The Treasury deserves great credit for introducing this compensation scheme in the first place. It is a pity that the Minister responsible—my hon. Friend the Economic Secretary—is not on duty today, because he deserves personal credit for that, but the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Hexham (Guy Opperman) is an excellent stand-in.
Warren Buffett once said that what we learn from history is that we do not learn from history. The key lesson that we have to learn from this sorry episode—a damning assessment of the Financial Conduct Authority’s capability as a regulator at the time—is the need for scrutiny of the regulator. As many Members know, I do quite a lot of work trying to hold banks to account in the all-party parliamentary group on fair business banking, but I still do not know how this place holds the regulator to account. I know that the Treasury has some direct influence, and the Treasury Committee can write reports and conduct inquiries, but I still do not know of a direct mechanism that can be used by this House to address regulation and regulations.
Now that we have repatriated the oversight function from the European Union, various different suggestions have been made as to how that might happen in this House. One of the most interesting proposals is for something along the lines of the Public Accounts Committee—a regulatory accounts committee, supported by a version of the National Audit Office, so that professionals would sit behind a parliamentary committee made up of elected parliamentarians. Whoever holds the regulator to account should be accountable to the public; they should not be an independent body of appointees. There must be a mechanism to make sure that the regulator does the right thing, makes good on its future commitments and ensures that episodes like this do not happen again.
The Gloster report, which led to the compensation scheme that we are putting in place today, made very damning criticisms of the then governor of the FCA, Andrew Bailey, who is now the Governor of the Bank of England. I have experience of dealing with the FCA and Andrew Bailey—I asked him four times whether he had followed the FCA’s own whistleblowing procedures when handling the case of Sally Masterton’s whistleblower complaint with HBOS Reading and Lloyds. He refused to answer that question, which I find horrendous. Both the FCA and the whistleblowing legislation were established by statute, yet we as parliamentarians cannot hold the regulator—which we put in place—to account. We need a better system of regulatory oversight.