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Great. Supervision, as I have said, is subsidiary to national control, but the critical words are,

Are we seriously mad? I may think that some members of the Government are, without mentioning them by name, but it is absolutely astonishing that we should allow that measure to go through on the pretext that, somehow or other, it will improve the stability of the UK financial system.

It is invidious to go through the Bill for this purpose, but over and over again we find that we are faced with a requirement to accept a subsidiary role in financial regulation. My hon. Friend the Member for Fareham (Mr. Hoban), on the Front Bench, will understand me when I say that he and I have had a few words about that in the past, but I generally agree that we need proper fiscal responsibility, as I said in last week's debates over and over again. This Government are fiscally irresponsible, but the proposed institutional arrangements are to be subjected to the decision-making processes of the European Union and the European Court of Justice, as I said on Second Reading. It is therefore no answer to say, as the Chancellor tried to say to me on the Icelandic banks situation, "Oh well, it gives us some kind of leverage," when, in fact, we are to use the European Union to try to redress the balance if other countries want to do to us things that we do not like. Do we have no self-respect anymore? Do we not believe that we can run our own affairs?

This is not just a cri de coeur; it is about the practical workings of the City of London, which are being put under intense pressure and threat and, indeed, put into
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abeyance. When the crunch comes and the legislation has made its way through the European Parliament, the milk-and-water, pathetic, third-rate, abject surrender to this process, which has been going on for several months and which I wrote about, if I may presume to say so, Madam Deputy Speaker, in the Financial Times way back in February last year-

Madam Deputy Speaker (Sylvia Heal): Order. I think that I would actually prefer it if the hon. Gentleman related his concerns to the new clauses and amendments that we are discussing instead of referring to articles that he has written.

Mr. Cash: Then I merely say, Madam Deputy Speaker, that new clause 11 would insert after the word "Treasury" the words,

and that that makes my point. The council for financial stability contained in these clauses is part and parcel of a proposal that Conservative Members are putting forward to try to put greater sense into the arrangements proposed in the Bill.

I am deeply concerned about the imposition of international financial regulation and supervision on to the United Kingdom. We will pay a very heavy price for it. As with appeasement in the 1930s, I do not think that people yet appreciate just how significant all this is. When the Bill refers to

that means

and "relevant authorities" means the Treasury, the FSA and the Bank of England. I am not convinced that putting the council for financial stability into this equation will necessarily be able to override the total loss of the control on which I think the British people would expect us to insist as regards the banking system of the United Kingdom and the central banking associated with it, which has been increasingly divorced from us since the time of the Maastricht treaty.

Having served on the Committees that considered the Bills that became the Banking Act 1986 and the Financial Services Act 1989, and having witnessed the manner and the extent to which we have now completely abdicated our responsibilities, I am not surprised that we are debating this matter. I think that that abdication will come home to roost. We will find that we want to do things, and we will be told that we cannot do them and that if we do, sanctions will be imposed on us-although if the stability and growth pact is anything to go by, nobody will apply them. This Bill is nonsense, the Committee stage was nonsense, and the Report stage is compounding nonsense into farce. It is a very great pity that we are handing over the running of our financial services to other people, but those are my views and that is all I have to say.

Ian Pearson: This debate has followed a well-trodden path on which we trampled extensively during the Bill's Second Reading and mercilessly during the Committee proceedings, and I feel that we are going to do so again in the remaining time available. It is therefore with a certain sense of ennui that I rehearse the Government's
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arguments as to why we believe that the existing tripartite framework is the right model. My sense of ennui is lightened only by the fact that as we have gone on through these debates, I have begun to be excited by my realisation that I know even less now than I did before about what the Opposition would do if they came to power.

When it comes to the issue of who is in charge, we have clear answers, but I do not believe the Opposition do. They need to explain who will be in charge-will it be the Governor of the Bank of England? Will it be the Chancellor of the Exchequer? Simply proposing to move around the deckchairs by getting rid of the FSA and transferring its powers to the Bank of England does not answer the question of who is in charge, and it does not substitute for the fact that what is most important is the exercise of judgment.

Our answer to the question of who is in charge is very clear. Each of the tripartite authorities has its responsibilities and tools for financial stability, and the key thing is that their analyses, including of long-term systemic risks and approaches, are effectively aligned and co-ordinated. That is what the council for financial stability will be about. It will be chaired by the Chancellor, who is ultimately accountable to Parliament, unlike some of the Opposition's proposals. Its role will not be to take binding decisions or to impose its will on an independent central bank and financial services regulator, but to work together with them to deliver financial stability objectives.

8.45 pm

I am disappointed, but not surprised, that the hon. Member for Fareham (Mr. Hoban) persists in his views. He has not explained to the House who would be in charge and what his party's policies are. I have set out in detail-at boring length in Committee-the actions that we have taken to protect depositors, the taxpayer and the financial stability of the system as a whole. The authorities have worked closely together to develop a new policy toolkit for dealing with bank failures and instability, and they have implemented often radical solutions to unprecedented difficulties while successfully avoiding a meltdown. It has been an incredible time for all those involved in the endeavour.

