I am grateful to the noble Lord. As I have answered before in Questions on the LIBOR issue and as I said earlier, there are potentially other offences which may have been committed, and the prosecuting authorities and investigators are looking to see whether anybody could be charged under pre-existing law, so I am grateful for that clarification. The point is that it would be much more effective to have a targeted offence, which is what we are putting in place here.
Turning to Amendment 80A, under which the noble Lord, Lord Eatwell, would like the FCA to have the ability to refer to codes published by the Financial Reporting Council, as well as the body responsible for setting the benchmark, I believe that Amendment 80 already allows the FCA to make such a reference since it would be able to make,
“reference to any code or other document published by the person responsible for the setting of the benchmark or any other person”.
As Amendment 80 stands, the FCA is able to refer to a code issued by the FRC or any other body.
Having said that, while from time to time, the Financial Reporting Council publishes codes and documents relating to standards of corporate governance and so on, it is unlikely that they will be directly relevant to the setting of specific benchmarks. Of course, as the noble Baroness, Lady Hogg, is here, if she would like to correct me I am very happy to be corrected, but I think that is very unlikely. The intention of the provision in the Bill is to allow the FCA to make reference to detailed codes, allowing the detailed instruction of how, when and to whom information should be provided to a benchmark. I certainly do not anticipate that the FRC would publish codes relating to benchmarks in that detailed way. I therefore do not believe that the amendment extends or affects the powers of the FCA to make the rules in any material way, and I cannot accept it.
I spoke earlier of my gratitude—and this has been repeated by other noble Lords—to the noble Baroness, Lady Hayter of Kentish Town, for spotting the small drafting mistake, and confirm my intention to accept her proposed Amendment 80B. I encourage her to move it.
I now turn to Amendment 80C and the recommendation that the BBA transfer responsibility for administrating LIBOR to a successor body. I have already dealt in some detail with aspects of this, but let me go through it again. The nomination for that successor body will be determined through an open and transparent tender process that will be run by an independently-chaired committee comprised of respected individuals from the financial services industry and the UK authorities. As I have already said, I am delighted that the noble Baroness, Lady Hogg, has agreed to chair that committee. The committee’s work
is in its preliminary stages, but further information will of course be published in due course. I acknowledge the noble Lord’s concern that there is a risk that a suitable rate administration will not be willing or able to administer LIBOR; I firmly believe, however, that this risk is of very low probability. As I said, a considerable number of expressions of interest have already been received.
In the unlikely event that there is no appointable administrator, or in the event that we have already discussed that the administrator is appointed and then fails, the FCA will already have power to step in to administer LIBOR, should that be necessary. A disorderly collapse or the unavailability of LIBOR would have severe implications for institutions and financial markets across the globe, as the Wheatley review sets out in detail. It is under the objectives of the FCA, particularly its consumer protection and integrity objectives, that would give it sufficient basis to step in and administer the rate. The FCA therefore would not need any specific legislative power to administer LIBOR, and it is worth reminding ourselves that LIBOR is currently administered by the BBA without a statutory underpinning. We know that this is unsatisfactory, but I am just making the point that the setting of LIBOR itself has never required any statutory powers. I am quite clear that the FCA’s powers, as outlined elsewhere in the Bill, are sufficient for it to undertake such a course of action, although we anticipate that being very unlikely.
I do not wish to put a specific time limit on how long the FCA could maintain the administration of LIBOR, but neither the Government nor the FCA would want the FCA to administer LIBOR in the long term. We want the regulator to concentrate on regulating the market, not to fill a gap in the market on a permanent basis. I do not consider Amendment 80C is needed.
5.45 pm