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Banking Bill

The Government are not opposed per se to the view that credit-rating agencies should be subject to additional oversight. We believe, however, that given the global nature of the credit-rating industry, regulating such agencies nationally would not be the most effective option. The Committee will be aware that the European Commission has published a proposed regulation on credit-rating agencies. The Government have been in discussion with the Commission during preparation of that proposal, and we have consistently supported the introduction of a strengthened oversight regime for those agencies—as agreed at the ECOFIN council on 8 July last year—and the principles that they should be subject to an EU registration system, subject to practical considerations being resolved, and that such a system should be proportionate, principle-based and risk-based. As the EC plans to adopt that regulation in the coming months, it would clearly be inappropriate for the UK to take forward national regulation of credit ratings. Even if that were not the case, I can reassure the noble Baroness that if the Government decided unilaterally to regulate credit-rating activity under the Financial Services and Markets Act, that Act as it stands may well be broad enough to permit it. Credit-rating is probably sufficiently close to the activities already listed in Schedule 2 to fall within the scope of what may be regulated under the FSMA. Therefore, changes in primary legislation are not necessary; the only amendment needed would be to that Act’s regulated activities 2001 order. If that is insufficient comfort for the noble Baroness, I reiterate what has been said repeatedly from the Dispatch Box during this Committee on amendments that seek to change the Financial Services and Markets Act: it would not be appropriate to change the fundamental objectives of the FSA via this Bill, as its primary focus is banking. This is not the occasion for a fundamental rewrite of the legislative structure governing the FSA. On both those main grounds, I hope that the noble Baroness will appreciate that the Government’s position is sound, and that the amendment should be withdrawn.