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Financial Services Bill

As you would expect, Madam Deputy Speaker, so as not to detain the House too long, I have sought an answer to the question whether there is widespread support for new clause 8, as drafted, and in particular whether the Liberal Democrats support it. It now appears that they do not, so I will use the new clause as a probing proposal. Lord Vinson is also working on this matter, and when we have listened to the debate, we might come back with a much more narrowly defined proposal when the Bill reaches the other place. My starting point is those hectic days before the bank collapses, when we saw people piling in, trying to destroy the value of the share capital of some of the best-known company names in the country. We learned that some of those individuals—perhaps many of them—were doing that not with their own shares, but with shares that they were borrowing. They were forcing down the price of the shares, then handing them back when they were much reduced in value to the people who owned them. I was puzzled by that. How could anybody in their right mind lend shares to what appeared to be, if we were to believe the media, financial sharks, only to get the shares back at the end of the day much reduced in value? The next stage in my enlightenment on this topic was when a pension fund chairman—it is not a large fund, but it is certainly a substantial one—wrote to me to say that he, too, was puzzled by this practice. He had inquired of the custodian of his company's series of pension funds whether the shares of those funds were being lent out. After an uneasy negotiation with the custodian, he found that they were being lent out without his permission, without the trustees' permission and certainly without the knowledge of people who thought that their pension savings were safe. The custodian's role is key. I have been a Member of Parliament for some time—I was here when Robert Maxwell lifted the shares of many of the pension funds that he felt he owned. We were lax in those days and he found it possible to bully the chairman and trustees to lend him—to put it euphemistically—those shares.