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Clause 89

Banking Bill – in a Public Bill Committee at 2:00 pm on 13th November 2008.

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Objective 1: (a) or (b)?

Question proposed, That the clause stand part of the Bill.

Photo of Mark Hoban Mark Hoban Shadow Minister (Treasury)

My assumption regarding the action that the administrator should take in implementing objective 1—prompt payout to customers—is that the order of preference for that action is not as set out in the Bill:

Objective 1(a)...Objective 1(b)...Objective 1(a) for one specified class of case and Objective 1(b) for another.

It would actually be objective 1(a), then the hybrid of 1(a) and 1(b) and, perhaps as a last resort, objective 1(b), given that 1(a) provides fast payout for all depositors, the second option provides fast payout for some and the third is the default. I assume that is how the liquidation committee would judge the various options.

Photo of Peter Viggers Peter Viggers Conservative, Gosport

Similarly, may I assume that if circumstances were to change quickly and dramatically—as they can in a fast-moving situation—it would be possible for the liquidation committee to change its options and indicate that to the bank liquidator?

Photo of Ian Pearson Ian Pearson Parliamentary Under-Secretary (Economic and Business), Department for Business, Enterprise & Regulatory Reform, Economic Secretary (Economic and Business), HM Treasury

In direct response to the question put by the hon. Member for Fareham, it would probably be wrong to speculate on the detail of future cases. The authorities would want to make a decision based on the available information. They would be working behind the scenes to figure out whether a bulk transfer of accounts was possible in respect of subsection (1)(c). If not, they would obviously resort to objective 1(b). In the clause, we give the authorities all the options, but we have to be clear that bulk transfer of accounts would be the preferred option if someone were willing to take the accounts, and if the expenses of the bank liquidator cost the FSCS less than paying out compensation. However, we need to operate case by case. It would be up to the authorities to make the best decision, based on the information available at the time.

Question put and agreed to.

Clause 89 ordered to stand part of the Bill.