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On the next amendment I will make some broader points about the clarity of the structure that we have tried to establish, and some of my remarks in this stand part debate will touch on that; but I shall deal first with the issue of the status of the current regulatory arrangements, and the extent to which they are front-running the Bill.
To make things clear, Hector Sants is still the chief executive of the FSA. He has not been appointed the chief executive of the Prudential Regulation Authority or a deputy governor, because those posts do not exist. At the moment he is overseeing the transition of the FSA to the new regime, assuming that the House and the other place pass the Bill.
None of the changes being made in preparation is irreversible; they could be undone, if Parliament disagrees. I am the first to say that Parliament should express its view, and not be bound by institutional changes being made at the moment. For further comfort, it has been made clear by both the Bank and the FSA that they have not sought to spend money on implementing the changes before Second Reading. They recognised that it was important to hear the will of the House.
Of course, as the Committee will know, the Bill received its Second Reading without a Division. That seems to provide a degree of support, although I think it was caveated to an extent by the speech of the shadow Chancellor. We are not pre-empting Parliament. We are putting it in place so that if Parliament approves the Bill and the Bill receives Royal Assent, it will be possible to implement the changes quickly and effectively. Given the state of the regulatory regime that we inherited and the lessons that need to be learned from the financial crisis, I think we would agree that it would be important, once the legislation is on the statute book, to implement the changes quickly and effectively. We would not want an undue lag in the process.
The hon. Member for Nottingham East asked about the deputy governors. We have sought to be clear about them throughout the process. One of the questions at the back of my mind and the Chancellor’s mind when looking at the system is the one posed by the Treasury Committee in one of its many reports on the financial crisis: who is in charge? We are therefore trying to create a system where there is clarity about roles and responsibilities, not just about the individual components of the regulatory structure, but about some of the players.
The three deputy governors have clear roles. The deputy governor for monetary policy is responsible, as his job title says on the tin, for the Bank’s monetary policy activities. The deputy governor for financial stability is responsible for its financial stability activities, including the work of the Financial Policy Committee and the regulation of important elements of the financial infrastructure. For example, the Banking Act 2009 gave the Bank responsibility for the regulation of payment systems, and that is a responsibility for the deputy governor for financial stability. The 2009 Act also set up the special resolution regime, and again, the deputy governor is responsible for that activity. The deputy governor for prudential regulation, which will be a new post to be created by this part of the Bill, will be responsible for, and will be the chief executive officer of, the PRA, and for the micro-prudential supervision of banks, insurers and systematically important investment firms.
I think that there is clarity of the responsibilities of each deputy governor. The deputy governor for financial stability is more responsible for systemic issues, whereas the deputy governor for prudential regulation will look at micro-prudential matters. There is a clear distinction between them.
Of course, there will be times when those responsibilities have to be discussed collectively, which is why there will be debates in court, in which everyone will be able to participate.