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Banking Bill

I thank all noble Lords who have taken part in the debate and the Minister for the spirit in which he approached his reply. We are perhaps not very far apart. The noble Lord repeated what is contained in other documents and other communications—that the ““no creditor worse off”” regulations and the code of practice somehow contribute to the certainty required in this area—but the clear opinion of the lawyers dealing with this is that neither the code of practice nor the ““no creditor worse off”” regulations will contribute one jot to legal certainty and therefore are not part of the framework necessary to create it. We need clean legal opinions for all kinds of reasons, including regulatory capital. Unless we can get clean legal opinions which rest on legal certainty, we will not make progress in this area. It is most disappointing that the Government are not prepared to back their clear statement in the consultation document that they have no intention of upsetting anything that is necessary for regulatory capital purposes. They are not prepared to reflect that clear commitment in legislation, which is what my amendment seeks to do—although not necessarily in very good words—and I urge them to think again. I will quote from an organisation with which we have been in touch—I thought that we would be debating this amendment last week and took a briefing in the afternoon. The organisation said: "““As matters stand, there remains significant doubt about whether the Government have appreciated fully the potential consequence of their proposals and as a result, there remains””—" this is in the banking community— "““considerable unease over the possibility that an inability to attract clean legal opinions in support of longstanding setoff and netting arrangements may significantly impact regulatory capital and the underlying economics of completing transactions within the UK. This in itself could significantly impact liquidity and place further constraints on the ability of banks to lend””." This is something that we will discuss later this afternoon, and is not something that we want to achieve. It is such an important area and it is a pity that we will have no discussions before Report, because the issue is still open on whether the Bill has enough in it to justify the reliance on secondary legislation that the Government want. It will be difficult to decide whether the Bill goes far enough and we can rely on that secondary legislation. If the Minister can communicate before Report with members of the Committee who have an interest in this matter, that will help a more efficient process at Report stage.