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Banking Bill

Clause 173: Information Debate on whether Clause 173 should stand part of the Bill. I have given notice that I wish to oppose Clause 173 standing part of the Bill in order to pursue a matter that I raised on our first day in Committee but to which the Minister did not respond. Under Clause 173, the FSA can make banks give it all kinds of information which it can then make available to the Financial Services Compensation Scheme. There is considerable concern among the banks about the use which might be made of this provision. This is not a concern about providing information per se; it is a concern that the FSA will use this power to impose data requirements on the banks to provide information that the banks do not need for their business purposes, and the effect of that will be to impose costs on the banks on a disproportionate basis. The issue that is currently causing the greatest concern is the proposal for faster payout, which will impose significant additional costs. An independent study by Ernst & Young, which was commissioned by the FSA, the Financial Services Compensation Scheme and the British Bankers’ Association, has recently reported on the costs of the faster payout proposals. Those will require banks to marshal their customer data into a single customer view, as well as a number of other systems changes. The Ernst & Young study found that the costs over the first five years just to set up and maintain this system, whether or not it was used, would be in the range of £0.9 billion to £1 billion. This contrasts with the regulatory impact assessment for the cost of the whole of this Bill—not just Clause 173—amounting to no more than £5 million. Will the Minister say whether Clause 173 is in this Bill to support faster payout arrangements or for any other purpose? If there is another purpose, I would be grateful if the Minister would set that out. If Clause 173 is there simply to support faster payout arrangements, will the Minister acknowledge that faster payout will be very much less of an issue if continuity of banking services, for which we sought an amendment to Clause 4, is placed in the Bill as an objective of the special resolution regime? This is the way forward that the banks themselves support. They do not support the current proposals set out by the FSA, so Clause 173 is a potential problem. I look forward to the Minister’s comments.