Financial Services Bill

That is a very good problem to be solved. I just wonder whether it will be solved by living wills. Perhaps we will debate that when we get to one of the later clauses of the Bill. I was just saying that my noble friend Lord Northbrook reminded us that the Minister gave much the same answer in winding-up the Second Reading debate last month. My own party does not have a definitive view on the right way forward in terms of structure for the financial system. My honourable friend George Osborne has been clear that we will look at these issues and that we have an open mind on the structural separation of banking activities and proposals such as the Volcker rule, which my noble friend Lord Higgins put forward a few minutes ago. We are well aware that there are problems with any of these possibilities, and, of course, the banking industries will resist changes to their business model. I feel that doing nothing is probably not an option. The UK now has a particular concentration of banking which makes us particularly vulnerable to not being able to solve the too big to fail problem. In the UK three banks own 75 per cent of domestically-owned assets. It seems to me that we need to look beyond more regulation, more capital and more governance if we are to protect the UK from the impact of another bailout. I agree with my noble friend Lord Trenchard that we need to move in tandem with developments in other major countries. We have always said that that is what we would do if there were any changes. Going alone, however attractive that appears, could pose major risks to the health of our economy. All political parties like to talk about rebalancing the economy. Our economy has a huge dependence on financial services and rebalancing will not take effect overnight. It will take some time if we are to build up other parts of the economy. We must avoid damaging our financial services sector in the global marketplace. We have to remain competitive. The Treasury Select Committee in another place is at the moment carrying out an investigation into too big to fail. I am sure that its report will be extremely useful. However, there is no substitute for the Government working with their new creation, the Council for Financial Stability, to bring the collective wisdom of the Bank of England, the Treasury and the FSA to bear on this issue. I support my noble friend’s amendment and I hope that the Minister will do so as well.