Draft Silicon Valley Bank UK Limited Compensation Scheme Order 2024

Mark Garnier Excerpts

Monday 20th January 2025 General Committees

[Mark Garnier (Wyre Forest) (Con)]

It is a great pleasure to be standing opposite—albeit in opposition—the newly promoted Minister. I look forward to spending an entire week locking horns with her.

Let me start by saying that it is fantastic that we have seen some very swift action. It just goes to show that the Banking Act 2009 has worked extraordinarily well, and how efficiently the previous Government did when it came to resolving this financial problem. A huge amount of work was done by a number of people in the previous Government, including the Treasury Committee, which looked at the Financial Services Act 2012, and the Parliamentary Commission on Banking Standards, which looked at the Financial Services (Banking Reform) Act 2013. A huge amount has gone on and it is reassuring to see that when something does go wrong, the system cuts in incredibly quickly and resolves the situation very well. The Minister and I will be talking directly about bank resolution on Wednesday; it is incredibly important that we work together on this, and I think we are probably in broad agreement.

This order raises an incredibly important point about shareholders—the people who take the ultimate risk in any sort of business. Shareholders are at the bottom of the list of people who are compensated in the event of the winding-up of any privately owned institution. That is the right thing—at the end of the day, private shareholders need to take that risk—but we need to remember that they are taking the ultimate risk in any business. We in this place sometimes beat them up, because we do not necessarily like to see them make too much money, but part of the risk-reward ratio of the current system is that shareholders take a lot of risk; we should not attack them for taking good returns, given the fact that they can lose every penny of their money. The other point about shareholders is that they provide an incredibly useful service in the governance of any institution: making sure that something like this situation should not happen. There was a single shareholder in this case, but multiple shareholders do provide good scrutiny, and we need to address the tone with which we talk about them.

The instrument is absolutely right, and the Opposition recognise that the system is working extraordinarily well. We will certainly not oppose the order; it is very good that we are finally delivering the last part of the resolution. I have no more to add.