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Banking Bill

For the benefit of the noble Baroness, I repeat the reply that I gave my noble friend Lord Eatwell. The Financial Services Authority has a responsibility for supporting the stability of the financial system of the UK as part of its objective under Section 3 of the FSMA; namely, to maintain market confidence. Market confidence is critical to financial stability; it is an important pre-condition to, and indeed a feature of, financial stability. I suggest therefore that the Financial Services Authority has a nexus with financial stability. Before my noble friend’s intervention I was dealing with his amendments which seek to establish a joint Financial Stability Committee of the Bank and the FSA. I should like to set out why, respectfully, I disagree with the purpose of those amendments. First, it is entirely unnecessary to establish a new committee whose aim is to allow the tripartite authorities, or any two members thereof, to discuss financial stability. There are clearly well established mechanisms for the tripartite authorities to communicate and to co-ordinate their actions in relation to their joint and individual responsibilities, including that of safeguarding the UK’s financial stability. The three authorities meet at a number of levels on a regular basis under the auspices of the memorandum of understanding. The standing committee meets at least monthly—during recent times it has been meeting weekly and even daily to discuss financial stability issues—and it can convene at any time when necessary. These arrangements have proven successful. Recent actions taken to safeguard and strengthen the UK’s banking system and wider financial stability have demonstrated the tripartite arrangement at its best, with the authorities working together in an effective and timely manner to stabilise UK banks and support the long-term strength of the economy. An additional forum for the entire tripartite to convene to consider issues of financial stability is therefore unnecessary. Secondly, the arrangements that my noble friend Lord Eatwell seeks to put in place are, with respect, unworkable. His amendments would create a joint committee—