Clause 187
Banking Bill
5:30 pm
David Gauke (Shadow Minister, Treasury; South West Hertfordshire, Conservative)
The clause relates to the warning procedure that will exist before a sanction is made under clauses 183 to 186. We welcome subsections (1) and (2). Subsection (3) provides an exception from the warning procedure, where it says:
“if satisfied that it is necessary the Bank may without notice—
(a) give a closure order under section 185, or
(b) make an order under section 186.”
The wording is very vague:
“if satisfied that it is necessary”.
Perhaps this is one of those circumstances where I would be tempted to insert a “reasonably” somewhere along the line and the Minister would have argued against that.
The explanatory notes provide a little more detail. They say:
“Such situations may arise if, for instance, delaying the cessation of the operation of the payment system...were to pose an imminent threat to the stability of the UK financial system.”
Clearly that is a fairly high benchmark but it is not in the Bill, which is probably regrettable. However, may I encourage the Minister to be as emphatic as possible that the exception from the warning mechanism contained in subsection (3) will only be used in the most exceptional circumstances? I do not know whether the wording
“imminent threat to the stability of the UK financial system”
is merely illustrative or whether that is, in fact, the test that should apply. However, I think that there is some argument for considering whether subsection (3) should be amended to toughen it up.