Financial Services Bill — Committee (2nd Day) (Continued)

Part of the debate – in the House of Lords at 9:08 pm on 15th March 2010.

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Photo of Baroness Noakes Baroness Noakes - Shadow Minister, Shadow Minister 9:08 pm, 15th March 2010

My Lords, I thought that the Committee might like to move on to Clause 5. Amendment 33 is the first of a small series of amendments which will tease out the relationships between the Bank, the FSA and the Council for Financial Stability.

When we looked at amendments to the earlier clauses we were looking at the interrelationships from the perspective of the council, which is where they come together. I now seek to probe the interrelationships when seen from the other end of the telescope, namely from the perspective of the FSA or the Bank.

Clause 5 amends the Financial Services and Markets Act 2000 and sets out a new objective for the FSA to contribute to financial stability. Clause 5(3) expands on the financial stability objective, and sets out in subsection (2) of new Section 3A of FSMA various things to which the FSA must have regard. My amendment adds to that list and says that in considering the financial stability objective, the FSA must have regard to the proceedings of the Council for Financial Stability.

In another place, the Minister said that the amendment was unnecessary and that nothing was to be gained by it. He said:

"The FSA will clearly take account of the discussions in the council when considering how best to meet its objective of contributing to financial stability".-[Hansard, Commons, 25/1/10; col. 632.]

This is a traditional ministerial defence of government drafting. First you say that it is unnecessary and then say that it will happen anyway. Some of us have become cynical about this defence. The noble Lord, Lord Myners, used it last year in connection with the Banking Bill debates, when he resisted the substance of what is in this clause. Last year he said that the FSA did not need a financial stability objective because it was already implicit in its market confidence objective. He said that a financial stability objective was not appropriate. If something is not in plain language in the Bill, we cannot assume that it will be taken for granted. The Minister cannot give a Dispatch Box assurance about what the FSA will or will not do, and so we have to judge the Bill for what it says, not what the Minister would like it to mean. I beg to move.