My Lords, perhaps I might go back over the history a little. The banking commission found that the approved persons regime had proved pretty toothless and that virtually no senior figures had suffered any serious sanction, and recommended a two-tier system: the most senior tier would require prior registration, and the second tier would require the banks to attest that the people working for them were fit and proper.
Both the Opposition and the PCBS found that the original government proposals were unsatisfactory, and each put down their own amendments. The one put forward by the Government, which was supported by the PCBS, was passed—but so, too, was the Opposition’s Amendment 41. They are different in some significant ways, but they do not differ in their attempt to define the standards that this generality of employees in trading or serving the public should be asked to reach.
The Opposition’s amendment refers to,
“minimum thresholds of competence including integrity, professional qualifications, continuous professional development and adherence to a recognised code of conduct”.
The Government’s Amendment 53 contains something that is more or less identical. It refers to a “fit and proper” person who has,
“obtained a qualification … undergone, or is undergoing, training … possesses a level of competence, or … has the personal characteristics”.
On that there really is no difference at all between us. The difference is the mechanism by which this is achieved.
The noble Lord, Lord Tunnicliffe, prefers the word “licensing”. I cannot really tell the difference between that and “certification”. On the question of defining minimum standards, I have just explained that those are true of both these proposals. On the question of annual approval, in the Government’s case all these characteristics are,
“required by general rules made by the appropriate regulator in relation to employees performing functions of that kind”,
and the certificate issued is valid for 12 months—so, again, we do not really have any difference between us; or at least the differences are tiny.
As has been pointed out by the Minister, the one important difference is that in one case the enforcement goes directly from the regulator to the regulated person and in the government amendment, which follows the PCBS’s approach, it is the bank—paradoxically called an approved person—that has to identify those people who are capable of causing harm to the bank, its customers or its regulation, and to ensure that they meet the right standards. You have to make a choice about which you think is the better system.
The Opposition’s amendment would involve the direct regulation of tens of thousands of people, and in the alternative system it would be the bank that is, in a sense, the first line of regulation, but according to standards that the regulator has set. I think that that is a superior approach, and therefore I will certainly support the retention of Amendment 53 rather than voting to allow Amendment 41 to prevail.
8.15 pm