Clause 156
Banking Bill
1:00 pm
Ian Pearson (Parliamentary Under-Secretary, Department for Business, Enterprise & Regulatory Reform; Dudley South, Labour)
The overall effect of the proposed amendments would be to divide responsibility for the introduction of pre-funding between the Treasury and the FSA. The Treasury, after obtaining parliamentary approval through the affirmative resolution procedure, would give the green light to the FSA to make rules to cover the matters set out in subsection (2) of proposed new section 214A.
It is not clear from the amendment whether the Treasury, with parliamentary approval, could set any high-level parameters in those areas. If the amendment were agreed by the Committee, we would need to do further work to clarify that point. However, I am not persuaded that a two-stage process for bringing in pre-funding is either necessary or desirable. The reality is that the Government would never seek to introduce pre-funding without consultation, including extensive consultation with the FSA, the Bank of England and the FSCS. Self-evidently, the Treasury would want to have a pretty good idea of what the FSA might plan to do in its rules before it sought parliamentary approval to give the FSA the green light. At the same time, it could not say to Parliament, “These are the rules that the FSA will make,” because FSA rules are a matter for the FSA.
It seems much better, therefore, that the Treasury should ask Parliament to approve all the key elements of any pre-funding package. In particular, we thought it right that Parliament should have the final say, through the affirmative resolution procedure, in a decision to allow levies to be imposed. Under the current pay-as-you-go system, the levies follow costs incurred by the FSCS or anticipate costs that the FSCS might incur in the near future. With pre-funding, levies may be imposed long before the FSCS incurs any costs, and costs will never be incurred if no default occurs.
Our approach is the right one, with the Treasury asking Parliament to approve all the key elements of any pre-funding package and with the affirmative resolution procedure, for which the hon. Member for Fareham has expressed a strong preference in previous debates. I ask the Committee to reject the amendments if they are pressed to a vote.