Financial Services Bill

In refining the tripartite through the Council for Financial Stability, the Government are keen to improve the transparency and accountability of the current arrangements. The publishing of minuted quarterly meetings forms an important element in this, as does the formal report on the council by the Treasury each year. The report will cover the activities carried out by the council and it will also describe significant regulatory actions taken and future developments proposed for regulatory legislation. Amendment 22 would require the council and not the Treasury to prepare the report. The Government believe that it is appropriate for the Treasury to lead on the drafting of the annual report; the Chancellor is in the chair of the council and is ultimately accountable to Parliament and the public. We recognise the vital interest that other council members have in the report. As such, it is not the intention of the Treasury to produce a report without recourse to the other authorities. Indeed, Clause 2(3) provides explicitly that the draft of any report prepared by the Treasury must be considered by the council at one of its quarterly minuted meetings, and noble Lords will bear in mind that comments will and can be attributed to members of the council at those meetings. The draft terms of reference also sets out a formal engagement process for the council prior to publication, and there will clearly need to be official-level engagement between the Treasury and other authorities prior to any formal discussion. In sum, the authorities will work closely on the production of the report and the council will formally consider and discuss a draft of the report in advance of publication. That discussion will be publicly published with the comments of both the chairman of the Financial Services Authority and the Governor of the Bank of England minuted—as will be the comments of the Chancellor—if they wish to make minutable comments. However, it is right that the responsibility for producing the report lies with the Treasury. The Bank of England and the FSA will continue to produce their own regular reports on the risks to financial stability and their own annual reports on which they will be free to comment on the Council for Financial Stability. Amendment 23 concerns the scope of the report as set out in Clause 3(1). The report is intended to cover the activities of the council in the previous year and, additionally, any matters that have special significance for the stability of the UK financial system. The amendment would change the scope of the report to being a matter for the council and not the Treasury. I do not accept this proposal for two reasons. First, the report is conceived as a report of the Treasury and, as such, provides an avenue for the Government to report more widely on financial stability. A Treasury report adds balance to the work of the council, with other members providing the financial stability report and the financial risk outlook. Secondly, other members will have the opportunity to be fully consulted, as I have set out previously. There is, therefore, scope for the views of all members of the council to be incorporated in the final report and transparently recorded. On the clause stand part debate, the Government believe that the annual report provided for by this clause will provide for enhanced transparency about the work of the council, the risks to financial stability and the actions that are being co-ordinated to mitigate those risks. I cannot see how removing this requirement for greater transparency and accountability would in any way be beneficial to the maintenance of financial stability. I may well have led a sheltered life, but I do not think I have been so sheltered that I cannot see that the proposals made here represent a significant step forward in transparency and accountability. Accordingly, I urge the noble Baroness to withdraw her amendments.