Report (1st Day) (Continued)

8.40 pm

Clause 4 : Financial stability strategy and Financial Policy Committee

Amendment 7A

Moved by Lord Eatwell

7A: Clause 4, page 12, line 33, after “Committee” insert “after consultation with the Treasury”

Lord Eatwell: My Lords, noble Lords will notice that this group includes Amendments 6M and 6Q. I apologise to the House for not moving those amendments at the appropriate time, but as noble Lords may recall, there was considerable confusion between the Deputy Chairman and the clerks and everyone here. The noble Lord, Lord Sassoon, was not confused. He never is. But in the confusion I inadvertently failed to move these amendments. I also apologise that at that time I

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failed to support the noble Baroness, Lady Noakes, when she presented her arguments for Amendment 7, which I wholeheartedly support, as indicated by the fact that I added my name to hers. With the leave of the House, I will proceed with the remaining amendments in group 19, namely Amendments 7A, 7B and 7C.

The purpose of this group of amendments is to ensure that there is regular consultation between the Treasury and the FPC over the FPC’s directions and its recommendations. Leaving aside—since the time has passed—the question of directions, even though they are more important, Amendments 7A, 7B and 7C serve to emphasise the interest that we all have in requiring that regular consultation takes place. The idea is simply that in making a recommendation the FPC would have a discussion with the Treasury about that to ensure that both sides are, if you like, singing from the same hymn sheet.

This is part of the endeavour that we have on this side of the House to ensure that the whole development of the financial stability analysis, the financial stability strategy and the financial stability actions is co-ordinated effectively between the FPC and the Bank as a whole—whether Bank means court or Bank or whatever—and the Treasury. I beg to move.

The Commercial Secretary to the Treasury (Lord Sassoon): My Lords, this group of amendments seeks to require the FPC to consult with the Treasury before issuing a recommendation, directing the PRA or FCA to take action or revoking an existing direction. I am certain that not only are these amendments unnecessary, they would damage the independence of the FPC.

As I am sure noble Lords are aware, the Bill provides for a non-voting representative of the Treasury to be a member of the FPC. This Treasury representative will be able to ensure that the views of the Treasury are available to the committee if required. This renders these amendments unnecessary.

Let me explain why, more seriously, I feel that the amendments could be harmful to the work of the FPC. The Government have drafted the Bill so that the FPC will be housed within the independent Bank of England. It is paramount that macroprudential policy decisions are insulated from political considerations. The purpose of the FPC is to “take the punchbowl away” when the party is getting too raucous, something that politicians of any affiliation may be reluctant to do.

By insulating the decisions of the FPC from political considerations, it will be much easier for the committee to be a credible and effective policy-making body. The amendments would risk that credibility by requiring the FPC to consult the Treasury before it makes any policy decision. For that combination of reasons, I ask the noble Lord to withdraw his amendment.

8.45 pm

Lord Eatwell: My Lords, the noble Lord has left me somewhat puzzled with his final point. First, as he is well aware, consultation does not necessarily mean acceptance of any argument or the idea that there should be any direct influence of the Treasury on the

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FPC. All we are trying to do is to ensure that there is effective communication. As I noted earlier, the Minister has in the past raised the fact that communication between the Bank and the Treasury has been very poor. There are other issues about the lack of communication which will be raised on Report.

The Minister says that somehow consultation between the Treasury and the FPC would endanger the credibility of the FPC and of the macroprudential strategy. Yet earlier it was argued that under the common law, as he put it, the Treasury may at any time make recommendations on the provisions of the Bank’s financial strategy. Is the Treasury involved or not? Surely recommendations and discussion are very valuable at all times, but that does not in any way limit independence. Perhaps the failure of the Bank and the Treasury to communicate, which the Minister has referred to in the past, arose from a mistaken idea that independence means non-communication. It does not; communication is important to the development of coherent policy. If he is saying that consultation would undermine independence, this is a very serious matter for an area of macroeconomic policy with which the financial stability strategy and the Financial Policy Committee, as its agent, will be intimately involved.

