Before we made the final decision to create the regulator, a full consultation was carried out. We received input into that consultation from many stakeholders, and that formed part of the analysis of how the regulator could carry out its function, as well as the importance of having such a regulator. We expect not only that the regulator will be fully up and running in around 2015, but that once the Bill receives Royal Assent the FCA will begin the process of setting it up early next year. The FCA has resources that can be called on, and it has already started working on exactly how the regulator would operate, so I think that it will be able to start at least some of its work sooner than 2015.
Amendments 135 to 152 establish a special administration regime to be known as the financial market infrastructure, or FMI, administration. Inter-bank payment and settlement systems are integral to the efficient operation of the financial system, processing transactions worth hundreds of billions of pounds a day. Currently, if such a system becomes insolvent, it will typically enter the normal administration procedure and the administrator will be under a duty to look after the interests of the company’s creditors without regard to the implications for the wider UK economy. In those circumstances, the continued operation of crucial payment and settlement services could be threatened, which could have a significant adverse impact on the market and the wider economy. The amendments will ensure the continuity of crucial service provision of recognised inter-bank payment systems and security settlement systems in a time of crisis by imposing a duty on an FMI administrator to maintain the company’s crucial services during administration.
The key features of FMI administration are: the FMI administrator is placed under a duty to maintain the company’s crucial services during the period of FMI administration; the Bank of England is given the ability to apply to the court to place a relevant company into FMI administration and has conferred on it a power of direction over the FMI administrator; powers are granted allowing for the property, rights and liabilities of the relevant company to be transferred; and restrictions are established on early termination of contracts for the supply of certain goods and services to a company that has entered FMI administration.
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I now turn to payday lending—a subject about which many Members in all parts of the House rightly feel very strongly. The Government are deeply concerned about consumer detriment in the payday market and committed to taking action to protect borrowers from
the harm that these lenders can cause. I know that this concern and commitment to act is shared and supported by Members in all parts of the House. This Government have already taken decisive action to overhaul regulation on the payday lending sector, with the Financial Conduct Authority taking on its broad new powers in relation to consumer credit from April next year.
However, the Government will do more. We want to put an end to the unfair costs of borrowing from payday lenders and to prevent the spiralling costs faced by those struggling to repay.