Financial Services Regulation

Lord Newby Excerpts

Wednesday 16th June 2010 Lords Chamber

[Lord Sassoon]

My Lords, I should point out to the noble Lord, Lord Barnett, that the Bank of England was indeed drawing attention in its financial stability reports to the debt crisis and some of the looming debt problems, but did not have the tools to deal with it. In his Mansion House speech in June 2009, the governor himself commented that even under the partially patched up regime that the previous Government put in place,

“it is not entirely clear how the Bank would be able to discharge its new statutory responsibility if we can do no more than issue sermons and organise burials”.

It is all very well having some of the new tools in place, but they need to be in the right hands—those of someone who can bring the responsibilities together.

[Lord Newby]

My Lords, following the question of the noble Lord, Lord Bilimoria, I underline the importance of the Government proceeding with speed in this area. The Minister will be aware that a number of senior staff at the FSA have announced their intention to leave that body and that morale there is extremely low. Can he impress upon the Chancellor of the Exchequer the need to proceed quickly with institutional changes so that the period of uncertainty—and, therefore, the period during which supervision is undertaken with less rigour than we would wish—is minimised?

[Lord Sassoon]

My Lords, I thank my noble friend Lord Newby for drawing further attention to the fact that we need to deal in an appropriate way with all the personnel issues. The system has failed but there are extremely good officials in the Bank of England, the FSA and elsewhere working on these matters. It is imperative that we act as sensitively as we can to enable them to carry on with their important work, particularly at a time of continuing financial fragility. While there will be a tension with the desire for speed, the need for legislation and so on, we are discussing these points with both the Governor and the chairman and chief executive of the FSA.