in such circumstances at any time, but certainly not at a time when, as will be recognised, the Bill is being considered first in this House. Therefore, if there were any failure to meet the criterion of technical amendments, I have no doubt that my colleagues in the other place would light upon it with some alacrity, so I am happy to support these amendments.

Amendment 3 agreed.

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[Baroness Kramer (LD)]

I very much join in the thanks, particularly to the noble Lord, Lord Bridges, for the way in which he conducted the work of the ministerial Front Bench. He was always open to meeting and kept us incredibly well informed—frankly, above and beyond the usual. I extend those thanks to the noble Lord, Lord Ashton of Hyde, and to the whole of his Bill team for the generous way in which they handled this piece of legislation. The Government listened, particularly on one key issue which these Benches were concerned about—oversight of the Bank of England —and the Bill will now be stronger for that.

I have to say, very briefly, that there were areas where the Government did not listen, and we will all live to regret two of them. One is the decision to end the reversal of the burden of proof, which would have had a big impact on the culture of banking, and for the better, and the other is the concern we raised over the independence of the FCA. Both those concerns have been very much underscored by the recent disclosure that the FCA has cancelled its review of the culture of banks and by the timing of the way it did so, just a few weeks after the Bank of England parachuted an executive director into the FCA to supervise this area. So we have concerns, which I am sure will be picked up in another place and by the Treasury Select Committee. But I very much thank those who worked on the Bill and who did so with great graciousness.

[Lord Davies of Oldham]

My Lords, I, too, thank the Minister and his colleague, the noble Lord, Lord Ashton, for the way in which they have conducted the progress of this Bill. We particularly appreciate that the Minister was concerned to arrange meetings at which we could discuss fully, outside the processes of the Chamber, crucial aspects of our anxieties. We were greatly exercised over the issues of the court and its powers and the oversight committee, so we also particularly appreciated the fact that a meeting was arranged for us by the Minister with the chairman or chief officer of the court. That was extremely helpful and it aided us in our consideration of the Bill. So I thank him and his team for their work on the Bill.

I also indicate to the Minister that, as a Lords starter, the Bill has further scrutiny to undertake. He will be well aware that my colleagues in the other place will subject the Bill to intensive scrutiny and will seek to find areas where perhaps the Government can be persuaded to think again, not least on the reverse burden of proof and their position with regard to the court. But this has been a constructive exercise. I suppose that it is the Minister’s maiden Bill and I congratulate him on his achievement as the Bill is about to pass.

Bill passed and sent to the Commons.