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Banking Bill

I thank the noble Lord, Lord Newby, and my noble friend Lord Higgins for taking part in this important debate. The Minister will have gathered that we are not entirely convinced by what he is saying. There is an issue of what is meant by the phrase that is found in Clause 7 and the Minister has given some elucidation. That elucidation has taken us towards it being something like a balance of probability, but without him positively confirming that. The question is whether that is the right approach, or whether we should leave it completely vague and hope it will never be tested in the courts. The problem that I think lies behind the Minister’s attitude is that the judgment is all for the authorities—that nanny knows best. The authorities would be taking their view on whether they should accept whatever plans were being put forward for recovery for the bank or whether they should pull the trigger, take the bank away from its owners and split it up, sell it on or do whatever. Our position is that the authorities need to be very sure before they get to that position, not just on the balance of probabilities, 50:50 or something similar, which is far too low a test. That is why bodies such as the BBA and LIBA have consistently said to us that they are extremely unhappy with this test. Of course everyone is unhappy with the lack of articulation about precisely what the test means, but in addition the problem is that it is seen as a judgment that will be made in a way that will be harmful to the owners of the business. That is what people fear. There are those who will talk about the problem of the FSA, and indeed the authorities generally, becoming trigger-happy if this legislation goes through. I hope that will not be the case, but this particular formulation leads one to believe that it would be easy for the FSA to become trigger-happy in the context of this legislation.