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Similarly, I understand that there was some confusion about the scope of the short selling power. We had the opportunity to debate short selling today. I hope the confirmation that any prohibition would apply to identified
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financial instruments, or ban short selling in specified cases rather than by certain firms, will reassure hon. Members. It is not the case that one firm might be banned from short selling a stock when another was able to do so. I am happy to reaffirm that.

Overall, I was encouraged by the willingness of the Opposition to support the principle of many of the Bill's provisions. Many of the questions relating to the recovery and resolution plans sought to ascertain what they might look like in practice, rather than challenge the intention of the plans, which is to reduce the impact and likelihood of firms failing. Only recently, we heard contributions to the "too big to fail" debate.

I pay tribute to the hon. Member for Fareham (Mr. Hoban) for the thorough way in which he led for the Opposition. He was keen to find out what the court rules might look like in relation to collective proceedings. I sympathise with his desire to engage on the greater detail, although I hope the House appreciates that such a level of granularity is best determined by experts in the fields, and is a matter for other channels. Those aspects will, of course, be subject to consultation.

We have discussed the shape of institutional arrangements at considerable length. I said a few moments ago that it was a well-trodden path-if not an excessively trampled one. It is an important issue, but as I have been at pains to stress on several occasions, I do not think structure is the issue. The crisis was a global one, affecting countries regardless of their institutional frameworks. What matters most is not who does the job, but that the job is done effectively, and that the institutional framework is clear and coherent. That is why the Bill focuses on making the existing arrangements work better by strengthening them further-for example, by introducing the council for financial stability, which will operate on a more formal, transparent and accountable basis than the previous arrangements, should the Bill pass into law.

It is clear that the arrangements have not received universal approval, but the Government are clear that we need the authorities to focus on reducing risk and strengthening the resilience of the financial system, and-at the risk of repeating myself-not having to deal with the disruption and uncertainty that would be caused by unnecessary institutional upheaval. I think that we need to be very clear about the real risks that would be involved in that.

Hand in hand with that, we propose to give the FSA a financial stability objective. While many have interpreted that as an erosion of the FSA's consumer protection objective, or vice versa, I believe that the objectives are in fact complementary. It is unlikely that one would succeed without the other-both are necessary.

The Bill will enhance the powers and responsibilities of the FSA, embed a structure to monitor financial stability in the UK and abroad, and give regulators additional powers in relation to remuneration in the financial services sector. It was a shame that we did not have the opportunity to debate some amendments relating to those proposals today, but the measures were considered substantively in Committee. Importantly, the Bill will also ensure that banks and building societies address the likelihood and impact of their failure by drawing up contingency recovery and resolution plans.

In parallel, the Bill includes provisions that will enable the creation of a brand new independent consumer financial education body to enhance education and
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awareness. It will establish new and more effective routes to redress and compensation for consumers where there has been widespread detriment. Again, although we were unable to discuss those issues on Report, we discussed the proposals extensively in Committee, and they have been widely welcomed by consumer groups.

The proposals represent the Government's considered response to some of the key lessons learned during this crisis. The Bill entrenches a new strategy to ensure the protection of financial stability and wide-ranging reforms to the financial services industry. We want to ensure that the industry on which our economy relies so much emerges on a more robust footing. This vital Bill will help to build a new environment in which a financial services industry based on both stability and prosperity can thrive. That is no small task. I am most grateful for the thoughtful and thorough scrutiny that the House and the Public Bill Committee have given the Bill, and I commend it to the House.

9.37 pm

Mr. Hoban: I echo the Minister in commending all those who have participated in the scrutiny of the Bill, both on Report and in Committee. One of the strengths of the Public Bill Committee-I referred to this at the conclusion of its proceedings-was that it was assisted by the presence of several hon. Members from both sides of the House who were able to bring their expertise from serving on the Treasury Committee to bear on the matters in the Bill.

Those Members were not the only people who contributed to the Public Bill Committee, however, and I am grateful to my hon. Friends who served on it for the time that they put into developing their ideas. The hon. Member for Wolverhampton, South-West (Rob Marris), of course, was a prodigious commentator on the Bill. I was sorry that the hon. Member for Twickenham (Dr. Cable) did not join us in the Public Bill Committee, even though he was a member, but his colleague, the hon. Member for South-East Cornwall (Mr. Breed), did a good job of setting out several of the arguments.

It would be remiss of me if I did not say a few words about the Minister. This is our fifth Bill since October 2008, and among his hallmarks are his willingness to engage in debates and to give good answers to questions that are posed, and his understanding of the content of Bills, which goes beyond that occasionally displayed by Members on both sides of the House. I understand that he has decided to step down after the next election, whenever that comes, and I wish him well in whatever he chooses to do.

