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Banking Bill

Amendment 24 24: Clause 6, page 4, line 19, at end insert— ““( ) The code shall not come into force unless an order containing a draft of the code has been laid before, and approved by a resolution of, each House of Parliament.”” This amendment concerns the parliamentary process for the code of practice. As Clauses 5 and 6 are currently drafted the Treasury issues the code of practice after the minimal consultation set out in Clause 6. There is no requirement for more general consultation because the Government rejected the amendments in the previous group, nor is there any role for Parliament. That is what Amendment 24 focuses on; it requires a draft code to be approved by each House before it comes into force. It is perfectly normal for statutory codes to be approved by Parliament; this is not an innovative procedure. When the amendment was debated in another place, the Minister said that the FSA’s handbook was not approved by Parliament so it was not necessary for the code to be approved. I believe that the Government have chosen not to understand the difference between the FSA’s handbook and the related powers in the Financial Services and Markets Act and this Bill and its code. The FSMA inter alia sets out the basis on which regulated activities can be undertaken and gives the FSA the related powers, and the handbook sets out how the FSA will use those powers. On the other hand this Bill gives relevant authorities some sweeping and intrusive powers that go way beyond anything that we found in the FSMA. It is one thing to say how a regulatory body will apply its regulatory constraints but quite another to say how public bodies will use powers to grab property that belongs to other people. That is why we believe that it is important that Parliament is involved in all stages of the implementation of this Bill, including the extremely important code of practice, which will be the main route of communication between the relevant authorities and the businesses that could be subject to the powers in the Bill. In addition, as a purely practical matter, the FSA’s handbook was reputed at one stage to have reached nine feet had it been printed out in total. That did not reflect particularly well on the FSA but for present purposes tends to indicate a level of detail with which Parliament ought not to get involved. The code of practice, a draft of which we have seen, is commendably short and very amenable to parliamentary scrutiny. The Government have produced their helpful draft code, but it is already clear from the November consultation that significant new elements will be added to it before it is finalised. It is important that the whole code is subject to proper scrutiny, and it is difficult to see how that can be achieved without proper parliamentary process. Furthermore, it is important to remember that the code can be revised and reissued whenever the Treasury chooses by virtue of Clause 6(3)—I have no problem with that power—so, over time, a very different code might emerge. It cannot be right for Parliament to play no part in that