Clause 172
Banking Bill
12:00 pm
Ian Pearson (Parliamentary Under-Secretary, Department for Business, Enterprise & Regulatory Reform; Dudley South, Labour)
The clause sets out the process by which recognition orders are to be made. Again, I have to tell the hon. Gentleman that this is not the “going out to lunch” clause. It is a clause that makes clear how the procedure should operate.
I shall try to add flesh to the bones of the clause, in response to the largely theoretical questions posed by the hon. Member for South-West Hertfordshire. In practice, there will be a large, if not complete, measure of agreement between the authorities in the tripartite system and in the banking and building societies system, as to which inter-bank systems should be recognised. Important systems may, however, emerge in the future and the hon. Gentleman is right to want to probe the basis on which future systems might wish to be recognised. We have already indicated the sorts of system that will be recognised initially, and once the legislation has been passed we expect that a range of systems will be completely agreed between all parties. In the future, the Bank of England and/or the FSA could bring information to the Treasury along with a recommendation to recognise a system. In addition, an operator could apply to be recognised. The Treasury can consider any representations, and the decision to recognise is at its discretion. However, we would want to consult the FSA and, importantly, the Bank of England. There needs to be a clear designating authority, and the legislation makes it clear that that is the Treasury.