---

Banking Bill

Inasmuch as prevailing on the noble Lord, Lord Turner, is not seen as an intrusion on his independence, I shall seek to convey to him the fact that his appearance in the House will always be welcome and appreciated, particularly his contribution on matters relating to financial regulation. As I said, it is quite possible that he will include this in his report, but I wait to see whether that is the case. The noble Lord, Lord Newby, raised questions about the internal operation of the FSA in connection with the regulation of Barclays and Standard Chartered. I am afraid that I am not in a position to comment on that. The other amendments in the group relate more specifically to the scope of the amendment I propose. I appreciate noble Lords’ concerns that the enabling power the Government are taking is wide and I note the concerns on this point expressed by the Delegated Powers Committee. I note the earlier observations of the noble Baroness, Lady Noakes, on the Delegated Powers Committee and I certainly would not wish to gain a reputation in the House for not taking that committee with the seriousness with which I know it is taken by other Members of the House. We appreciate that this is clearly not ideal. However, the Government would not have framed their amendment in the way that they have if they thought that it was avoidable. As I mentioned earlier, there is considerable market pressure for this issue to be looked into. There is a risk that important financial services activity such as prime brokerage may migrate to other jurisdictions which may be perceived to offer competitive advantages to counterparties in obtaining client assets speedily in an insolvency situation. I have received a number of representations on this point, as I believe have other Members of the House. A move of business away from the UK would weaken the UK institutions even further at this difficult time. The Government would have preferred to take more time over this issue but, given the risks that I have just outlined, they feel that it is necessary to move quickly. The review that we have announced will show the market that the Government are serious in looking into this issue, and the enabling power we intend to take will show the market that we have taken an adequate power to make changes in a relatively short time. Other options, such as conducting a review and following it with primary legislation, were considered. However, the lack of parliamentary time and the sheer length of time a Bill takes to become law militated against this approach. Again by acting quickly and by dealing with the issue in primary legislation, the Government have clearly signalled their intention to resolve the potential difficulties faced by the brokerage market in the UK. Bearing this in mind and given that, unavoidably, the review into the operations of UK insolvency law on investment banks has yet to happen, we risk taking powers with insufficient scope if we do not draft our enabling power widely. A narrow scoping power might allow the Government to make the changes they may need to make, but this fact might cause the market to have less confidence that the Government are serious about addressing this issue in a short timescale. Therefore I ask that noble Lords support the Government in taking this wider power. I can, however, commit to the House that we will further consider the noble Baroness’s amendment and the report of the Delegated Powers Committee to assess whether there is a way in which the flexibility the Government require can be reconciled with a more limited and workable reduction in the scope of the power. We hope to be able to return to this issue on Report. For all these reasons, I hope that noble Lords will consider not pressing their amendments.