Financial Services Bill

Lord Northbrook Excerpts

Wednesday 17th October 2012 Lords Chamber

I also make the wider point that there has almost been a sort of global excess regulatory reaction to the banking crisis. We have the ESMA at a European level; we have the European Banking Authority, which, under the present EU proposals, would have powers to have the last say with regard to banking regulation in this country; and we have international regulatory authorities. All of those bodies effectively are saying what should be done without very much accountability. Therefore, at least to avoid mistakes, it is important for the UK entities to have consulted very fully with the relevant parts of the financial services industry. I pay tribute to the fact that in the main that has happened in practice and that by and large the UK representatives in Brussels seem to have done a pretty good job of looking after UK interests. Nevertheless, as prescriptive legislation is the fashion of the day, I think that there is a strong case for this Bill to prescribe for such consultation.

[Lord Northbrook]

My Lords, I rise to support my noble friend Lord Flight in his Amendment 190A. As far as I can see, Clause 62 currently contains no reference to consulting the financial services industry or, where appropriate, consumers in this area. I think that the clause should be amended to this effect as it is a useful and important potential extra area of consultation.

[Lord Sharkey]

My Lords, my noble friend Lord Flight seeks to amend Clause 62(6). The paragraph states that the MoU that we are discussing,

“need not make provision about co-ordination between the FCA and the PRA in relation to membership of, or relations with, the European Supervisory Authorities”.

However, subsection (1) of the same clause states:

“The Treasury, the Bank of England, the FCA and the PRA … must”—

I emphasise “must”—

“prepare … a memorandum describing how they intend to co-ordinate the exercise of their relevant functions so far as they relate to membership of, or relations with, the European Supervisory Authorities”,

and some others. On the face of it, these two paragraphs appear to directly contradict each other. I am sure that that is not actually the case, but I would be very grateful if my noble friend the Minister could explain why there is no contradiction here and perhaps also explain the purpose of subsection (6).