Before addressing the amendments in the group, I would like to say a few words—this is the only and last opportunity to do so—about the work of the Parliamentary Commission on Banking Standards. The task that Parliament set it was
“to consider and report on: professional standards and culture of the UK banking sector, taking account of regulatory and competition investigations into the LIBOR rate-setting process”
and on
“lessons to be learned about corporate governance, transparency and conflicts of interest, and their implications for regulation and for Government policy…and to make recommendations for legislative and other actions.”
That was a very large canvas. The backdrop was a profound collapse of trust in parts of the banking sector—triggered by, among other things, deep lapses in banking standards.
We should bear it in mind, however, that the banks were only partly responsible for all these problems, and that the commission’s proposals represent only part of
the solution. On the first point, responsibility for the problem also lies with regulators, central banks, Governments, auditors, risk-rating agencies and consumers, both retail and wholesale, who over-borrowed. They all need to take their share of the responsibility.
On the second point—finding the solutions—the Banking Commission’s proposals need to be set alongside both reforms to the regulatory structure, such as the creation of the Prudential Regulatory Authority and the Financial Conduct Authority after the abolition of the Financial Services Authority, and the structural reform of the banks, as proposed by Sir John Vickers.
I doubt whether the Government or the man who led the regulatory changes, Sir John Vickers—or indeed any member of the Banking Commission—thinks that, even taking together all the proposals we have put forward, we can solve everything. In any case, many on the commission were sceptical about the extent to which culture can be changed by legislation—a point made from the Front Bench earlier this afternoon. Legislation can, however, play an important role by incentivising good behaviour and penalising bad. Nevertheless, we concluded that, if fully implemented, our proposals should put us in a better place to protect taxpayers and the country from systemic risk and to protect consumers from lapses in standards.
As the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) said a few moments ago, there will continue to be regulatory failures, so only with the exercise of judgment and a good deal of vigilance are even these proposals likely to make a big difference in the long run. Our job today is narrower—to complete the task of making sure that those responsible for exercising that vigilance have the statutory tools to do the job.
1.45 pm
The Banking Commission made a number of far-reaching proposals. It has been a massive collaborative effort for and by Parliament and parliamentarians. I would particularly like to thank all the commissioners for their hard work, determination and ideas, without which virtually nothing could have been achieved. I see that two of the five Commons commissioners are in their places with us this afternoon. I would like to thank, too, the staff: the Clerks, those seconded from other work and the specialist advisers, all of whom worked long hours to deliver five reports in under a year. With respect to this specific legislation, I would like to thank our legal team—both former parliamentary counsel—for their professional help over the past few weeks.
A measure of the scale of what we are trying to scrutinise this afternoon is the fact that the Bill went to the House of Lords 35 pages long but has come back to us with an extra 170 pages. I do not think that does much for parliamentary scrutiny of legislation—however important, necessary and urgent it might be. Is it so urgent that we could not have found more time for it?
It was clear on Report that the Government’s commitment to implement our proposals was, frankly, somewhat lukewarm. Our first report was cherry-picked, and of the two other reports that had made recommendations, one, on proprietary trading, was ignored,
and the other, the final report, received only a partial commitment for implementation. So I am delighted to report that there has recently been a dramatic change of heart from the Government. Over the past few weeks, this Bill has been transformed.