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Banking Bill

Clause 195: Penalty Debate on whether Clause 195 should stand part of the Bill. I have given notice that we oppose Clause 195 standing part of the Bill because it gives the Bank a completely untrammelled power to levy penalties for a compliance failure. Furthermore, it creates an incentive for the Bank to levy penalties because the penalty is paid to the Bank. For the convenience of the Committee, I have grouped this with Clause 219 stand part, as that clause concerns an identical provision in Part 6, which deals with banknotes. I have no problem with penalties for compliance failure, as that is an accepted part of regulation, but I do not believe that it is proper for the Bank to be given an unlimited power of penalty-raising. In other parts of the legislative sphere we can find multiple turnover limits which apply to penalties under competition law. The FSA is required under its statute to set out and publish a scheme of how it will apply penalties. There is absolutely no guidance in this clause, and no requirement for the Bank to do anything such as set out a scheme. Indeed, an operator may fare better by being prosecuted under Clause 196 because at least that system imports rules about fines from the criminal justice system. As I mentioned earlier, I also have a problem with any penalty being paid to the Bank. Why should the Bank be enriched by a large penalty? I can see that it would want to recover its costs from dealing with a recalcitrant system operator, but what public policy is served by the Bank profiting from its activities?