Draft Bank Recovery and Resolution Order 2016 Draft Bank of England Act 1998 (Macro-Prudential Measures) Order 2016

Oliver Letwin Excerpts

Monday 5th December 2016 General Committees

[Sir Oliver Letwin (West Dorset) (Con)]

I am aware that the Committee is not able to propose amendments. I will certainly want to support the orders, but can I induce the Minister to make a comment, which might be useful for the purposes of subsequent legislation and perhaps any subsequent court actions, in relation to article 32, particularly the removal of directors and senior executives under section 71B? May I draw his attention to an oddity of drafting? He will see that under section 71H the regulator can impose the requirements for a new temporary manager only if he reasonably considers that it is necessary for the requirement to take immediate effect. That seems to be proper drafting. However, under 71B, bizarrely and very unusually in this kind of illustration, there is no reference to reasonableness as a test. It states,

“If the appropriate regulator is satisfied that the conditions in section 71D(1) and (2) are met”—

essentially, if there is significant deterioration in the bank’s solidity, the appropriate regulator may require the firm to remove the person who is a director or senior executive, so there is no reasonableness test there. I think that is an oversight in the drafting, but we cannot change the drafting. Is the Minister therefore willing to put on the record what I think must be the intent of the Government, namely that 71B would apply only where the regulator is reasonably satisfied that the conditions are as such? I take it that that is the way the court would then read it and I think the possibility for mischief would be removed.