---

Banking Bill

I am grateful for the contributions to this debate by my noble friend Lord Eatwell and the noble Lord, Lord Newby. The comments made by the noble Lord, Lord Newby, captured the essence of how this committee may operate in practice. That is why I respectfully suggest that this amendment, which again seems to use the Monetary Policy Committee as a precedent, is not appropriate. We cannot simply transpose the success of the Monetary Policy Committee into the architecture and processes of the Financial Stability Committee. The decisions discussed at meetings of the Monetary Policy Committee are highly market-sensitive until they are announced. However, once the decision is in the public domain, the grounds for making it can usually be disclosed in full. The case of financial stability is very different. The grounds for making decisions about one institution or sector will often reflect the committee’s assessment of other institutions and sectors, and of the system as a whole. Noble Lords will recognise that publication of such material could be highly destabilising, whether six days, six weeks or six months after the fact. It is difficult to understand how the noble Baroness could conclude that the publication of these minutes would achieve a goal of transparency without compromising the effectiveness of the committee, which should be our primary consideration. The amendments seek to address some of these points by allowing the committee to exclude from publication minutes regarding decisions on the use of the stabilisation tools in the SRR. However, there is no similar carve-out for the FSC’s other roles. Would noble Lords, for example, consider a discussion of the robustness and stability or otherwise of a payment system such as BACS or CHAPS, on which millions of people rely every day, to have less potential to threaten financial stability than a similar discussion regarding a bank? I think not. What of any additional functions that the court may delegate to the FSC? Representatives of the Bank of England have signalled in the other place that they are considering delegating to the FSC responsibility for decisions regarding liquidity support. Would it be appropriate to publish minutes of these issues? I think not. It is clear that the Bank would not be able to publish these deliberations without fear of causing a run on a financial institution. Surely that cannot be the noble Baroness’s intention. There are measures later in this part of the Bill that are designed to prevent instances of potentially damaging premature disclosure of liquidity support. For the sake of argument, let us suppose that it would be possible and desirable to expand the carve-out in the amendment to cover these and other cases. Even if this were possible, we would still oppose the publication of minutes for the following reasons. First, it is vital that the committee feels able to speak freely on issues without the threat that the minutes may be published at some point in the future. Any possibility of the detail of discussions entering the public domain would inevitably compromise the honesty and comprehensiveness of any debate, or record thereof. Secondly, it would be very difficult for the committee to assess the potential impact on financial stability. The issues discussed may subside for a time, and the committee publish the minutes, confident that they pose no threat to stability. If the issues were to re-emerge, market reconsideration of the committee’s minutes, and any subsequent reaction, could pose a risk to financial stability. Finally, the mere fact of the committee’s ceasing to publish minutes of its meetings after a period of consistently making them available would send a clear signal to the market that there was some threat to the stability of the financial system, which is exactly what we are trying to avoid. The Monetary Policy Committee meets on a formal schedule. The dates of the MPC’s meetings for the next 12 months are already a matter of public record. It is an entirely different committee, with an entirely different set of processes, from the Financial Stability Committee. To borrow the rules, procedures and processes of the MPC for the Financial Stability Committee shows a failure to appreciate fully how the FSC would work. I beg the noble Baroness to withdraw her amendment.