Clause 170
Banking Bill
11:15 am
David Gauke (Shadow Minister, Treasury; South West Hertfordshire, Conservative)
I will leave the issue of which payment systems will be recognised until we discuss clause 171. However, I have one or two questions on clause 170.
First, as the hon. Member for Dundee, East said, the recognition order is made by the Treasury. Presumably, because it is an order it must be made by the Treasury and cannot be made by the Bank of England. Will the Minister explain what the role of the Bank of England will be in determining whether a recognition order is appropriate? This issue relates to the discussions we have had on the relationship between the parties to the tripartite arrangement.
Subsection (2) states:
“A recognition order must specify in as much detail as is reasonably practicable the arrangements which constitute the inter-bank payment system.”
The terminology
“in as much detail as is reasonably practicable”
is somewhat vague. It may be the best that can be done in the circumstances. Does the Minister anticipate difficulties in specifying what is covered? I do not think that there will be, but I should be grateful for his thoughts.
Subsection (3) makes the interesting point:
“The Treasury may not specify an inter-bank system operated solely by the Bank of England.”
Following the example of my hon. Friend the Member for Braintree, I too have looked at the explanatory notes on the clause. Paragraph 381 is interesting:
“The Bank of England has a central role in relation to certain payment systems. In particular, it operates the Real Time Gross Settlement System and it acts as an infrastructure provider in relation to CHAPS.”
I am sure that subsection (3) is not preventing the Treasury from specifying a system that is partly operated by the Bank of England, because that would cover some of the main payment systems being addressed. The terminology clearly refers to inter-bank systems operated “solely” by the Bank of England, while the explanatory notes say that
“the Bank of England could step in and provide payment system services.”
In the light of recent events, we consider that less unlikely than in the past—the Government or a Government agency performing such a major role in this area.