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New Clause 8

Banking Bill – in a Public Bill Committee at 11:30 am on 18th November 2008.

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Banking Liaison Panel

‘(1) The Treasury shall make arrangements for a panel to advise the Treasury about the exercise of powers to make statutory instruments under or by virtue of this Part, Part 2 or Part 3 (excluding the stabilisation powers, compensation scheme orders, resolution fund orders and third party compensation orders).

(2) The Treasury shall ensure that the panel includes—

(a) a member appointed by the Treasury,

(b) a member appointed by the Bank of England,

(c) a member appointed by the FSA,

(d) a member appointed by the scheme manager of the Financial Services Compensation Scheme,

(e) one or more persons who in the Treasury’s opinion represent the interests of banks,

(f) one or more persons who in the Treasury’s opinion have expertise in law relating to the financial systems of the United Kingdom, and

(g) one or more persons who in the Treasury’s opinion have expertise in insolvency law and practice.’.—[Ian Pearson.]

Brought up, and read the First time.

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 11:45 am, 18th November 2008

I beg to move, That the clause be read a Second time.

As hon. Members will by now know, in October I set up an expert liaison group to advise Ministers on the development of the secondary legislation that will implement the Bill’s special resolution regime provisions. When I met stakeholders they requested that that group be formalised in legislation, and the new clause is a direct response to that request. The clause places the Government’s stakeholder consultation group, known as the expert liaison group, on a permanent statutory footing. It is designed to formalise the role of this  important mechanism of Government consultation with the financial services industry. The expert liaison group will advise the Government on the development of secondary legislation related to parts 1, 2 and 3 of the Bill, such as the safeguards for partial transfers. I hope that the expert liaison group will also be able to help the Government review secondary legislation in the light of practical experience and developments in the financial markets.

The expert liaison group will advise the Government on the permanent secondary legislation relating to parts 1 to 3 of the Bill. It will not have input into any specific orders such as the stabilisation powers, compensation schemes, the resolution fund and third-party compensation orders, as consultation on such matters would be inappropriate due to the market-sensitive nature of such orders and the potential need to exercise these powers on a very urgent basis.

As hon. Members will know, the initial focus of the group is very much on secondary legislation on partial transfer safeguards and the group has already contributed significantly to the development of the proposals on which we are currently consulting. I look forward to the group’s continued engagement on this. While not mentioned in the new clause, there could be a role for the group in wider matters such as the development of the code of practice and, over time, reviewing the SRR in general. As I have said before, we will consult the expert liaison group over any changes made to clause 65 and its application to the Banking Bill to strengthen legal certainty around that vital power. The new clause provides for the expert liaison group to include representatives from the Treasury, the FSA, the Bank of England and the Financial Services Compensation Scheme. It also provides for the Treasury to appoint persons it believes are able to represent banks and persons who, in the Treasury’s opinion, have expertise in financial services and insolvency law. The Treasury will chair the group which is consistent with its role in formulating Government policy. I believe that the expert liaison group has already shown its value in advising the Government on some of the safeguards relating to the Bill.

Photo of David Gauke David Gauke Shadow Minister (Treasury)

As briefly as possible: one, we welcome this and two, will the minutes of the banking liaison panel be published?

Photo of John Pugh John Pugh Shadow Minister (Treasury)

Just to make a simple point again, does the new clause address the concerns felt within the banking industry? Looking at the list of people appointed, they are largely appointed by branches of Government, or thought to be okay according to Government. I would like the Minister’s assurance that the expert liaison group is not just another name for Government advisers under one guise or another but genuinely reflects the wider concerns of the financial services industry.

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

I can certainly tell the hon. Gentleman that this is not just a group of Government advisers. The initial meeting that I attended with the British Bankers Association and other representatives, who are now members of the expert liaison group, did not give a clue that this was a cosy little grouping of Government appointees. That is not what we want to see. We want an expert liaison group that is representative of the industry,  can provide us with technical import and help us initially with secondary legislation and potentially more widely.

With regard to whether minutes will be published, I do not see the expert liaison group as working in the formalised way in which minutes would be published on a website. It is more there to provide technical advice. If the group felt it wanted to publish minutes or a memorandum, I would not have a problem agreeing. The group may also be discussing market-sensitive issues that it would not wish disclosed. I would be happy to take that issue back to the expert liaison group and ask it whether it felt that such publication were necessary. If the group felt that that would help, I would not object to it.

Question put and agreed to.

Clause read a Second time, and added to the Bill.