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Banking Bill

As this is my first experience of taking a Bill through Committee, I shall endeavour in my response to these amendments not to fall into the trap of chiding the noble Baroness, Lady Noakes, or teaching the Committee lessons, and certainly never that of quoting any Member of the Committee out of context. To address the noble Baroness’s points on Amendment 4, the Government believe that there should be a clear role for the FSA, the Bank of England and the Treasury in the special resolution regime. These roles should be in line with their expertise, and are accordingly mandated with, as the Minister said in the other place, a clear and sophisticated model. The FSA should be responsible for assessing whether a firm should enter the SRR, and the ongoing supervision of any firm while it continues to operate in the SRR. In that respect I agree with the noble and learned Lord, Lord Mackay. The Bank of England should be responsible for the operation of the SRR and the tools within, other than temporary public ownership. The Treasury should be responsible for public finances and the overall public interest. The Treasury will also lead on the decision to take a bank, or bank-holding company, into temporary public ownership. This position has been consulted upon and is widely supported by stakeholders. Of course, the authorities will continue to work closely together both prior to and during the period for which a bank is subject to the measures of the special resolution regime. This has been demonstrated during the recent resolution of actions on financial stability. As Members of the Committee will know, I have only been a Member of the House of Lords for a relatively short period of time. Before that, I was actively involved in the banking and financial sector. I was an observer from the outside of most aspects of the tripartite process. Over the past three months, I have had an opportunity from the inside to see how the tripartite process works. My judgment is that it works a lot better than many would suggest. It may appear that these separations of responsibility in themselves give rise to scope for conflict, tension or, conceivably, for nobody owning a particular issue; ““Who’s in charge?”” was the question that Mr McFall put to the Government at the Treasury Select Committee. But the reality is that the tripartite authorities all have a shared responsibility that draws upon their specialist area of expertise and which gives them particular focus on different aspects of how the tripartite arrangement works. Therefore, I respectfully do not agree with the amendment proposed by the noble Baroness, Lady Noakes. The Banking Bill provides for the roles that I have just set out for the authorities, providing in each case a lead authority. For example, Clause 9 provides the Treasury only with the power to take a bank into temporary public ownership. Clause 7 makes it clear that the FSA is the lead authority in deciding that the general conditions for entry into the SRR are met, as the noble and learned Lord, Lord Mackay, drew to the Committee’s attention.