Clause 172
Banking Bill
12:00 pm
David Gauke (Shadow Minister, Treasury; South West Hertfordshire, Conservative)
I have one or two questions about the procedure for making a recognition order. The clause gives us another opportunity to raise questions about the relationships between the Treasury, the Bank of England and the FSA. Subsection (3) states:
“In considering whether to make a recognition order in respect of a payment system the Treasury may rely on information provided by the Bank of England or the FSA.”
Does the Minister envisage circumstances in which the Bank of England or the FSA will initiate the process? Will there be times when the Bank of England goes to the Treasury and says, “We think that this payment system needs to be recognised.”? Is that how the process will work in practice? There is an obligation on the Treasury to consult the Bank of England, but can he imagine circumstances in which the Bank of England may take a different view and say that a payment system should not be recognised? Are there any circumstances when the Treasury will overrule the Bank of England?
Although it is unlikely, will it be possible for the operator of a payment system to make an application to be recognised, in the same way that they can make an application to be designated? Under subsection (1), the Treasury will “consider any representations made”, presumably by the Bank of England or the operator of the system. An operator of a system may not want it to be recognised. What will be the time frame in which the operators of systems that could be recognised can make representations? How long will the Treasury take to consider such representations?
Subsection (2) raises the issue of recognised investment exchanges and clearing houses and the FSA’s role. Where a recognised clearing house or investment exchange will be a recognised payment system, which entity will take the lead in regulation—the FSA or the Bank of England? The Minister will be aware of the concerns about entities slipping between the gaps, which I suspect is one of the driving forces behind the Bill. Can he answer that question?