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Building Societies (Insolvency and Special Administration) (Amendment) Order 2010

My Lords, I thank the Minister for introducing these orders and I shall not respond to his opening words, which were broadly that the mutual sector is doing rather well. In the face of several consolidations and one failure, it has not been a good time for the mutual financial sector. But that is a debate for another day. When we considered the 2009 insolvency and special administration order, which will be replaced by the order before us today, I had rather a lot to say. I think that the Minister may be relieved to know that I shall not be repeating that performance and we have no fundamental problems with either of the orders. So far as the Building Societies (Insolvency and Special Administration) (Amendment) Order is concerned, it was good to see the advice of the sub-group of the Banking Liaison Panel in full on the Treasury’s website and summarised fairly in the Explanatory Memorandum. The panel has been a good invention for all these highly complicated areas of law surrounding banks, building societies and financial transactions generally. It gives a lot of comfort to see that the draft order has been reviewed by the sub-group and I shall not pursue the relatively small points that remain from that review and from the consultation generally. Turning to the Building Societies (Financial Assistance) Order, I can criticise the Treasury a little. The Treasury’s website for the consultation on these orders shows the responses from the Building Societies Association and the Insolvency Service, although in each case they are wrongly referenced to each other. If you click on "Insolvency Service", you get the Building Societies Association and vice versa. I checked that again this morning and it is still the case. The main response of the Building Societies Association says, at paragraph 30, that it has responded separately to the financial assistance consultation. But that is not on the Treasury’s website. The noble Lord will be relieved to know that I found it on the website of the Building Societies Association. Luckily for the Minister, that did not raise any points that I wish to raise with him today. I have one point for the Minister on the financial assistance order. He said that it is wider in its potential application because the Banking Act 2009 defined "financial assistance" in a broader way than the 2008 Act, in that it was not confined to financial stability. I think that that was because Section 228 of the 2009 Act was intended to be a very broad definition of financial assistance for other purposes in the Banking Act. I understood what the Minister said as regards this wider definition not being used to apply to floating charges, but it remains and can be used for financial assistance to building societies. Will the Minister say what the practical impact of this wider definition is intended to be? Do the Government intend to use the power under this Act in a way that they would not have used it under the 2008 Act? It looks as if the Government have rather a wide power now to prop up all kinds of ailing building societies and, if I go back to my opening remarks, I have noticed that they ail from time to time. Therefore, it is a potential concern that such a power exists.