Banking reform: towards the right structure - Parliamentary Commission on Banking Standards Contents

5  Wider reforms and our final Report

78.  In our First Report we expressed scepticism about the Government's apparent conviction that getting the proposed Bill on the statute book in 2013 was the best way to ensure all primary and secondary legislation to implement the ring-fence was in place by May 2015. We emphasised that it was vital that there was a full opportunity for parliamentary scrutiny of the Bill itself and for consideration of crucial proposals for secondary legislation in draft, and emphasised that "the primary concern of Government, Parliament, regulators and the affected institutions should be on getting the new legislation right".[175]

79.  If this applies to the Bill as it stands, it applies in equal measure to the provisions that are likely to be added to the Bill. In its mid-term review, the Government has made the following, welcome commitment:

We will introduce any necessary amendments to legislation arising out of the Parliamentary Commission on Banking Standards, including any necessary new criminal offences and associated penalties.[176]

The Government has also made clear that it intends to use the Bill now before the House of Commons for giving effect to legislative proposals arising from this Commission's work.[177]

80.  In his speech on 4 February, the Chancellor of the Exchequer encouraged us to "come forward with far-reaching proposals" relating to professional standards and culture.[178] The Secretary of State for Business, Innovation and Skills has also suggested that "root-and-branch reform of the banking sector is inevitable".[179]

81.  When this Commission was first established, we were required to report on the draft Bill before Christmas and on other matters "as soon as possible thereafter". In view of the intensity of our evidence-gathering processes and the number of new issues that have arisen in the course of our work, we now consider it likely that we will produce our final Report by mid-May 2013. If we adhere to this timetable, the Government will need some time to consider our recommendations and to bring forward the necessary amendments to the Bill. In its response, the Government has not shown signs of any new flexibility on the timetable for the Bill,[180] but the Chancellor of the Exchequer has referred to the Bill's becoming law by early February 2014.[181] The Commission considers it essential that the timetable for the progress of the current Bill through both Houses of Parliament allows adequate time not only for the full scrutiny of the current content, but also for the addition of provisions to give effect to the recommendations in our final Report. We welcome the Chancellor of the Exchequer's implied acknowledgement that Royal Assent in 2013 is no longer appropriate. We recommend that the report and third reading stages in the House of Commons do not take place before the Summer.

82.  The Commission is encouraged by the positive tone of the Government's response and by the steps it has already taken or agreed to take to give effect to the recommendations of our First Report. This augurs well for the Government's actions in response to our final Report. There is, however, still a long way to go if the legislation now before the House of Commons is to provide legislative impetus for a transformation of the UK banking system. The Bill as presented to the House of Commons represents not the beginning of the end for the necessary reform process, but the end of the beginning.

175   First Report, paras 12, 112 - 125 Back

176   HM Government, The Coalition: together in the national interest: Mid-Term Review, January 2013, p 13 Back

177   First Report, para 9 Back

178   Chancellor's Banking Reform speech Back

179   Speech by Secretary of State for Business, Innovation and Skills on 6 February Back

180   Banking reform, para 2.9 - 2.10 Back

181   Chancellor's Banking Reform speech: "I'm sending the legislation to the House of Commons today and I expect them to be passed by Parliament this time next year". Back

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Prepared 11 March 2013