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Banking Bill

Amendment 26 26: Clause 7, page 4, line 31, leave out subsection (4) Let us see if I have a continuing run of luck, although I think that the odds are strongly against it. In moving Amendment 26, I shall speak to Amendment 27 as well. Both amendments concern Clause 7(4). Subsection (4) requires the FSA to treat conditions 1 and 2 as met if they would be met but for the financial assistance provided by the Treasury or the Bank of England. In the latter case, this disregards ordinary market assistance offered by the Bank on its usual terms. Amendment 26 would amend subsection (4) so that the FSA can substitute its own judgment about the role of financial assistance. For example, a bank may currently need financial assistance and may even need a small amount of financial assistance to supplement a bank recapitalisation package being put in place. The current drafting of subsection (4) would compel the FSA to say that both conditions 1 and 2 were met because it had to ignore the financial assistance which had been provided to date and was needed in future, even if that was of a relatively small, possibly even a de minimis, amount. The FSA might otherwise be satisfied that the best solution would be for the bank to proceed on this basis but could not arrive at a sensible judgment if it were forced to take a particular view of financial assistance. What public purpose is served by eliminating the FSA’s judgment in such a situation? Amendment 27 deletes subsection (4), largely on the same grounds—namely, that there should be no compulsory judgment forced on the FSA. If that case is accepted, there is no need for subsection (4) because condition 2 allows the FSA to take account of all ““other relevant circumstances””, a term which is so wide as to encompass anything that is important in the matter. My point is that the FSA should not be required to take the stance set out in subsection (4), in which case we would not need subsection (4) because subsection (3) is perfectly wide enough. I beg to move.