Banking: Co-operative Bank Debate

Full Debate: Read Full Debate
Department: HM Treasury

Banking: Co-operative Bank

Lord Flight Excerpts
Wednesday 30th October 2013

(11 years ago)

Lords Chamber
Read Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Newby Portrait Lord Newby
- Hansard - - - Excerpts

My Lords, the banking Bill incorporates many of the proposals of the Parliamentary Commission on Banking Standards. On switching, a new seven-day switching service was introduced last month. In its first month, there has been an 11% increase compared with the previous year in the number of people who switched their bank accounts. One would expect that number to increase as the service becomes better known. This year the big change in terms of new entrants to the market is that the regulators have greatly reduced the time that it takes to become a new bank and greatly reduced the amount of money it takes to establish a new bank. Those are key drivers for getting new competitors into the market.

Lord Flight Portrait Lord Flight (Con)
- Hansard - -

My Lords, as the noble Lord, Lord Sharkey, has pointed out, it is perhaps somewhat of an irony that the Co-op Bank should being bailed out by hedge funds. The crucial point is that the Government have made clear that the time of taxpayers bailing out banks is over. Bluntly, if a bank cannot organise its own financial affairs, the resolution mechanism is the only alternative.

Lord Newby Portrait Lord Newby
- Hansard - - - Excerpts

My Lords, one of the key purposes of the Financial Services (Banking Reform) Bill is to provide, in ring-fenced retail banks, relatively risk-free places for ordinary customers to put their money. Beyond that, the key thing is that the Bill’s resolution provisions will require banks to put in place mechanisms to be activated if they got into financial difficulties, such that they would not need to come to government in those circumstances.