I find the Minister’s remarks very disturbing indeed. They suggest a fundamental misunderstanding of the way in which we can take forward constructive developments in this novel and important area of economic policy. It is a matter to which we may have to return but for the moment I beg leave to withdraw the amendment.

Amendment 7A withdrawn.

Amendments 7B and 7C not moved.

Amendment 7D

Moved by Lord Eatwell

7D: Clause 4, page 14, line 32, leave out from “9H” to end of line 33

Lord Eatwell: My Lords, this amendment refers to an oddity in the drafting of new Section 9T(1)(a). The Bill requires the Financial Policy Committee to review each direction that it makes over the relevant period, which is 12 months, other than,

“a direction revoked before the end of the review period”.

I do not understand this business about leaving out directions revoked before the end of the review period. Suppose the direction has been a great success but was enforced for only 11 months. Or suppose the direction was a great failure but lasted for only 11 months. Should not these directions be reviewed? Can lessons not be drawn from them just as much as from directions which are in force for 12 months? Why would you have a direction that has been revoked from which we are not allowed to draw lessons but a direction that has been kept in place from which we are? This is too limiting in a novel area of economic policy from which we should seek to get all the information and draw as

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many lessons as we possibly can, whether or not a direction has been revoked within the relevant period. I beg to move.

Baroness Noakes: My Lords, what the noble Lord, Lord Eatwell, has said is entirely sensible. I cannot see the distinction between those directions which have been made and continue in force and those which have been made and revoked. This is about public communication, the directions being made and their effect. The information that we gain from a revocation must be at least as good as from the making of a direction.

Lord Sassoon: My Lords, the amendment reflects a slight misunderstanding of the purpose of the reviews that we are talking about in new Section 9T of the Bank of England Act, as inserted by Clause 4. The purpose of these reviews centres around live actions and requiring the FPC regularly to look again at all live actions—in other words, at the directions and recommendations that still have effect—and to review whether or not the action is still needed. That is a rather different matter from the admittedly important question of reviewing past actions and learning lessons, which is not the subject of the clause.

The idea behind the new section is to ensure that FPC actions do not remain in place if the circumstances which originally merited them have disappeared or changed substantially. Of course, we would expect the FPC as a matter of course to keep its past actions under review and revoke them once they are no longer needed, but new Section 9T ensures that this will be the case by creating a formal requirement for the FPC to review regularly all of its live directions and recommendations.

Amendment 7D seeks to remove the wording in subsection (1)(a) which provides that the FPC need not review directions that have already been revoked. The provision is appropriate because once a direction has been revoked there is no need for the FPC to review it to determine whether it is still needed; the direction is already defunct. It is as simple as that.

The concern of the noble Lord, Lord Eatwell, lies clearly in the importance of the FPC evaluating the impact of its actions. I can reassure him that mechanisms already exist elsewhere in the clause to address this issue. First, new Section 9S requires the FPC to set out for each of its actions an explanation of its reasons for believing that the action is compatible with its objectives and associated “have regards”, including where practicable an estimate of the costs and benefits of the action. Secondly, subsection (4)(b) of new Section 9W requires the FPC to include in each financial stability report an assessment of how its actions have succeeded in achieving its objectives. Finally, the new oversight committee of the court has an explicit remit to oversee the FPC’s performance and can undertake or commission a more comprehensive review of the FPC’s past actions or approach where appropriate.

I am confident that the FPC’s actions are already subject to extensive mechanisms of oversight and evaluation and, as I said at the outset, that the amendment reflects, perhaps, a slight misunderstanding of what

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the purpose of the specific provisions in new Section 9T is all about. I hope that on the basis of that explanation the noble Lord will feel able to withdraw his amendment.

