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Banking Bill

My Lords, I am grateful to the noble Baroness for the way in which she moved her amendment. I appreciate that she wants to see the colour of the Government’s money in terms of their amendments before she makes a judgment about her own. Therefore, I shall first address government Amendments 8, 9 and 10, which add to the list of matters that the code of practice may address. In Committee, there were a number of areas where Members requested further clarification, or expressed a desire that the code of practice include further information. While Clause 5, in particular subsection (1), already sets a broad remit for the code of practice, the Government agree that further information should be added to the code and that it is appropriate to signal this through Clause 5. Amendment 8 seeks to provide reassurances to the noble Baroness on two issues that she raised in Committee. She proposed an amendment to the effect that the code should include information on the meaning of, "““the stability of financial systems in the United Kingdom””—" that is, the phrase used in the first of the SRR objectives. We agreed that an exhaustive definition could not be provided but that the code could elaborate on this and how it is to be understood. The first part of the government amendment provides for that and indeed goes further by signalling that the code can provide similar information about all the SRR objectives rather than just focusing on the first. I believe that that is the right approach and I hope that the House will accept this as a useful addition to Clause 5. For that reason, I hope that I am able to persuade the noble Baroness to withdraw her amendment. The second part of the amendment expressly states that the code can provide further guidance on the choice between the stabilisation options. Questions were raised in Committee as to the factors that will determine the choice of one tool over another. Given that such a decision will be made on a case-by-case basis, the code is indeed the right place to provide significant additional information on this matter. The draft code already lists factors to be taken into account when deciding between different options, and it could include more information on this matter. I hope that this can be seen as a response to the noble Baroness’s request for a requirement that temporary public ownership be seen as an option of last resort. We have continually stated that that is the case. The amendment draws out expressly that the code of practice can provide further guidance on this important point. The next two government amendments in this group add further to the list of areas about which the code can give guidance. They are a response to two parts of the debate in Committee. First, further information was requested on the working of the continuity obligations under Clauses 63 and 66. Given that they are new obligations, I agree that there should be a vehicle for providing additional information within the Bill on how those obligations will be used. In case noble Lords are concerned that there is no reference to the special continuity obligations in Clauses 64 and 67, let me explain that the code can also make provision about those. Special continuity obligations are exercised by share and property transfer instruments and orders. As a result, they are an aspect of the use of stabilisation powers about which the code may already clearly provide guidance under Clause 5(1)(a). The second addition is to signal that the code can include information on compensation arrangements. I make it clear that there will, of course, be certain parts of compensation arrangements that it would not be appropriate to provide information on in the code. For example, it would not be appropriate to provide guidance on the precise activities that an independent valuer should undertake, as this could compromise his independence. During the debate, questions were raised about the new concept of a bank resolution fund, with its associated management duty, the role of the monitor and the criteria for independence of a valuer. We will come back to these questions in later debates, but we believe that the code of practice can include useful information on some of these areas, so my noble friend has tabled government Amendment 10. Before concluding, I confirm that information on the Bill’s powers with regard to bank holding companies will be included in the code of practice. The powers in Clause 81 are stabilisation powers and therefore the code of practice must make provision about them, as is made clear in Clause 5(1). I make this point now, in advance of our later debate on the noble Baroness’s amendment intended to have this effect. In summary, the code provides a useful addition to the architecture of the new special resolution regime. The Government have listened carefully to the points made in debate during Committee and have sought, through our amendments, to provide the necessary reassurances that further information can and should be provided on a number of important elements of the special resolution regime. Accordingly, I hope that the noble Baroness will feel that the Government have responded positively and with sufficient thoroughness that she can withdraw her amendment.