The Bill is a strange combination. We did not oppose its Second Reading, and when I glanced just now at its contents, I realised how much of it we support. I would divide the measures into three categories: the welcome, the cosmetic and the misconceived. There are more measures in the welcome category than in the other two and important proposals will enhance consumer protection, but one challenge that the financial services sector faces as it seeks to rebuild confidence in it following the financial crisis of the past two or three years is how to encourage consumers to engage with the Bill.

Many measures that focus on the consumer will help to encourage consumers to engage. Three distinct areas are involved in that, the first of which is the establishment
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of the consumer finance education body. One challenge that we all recognise is the need to increase people's confidence in discussing financial products with independent financial advisers, banks and insurance companies. A huge deficit in people's financial understanding needs to be dealt with.

We will not necessarily all agree exactly about how that deficit should be repaired-the hon. Member for South Derbyshire (Mr. Todd) has his own views on how effective those measures will be and how best to target the work of the new consumer finance education body-but we are all clear that the work that the FSA has already established in the pilot projects needs to continue. On a visit to Gateshead, I saw for myself the importance of the work done by Age Concern and Help the Aged as part of the pilot project.

The second group of measures aimed at improving the lot of consumers is the action taken on banning credit card cheques. Sending out unsolicited credit card cheques has been one of the most indefensible practices in the consumer credit industry over a long period. In Committee, I told hon. Members that my wife had received some credit card cheques before Christmas. The industry, knowing that such cheques were to be banned, was still sending them out. I had rather hoped that the pre-Christmas mailshot would be the last that she received including such cheques, but I was disappointed, as in the past 10 days or so they have been offered to her in another mailshot from her credit card company. Clearly, the consumer credit sector is having a last hurrah.

The next batch of measures that protects consumers, which we welcome, is the arrangements on collective proceedings orders and consumer redress schemes. The point of contention, perhaps, between me and the Minister is straightforward: the measures have been included in the Bill, but they came as a surprise to the industry despite the fact that they were trailed in the consumer White Paper.

The industry was not clear about how the measures would work in practice. The scrutiny process achieved some clarity on the fact that generic court rules would be designed, then Treasury regulations introduced to modify those rules to ensure that they were appropriate for financial services claims. That process is now understood and welcomed, but the industry will want to engage with it in some detail over the coming months, as the Minister might expect.

Another important area, which we touched on occasionally in Committee, is what we do when a number of people have experience of buying a particular product involving a systemic case of mis-selling-for example, when a number of products with the same fault have been put on the market.

Currently, such cases are dealt with by the Financial Ombudsman Service. I think that the procedure is unsatisfactory, both for FOS and the industry. The reforms set out in the Bill will insert a new section 404 in the Financial Services and Markets Act 2000 to create consumer redress schemes, which is an important move forward. I am sure that there is more we can do on safeguards to ensure that they work properly, especially where there is some doubt about the application of law or of FSA regulations. Improvements can be made to ensure that the proposals are welcomed not only by consumer groups, but by the industry.

25 Jan 2010 : Column 645

We also welcome measures on remuneration, the framework for short selling, which we debated earlier, and living wills. Our financial regulation White Paper, issued last year, outlined our support for living wills. That is an important part of the resolution regime introduced in the Banking Act 2009.

There are cosmetic changes on financial stability and the Bank of England. When the hon. Member for Wallasey (Angela Eagle) was Exchequer Secretary, she was keen to point out that the FSA already had the implicit objective of financial stability. The Minister believes that by making that objective explicit it has greater salience, but we shall see what happens and how behaviour changes as a consequence. The duty to co-operate with international bodies was a matter of interest for my hon. Friend the Member for Stone (Mr. Cash). The FSA already does so much of that that it is difficult to see what more can be achieved.

Some measures in the Bill are misconceived. The Minister referred to the well-trodden path in the first four clauses. We trod it well in Committee, both in our evidence sessions and in our debates. Indeed, the issues were reprised this evening, and they are the source of fundamental disagreement between the Minister and me. We set out clearly in our White Paper our plans to give increased powers to the Bank of England on micro and macro-prudential stability, and what we are going to do to give new powers to the Consumer Protection Agency. If I go on for too long, Mr. Speaker, you will rule me out of order for a Third Reading speech, so I shall save my remarks for another occasion, if the opportunity presents itself.

There are important lessons to be learned from the financial crisis, and the Bill deals with some of them. However, the financial services sector must recognise that it is not just policy makers and legislators who need to make reforms, but that it, too, must engage. I am sure that we will return to these issues again, because as the financial crisis unfolds-the Bill is good at future-proofing, with measures on living wills, for example, on which we are creating a framework for the FSA, and measures on remuneration, which create another framework for it-there will be opportunities to identify new issues, which may require legislation, as a result of the duty to co-operate with international financial institutions.

This is a helpful Bill that improves the opportunities for consumer protection and education. It makes important changes to the framework to help to ensure that if there is another banking crisis a proper resolution is in place. There are things in it that we support; there are some things that we think are purely cosmetic; and there are some things that are misconceived. However, the process that it has undergone over the past couple of months has helped to illuminate its workings and set out the challenges to which we all need to rise.

