Financial Services Bill

I thank the noble Lord, Lord Higgins, for his intervention. My experience is that when I make up the answer as opposed to reading it I invariably get myself into difficulty. Common sense tells me that on the whole I should stick to developing my skills in reading aloud rather than in trying to convey to the House my understanding of why we are making particular proposals and how I think they will operate. It is precisely because of my tendency to extemporise that I found myself challenged earlier by the noble Lord, Lord Lawson of Blaby, as to whether I had misled the House on issues in Canada. Having used the dinnertime break to check the facts assiduously, I am increasingly confident that I did not mislead the House, although I still have to do a little further work in answering that point. This takes me back to the more substantial point made by the noble Lord, Lord Higgins: the question of what limits the FSA from making unreasonable requests. The FSA is required to have regard to costs and proportionality in the inquiries and requests that it makes for information. I agree with the noble Lord that the balance of argument is strongly in favour of the fact that in recent years the FSA should have been asking more questions. I would even go a little further and say that it should have been asking more questions about business strategy and managerial competence rather than simply gathering data. However, both in the Turner review and in its forensic analysis of the failure of Northern Rock, the FSA itself admits that it needs to change its style of engagement. The question of whether it asks for too much information has to be addressed through processes of open consultation. On the matter of who asks the banks for information, the noble Lord asks a very good question. Our view is that regulatory institutions should not be bombarded with requests for information from the Treasury, the Bank of England and the FSA in connection with financial stability. That is why we require that those questions are channelled through the Financial Services Authority. If the Bank requires additional information, it will seek it through the FSA.