Clause 155
Banking Bill
1:00 pm
Mark Hoban (Shadow Minister, Treasury; Fareham, Conservative)
Let me summarise where we are. Members of the Committee have expressed views about various aspects of the Financial Services Compensation Scheme, with the one exception of the Minister, who has spoken about the generality of the scheme, but has not expressed a view on the Government’s approach. Before the lunch break, he said that the FSA was consulting—which it is, and the various stakeholders will respond to that consultation—but I question where the Government’s intervention or input will come in the process. It is right and refreshing to hear a Minister say that we had better await the outcome of a consultation process—I had not realised that it always worked like that—but at what point will the Government say that the scheme is right, or that there is an issue? Taxpayers have ended up being the back-up in the scheme. We have talked about consultation on limits and, of course, the decision has been made about the limit, which is now £50,000, but the Government decided in connection with Northern Rock and the Icelandic bank accounts that there was no limit.
The Government will always be in a fall-back position if the scheme does not work effectively, to step in and intervene. It would be helpful to the Committee to understand how the Government will comment on the emerging consensus that will result from the FSA’s consultation to ensure that taxpayers’ future liabilities are limited.
I want to pick up a couple of comments made by other hon. Members. The hon. Member for South-East Cornwall, who speaks from practical experience of the banking sector, raised a broader issue that is not covered by the new clause—whether the current scheme is still fit for purpose. It was designed for normal activities, such as the collapse of the odd credit union or an insurance company such as Independent Insurance, and I am not sure whether anyone had thought through the consequences for the scheme of a major bank becoming insolvent, and how those costs should be borne. We can perhaps touch on that in later sittings.
There was a broader issue about how the compensation scheme should be revisited. We never got to the bottom of the comment that my hon. Friend the Member for Wellingborough made about the current limit—about whether there is a de facto unlimited amount, or whether there is a £50,000 limit. My impression is that the Minister feels that we should wait and see, depending on the circumstances. That may be prudent, but it does not give constituents clarity as to how they should manage their affairs.
We will not come to the formal moving of new clauses until later, as you have indicated, Mr. Gale. This was a probing debate and we have covered a fair amount of territory, so I will not move the two new clauses, at the appropriate time.