Several hon. Members rose -

Mr. Speaker: Order. Before we proceed, a moment ago, three hon. Members were seeking to catch my eye. We have less than 12 minutes to accommodate them all. I should like to do so, but Members can do the arithmetic themselves.

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9.48 pm

Mr. Breed: I shall not detain the Chamber long, Mr. Speaker.

The Bill was born of the need to learn lessons, and it must be said that many of those things were not spotted by the original regulatory and supervisory system. It introduces some sensible measures, most of which we can wholeheartedly support, and our work has certainly been assisted by the witness sessions. We could not support the official Opposition's amendment to abolish the council for financial stability. Overall, there is a need for a tripartite system. It did not work last time, but that does not mean that it cannot work. We would like to stiffen it up even more, but perhaps in the light of events, we have the opportunity to give it greater transparency and authority. We were able to support the granting of additional powers for the FSA. I heard what the hon. Member for Fareham (Mr. Hoban) said about the Bank of England, but it would experience some difficult conflicts of interest if it was given significant new powers on financial stability.

Recovery and resolution plans will need to be fleshed out-their cost, how they will be updated and how they will apply. Whether we break up some of the big banks will have a major effect on them. We support the collective proceedings, but they are wide ranging and cause concern to the industry. Some tweaking is needed so that they get the necessary support.

I welcome the fact that we will get rid of credit card cheques. I am disappointed that we could not also get rid of unsolicited credit limits, but I assume that will be considered fairly soon, hopefully after a review. It would be a similar and complementary measure. The financial education body will be extremely useful. Much more consumer education is needed if people are to understand what they are buying, how they are paying for it, and their rights and responsibilities.

Finally, as the Minister, like me, has decided not to stand again, may I say that I have much enjoyed his company? His courtesy, kindness and good humour greatly assisted our Committee proceedings.

9.51 pm

Mr. Charles Walker (Broxbourne) (Con): I, too, enjoyed serving on the Committee that considered the Bill, and shall say some nice words about the Minister. He has worked incredibly hard over the past two years-some people have worked him too hard. He has announced that he is leaving the House at the next election. I know that he has a great many friends on both sides of the Chamber, and I am sure he will find a berth very quickly in the private sector, where his talents will be put to good and, I hope, profitable use. So I say farewell to the Minister, at least from the perspective of seeing him at the Government Dispatch Box.

A witness who appeared before our Committee said that the banks made entirely the right decisions based on the totally wrong assumptions. If the Bill starts to redress that imbalance in decision making, it will be a good thing. I am not entirely sure that the council for financial stability will be a wild success. I remain to be convinced about that, because ultimately, if we want
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banks to be responsible, we need responsible management and responsible shareholders who want long-term returns on their investment, not short-term returns.

Perhaps I may add, without trying Mr. Speaker's patience, that we need fewer people called Fred the Shred running our banks. We need more people called Brian the Boring running our banks-good, old-fashioned, boring bankers who can make the numbers add up at the end of the month. That is what the British public want-a lot of boring bankers. I said that very slowly.

Consumer financial education sounds very boring, but my word, it is important. If something sounds too good to be true, it is too good to be true. Many banks have taken advantage of people who lack financial sophistication, and that is not to the banks' credit. One of the reasons we are in this mess is that many people have over-extended themselves, not because they are greedy but because they have been persuaded by their banks that they can afford to take that debt on board. Educating the customers of banks and financial institutions is crucial. We do not want to do that only when they walk through the doors of those establishments as adults. We need to start educating them at school at an early age. For that reason, if for no other, I am entirely happy to support the Bill. I am sure it is just one building block of a very large house that we will all need to build.

James Duddridge: I declare an interest as a reformed and very boring banker. Although there is a need for education, what confidence does my hon. Friend have in the Government to give that education to young schoolchildren? I worry about the children of Southend. They need to be educated in financial management, but I would not want to send them along to the Government in general, despite the good things that my hon. Friend said about the Minister. I would not want to send them along to a Government who have run up debt and spent, spent, spent.

Mr. Walker: I want to be charitable this evening, because I believe that there will be a change of Government in three to four months, and that is a good thing. The democratic wheel turns and other people get their turn in Parliament; and then in 10 years' time we will all be hated and I imagine that the other lot will get their turn. In agreeing with my hon. Friend, however, I think it very important that children in Southend and Broxbourne understand from a very early age, the importance of finances, and understand that how they manage their finances will have a major impact on their life. With that, I shall sit down and allow others to take part.

9.55 pm

John Howell: I, too, pay tribute to the Minister. He is an intellectual. I know that that can in some places be a dirty word, and I hope that his Whips will not hold that against him for the remaining time that he is a Member. However, it is always a great pleasure to sit on a Committee with a Minister who has the intellectual capabilities to understand and to run arguments, so I thank him very much for that.

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