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Banking Bill

The provision which the noble Baroness questions gives the FSA and the Bank of England rights to take part in certain matters concerning a bank insolvency after they cease to be members of a liquidation committee; for example, to participate in legal proceedings and to attend and be heard at meetings of a liquidation committee formed by the bank’s creditors. Clause 98(7) has been included to give the Financial Services Authority the same rights in a bank insolvency as it would have in ordinary insolvency proceedings, such as liquidation or administration involving firms authorised by the FSA. The subsection therefore mirrors existing provisions of the Financial Services and Markets Act 2000. They entitle the FSA, where an authorised person enters administration or liquidation on the application of a third party, to participate in court proceedings relating to the insolvency as well as certain other rights. These include, for example, an entitlement to receive copy documents or attend meetings of a liquidation or creditors committee. Since the bank insolvency procedure is part of the special resolution regime, and given the important role of the Bank of England in it, it is considered appropriate to give the Bank of England the same rights of participation as the FSA. Although the FSA and the Bank of England are obliged in a bank insolvency to stand down from the liquidation committee once objective 1 has been achieved, it seems sensible that, in keeping with the Financial Services and Markets Act 2000, the relevant authorities should be able to attend and be heard at future meetings. Of course, at that stage in the proceedings they will be able only to make representations, as any decisions will ultimately be made by the creditors sitting on the liquidation committee. They are not part of the decision-making process; it is a matter of copy documents and the right to attend. Similarly, Clause 98(7) gives the FSA and the Bank of England the right to participate in legal proceedings concerning a bank insolvency, but any judgments would of course lie with the court. It is not possible to set out all the circumstances in which the authorities might wish to exercise their rights under Clause 98(7), but the provision offers flexibility which is in keeping with existing legislation. That is why I hope that we can retain it and that the noble Baroness will withdraw her amendment.