Financial Services Bill

My Lords, I support my noble friend Lady Noakes in her opposition to Clauses 1 to 4. This Bill is the Government’s response to the worst financial crisis in living memory, but it leaves a discredited regulatory regime firmly in place. The failure of the tripartite authorities to anticipate, prevent or even mitigate the damaging effects of the crisis is there for all to see. However, rather than tackling the confusion inherent in the regulatory structure, which led the Governor of the Bank of England to ask who was in charge, the Bill simply puts the tripartite standing committee on a statutory footing, operating under terms of reference practically identical to the Memorandum of Understanding that governed the old standing committee. This measure is misconceived, because it fails to get to the root of regulatory failure. We need real regulatory reform, learning the lessons of the financial crisis. Real reforms mean an enhanced role for the Bank of England, including putting it in charge of prudential supervision of all significant institutions. As the noble Lord, Lord Howard, has said, in the old days, the Bank of England genuinely seemed to be ahead of the game. But in cases such as Northern Rock, it seems to me that the FSA supervisors had expertise only in insurance matters, so no wonder they failed to realise that Northern Rock’s lending was expanding at a completely uncontrollable rate, and it was lending at 120 per cent of property values. I support my noble friend.