Lord Eatwell: My Lords, my immediate reaction is that if that is what the new section meant, why did it not say so? We persistently have a point where there is a lack of clarity in the Bill and, time and again, the noble Lord says, “That is what we said but it is not what we really meant”. It is truly unsatisfactory.

On the areas which he says cover the issues that I raised, proposed new Section 9S specifically refers, I think—although of course it may not mean this—to a prior explanation of specified purposes. It provides for an explanation of why the FPC is doing something, which seems to be a prior requirement, not an assessment of effect.

The Minister is on stronger ground on new Section 9W(4)(b), which refers to whether the functions of the FPC have succeeded, but it refers generally to its functions rather than to the specific issue in new Section 9T, which refers to the very sensitive and important area of directions.

There is another important point. It is quite possible that a direction would be introduced to deal with a particular set of circumstances and revoked because those circumstances have been mitigated, but then reintroduced some time later because the problem reappears. In those circumstances, all this stuff about live actions is irrelevant. We need to learn from both those actions that are contemporaneous and those that may be introduced from time to time to deal with specific circumstances. I really feel that this is a very unsatisfactory approach to the general issue of review.

I will keep talking so that the Minister can get his note and say why I have got it wrong; he has it now. The issue of keeping matters under review should include those matters that only last for a period within the relevant 12 months, as well as those that go forward. Shall I sit down? No, the Minister did not get a good reply in that note. This is an issue that I want people to think about: either the clause is badly drafted and not clear, or the amendment should be considered appropriate. However, for the moment I beg leave to withdraw the amendment.

Amendment 7D withdrawn.

Amendment 7E

Moved by Lord Eatwell

7E: Clause 4, page 17, line 13, after “Bank” insert “, the Chief Executive of the FCA, the Chairman of the PRA”

Lord Eatwell: I assure the House that this is going to stop soon. First, I draw attention to a drafting error in the amendment as tabled. It refers to the “Chairman of the PRA”, who is of course the Governor of the Bank of England, rather than the chief executive. The objective of the amendment is to widen the group who meet to assess the importance of the Financial Stability Report, a very important document that has been one of the most interesting and creative documents published by the Bank for some years, not least because of the

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major intellectual influence of the executive responsible for financial stability. Since the FCA and the PRA are the vehicles through which the FPC—I apologise, everything is just three letters—exercises its influence, it is important that informed discussion and assessment between the Treasury and the Bank should include the chief executives of those two bodies and not simply be between the governor and the Chancellor.

The amendments have the added advantage that, should we have a governor who wishes to delegate responsibilities in order to reduce the excessive load placed on his or her shoulders by this Bill, this would in no way reduce the value of the Bank-Treasury meeting and the quality of the assessment of the Financial Stability Report. It seems enormously valuable to have these two individuals—the chief executives of the FCA and PRA—there, because they are the people who implement the proposals of the Financial Policy Committee and will help in the general assessment of the Financial Stability Report. I beg to move.

Lord Sassoon: My Lords, are we inserting “chief executive”?

Lord Eatwell: It was a drafting error. It should not have said “Chairman”.

Lord Sassoon: So it is chief executive. I am not sure whether I heard chairman or chief executive but it should have said, “Chief Executive of the PRA”.

In responding to Amendment 7E it may help if I explain the purpose of the meetings set out in new Section 9X of the 1998 Act. The success of the new regulatory structure will rely heavily on the relationship between the Treasury and the Bank of England. As has already been noted this evening, one of the major problems leading up to the financial crisis was that the tripartite committee established under the previous Government’s regime did not meet at the principals’ level for a decade. The Chancellor and the governor simply did not meet often enough to discuss financial stability. When the crisis hit—I am sorry the noble Lord, Lord Eatwell, thinks this is an amusing matter. Unfortunately, this was one of the most serious issues when it came to handling the crisis.

9 pm

Lord Eatwell: I agree with the Minister. It is a terribly serious matter. When he adds the phrase “for a decade”, it is such desperately bad news that some degree of amusement is the only relief to the depression that one feels at the failure of this mechanism.

