Banking Reform

Lord Haskel Excerpts

Thursday 17th June 2010 Lords Chamber

[Lord Sassoon]

I am grateful to my noble friend Lord Newby for pointing out, very helpfully, how the Government’s programme in this area has taken account of some of his concerns from before the election. On the transition, it might be helpful if I additionally confirm that the FSA will remain the financial services regulator until the legislation is implemented, so it is quite clear who will be doing what. I am grateful to my noble friend for stressing the management arrangements and I will relay to both the Bank and the FSA his concern that they do what is of course a high priority—to make sure that they retain the essential and extremely good staff they have in both organisations.

[Lord Haskel]

I thank the Minister for telling us about the regulation of debt and banking, and about taking care of the consumer at the Bank of England. Who will take care of inflation? Will it just be the poor relation, somewhere between the Bank of England and the Monetary Policy Committee, or will it be somebody’s special responsibility?

--- Later in debate ---

[Lord Sassoon]

I am grateful to my noble friend Lord Trenchard for his warm words. He mentions the question of too many powers under the old regime. I stress that I think it is more a question of the mindset and the regulatory approach rather than the powers themselves; it is the whole approach to regulation that needs to be changed. He raises the important question of whether we are creating too many bodies. I shall try to reassure him on that; indeed, the landscape is being simplified. Although the PRA will be a subsidiary of the Bank of England, it will be fully embedded in the bank structure. In that sense, I do not see that as the creation of a new body. My noble friend draws attention to the CFEB, which was created as a self-standing body but will now come under the auspices of the CPMA. We are creating a much simpler and more efficient structure in the landscape that should not create any additional difficulties.

My noble friend asks about the remit of the CPMA. Although its principal remit will be to ensure that the conduct of business is properly regulated across all markets, the question of secondary responsibilities, which could become primary responsibilities, including the competitiveness of markets, needs to be considered during the consultation process.

[Lord Haskel]

My Lords, the noble Viscount, Lord Trenchard, reminded me that I too served on the Joint Committee for the Financial Services Act, under the chairmanship of the noble Lord, Lord Burns. I remember that we imposed a duty on the FSA to educate the public about financial matters and financial regulations; indeed, we ring-fenced money so that that could be done. Will all this remain in place?

[Lord Sassoon]

I ask the noble Lord, Lord Haskel, to be patient with us and, as we get into the detailed design, to see how we deal with all these matters. I take his point that this is another thing that needs to be addressed in the detail of the proposals.