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Banking Bill

Clause 167 provides for the creation of contingency funds for the Financial Services Compensation Scheme, and this amendment appears to be intended to ensure that contingency funds could be used to meet the expenses arising from the failure of deposit-taking firms which are incorporated outside the UK but have Part 4 permissions like UK banks. The amendment, however, would only cover banks incorporated outside the European economic area which establish branches in the UK. These banks need a Part 4 permission to open a branch here. EEA banks can establish branches here using a passport issued by the home state authorities under the relevant EC directive. They are still authorised persons but qualify for authorisation under Schedule 3 rather than by having a Part 4 permission. I assume, therefore, that the amendment is a desire to make clear that, if pre-funding were restricted to banks and building societies, as the noble Baroness has proposed, this would not mean just UK banks and building societies. The objective is helpful but the amendment is unnecessary. Foreign banks which have branches in the UK are authorised persons. Non-EEA banks must join the FSCS and contribute to its levies. European economic area banks which join the FSCS to top up the coverage for their depositors also have to make an appropriate contribution to any FSCS levies. Pre-funding, if it were introduced, would not change that, so the proposed addition to Clause 167 would be redundant. I therefore hope that the noble Baroness, moving what I hope is a probing amendment, will think that this is a satisfactory explanation and be prepared to withdraw it.