Banking Bill

Let me start by addressing new clause 6, tabled by the hon. Member for Fareham (Mr. Hoban), which would require the Treasury to lay a report before Parliament before bringing forward any regulations under section 214A of the Financial Services and Markets Act 2000 to introduce pre-funding. It is worth recalling that those regulations will be laid before Parliament in draft. They will need to be debated and approved under the affirmative procedure before they are made, so there will be ample opportunity for debate and parliamentary scrutiny—plenty of time for the Government to set out their thinking, and for Members of this House to challenge and question that reasoning. As I have said before, this is not a matter on which the Government would expect to have to act without prior consultation. Pre-funding is not an emergency action after the event—quite the reverse—so I expect that there would be plenty of material, including consultation documents, in the public domain before the regulations were laid, or before the report that new clause 6 proposes had been prepared. In short, I do not think that such a report would be of much use or assistance to hon. Members when they consider the draft regulations. I hope that I have made it clear that there would be extensive consultation beforehand, and I hope that the hon. Gentleman will not press his new clause any further. As well as requiring consideration of the impact on the levy payers who contribute to the contingency fund—as I said, that will be considered in any case through consultation and parliamentary scrutiny—the proposed measure would require the report to consider whether pre-funding was the best way to achieve the objectives of the special resolution regime. I do not see the connection between pre-funding and the achievement of those objectives. Pre-funding is about building up funds to meet the costs of contingencies that may, or may not, occur—we hope that they will not—and one of those contingencies requires the Financial Services Compensation Scheme to contribute to the costs of the use of tools in the special resolution regime. The choice of tools, and any decision about whether the scheme should contribute to the cost incurred, would need to be made in the light of circumstances. Decisions would then need to be made about the way in which any FSCS contribution was to be financed, so I do not know what a report prepared before pre-funding was introduced could usefully say about the hypothetical future use of the special resolution regime tools. The new clause is unnecessary, because there will be extensive consultation, and by referring to the special resolution regime objectives it does not help in any event.