Banking Bill

When people start picking through the entrails of this crisis, it will undoubtedly emerge that there was fraud as well as misjudgment and irresponsibility. I hope that our Serious Fraud Office was not so badly traumatised by its experience of dealing with the Saudi royals that it is not still sufficiently motivated to go after serious fraudsters. Since we have a deposit protection scheme, it is important that it is properly constructed and credible, and various points have been made about the proposed scheme, which I hope the Chancellor will take on board. For example, there is a problem that has not been resolved to do with people who are temporarily worried about the £50,000 limit—or who were worried about the £35,000 limit—because they are buying homes. I think a Conservative Member mentioned in Prime Minister's questions last week a constituent in Devon who was concerned about that problem, and it is a legitimate issue. How, under the proposed deposit protection scheme, will people be protected who have temporarily very large balances? That is a tricky problem to manage, but it is important. There is also the separate issue of whether people should be protected on the basis of the brands of the banks that they invest in, as opposed to the institution. I suspect that not many people are aware that Cheltenham & Gloucester is part of Lloyds. We must not just assume that, when calculating whether they should worry about deposit protection, everybody knows which subsidiary of which bank belongs to which brand. There is another important issue that did not surface much in public debate—perhaps because people were not aware of it at the time—which is that the compensation scheme applies to net, rather than gross, exposure. People who have substantial deposits as well as substantial borrowings do not enjoy as much protection as they might assume. Therefore, there are certain aspects of deposit protection that need to be clarified if proper consumer protection is to exist. Much of what the Conservative spokesman and the Chancellor spoke about related to the special resolution regime, and I do not have a great deal to add on that.