Financial Services Bill

Conservative Members continually ask, "Who is in charge?" They do not have an answer. As I have said, we are clear that each authority has its own responsibilities. The FSA, as the independent financial regulator, is responsible for authorising and supervising financial firms and markets. It triggers the special resolution regime. The Bank of England, as an independent central bank, is responsible for providing liquidity assistance to the banking system. It has oversight of inter-bank payment systems and it is the resolution authority under the special resolution regime. The Treasury, as the UK's finance and economics Ministry, is responsible for the overall institutional structure of financial regulation and the legislation that governs it. It is ultimately accountable to Parliament and responsible for decisions that have an impact on the public finances. There is role clarity and there are different responsibilities, but we are all in it together. That is why the council for financial stability needs to sit down and go through the problems. The hon. Member for Stone should welcome that, and Opposition Front Benchers should recognise that it is in the United Kingdom's best long-term interests. I cannot find many people who are particularly sympathetic to the idea of creating the immense disruption that would ensue if the Conservative party's proposals to fold the FSA into the Bank of England were supported. Let me consider the amendments and new clauses. I think that the hon. Member for Fareham has tried to provide a focus for debate rather than help the Government —that is clear from amendment 3. Amendments 4 and 5 and new clause 11 relate to the way in which the authorities will work together to achieve their shared goal of financial stability. Amendment 4 would change matters to require the FSA to consult the Bank of England as well as the Treasury. In our view, it is unnecessary. The draft terms of reference for the council for financial stability already specifically require it to consider the financial stability strategies of the Bank of England and the FSA. New clause 11 is intended to have a similar effect to amendment 4, and the same arguments apply. On the Bank of England's financial stability strategy, it is required to prepare such a strategy under section 2A of the Bank of England Act 1998, as amended by the Banking Act 2009. The hon. Member for Fareham said that new clause 11 would make a difference, but we believe that it is defectively drafted. To have the effect that he seeks, it should refer to subsection (3) of section 2A of the 1998 Act. Regardless of its technical deficiencies, I make the same point as I did about amendment 4—it is simply unnecessary. Amendment 5 would require the FSA to have regard to proceedings for the council for financial stability when considering its financial stability objective. Again, it is unnecessary—I shall mention one or two amendments that I believe to be unhelpful, too. However, in the case of amendment 5, the FSA will clearly take account of the discussions in the council when considering how best to meet its objective of contributing to financial stability. I do not think there is anything to be gained by adding the "proceedings of the Council" to the list of matters to which the FSA must have regard in proposed new section 3A of the Financial Markets and Services Act 2000, which clause 5 would insert. Schedule 2(26) to the Bill already amends section 354 of the 2000 Act on the FSA's duty of co-operation, and we believe that that is more than sufficient. In new clause 12, the hon. Member for Fareham proposes new section 238A to the Banking Act 2009 to give the Bank of England the power to require any person with any information it believes necessary either in pursuit of its financial stability objective or to meet its responsibilities in respect of its recovery and resolution plans. Again, this is not a new issue—in fact, we debated the matter at some length in Committee and during the passage of the 2009 Act. The proposal is neither necessary nor desirable. For the record, if the Bank believes it needs access to information in connection with its responsibility for financial stability, it can ask the FSA to provide the required information. The FSA does not hold the information, but it would be able to collect it and provide it to the Bank. There is absolutely no need for the Bank to have its own direct powers to gather information from firms. As I think the hon. Gentleman is well aware, the protocol between the Bank and the FSA covers, among other things, how such flows of information will be managed between the two authorities. I welcome that as a good example of the Bank and the FSA working together on financial stability issues, which addresses some of the concerns that he quoted in his remarks.