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Banking Bill (Money)

This group of amendments covers two broad but interrelated issues: default events and partial transfer safeguards. The majority of the amendments made in the other place have been in response to the concerns of stakeholders and reflect the approach that we have adopted—to listen and to try to build consensus. As hon. Members will know, we have tried throughout this Bill to balance the need for the authorities to have the right powers to effect a successful resolution with the right protections to protect legal certainty and market confidence. The Government have sought to consult stakeholders and provide the protections that precisely target their main concerns. Admittedly, that approach has taken numerous consultations and several amendments to the Bill, but I do not apologise for that. The Bill is certainly much improved as a result. With that approach, which includes the safeguards in secondary legislation, we have got the balance right. I wish to place on record my thanks to stakeholders and members of the Opposition for working with us to achieve that overall result. I do not propose to cover the detail of the amendments at any great length. As I have said, they are the result of numerous rounds of consultation and co-operation between all concerned. Baroness Noakes provided my noble Friend the Financial Services Secretary and Minister for the City with an opportunity to read into the record, at some length, the technical detail of and effect achieved by each amendment. I propose instead briefly to summarise the amendments. They achieve two things. First, they amend various technical definitions in the Bill to provide complete certainty on important legal concepts including termination rights, trust interests, and set-off and netting. Secondly, they provide a balance between, on the one hand, the legitimate interests of bank and third-party counterparties in being able to contract with certainty for termination rights where set-off and netting arrangements are involved in financial contracts and, on the other hand, the ability of the authorities to transfer banking business to a new company—either a private sector purchaser or a bridge bank—with certainty over what contracts have been transferred. The balance is achieved via the mechanism of the conditional transfer provided for in an amendment to clause 34, which will be backed up by the necessary safeguards to be made under clause 47. I can, of course, provide more detail on these matters should any hon. Member wish me to do so. However, as I have said, they have been extensively explored in the other place and put on the record there.