My Lords, I shall be very brief. I intervene particularly because I wish to apologise to the House. When I spoke on Second Reading on
"Arguably, the only advanced economy able to largely withstand the banking crisis was Canada, and its regulatory structure is very similar to our own".-[Hansard, 23/2/10; col. 1000.]
When I heard that I was very puzzled, because I did not think that it was. However, I thought that I should check up on it first. I found that, in a fundamentally important way, it is not similar. Our structure-which the Council for Financial Stability, or whatever it is, enshrines-is a tripartite structure. The Canadian structure is quadripartite, which is fundamentally different. The Canadian system separates conduct of business regulation from prudential regulation. They are in two completely separate institutions, whereas our system puts them together. In my judgment, that is the single biggest mischief in the tripartite system that the Government have put into place. Conduct of business regulation is a totally different matter, requiring a totally different expertise and totally different kinds of people from those required for prudential supervision and prudential regulation. They have to be separate. You can separate them out in two ways: you can do it as the Canadians have done it, or you can do it as the Conservative Party has decided is the right way, by putting prudential supervision with the Bank of England and separating out the conduct of business regulation.
The mischief is not just that these two activities are completely separate and require different qualities, skills and, incidentally, different pay grades; conduct of business supervision and regulation-which involves questions about mis-selling and consumer protection issues and so on-is constantly in the public eye. That tends to be the main focus of the people responsible for the regulator. That is one of the main reasons why they manifestly did not have their eye on the ball when it came to the need for prudential supervision and prudential regulation. This is of fundamental importance and a fundamental reason why the tripartite system is no good and has to go. It is also a reason why the noble Lord, Lord Myners, inadvertently misled the House on