Lord Sassoon: Believe you me, I was on the standing committee of deputies for three years and I saw it at first hand. There we are—we understand the difficulty. At a personal level and in terms of institutional arrangements and practices, the absence of meetings clearly has a very significant impact when it comes to handling a crisis. However, everything is now different and as it should be. The Chancellor and the governor now meet often. Indeed, under the previous Government, once the crisis hit, of course that was also the case.

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But it was not always the case, as I have said, and as we understand. Without the requirement in new Section 9X, there would be no guarantee that the regular meetings would happen in the future, once the individuals concerned change and memories of the current crisis have faded.

New Section 9X therefore places a legal requirement on the Chancellor and the governor, in his capacity as chair of both the FPC and the PRA, to meet formally at least twice a year, shortly after the publication of the FPC’s twice-yearly Financial Stability Report. I agree that it is a truly creative, in the best sense of the word—which I am sure the noble Lord, Lord Eatwell, meant—and important document.

Of course, both the Chancellor and the governor may invite others to attend the meeting. For example, the Treasury’s Permanent Secretary or another senior official may attend. The Chancellor’s private secretary may also be in the room. On the Bank’s side, the governor may well choose to invite another deputy governor or the executive director responsible for financial stability to attend the meeting with him. However, I believe the approach taken in the Bill—for the legal requirement to meet to be on the Chancellor and governor only, leaving it up to each attendee to decide if others should be present—is the correct one. The governor will be best placed to decide, based on the content particularly of the Financial Stability Report and the wider financial stability context, which, if any, of his senior executives should attend the meeting.

If the chief executive of the PRA were required by statute to attend every meeting, surely there would be an argument for all the other senior Bank officials who had some responsibility for financial stability to also be added to the list. Equally, if the CEO of the FCA were required by legislation to attend every meeting, would there not be an equal argument for the external members of the FPC also to be required in the room? This could go off in all sorts of directions. A small, personal meeting between the Chancellor and governor could easily turn into a large committee if we were to take that approach.

This is an important opportunity to restate our common objective: to make sure that the principals meet. It should not be necessary to have such a meeting in legislation, but regrettably history has shown that it is. That is the purpose of the requirement, as a backstop for those meetings to happen, but it continues to be the Government’s view that the attendance of others should be left to the discretion of the principals. On the basis of that explanation I again ask the noble Lord to withdraw his amendment.

Lord Eatwell: Before the noble Lord sits down, perhaps we could probe the discretion of the principals a little. Supposing the governor wants to turn up alone and the Chancellor wishes the chief executive of the PRA to attend, would that be possible?

Lord Sassoon: That is not then a question of legislation but a question of common sense and how the parties get on with each other, and I am sure that common sense would prevail. For that sort of circumstance, no amount of legislation is going to get around people behaving sensibly. If we put a particular attendee or

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two into these meetings the same question arises about others who one side or the other might believe would be sensible to have at a particular meeting given the topics that might be under discussion. We have to rely on the good sense of the principals here.

Lord Eatwell: Yes, well, we hoped that we could rely on the good sense of the principals to run the Financial Stability Committee, but they did not meet for a decade so they were not very sensible, were they?

If I may respond to the noble Lord, I feel that his vision of the committee extending to indefinite size is really excessive. We are identifying the chairman of the Financial Policy Committee, namely the governor, and the two operational figures—the chief executive of the FCA and the chief executive of the PRA—to be in this meeting to assess the financial stability position in the light of the financial stability report. I think that would be valuable. I quite understand that others can be invited in but, as we have seen in the past, these matters are not necessarily as well handled as, in retrospect, we would like. I hope that this matter might be reconsidered in due course, but for the moment I beg leave to withdraw the amendment.

Amendment 7E withdrawn.

