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The amendment is a technical correction intended to provide consistency across part 5 of the Bill. Clause 170 provides for the Treasury to make a recognition order in respect of an inter-bank payment system, thereby bringing it within the Bank of Englands remit as formal overseer. Clause 173 provides for the revocation of a recognition order made under clause 170. The amendment makes it clear that the Treasury must consider requests by the operator of a recognised inter-bank payment system only in relation to the recognition order made under clause 170(1) and not one made, for example, under the Financial Services and Markets Act 2000.
By way of example, clearing houses or investment exchanges may be recognised by the FSA under part 18 of the 2000 Act. Such recognised clearing houses and investment exchanges are then subject to the FSAs regulatory regime, and those recognised clearing houses or investment exchanges might contain embedded payment systems that do not meet the recognition criteria in clause 171 and would not, therefore, be recognised by the Treasury under clause 170(1). In such circumstances, it would be inappropriate for the Treasury to consider requests for revoking a recognition made by the FSA. That is why we believe this technical amendment to be necessary.
I have a brief question for the Minister on the subsection that he has amended, and we are grateful for his explanation for that amendment. My question relates to the circumstances in which the Treasury must consider any request by the operator of a recognised payment system for revocation of its recognition order. We have not tabled an amendment to the clause, but perhaps the Minister might help the Committee on this point. When the Treasury rejects any such request, does he consider it appropriate that it should give reasons for that rejection? Furthermore, is there anything more that he can say on whether an application for revocation would be successful, other than referring to the recognition criteria in clause 171? If a payment system saw its market share fall substantially, whether because of this regulatory regime or commercial factors, would that be the sort of matter that the Treasury would take into account, on which grounds it would be willing to grant revocation?
Would it ever be possible for a payment system to put in an application with a view to its coming into effect some months down the line? A payment system might be seeking to wind up its business. Rather than simply doing so and still finding itself a recognised system for these purposes and with various obligations on it, I wonder whether it could work with the Treasury and say, We are going to cease performing at some time. We would like the revocation of the recognition order to coincide with the time we cease trading so there is not a huge overlap. Would the Treasury be willing to work in a constructive manner with payment systems were those circumstances to arise? I do not know how likely that would be, but certainly in other sectors when a business winds up it wants to be able to work with the regulator to do that in as smooth and orderly a fashion as possible.
I can assure the Committee that the Treasury always wants to act in a supportive and helpful manner in these areas. The hon. Gentleman raises some practical points about what might happen if an inter-bank payment system was in decline and no longer had any systemic importance. The Bank of England will monitor the situation closely. It will undoubtedly be in contact with the operator. The tripartite authorities work very closely together. In those circumstances, there would be no alarms and no surprises. On the question whether reasons would be given if the Treasury refused a request of an operator to de-recognise a payment system, in the spirit of openness and transparency, the Treasury would naturally want to give its reasons. I am happy to place that comment on the record for those who look at these things.