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Buoyed up by that triumph, I would like to ask the Minister a question on a point of clarification. The sanction of closure of a payment system is clearly a serious one. I am sure that he will confirm that it will be used in exceptional circumstances only, but I draw the Committees attention to the fact that clause 185 applies where
a compliance failure threatens the stability of the UK financial system.
Returning to the debate we had this morning on clause 171 and the dual criteria for assessing whether a payment system should be recognised or not, those criteria are:
(a) to threaten the stability of, or confidence in, the UK financial system, or
(b) to have serious consequences for business or other interests throughout the United Kingdom.
I quoted the Bank of England in putting the argument to the Minister that it is essentially the wholesale payment systems that can be described as systemic. The more retail-based payment systems cannot be described as systemic, but could none the less have serious consequences for businesses. The Minister did not accept that distinction. Would he say, however, that the clause is more likely to apply to big payment systems, which deal with large amounts of money? If so, significant and disruptive failures in payment systems that are not of such a scale would not be systemic and therefore would not be liable to closure under the clause. I hope that I have made my point clear.
I understand the reason behind the Government wanting to stop the operation of a payment system. However, have they considered the reverse? Are there provisions in the Bill to keep a payment system open when the company wants to shut it down, but the Government want to keep it going so that there is no failure in the system?
None of the enforcement powers proposed in the Bill should be taken lightly. I am happy to confirm that we anticipate their being used only in unusual and exceptional circumstances. The power to make a closure order is necessary as the ultimate sanction in cases of a compliance failure that is considered so serious that the Bank of England believes that the continued operation of a recognised inter-bank payment system could destabilise the UK financial system. It is entirely appropriate for the Bank to have such a power in such circumstances, because it will have to act decisively to address such threats by closing down all or part of a recognised inter-bank payment system.
I say again that that could happen to a payment system on the wholesale or retail end of spectrum, but it would have to be of systemic or system-wide importance. The combination of this power and the others that we have discussed on publication compliance failures and financial penalties provides a suite of tools that may be applied, depending on the severity of the compliance failure.
The hon. Member for Wellingborough raised an interesting point. It is not likely that the circumstance he described could or would ever arise, but I have in the back of my mind that there are already powers that could deal with it. If I find that that is not the case, I will think about whether anything needs to be done in that area. However, I am pretty confident that the matter is covered.
The Minister is being very generous. During pre-legislative scrutiny, the British Bankers Association said if a bank failed, an issue in retail banking would be to keep payments flowing. Thinking about that in relation to the present example, if the owners of a payment system fail for another reason, it may be desirable to keep the payment system running so that there is not a systemic failure.
I understand the hon. Gentlemans point. It is probably covered in the clauses concerning system rules and directorates. If a problem remains, I will reflect on whether improvements need to be made at a later stage.