Clause 180
Banking Bill
4:30 pm
David Gauke (Shadow Minister, Treasury; South West Hertfordshire, Conservative)
The clause deals with the circumstances in which Bank of England inspectors may apply for a warrant entitling them to enter the premises of an operator of a payment system and in which justices of the peace may issue one. A number of conditions are set out and if any one of them is fulfilled, an inspector will be permitted to seek to obtain a warrant for entry. The amendment relates to condition 4, which states that
“a person occupying or managing the premises has failed to co-operate with an inspector.”
To understand the thinking behind the amendment, it is worth looking at the other conditions. It must be remembered that it is necessary to satisfy only one of them. Conditions 1 and 2 relate to the information-gathering process set out in clause 190. Condition 3 relates to refusing to give an inspector access to premises, despite reasonable notice having been given. If an operator has not failed to provide information or access, a warrant can none the less be issued on the basis that the person occupying or managing the premises failed to co-operate with an inspector.
The point of the amendment is that only an inspector who is acting reasonably should be able to obtain a warrant. The other conditions are set at the appropriate level, but condition 4 simply allows an inspector to make requests of the occupier of premises that are part of a payment system. If he refuses to co-operate in any way, he makes himself vulnerable to a warrant from a justice of the peace. I would be grateful for the Minister’s views on that point.
If I may talk generally on the clause, it would preclude the need, from my point of view, for a stand part debate. I shall raise the usual points and I am sure that the Minister will be obliging in responding to them. Will he give an assurance that the procedure in the clause will be used only in exceptional circumstances? Does he anticipate the Bank of England looking to obtain warrants to enter premises as a routine matter? Given his comments on clause 179, I am sure that he will have no problem in giving that assurance.
Amendments Nos. 40 and 41 relate to clause 181, which sets out that the Bank of England may require the operator of an inter-bank payment system to appoint an expert to report on the operation of the system. Amendment No. 40 would insert the word “reasonably” so that the Bank may impose a requirement only if it reasonably thinks that the operator is not taking sufficient account of the published principles or the code of practice. Amendment No. 41 would insert the word “substantially” in subsection (2)(c) so that the Bank may impose a requirement only if it reasonably thinks that the report is likely for any other reason substantially to assist the Bank in the performance of its functions under this part. Both amendments attempt to be slightly more specific, because a report might be of only marginal benefit to the Bank yet cause substantial inconvenience and costs for the payment system, so it should not be issued lightly.
Amendment No. 42 relates to clause 185, which sets out the Bank of England’s powers to close a payment system, which is clearly a draconian sanction. The amendment proposes that those powers may be applied only if the Bank reasonably thinks that the compliance failure threatens the stability of the UK financial system. It is a probing amendment, so I would be grateful for the Minister’s thoughts on it.
Amendment No. 43 also relates to clause 185 but is less of a probing amendment. Although it would not be fair to claim that it goes to the heart of the Bill, I feel quite bullish about it. The current drafting states:
“This section applies if the Bank of England think that a compliance failure threatens the stability of the UK financial system.”
The amendment would instead state that the Bank of England “thinks” that the compliance failure threatens the stability of the UK financial system. Elsewhere, the Bill states that the Bank “thinks”, so I hope that the Minister will accept the amendment.
Amendments Nos. 44 and 45 relate to clause 190, which provides that the Bank of England may request information from an operator of a payment system. Again, I propose that that should occur when the Bank “reasonably” thinks that it will help the Treasury in determining whether to make a recognition order and when it “reasonably” requires the information in connection with its functions under Part 5. I am sure that the Minister will say that the Bank of England will act reasonably in all circumstances, but I suggest that we should include the provision in the Bill.