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Banking Bill

My Lords, this is another area where I think that there is very little difference between the Opposition and the Government in terms of the goal that we seek to achieve, but there is a difference of opinion as to whether there is a need for that to be formally incorporated in the Bill. I shall seek to persuade the noble Lord, Lord Howard of Rising, to withdraw his amendment. In Committee, I provided a number of reassurances on how the Government treat competition, referring to the important role of the Competition Commission, the Office of Fair Trading and the FSA. I also drew attention to the SRR code of practice, which includes guidance on the management of publicly owned banks, requiring them to be run in a conservative manner. In addition, during the debate on the amendment of my noble friend Lord Whitty, I described how the OFT and Competition Commission have an active role in monitoring and investigating movements that have implications for competition within a specified market. This includes the OFT’s ability actively to investigate markets that do not appear to meet the needs of consumers. Therefore, to reiterate what I said in Committee, we should be satisfied that the competition authorities will continue to keep relevant markets under review in order to protect the interests of UK consumers and the British economy. Finally, I again draw attention to the fact that a banking business transferred to a private sector purchaser, a bridge bank or a bank in temporary public ownership will continue to be regulated by the FSA in the same manner as other financial services providers. Rather than repeat those arguments further, I should like to reflect on a matter raised during the Committee debate by the noble Lord, Lord Howard of Rising, in connection with the merger of Lloyds and HBOS, a subject to which he referred again this afternoon. With the greatest respect, I do not agree with the noble Lord’s assessment of this matter. My noble friend the Secretary of State for Business, Enterprise and Regulatory Reform considered the matter and gave regulatory clearance on the basis of the public interest. In coming to this decision, my noble friend, as well as considering representations from the authorities, also considered representations from the parties to the proposed merger and interested third parties. The fact that the merger went ahead does not mean that competition was ignored. Rather, proper process was followed and competition issues were considered. I repeat, therefore, that there are structures and systems in place in other legislation—in particular, the Competition Act and Enterprise Act—to ensure that distortion of competition is avoided. In Committee, the noble Lord, Lord Howard, requested that my assurances on the points that he raised should occasionally ““have a practical result”” in the Bill. I am afraid that in this instance they should not. I do not agree that the protection of competition within the financial and other markets that already exists in other legislation needs to be duplicated in this Bill. The special resolution objectives set out the broad purpose of the SRR and therefore the matters to which the authorities must have regard when undertaking action under the SRR. There is, as noble Lords will have noticed, one exception to this: objective 5, relating to the avoidance of interference with property rights. This is not of course a core purpose of the SRR, as, for example, is the protection of depositors. However, this was included in recognition that many of the SRR powers directly interfere with property rights. Given this, it seemed appropriate to place an explicit objective to avoid any interference that is in contravention of a convention right under the European Convention on Human Rights. As the noble Lord has pointed out, a number of consequences of action under the SRR may result in an effect on competition. I do not believe that this is of the same magnitude as the direct effect of the Bill’s powers on property rights. Further, and at the risk of repeating myself, a significant body of English and EU law already works to protect competition matters. This is an important matter, which is why I have endeavoured to be reassuring. But for the reasons I have set out, I urge the noble Lord to withdraw his amendment.