Banking Bill — Committee (5th Day) (Continued)

Part of the debate – in the House of Lords at 1:00 am on 26th January 2009.

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Photo of Baroness Noakes Baroness Noakes Shadow Minister, Treasury 1:00 am, 26th January 2009

I return to the theme of spotting what has emerged in the past 18 months of the banking crisis but is not dealt with in this Bill. There has been much criticism of the work of the credit-rating agencies, which were at the heart of the activity of packaging up loans or elements of loans and giving them credit ratings which, as it turned out, seemed out of line with the underlying reality. The credit-rating agencies came in for a lot of criticism for their involvement in the sub-prime debt crisis. Of course, the individual institutions that had their instruments rated did not escape blame, but the credit-rating agencies themselves attracted considerable blame. They also attracted blame from, for example, local authorities that had deposited money with Icelandic banks and felt let down by the ratings given.

As I understand it, the Financial Stability Forum is working on this issue for the G7. The EU has already announced that it wants to use the Committee of European Securities Regulators, working through national regulators, to deal with credit-rating agencies—so it will probably happen anyway. My amendment would allow the Government to get ahead of the curve. We do not need to be told by Brussels or the G7 what to do; we have one of the biggest financial services centres in the world and we should be leading the way, not waiting to follow. My amendment adds credit-rating agencies to the activities covered by the FSA's definition of regulated activities, thus bringing it within regulation. I beg to move.