Banking (Special Provisions) Act 2008: Compensation: valuer

Employment Opportunities – in the House of Commons at 9:15 pm on 10th February 2009.

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Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

With this it will be convenient to consider Lords amendments 90 to 93.

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Photo of Ian Pearson Ian Pearson Parliamentary Under-Secretary (Economic and Business), Department for Business, Enterprise & Regulatory Reform, Economic Secretary (Economic and Business), HM Treasury

We now move to the final group of amendments. Amendment 89 would amend the Banking (Special Provisions) Act 2008, and clarify it with respect to information-gathering powers given to the independent valuer. It introduces a new clause that declares that the power, under section 9 of the 2008 Act, to make provision for the appointment of a valuer includes the power to replicate or make provision of a kind that may be made under the provisions dealing with similar matters in the Banking Bill clause 55(1) to (3). That will enable the Treasury to make an order to ensure that the independent valuer has all the powers he or she needs to carry out their functions, thus ensuring that an appropriate level of compensation, if any, can be determined in a timely fashion.

The Northern Rock valuer has recently written to the Treasury requesting powers to allow him to obtain information from third parties where such information is necessary for him to be able to determine the amount of any compensation due to former shareholders. It is appropriate that the valuer has these powers in order to avoid delay in the future should a tribunal question his valuation decision for lack of evidence. Therefore, in the interests of determining the amount of any compensation due to former shareholders swiftly and definitively, we are making this amendment to the Bill to put beyond doubt the legal basis for the provision of such information-gathering powers by way of Treasury order. Any additional information-gathering powers provided to the valuers would be by Treasury order laid before both Houses of Parliament and subject to the draft affirmative procedure; and the powers, once granted to the valuer, would be governed by a court or tribunal.

Moving on to amendment 90, the Government believe, as I have said in debate on several occasions, that full and effective co-operation between the tripartite authorities is both desirable and necessary. That is especially important in the case of safeguarding the UK's financial stability, where, as I have said, each member of the tripartite authorities has a distinct role to play. When addressing the Bank of England's new financial stability objective in Committee, my hon. Friend the Exchequer Secretary referred to the phrase "to contribute to" and said:

"That phrase reflects the fact that the Bank does not have a duty to ensure financial stability on its own, because that would be impossible. That responsibility is shared nationally with the FSA and HM Treasury and internationally with the European Union and other international bodies, which all have a major role to play, alongside market participants themselves." ——[ Official Report, Banking Public Bill Committee, 30 October 2008; c. 240.]

It is clear that the phrase "contribute to" implies that the UK's financial stability is not the sole responsibility of the Bank of England. However, on reflection, and having considered the concerns raised by noble Lords in the other place, we have decided to make explicit reference in the Bill to the fact that the Bank's financial stability objective will be pursued in collaboration with other relevant bodies, including the other tripartite authorities. Therefore, amendment 90 inserts wording to the effect that the Bank should aim to work with the Treasury, the FSA and other relevant bodies to protect the UK's financial stability.

Amendments 91 to 92 broaden the circumstances in which a member of the FSA must disclose interests. With these amendments, the member must now disclose any interest in a business or dealing that falls to be considered by the committee, whether the interest is direct or indirect, current or a likely future interest. This, I believe, is the appropriate scope for the provision. As I have said previously, I am grateful to the noble Baroness, Lady Noakes, for tabling amendments in another place that highlighted where these provisions could be improved.

Amendment 93 is consequential and removes what was subsection (3) of the new clause in the Bank of England Act 1998, which overlapped to a great extent with the new provisions for disclosure of interests. I commend the amendments to this House.

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Hon. Members:

Speak for England!

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Photo of Mark Hoban Mark Hoban Shadow Minister (Treasury)

I think that my hon. Friends would be reluctant for me to do that, since I could speak for another 32 minutes on this group of amendments. [ Interruption. ] I might be tempted to do so, but not on this occasion, to my colleagues' relief as much as mine, I suspect.

The Minister said that the purpose of amendment 89 is to assist the valuer of Northern Rock in completing his work, and that it amends the Banking (Special Provisions) Act 2008. Can he confirm that there are adequate powers in the Bill to assist valuers when a company has been taken into temporary public ownership so that we do not have to return to this at a later stage?

On amendment 90, we discussed in Committee the fact that it seemed rather odd for the Bank of England to be the only body that had statutory responsibility for financial stability. It is not a statutory responsibility of the Treasury or of the FSA, so this is a welcome move forward as it ensures that the Bank and the Treasury recognise their roles. We had tabled an amendment along similar lines in the House of Lords, but apparently the Government did not like our use of the phrase, "in co-operation with" and preferred the much more dynamic, "working with". I am not sure that I can see much difference, but the Government have their own view of what is and is not appropriate language to include in the Bill. I am rather grateful that they did not try to use the word subserviate in the amendment.

On amendments 91 to 93, I echo the comments that the Economic Secretary made about my noble Friend Baroness Noakes, who has made a significant contribution to improving the Bill during the deliberations in the Lords. It is right to ensure that there is broader disclosure of any conflicts of interest of members of the financial stability committee, some of whom are non-executive directors who hopefully will have relevant experience from their business lives to contribute to the committee. I welcome all of the amendments.

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Photo of Ian Pearson Ian Pearson Parliamentary Under-Secretary (Economic and Business), Department for Business, Enterprise & Regulatory Reform, Economic Secretary (Economic and Business), HM Treasury 9:30 pm, 10th February 2009

I am glad that the hon. Gentleman gives such a warm welcome to the amendments. He asked whether it is our understanding that the valuer now has sufficient powers with regard to a bank in temporary ownership to conduct the work that it is required to do. That will be the case if the amendments are passed. Of course, that is not to say that other requirements may not come to light where the legislation might not be as effective as desired, but it is appropriate to the needs that we can envisage at the moment.

Lords amendment 89 agreed to.

Lords amendments 90 to 97 agreed to.

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