I remain of the view that not everything has been perfect, hence some of the improvements in the Bill. We have heard the Opposition say a lot that we should get rid of the powers of the FSA and ensure that the Bank of England has them. Of course, I accept that many different institutional frameworks exist in different countries, and there is no perfect architecture. I ask the House to accept that no single model of financial regulation has been successful in fully insulating any country against the crisis. Fundamentally, my position and that of the Government is that what the regulators actually do, and the judgments that they exercise, matter as much as, if not more than, the institutional framework within which they operate.

Mr. Cash rose-

Ian Pearson: Before I give way to the hon. Gentleman, I say to him that changing the institutional system and moving specific responsibilities from one body to another will not in itself make a blind bit of difference, other than to cause significant disruption at a time when
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attention should surely be focused on practical, workable solutions on regulatory performance and decision making. His idea of regulation seems to be based on constructing some sort of new Maginot line of financial services regulation. In a global financial system, it is sometimes helpful to have discussion internationally and to co-ordinate regulatory action on a global or pan-European basis. The policies that he argues for do not reflect the modern reality of how the world does its business.

Mr. Cash: The Economic Secretary has mentioned the Maginot line, which fits in well with my reference to appeasement, because the Maginot line was broken almost immediately afterwards.

The real question is, "Who is in control?" Does the Economic Secretary accept that, when he talks about jurisdiction, the European Union and the European Court of Justice will have jurisdiction? When he talks about supervision, as the Chancellor does, and when he uses the ridiculous language of who is in charge, does he realise that being in charge is not the same as being in control? Does he accept that, since the 1690s, the whole United Kingdom has been based on the assumption that we ultimately control our economy-the Bank of England Act 1946 was based on that-and that he is surrendering that control?

Ian Pearson: Conservative Members continually ask, "Who is in charge?" They do not have an answer. As I have said, we are clear that each authority has its own responsibilities.

The FSA, as the independent financial regulator, is responsible for authorising and supervising financial firms and markets. It triggers the special resolution regime. The Bank of England, as an independent central bank, is responsible for providing liquidity assistance to the banking system. It has oversight of inter-bank payment systems and it is the resolution authority under the special resolution regime. The Treasury, as the UK's finance and economics Ministry, is responsible for the overall institutional structure of financial regulation and the legislation that governs it. It is ultimately accountable to Parliament and responsible for decisions that have an impact on the public finances.

There is role clarity and there are different responsibilities, but we are all in it together. That is why the council for financial stability needs to sit down and go through the problems. The hon. Member for Stone (Mr. Cash) should welcome that, and Opposition Front Benchers should recognise that it is in the United Kingdom's best long-term interests. I cannot find many people who are particularly sympathetic to the idea of creating the immense disruption that would ensue if the Conservative party's proposals to fold the FSA into the Bank of England were supported.

Let me consider the amendments and new clauses. I think that the hon. Member for Fareham has tried to provide a focus for debate rather than help the Government -that is clear from amendment 3. Amendments 4 and 5 and new clause 11 relate to the way in which the authorities will work together to achieve their shared goal of financial stability. Amendment 4 would change matters to require the FSA to consult the Bank of England as well as the Treasury. In our view, it is unnecessary. The draft terms of reference for the council for financial stability already specifically require it to consider the financial stability strategies of the Bank of
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England and the FSA. New clause 11 is intended to have a similar effect to amendment 4, and the same arguments apply.

On the Bank of England's financial stability strategy, it is required to prepare such a strategy under section 2A of the Bank of England Act 1998, as amended by the Banking Act 2009. The hon. Member for Fareham said that new clause 11 would make a difference, but we believe that it is defectively drafted. To have the effect that he seeks, it should refer to subsection (3) of section 2A of the 1998 Act. Regardless of its technical deficiencies, I make the same point as I did about amendment 4-it is simply unnecessary.

Amendment 5 would require the FSA to have regard to proceedings for the council for financial stability when considering its financial stability objective. Again, it is unnecessary-I shall mention one or two amendments that I believe to be unhelpful, too. However, in the case of amendment 5, the FSA will clearly take account of the discussions in the council when considering how best to meet its objective of contributing to financial stability.

I do not think there is anything to be gained by adding the "proceedings of the Council" to the list of matters to which the FSA must have regard in proposed new section 3A of the Financial Markets and Services Act 2000, which clause 5 would insert. Schedule 2(26) to the Bill already amends section 354 of the 2000 Act on the FSA's duty of co-operation, and we believe that that is more than sufficient.

In new clause 12, the hon. Member for Fareham proposes new section 238A to the Banking Act 2009 to give the Bank of England the power to require any person with any information it believes necessary either in pursuit of its financial stability objective or to meet its responsibilities in respect of its recovery and resolution plans. Again, this is not a new issue-in fact, we debated the matter at some length in Committee and during the passage of the 2009 Act. The proposal is neither necessary nor desirable.

