Financial Services Bill

I, too, am attracted by my noble friend’s amendments, especially Amendment 11, as it would permit a degree of analysis to take place. It is said that distance lends enchantment; whether distance from the crisis that we have just had will lend enchantment is probably not likely, but it will probably lend perspective and maybe some clarity. Therefore, while Amendment 11 is attractive, Amendment 2, which requires it to happen in the next six months, is a little precipitant. Nevertheless the principle behind Amendment 11 holds good. I did not react to the Minister’s comments about the crisis being over, but his officials might slip into his red box the leading article from today’s Financial Times, as a number of things said in it are relevant to the debates that we had on both the first group and on this group of amendments. There are two relevant sentences in particular. First: ""What the recovery really shows is the scale of the moral hazard problem the world still faces"." That is the too big to fail issue that my noble friend raised. Secondly: ""The second is a resolution regime that would allow losses to fall where they should without bringing down the system. This would prevent creditors from sheltering behind vital functions, such as the payments system, in a crisis and thus pushing losses onto the taxpayer"." These are the thoughts that are emerging, and my noble friend’s suggestion that we need an investigation and a report to reflect that seems entirely appropriate. It is not all at the macro level either. If the Minister leaves the grandeur of his Great George Street office, returns to the City and—I declared an interest on Second Reading—comes to me to try to find financing for small and medium-sized enterprises, he would say that the banks will say that there is money available for good propositions. I am sure that he says that in absolute good faith, but trying to find bank finance for such companies remains exceptionally difficult on two levels. First, the credit process has become immeasurably lengthy and complicated and the minefield though which small companies must travel is very complex. Sometimes when emerging from one minefield unhurt, another lies ahead, as further bells and whistles are put on to the requirements for permission. Along the way in this process, if it becomes clear that the company needs the money it causes huge alarms and excursions. The process is long, and in many cases small and medium-sized companies require a reasonably speedy resolution of their credit needs. So there are macro issues and micro issues which need to be considered. These could usefully be looked into and considered by a report of the sort that my noble friend has in mind. Certainly, if the Government, with or without wash-up or wash-out, are determined to proceed with this type of Bill, we need the facility to draw lessons from what has been going on. We are too close to the crisis now to be able to draw all those lessons. The sort of investigation and considered response that my noble friend has in mind under Amendment 11 seem to be entirely appropriate.