Clause 185
Banking Bill
5:15 pm
David Gauke (Shadow Minister, Treasury; South West Hertfordshire, Conservative)
Buoyed up by that triumph, I would like to ask the Minister a question on a point of clarification. The sanction of closure of a payment system is clearly a serious one. I am sure that he will confirm that it will be used in exceptional circumstances only, but I draw the Committee’s attention to the fact that clause 185 applies where
“a compliance failure threatens the stability of the UK financial system.”
Returning to the debate we had this morning on clause 171 and the dual criteria for assessing whether a payment system should be recognised or not, those criteria are:
“(a) to threaten the stability of, or confidence in, the UK financial system, or
(b) to have serious consequences for business or other interests throughout the United Kingdom.”
I quoted the Bank of England in putting the argument to the Minister that it is essentially the wholesale payment systems that can be described as systemic. The more retail-based payment systems cannot be described as systemic, but could none the less have serious consequences for businesses. The Minister did not accept that distinction. Would he say, however, that the clause is more likely to apply to big payment systems, which deal with large amounts of money? If so, significant and disruptive failures in payment systems that are not of such a scale would not be systemic and therefore would not be liable to closure under the clause. I hope that I have made my point clear.