For the record, if the Bank believes it needs access to information in connection with its responsibility for financial stability, it can ask the FSA to provide the required information. The FSA does not hold the information, but it would be able to collect it and provide it to the Bank. There is absolutely no need for the Bank to have its own direct powers to gather information from firms. As I think the hon. Gentleman is well aware, the protocol between the Bank and the FSA covers, among other things, how such flows of information will be managed between the two authorities. I welcome that as a good example of the Bank and the FSA working together on financial stability issues, which addresses some of the concerns that he quoted in his remarks.

Mr. Hoban: In the evidence-taking session in Committee, John Footman of the Bank of England pressed for the Bank to be given the power to collect information from financial services institutions. He said that going through the FSA was not appropriate and not good enough. Why is the Treasury rejecting that request from the Bank of England for more powers?

Ian Pearson: I have already explained why such a power is unnecessary. The FSA can provide the information already. I am also concerned that the proposals might give rise to a system of parallel regulators, which is highly undesirable. They could create confusion for
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firms regarding who is responsible for supervising them and lead to the duplication of burdens, because both authorities could go to the same firm for the same information at different times. There are some powerful arguments why new clause 12 would be unhelpful.

Mr. Mark Todd (South Derbyshire) (Lab): I agree with my hon. Friend on the specifics of new clause 12, but the principle that the FSA is obliged to share information that is relevant to financial stability with the Bank is governed currently only by the protocol between the two bodies. I must admit that I have strong sympathy with the view that that should be strengthened in law.

Ian Pearson: I have mentioned the protocol, as my hon. Friend knows. Clearly, the Bank needs to have the information it requires to perform its duties and responsibilities, but I do not think there is a massive point of principle.

On amendment 8, the FSA is already required to submit an annual report. The new international duty proposed in the Bill is a new function for the FSA and the reporting requirement would apply automatically to it. Again, I do not believe that the amendment is necessary.

Amendment 6 concerns information about financial assistance, as defined in section 257 of the Banking Act 2009. We believe that there are already appropriate reporting mechanisms in place-

9 pm

Debate interrupted (Programme Order, 30 November 2009 ).

The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83E), That the clause be read a Second time.

Question negatived.

The Deputy Speaker then put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83E).

New Clause 14

Store cards and consumer credit agreements

'(1) The Consumer Credit Act 1974 shall be amended as follows.

(2) After section 60, insert-

"60A Form and content of retail credit-token agreements

(1) The Secretary of State may make regulations as to the form and content of documents embodying retail credit-token agreements, and the regulations shall contain such provisions as appear to him appropriate including requirements to ensure that-

(a) the rate of interest on the credit to be provided under the agreement for credit (or all the rates on a per annum basis where there is more than one rate of interest) does not prejudice the interests of debtors; or

(b) the agreement for credit includes a seven day cooling off period during which credit would not be available to the debtor.

(2) 'Retail credit-token' means a credit-token (which has the meaning given by section 14(1)) which results in the provision of credit under a credit-token agreement provided by a retailer or group of retailers which can only be used for purchases from the retailers concerned.

25 Jan 2010 : Column 634

(3) A 'retailer' means a person or business providing goods and services to an individual.

(4) Accordingly, a 'retail credit-token agreement' is a regulated agreement.".

(3) For section 67, substitute-

"67 Cancellable Agreements

(1) A regulated agreement that is not a retail credit-token agreement may be cancelled by the debtor or hirer in accordance with this Part if the antecedent negotiations included oral representations made when in the presence of the debtor or hirer by an individual acting as, or on behalf of the negotiator, unless-

(a) the agreement is secured on land, or is a restricted-use credit agreement to finance the purchase of land or is an agreement for a bridging loan in connection with the purchase of land, or

(b) the unexecuted agreement is signed by the debtor or hirer at premises at which any of the following is carrying on any business (whether on a permanent or temporary basis)-

(i) the creditor or owner;

(ii) any party to a linked transaction (other than the debtor or hirer or a relative of his);

(iii) the negotiator in any in any antecedent negotiations.

(2) A retail credit-token agreement may be cancelled by the debtor in accordance with this Part.".

(4) For section 68, substitute-

"68 Cooling-off period

The debtor or hirer may serve notice of cancellation of a cancellable agreement between his signing of the unexecuted agreement and-

(a) the end of the fifth day following the day on which he received a copy under section 63(2) or a notice under section 64(1)(b), or

(b) if (by virtue of regulations made under section 64(4)) section 64(1)(b) does not apply, the end of the fourteenth day following the day on which he signed the unexecuted agreement, or

(c) if the cancellable agreement is a retail credit-token agreement, the end of the seventh day following the day on which he signed the unexecuted agreement.".'.- (Mr. Hoban.)

Brought up.

Question put, That the clause be added to the Bill:-

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