Amendment 7F

Moved by Lord Eatwell

7F: Clause 4, page 18, line 40, at end insert—

“9ZZA Financial Stability Advisory Panel

(1) There will be a Financial Stability Advisory Panel.

(2) The membership of the Panel will be—

(a) the Deputy Governor for Financial Stability;

(b) 6 members appointed by the Treasury, subject to approval by the Treasury Committee of the House of Commons;

and the members appointed under paragraph (b) will be academics, members of staff of international organisations, practitioners, or others with particular skills in the analysis of systemic risk.

(3) The Financial Stability Advisory Panel will—

(a) provide written advice to the Financial Policy Committee concerning the analysis of systemic risk;

(b) once a year prepare a report assessing the analysis of systemic risk by the Financial Policy Committee over the preceding 12 months (the first report to be twelve months after this section comes into force);

(c) assess the effectiveness of measures prescribed under section 9K in the attainment of the financial stability objective of the Bank;

(d) assess the effectiveness of directions and recommendations of the Financial Policy Committee under sections 9G and 9N in the attainment of the financial stability objective of the Bank;

(e) prepare an annual report on matters referred to in section 9ZZA(3) to be presented by the Supervisory Board of the Bank, and subsequently published on the Bank website.”

Lord Eatwell: My Lords, Amendment 7F picks up an amendment that I moved in Committee and promised to return to on Report, concerning the establishment of a financial stability advisory panel.

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I will not go through the whole argument of different forms of financial stability arrangements as between this country and the United States and so on, but I will deal with one central issue: we want people of very high quality advising and reflecting on financial stability issues. The appointed members of the Financial Policy Committee are crucial but there is going to be some difficulty in identifying them satisfactorily because there will be a number of conflicts of interest in the financial services industry that will be difficult to manage.

We can overcome that difficulty by creating an advisory panel that does not have powers, as such, to make decisions, but which can advise on a variety of areas, including the success of measures taken and general effectiveness, by presenting a report to the oversight committee—not the “Supervisory Board”, as mistakenly referred to in the amendment as printed on the Marshalled List. We could gather together a wider group of people who felt it to be their responsibility to follow carefully the actions of the Financial Policy Committee and to express their views even if they have significant conflicts of interest, because these could be taken into account in the assessment of their views. Of course, they are distanced from any actual decision-making, unlike the appointed members of the Financial Policy Committee, who are right at the heart of decision-making.

Given that we are dealing with an area of policy which, as I have said already this evening, is novel, we are going to encounter entirely new problems. We will probably make some mistakes. We want to be able to assess a very wide horizon of experience around the world, where the European Union, the United States and other major jurisdictions are introducing financial stability committees of one sort and another to deal with the issue of macroprudential regulation. An advisory committee could be a valuable supplement to the information and assessment to which the Bank and its committees have access. I beg to move.

Baroness Noakes: My Lords, we do not need to hardwire this into legislation. If the FPC thinks that it needs some form of advice from other parties in relation to most of the matters mentioned in subsection (3) of the amendment of the noble Lord, Lord Eatwell, it can arrange it. Similarly, if the oversight committee thinks that it needs any assistance from outside parties in relation to matters mentioned in paragraph (e) of subsection (3) of the amendment of the noble Lord, Lord Eatwell, it can arrange it. I do not see why these matters need to be enshrined in law. If there are gaps within the resources available to the Bank, it can supplement them, or it may have them sufficiently internally. The statute does not need to deal with these matters.

Lord Sassoon: I completely agree with my noble friend Lady Noakes. This amendment was debated in Committee, as the noble Lord, Lord Eatwell says. The gremlins seem to have been getting into one or two of these amendments. He has already pointed out that this has been retabled in the previous form that it was in and should refer to the oversight committee and not the supervisory panel.

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Putting that aside, the nub of this is that I am puzzled and disappointed that the noble Lord, Lord Eatwell, does not agree that the oversight committee that we have already created will have responsibility for carrying out the function of performance evaluation referred to in this amendment, and that the oversight committee will have a wider-reaching role looking over the entirety of the Bank’s financial stability remit. That is surely better than an advisory panel with rather limited and specific terms of reference.

