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Banking Bill

I am grateful to both noble Lords who have spoken to this amendment. The Government regard Clause 195 as playing a crucial role in the new regulatory regimes for both inter-bank payment systems and the issuance of Scottish and Northern Irish banknotes as set out in Parts 5 and 6 of the Bill. In Part 5, Clause 195 gives the Bank of England the power to impose—as the noble Lord, Lord Higgins, has drawn attention to—a financial penalty on the operator of a recognised inter-bank payment system that has committed a compliance failure, as defined in Clause 193. This power to impose a financial penalty is intended to act as a deterrent against the non-compliance of operators of recognised payment systems with the obligations under Part 5. It reinforces the need to comply with, for example, provisions of codes of practice or directions intended to ensure that systems are not being operated in a manner that could present a threat to financial stability, and to ensure the robustness of payment systems of systemic or system-wide importance. I am sure the Committee recognises the public interest in both those objectives. In Part 6, Clause 219 provides that banknote regulations may enable the Bank of England to impose a financial penalty on an authorised issuing bank that has breached the banknote regulations. This is an important enforcement tool for cases where the breach is not so severe that it warrants withdrawal of an authorised bank’s issuing rights, which is a power that could be used in the most extreme case, yet warrants the imposition of a penalty to ensure compliance with regulation rules that are necessary to offer note-holders protection. Clauses 195 and 219 share an underlying purpose. Although the specific details may vary, I would like to discuss the imposition—which the noble Lord, Lord Higgins, was particularly concerned about—of a penalty in general terms which are applicable to both parts, as the grouping of these two issues into this single debate suggests. I am grateful for that grouping. The power to impose a financial sanction is intended to act as a deterrent and enforcement tool, underpinning the new regimes provided for in the Bill. I give way.