Banking Bill

May I say a few words about the compensation scheme? The essence of any such scheme is the confidence that the public can place in it. Whether we are talking about a pre-funded scheme, which is fairly unlikely to cover the whole amount that might well be necessary, or some other mechanism, depositors will need absolute confidence, first, that the money is there for them to have, and secondly, that they can get their hands on it fairly quickly. Even after Committee and our other debates, we have not yet quite got what the public would recognise as a clear compensation scheme in which they could have absolute confidence. Some issues are still up in the air, such as pre-funding. There are issues about the way in which foreign banks with UK branches will form part of the scheme. There is also the question of an absolute assurance on whether different branded products are treated similarly. Even now, in the Bill's Report stage, I do not believe that the average member of the public clearly understands that they can have real confidence in the compensation scheme, as they understand it. I suspect that there is a growing feeling among many members of the public that what happened was, in many respects, a debacle. They had to put their hand in their pocket to bail out the banks in whatever way, and given the cheap loans situation and everything else, they may well consider that any future compensation scheme should in some way be the responsibility of the banking industry. If such a scheme, however drawn up, is somehow dependent on the Government underpinning or guaranteeing it—of course, it is not the Government's money, but the taxpayers' money—I am not quite certain that members of the public will be thrilled to bits. They think that they have probably paid enough. They are looking to Government and Parliament to come up with a proper scheme in a new banking Bill to address those issues, so that they can have confidence in a compensation scheme, and their ability to access and understand it. They want to know that wherever they put their hard-earned cash, they can have confidence in a compensation scheme. The various amendments put forward, both in Committee and today, are attempts to improve the situation, and in general I support them, but with regard to this important aspect of the Bill, I do not believe—we may speak about this later—that we have arrived at a situation in which there is that cast-iron confidence, knowledge and security that depositors require if they are to put their money back into institutions. In some respects, the Minister may agree that the measures are still a work in progress, particularly as regards pre-funding. I accept that there are improvements, and that we are getting closer to arriving at such a situation, but I still do not think that we are close enough.