I am also disappointed that the noble Lord, Lord Eatwell, feels that an independent oversight committee led by non-executives would be either inadequate or insufficient to hold the Bank to account. I cannot see how it is better to create a committee chaired by an executive of the Bank who would simultaneously be a member of the FPC, responsible for providing advice to the FPC and expected to assess its performance.

Of course, the Bill already creates in the FPC a committee on which the deputy governor for financial stability sits, together with external members, some of whom may indeed be academics. As we have discussed before, there is plenty of provision for either the FPC or the oversight committee to take on any additional expert, academic or other advice that it requires at any point. The FPC will have a statutory responsibility to assess risks to financial stability and to take action to mitigate them. If it wants to take advice it is entirely able to do so, but it should have the autonomy to do so on its own terms if it is to be properly responsible for financial stability.

In conclusion, the effect of the amendment of the noble Lord, Lord Eatwell, would be to create duplication of responsibilities, to blur accountabilities and to diminish focus. As such, there is no way that I could accept such an amendment and I hope that, on reflection, he will withdraw it.

9.15 pm

Lord Eatwell: Before the noble Lord sits down, if the FPC wished to seek external advice, would it be suitably resourced to do so?

Lord Sassoon: Unequivocally, yes.

Lord Eatwell: In that case, I am far more content than I thought I would be, and I beg leave to withdraw the amendment.

Amendment 7F withdrawn.

Schedule 1 : Bank of England Financial Policy Committee

Amendment 8 not moved.

Amendment 9

Moved by Lord Sassoon

9: Schedule 1, page 198, line 35, after “bankrupt,” insert “that a debt relief order (under Part 7A of the Insolvency Act 1986) has been made in respect of M,”

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Lord Sassoon: My Lords, this is a group of minor and technical amendments. They update the Bill in the light of changes to EU law that have been made since the Bill was introduced to Parliament to reflect the effect of existing law by providing expressly that requirements imposed on firms may have indefinite duration, and to clarify the drafting of some sections of FiSMA. I am happy to discuss in more detail any particular amendment, but I beg to move.

Amendment 9 agreed.

Amendments 10 and 11 not moved.

Schedule 2 : Further amendments relating to Bank of England

Amendments 12 to 21

Moved by Lord Sassoon

12: Schedule 2, page 201, line 18, after “2” insert—

“(a) for “director” substitute “non-executive director”, and

(b) ”

13: Schedule 2, page 201, line 20, at end insert—

“( ) In paragraph 4, for “director” substitute “non-executive director”.”

14: Schedule 2, page 201, line 21, after “5” insert—

“(a) in sub-paragraph (1), for “director” substitute “non-executive director”, and

(b) ”

15: Schedule 2, page 201, line 24, leave out “director” and insert “non-executive director”

16: Schedule 2, page 201, line 28, leave out “director” and insert “non-executive director”

17: Schedule 2, page 201, line 30, leave out “director” and insert “non-executive director”

18: Schedule 2, page 201, line 32, at end insert—

“( ) In paragraph 7(2), for “director” substitute “non-executive director”.”

19: Schedule 2, page 201, line 34, after “(1),” insert—

“( ) in that provision, for “director” substitute “non-executive director”,”

20: Schedule 2, page 202, line 20, at end insert—

“( ) In paragraph 13, after sub-paragraph (3), insert—

“(3A) But a member of the court who is the Governor or a Deputy Governor of the Bank may not be designated under paragraph (a) or (b) of sub-paragraph (3).””

21: Schedule 2, page 202, line 21, at end insert—

“( ) In paragraph 15, for “director” substitute “non-executive director”.”

Amendments 12 to 21 agreed.

