My Lords, the amendments in this group are minor and technical amendments to Clause 14 and Schedule 2 that will help to ensure that the bail-in powers can be used as intended in order to deal effectively with the failure of a financial institution.
First, they clarify the scope of the Treasury’s power to make an order applying the bail-in provisions to building societies. Since introducing this clause, we have had the opportunity to consider further what provisions may be necessary and are therefore in a position to specify this in the Bill.
Moving to Schedule 2, minor amendments are made to new Section 44B. They permit supplemental property transfer instruments to make special bail-in provision. This is consistent with the situation for resolution instruments and will further assist in combining bail-in with the bridge bank stabilisation option. They amend new Section 48R which, without this amendment, applies only to resolution instruments that do not transfer securities. As special bail-in provision may relate to things that are not transferred, it is appropriate that the new Section 48R power applies irrespective of whether securities are transferred. By broadening the Section 48R power in this way, we can then remove the amendment to Section 21, which makes similar provision, as no longer necessary.
Paragraph 15 of Schedule 2 is amended to address situations where a resolution instrument does not transfer securities, such as shares. Paragraph 15 amends the power to make continuity provision conferred by Section 18 of the Banking Act. This change will allow, for example, supplemental resolution instruments which do not transfer securities to make ancillary provision relating to an earlier transfer of securities. There are also some minor amendments to the compensation provisions.
Where bail-in is combined with the bridge bank stabilisation option, the Treasury needs to make a resolution fund order. Some minor amendments are made to Section 52 and new Section 60A to ensure that the compensation arrangements for special bail-in provision will work with full effect in this context. Minor amendments are also made to Section 53 to ensure that the Treasury may make compensation orders under Section 53 whenever any form of supplemental order or instrument is made to effect a stabilisation option. Finally, we have brought the compensation provisions for bail-in further into line with the other stabilisation options by making it optional for the Treasury to make a further compensation order following a supplemental resolution instrument. I commend these amendments to the House.