---

Banking Bill

Amendments 81 and 95 amend Clause 48 by rewriting the definition paragraphs for security interests, set-off netting and similar arrangements. The amendment was drafted by the City of London Law Society in conjunction with the Scottish Law Society, so I claim absolutely no credit for it. I have a detailed technical note of explanation which the City of London Law Society prepared, but I am aware that it has been available to other noble Lords, it is available publicly, and that the Treasury will have received it. Therefore, in order not to delay the Committee I had not proposed to read it out. These amendments have the backing of banking representative groups such as the BBA and LIBA, and are supported by several large banks with which we have been in contact. I also understand that the amendment has been discussed with the Treasury and others in the expert liaison group. The Government have tabled their own amendments in this group, which cover some of the same ground and to which the Minister will speak. I should say, in the expectation that he will resist my amendments, that we will accept the government amendments, but it is not the end of the story. I am sure that the Minister is aware that the banks and lawyers who have been engaged with this issue, while welcoming the moves that the Government have made with their amendments, are not convinced that the government amendments go far enough. The City of London Law Society recently submitted further comments to the Treasury. In particular, I understand that there is a desire to see the wording in Clause 48 made to conform to definitions used in regulation 3 of the Financial Collateral Arrangements (No. 2) Regulations 2003 and regulation 2 of the Financial Markets and Insolvency (Settlement Finality) Regulations 1999. These are not mere technical issues of drafting preference. An eminent lawyer with whom I was in contact last week said that they are of considerable practical and legal importance in achieving the necessary level of certainty and confidence in the financial markets. Therefore, I anticipate that this is not the end of the story and that we will almost certainly need to return to this issue on Report. In the mean time, I hope that the Government will accept the importance of having legally watertight definitions of these terms in the Bill, because that will drive what is to be covered by the regulations made under the clause. I hope that the Minister will respond by stating the position as the Government now see it. Will the Minister address specifically the issues relating to Scottish law? There are some specific Scottish words in my amendment, and another issue has arisen since I tabled it on whether there needs to be a reference to trusts used in Scotland as an alternative to contracts, because Scots law does not accommodate equitable transfers. Do the Government accept that something is needed in Clause 48 to reflect the Scots law dimension? I assure him that his answer will be read with interest north of the border. I beg to move.