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Banking Bill

Let me emphasise the fact that we are trying to deal with circumstances which we cannot forecast in precise terms, but we have to ensure that the authorities can act effectively. To illustrate, what if a bank was facing rapid deterioration, the authorities were intending to act, and a fraud was discovered? They would then have act at extremely short notice to effect a transfer. The issue of due diligence would have to follow because action would have to be taken in such a way to ensure that confidence is sustained; otherwise the transfer would not be effected and the concept of the resolution regime would collapse. Under normal circumstances, of course the operation would not continue if there was a potential problem with the law, but it might be that the public interest is served by the effective continuation of the operation and resolution of the position, with the other factor being dealt with subsequently. Does the power undermine clear legal opinion? No, it does not. It will not be used to modify the provisions of the Banking Bill, and the Treasury will not use it to amend the legislative safeguards provided. We are not taking a power to interfere arbitrarily with the legislation. When Ministers were pressed in a similar discussion in the other place, the Government amended the Bill to ensure that that could not happen. The Government are working hard with stakeholders and market participants to design appropriate safeguards to cover the real problem of partial transfers, the nub of a very difficult situation. We are of the view that it would not be appropriate for this clause to be used to amend the safeguards we are putting in place. We are responding on whether a clear legal opinion on this legislation should be developed, and we defend Clause 75.