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This is clearly an issue that concerns the British Bankers' Association a great deal. The amendment that my noble friend moved would go a long way towards ensuring that these concerns are addressed because of the way she requires the FSA to plan and prepare and to explain why it will act in a proportionate way.
Lord Myners: Amendment 35A would require the FSA to issue a statement about its understanding of its financial stability objective and how it plans to use its power to achieve this. It would also require the FSA to consult the Treasury, the Bank of England and any other person whom it considers will be affected by the statement. While I agree with the sentiment of this amendment, I must argue that it is superfluous, because it is already covered elsewhere. I begin by referring the noble Baroness to new Section 3A(3) in Clause 5, which states:
As for the FSA consulting the Bank on its strategy for financial stability, I assure the noble Baroness that provisions for this are already in place. As noble Lords are aware, the Bank of England is a member of the Council for Financial Stability. The terms of reference for the council clearly specify that it will consider the financial stability strategies of the FSA and the Bank. Ipso facto, the Bank will have a role in scrutinising the financial stability strategy of the FSA, which already takes a proactive approach to consulting industry and
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Lord Higgins: I have had some difficulty because the noble Lord is reading out the answer to the questions raised by my noble friend behind me rather than making it up in his own words-it is always much easier to understand when he does not simply read it out.
I have some difficulty in seeing from the Bill as it stands where the FSA will not be in danger of demanding too much information from banks-although if it had demanded rather more in the past it would probably be to our general advantage. In particular, I am not clear about how duplication is to be avoided. If information is to be demanded from the banks, is it to be done by the FSA or the Bank, and how are they going to arrange this? Which will be the lead person in demanding information, and then, presumably, in ensuring that it is enough for both the Bank and the FSA? At the moment it is not at all clear from the Bill why any burden is placed on the FSA not to demand excessive information on the one hand, or to ensure that there is not duplication between the Bank and the FSA on the other.
Lord Myners: I thank the noble Lord, Lord Higgins, for his intervention. My experience is that when I make up the answer as opposed to reading it I invariably get myself into difficulty. Common sense tells me that on the whole I should stick to developing my skills in reading aloud rather than in trying to convey to the House my understanding of why we are making particular proposals and how I think they will operate. It is precisely because of my tendency to extemporise that I found myself challenged earlier by the noble Lord, Lord Lawson of Blaby, as to whether I had misled the House on issues in Canada. Having used the dinnertime break to check the facts assiduously, I am increasingly confident that I did not mislead the House, although I still have to do a little further work in answering that point.
This takes me back to the more substantial point made by the noble Lord, Lord Higgins: the question of what prevents the FSA from making unreasonable requests. The FSA is required to have regard to costs and proportionality in the inquiries and requests that it makes for information. I agree with the noble Lord that the balance of argument is strongly in favour of the fact that in recent years the FSA should have been asking more questions. I would even go a little further and say that it should have been asking more questions about business strategy and managerial competence
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On the matter of who asks the banks for information, the noble Lord asks a very good question. Our view is that regulatory institutions should not be bombarded with requests for information from the Treasury, the Bank of England and the FSA in connection with financial stability. That is why we require that those questions are channelled through the Financial Services Authority. If the Bank requires additional information, it will seek it through the FSA.
three broad categories. However, it does not focus, as the amendment does, on what is important, which is the FSA's understanding of the objective and how it will be achieved. That is why I support my noble friend's amendment.
Lord Higgins: The noble Lord's answer was very helpful in its context, but are we to understand that the Bank of England will not approach banks at all to ask for information but will always ask the FSA to get it and then pass it on?
Lord Myners: With the agreement of the noble Lord, Lord Northbrook, I will first answer the question asked by the noble Lord, Lord Higgins, which followed on from his earlier one. Of course, there is a lot of contact between the Bank of England and the banking community, particularly through Mr Paul Tucker, the deputy governor, and Mr Paul Fisher, another executive director of the Bank. I doubt whether there is a day when they do not meet people from the banking industry. But we are talking about the collection of data from banks. That data collection will go through the FSA because the first stage must be for the Bank of England to seek an understanding from the FSA where it already has the data or has data that will provide the answer to the question that the Bank is seeking to address. If that is not the case, that information request will be channelled through the FSA, which has formal links for the purposes of information gathering with all regulated and supervised banks in the United Kingdom.
On the point made by the noble Lord, Lord Northbrook, the three categories described are very broad, but that is consistent with our principle-based approach. If we are too specific, there is a danger that we limit ourselves and then find that new circumstances emerge that are not precisely contemplated in legislation. The language that focuses on principles and broad areas of authority without being too narrow or specific is consistent with the approach that we are seeking to adopt and will be supportive of the intention of the Bill.
Baroness Noakes: I thank my noble friends Lord Northbrook, Lord Higgins and Lord Hodgson for their passionate observations. My noble friend Lord Higgins hit the nail on the head in relation to information, because it emerged in evidence sessions for the Public Bill Committee in another place that information powers are one of the few things that the Bank wanted but that are not in the Bill. We have an amendment somewhere in the 300s that will address that.
Lord Myners: I was helpfully trying to point out that the direction of the question asked by the noble Lord, Lord Higgins, as the noble Baroness might have noted, might not be entirely consistent with an amendment that we may reach in the late autumn if we proceed at this pace with the Committee stage of the Bill.
It is perfectly clear that written right at the top of the Minister's brief is "resist", that word that appears on most ministerial briefs. One could tell that the Minister's heart was not quite in it. He told me that my amendment was superfluous because somehow a strategy was the same as a statement of policy. Since the City of London Law Society, which I respect greatly, has seen the Bill, which talked about a strategy, and still said that we needed a statement of policy, I rather took that as being important. There is no requirement here to issue or publish a strategy. There is no sign that it is the same thing. There is no consultation on the strategy beyond the Treasury, whereas my amendment would require wide consultation and in particular refers to other persons who,
of policy. The Minister is resisting something which is entirely sensible for the regulated community. There is an inability to see the kind of concerns that genuinely exist out there. If the FSA just had this objective without widening the powers to cover this, it might have been an easier matter. It is not an easy matter because the powers are to be broadened at the same time. For that reason, I would like to test the opinion of the House.
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