Clause 184
Banking Bill
5:15 pm
Ian Pearson (Parliamentary Under-Secretary, Department for Business, Enterprise & Regulatory Reform; Dudley South, Labour)
It is right that hon. Members ask questions about clause 184 and what we have in mind for the penalty. It might be helpful if I explain that the power to impose a financial penalty is intended to act as a further deterrent against the non-compliance of operators of recognised payment systems with their obligations under this part of Bill. It reinforces the need to comply with, for example, the provision of codes of practice or directions, which is intended to ensure that systems are not being operated in a manner that could represent a threat to financial stability, and to ensure the overall robustness of the payment systems. We have no reason to believe that operators will not want to co-operate and operate fully, but it is right that we legislate to have an enforcement regime in place.
The hon. Member for Southport suggested that there was no appeal system, but he clearly has not appreciated what we have proposed in clause 188, or the warning system set out in clause 187. Clause 184(1) gives the bank the bank the power to impose a penalty in the event of a compliance failure, and subsection (2) makes it clear that the penalty is payable to the Bank of England and is enforceable as a debt. The term “sanction” is defined in clause 187(2) and includes penalties or other sanctions contained in this part.
A number of hon. Members rightly asked how much the penalty will be. To answer the hon. Members for South-West Hertfordshire and for the Dundee, East in particular, it is intended that the Bank will impose financial penalties in proportion to the seriousness of the compliance failure and the system operator’s ability to pay. There is no statutory limit, but as the hon. Member for Dundee, East rightly pointed out, compliance failure could occur in a wide variety of circumstances, and it would not be sensible to try to envisage all those circumstances and include them in the Bill. However, I am happy to confirm in Committee that it is our intention that if the Bank was in a situation where it wanted to impose financial penalties, it would do so in a proportionate way, depending on the circumstances.