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Banking Bill

I thank noble Lords for their advice. I do not think that there is a great difference in opinion between us. It is really a matter of how the objective is delivered. I am not entirely clear whether the noble Baroness, Lady Noakes, envisaged that continuity of banking services would have as broad a definition as the noble Lord, Lord Oakeshott, appears to be suggesting, where it might be construed that continuity of service extends to a commitment to make credit available. I take the definition as being more relevant to the observation made by my noble friend, and as enlightened by the reference of the noble Baroness, Lady Noakes, to Bradford & Bingley—namely, the continued availability of the function of the banking system in respect of access to deposits and means of transferring money and settling obligations and transactions. I will take into account the comments on this point that have come from all sides of the Chamber. However, I would like to set out the factors that I also will be weighing in the consideration, ones that will lead to my inviting the noble Baroness, Lady Noakes, to withdraw the amendment. I do not believe that the amendment is necessary as both the second and third objectives, as set out in the Bill, implicitly include the concepts of access to deposits and ensuring continuity of banking services. If there is any doubt regarding this, the draft code of practice, which was published in November 2008 under the title Special Resolution Regime: Safeguards for Partial Property Transfers, makes this explicitly clear. The term, "““public confidence in the stability of the banking systems””," refers to the crucial role that public confidence has in maintaining the stable and efficient operation of financial services and markets. The confidence of the general public is of particular significance in maintaining stability in a banking system based on a fractional reserve model, whereby banks’ deposit liabilities exceed the liquid assets they hold at any one time. The Committee knows that confidence is critical to banking. The code goes on to state that public confidence has a number of dimensions. For example, it refers to the expectation that, first, deposits will be repaid in accordance with their terms; secondly, normal banking services will be continuously available; thirdly, problems, or perceived problems—and this takes me back to the point I was making earlier in response to an observation from the noble and learned Lord, Lord Mackay—in one bank or building society will not extend to other banks; and fourthly, if a bank or building society fails, systems exist to protect the interests of depositors. There is further discussion within the document, in the sections of the code relating to the objective of depositor protection—of the need for continuity of service and rapid access to funds—to which I refer Members of the Committee. Copies are available on the Treasury website or from the Bill team, which is standing by to help Members of the Committee with any inquiries they might have. Returning to the matter in hand, an explanation of the meaning of terms referred to in the SRR better fits in the code of practice than in the Bill. I therefore invite the noble Baroness to withdraw the amendment but, in so doing, I assure her that I will take it away and give the matter further consideration.