Amendment 22

Moved by Lord Sassoon

22: Schedule 2, page 203, line 38, leave out from beginning to “in” and insert—

“(1) Section 244 of the Banking Act 2009 (immunity) is amended as follows.”

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Lord Sassoon: My Lords, like the FSA, the PRA and FCA have statutory immunity from liability in damages for anything done in pursuit of their statutory functions. The Bank has a similar immunity in its capacity as the monetary authority which includes its regulatory functions. This is necessary because it would be very difficult for the regulators to take effective regulatory action if they thought that at any moment they could be bogged down in litigation resulting in multimillion pound awards of damages.

These amendments modify the immunity to ensure that where one regulator or a member of its staff carries out an investigation or produces a formal report for another regulator, that person is also covered by the immunity. This is being done to ensure that, where necessary and appropriate, the PRA can outsource the operational element of its enforcement activities to the FCA—in particular, the work of carrying out investigations into firms.

Prudential regulation involves far less enforcement work than conduct regulation, as it primarily involves the setting and monitoring of prudential standards, rather than, for example, detailed investigations into possible money laundering. It is therefore likely to be a far more efficient approach for the PRA to outsource these functions to the FCA, rather than maintain its own standing expertise. This approach is also likely to ensure that these investigations are well co-ordinated.

Enforcement is a highly litigious area in which the subject of an investigation is likely to cast around for any possible chink in the armour of the regulators’ statutory immunity. There is a risk that vexatious litigation could slow down or undermine the progress of an investigation. These amendments are therefore intended to ensure that when investigations are contracted out to another regulator, they can be undertaken without risk of litigation.

Government Amendments 22 and 23 provide that the Bank of England has statutory immunity if it is appointed to carry out an investigation or to produce a report on behalf of the PRA or the FCA under Sections 97, 166 to 169 and 284 of FiSMA. Government Amendment 63 provides that if the FCA or a member of the FCA’s staff is appointed to carry out an investigation or produce a report, their actions and omissions are treated as actions and omissions of the FCA for the purposes of the immunity. Amendment 69 makes the same provision for the PRA.

I trust that the House will agree that these are sensible provisions which will allow the regulators to take an efficient approach. I beg to move.

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Lord Eatwell: My Lords, I agree that these are indeed sensible measures. I have just one question. These days many actions and investigations by regulators are taken on behalf of what are truly other regulators—that is, regulators in other jurisdictions—and that exchange of information and co-operation is a hugely important activity. When the British regulators are taking very sensitive information in an area where there is a great deal of legal activity—for example, the relationship between the FSA and the regulator in Austria is a particular case—would they have immunity in that case as well?

Lord Sassoon: If the situation that the noble Lord is suggesting is one in which the FSA or a successor body was taking an action at the request of the Austrian authorities, I can confirm that in that case the immunity provisions would apply to the actions of the UK regulators.

Amendment 22 agreed.

Amendments 23 to 25

Moved by Lord Sassoon

23: Schedule 2, page 203, line 43, at end insert—

“( ) After subsection (2) insert—

“(2A) The Bank’s functions under the Financial Services and Markets Act 2000 are to be taken to include any functions that it may exercise as a result of an appointment under any of sections 97, 166 to 169 and 284 of that Act.””

24: Schedule 2, page 204, line 1, at end insert—

“ In section 4 of the Bank of England Act 1998 (Bank’s annual report), in subsection (4)(a), for “directors” substitute “non-executive directors”.”

25: Schedule 2, page 204, line 3, at end insert—

“ In Part 3 of Schedule 1 to the House of Commons Disqualification Act 1975 (other disqualifying offices), in the entry relating to the Bank of England, for “Director” substitute “non-executive director”.

In Part 3 of Schedule 1 to the Northern Ireland Assembly Disqualification Act 1975 (other disqualifying offices), in the entry relating to the Bank of England, for “Director” substitute “non-executive director”.”

Amendments 23 to 25 agreed.

Consideration on Report adjourned.

House adjourned at 9.21 pm.