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I want to probe how the special resolution objectives that were set out in clause 4 interact with the power to pull the trigger. We will look at the interaction between the objectives and other parts of the legislation under clauses 8 and 9.
It would be helpful to think about how the sequence of events is covered. Clause 7 gives the FSA the power to pull the trigger, which will determine whether the Bank or Treasury can exercise the stabilisation powers referred to in clause 1(4).
The Bill presents that as a linear process. The first step is either that the FSA will determine that the Bank, under clause 8, may exercise the stabilisation powers to enable it to sell a bank to a private sector purchaser or transfer it to a bridge bank, or that the Treasury will put the bank in temporary public ownership. The second step, if no financial assistance is given, is that the Bank of England will decide whether it should transfer the bank to a bridge bank or a private sector owner. The FSA, having said that the trigger can be pulled, may delegate the responsibility for what powers and options are used when no financial assistance is given. If financial assistance has been given, either the Treasury can take the bank into temporary public ownership, or the Bank can use the stabilisation powers to transfer the bank to a bridge bank or a private sector provider.
However, clause 7(6) appears to suggest that the FSA will act within a different framework of objectives from the Bank and the Treasury. The objective that will drive the FSA in that context will be the need to meet conditions 1 and 2, but it also appears that it will be driven by the objectives set out in the Financial Services and Markets Act 2000. There is not a complete match between those two sets of objectives, and after the FSA has pulled the trigger the Bank of England or the Treasury might decide not to exercise the stabilisation powers because they do not believe that to do so would be appropriate in the context of the clause 4 objectives.
The FSA might pull the trigger, and the Bank and the Treasury could say, No, we will not bother doing that because we do not think that we can achieve our objectives after you pulled the trigger. So what happens then? That might be part of the problem about the sequence of events, but I am not sure that the process is as linear as the Bill suggests. The Minister has said that the tripartite authorities will discuss resetting all those things, but will they get to the point of saying together that they would pull the trigger and take action so that the decisions are made virtually at the same time? That way, the FSA would in effect only pull the trigger if it believed that the Bank or the Treasury would use their stabilisation powers.
It is worth pointing out that subsection (4) relates to our old friend financial assistance. Given the debate we had on Tuesday about financial assistance, it would be helpful to understand what sort of financial assistance the Government envisaged in the context of the FSA being able to pull the trigger. It would be helpful if the Minister expanded on how the FSAs objectives under the Financial Services and Markets Act interact with the objectives under clause 4 and how the decision-making process will work in practice, as opposed to how it appears to work legally.