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Banking Bill

In Amendment 14 the noble Lord, Lord Howard of Rising, raises the important topic of competition. As he explained, the intention behind the amendment is to guard against competition distortions when a bridge bank is created or a bank is taken into temporary public ownership. I reassure him that we have put in place measures to meet this concern. I am a strong believer in having a competitive banking system that delivers value to customers. I believe that the points made by the noble Lord, Lord Newby, about the current shape of our banking industry are worthy of debate and discussion. I have previously expressed in this House my support for the concept of mutuality and my disappointment that we have seen so many mutual institutions in the financial sector—building societies and insurance companies—disappear. That is a matter of some regret, although those decisions were correctly and properly taken by the members of those institutions. The banking sector in this country is now much more concentrated, to which my noble friend Lord Borrie drew attention in the context of the creation of the enlarged Lloyds banking group. From where can I take some comfort that this amendment, laudable in its objective, is not necessary? The code of practice includes measures regarding the running of a bridge bank or a bank in temporary public ownership. It includes guidance on running the bank on a ““conservative”” basis, to use the word contained in the draft code. Further, both a bridge bank and a bank in temporary public ownership will continue to be regulated by the FSA in the same manner as any other financial service provider. There will be no special privileges or advantages under the regulation. The Office of Fair Trading will continue to keep the relevant markets under review to protect the interests of UK consumers and the British economy. I reassure noble Lords that firms in receipt of financial assistance will still be subject to the provisions of competition law with the competition authorities continuing to have the power to investigate breaches. As I said, the Office of Fair Trading will continue to keep the relevant markets under review to protect the interests of UK consumers and the British economy. Additional restrictions may also be imposed on those in receipt of financial assistance to comply with the rules on the provision of state aid. I hope that those points address the concerns raised by the noble Lord, Lord Howard of Rising, and I urge him to consider withdrawing his amendment in the light of the assurance that these banks will be exposed to the same rigorous competition laws as we regard appropriate for banks that do not find themselves within the special regulatory regime. Strong competition between banks is necessary regardless of whether the bank is in receipt of some form of support as contemplated by the Bill. I commit to be a fervent fan and promoter of effective competition in the banking system.