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The responsibility of the FPC and the staff that support it is to look at the emerging threats to financial stability. They will get information from a wide range of sources, in part from existing regulators, but also from the experience and engagement that they have with the financial sector. They will play an important role in identifying risks. There is quite a lot of resource already deployed in identification of risk. There is always an issue about the quality of information that is available. We will talk in a later amendment about the leverage ratio as a macro-prudential tool and the disclosure of the Bank’s leverage ratio. We are always looking for ways to improve the quality of reporting and transparency, to gain a better understanding of risk, and if we think about what has happened during the past year in the context of the eurozone crisis, the increased information that is available to supervise that crisis, which is also available to the wider public and markets, about individual banks’ exposure to eurozone sovereign debt has helped to improve supervision and regulation, not only by the regulator but by the market. Reporting is an important issue, which I am sure we will come back to.
The hon. Member for Nottingham East raised the issue of who would be responsible in the absence of the Governor. The reality is that the Governor performs a range of roles: some are about monetary policy; some are about financial stability; and because the Governor is the chairman of the Prudential Regulation Authority, some will be about micro-prudential supervision and regulation. If the Governor is indisposed, it is very clear which deputy governor is responsible for which aspects of the Governor’s portfolio. That is vital.
The hon. Gentleman also asked why the deputy governor for prudential regulation is not on the Monetary Policy Committee. Again, it is about the clarity of responsibility. The deputy governor for prudential regulation is looking at the safety and soundness of individual institutions; that is his remit. There is cross-membership between the Financial Policy Committee and the MPC, which is important. And there is a facility in the Bill, which we will talk about later, for joint meetings between the two committees or for someone from one committee to be invited to observe the other committee. What is important is that there are clearly defined roles and responsibilities, and that applies not only to the overall structure but to the responsibilities of individuals.
The hon. Gentleman also talked about the composition of the court again. If we look at the nature of corporate boards in the UK, there are a mixture of executive directors and non-executive directors. That is a model that has been followed in the Bank of England. The court has executive directors, in other words the Governor and his deputies, and non-executive directors; I do not think there is anything particularly novel in that. The fact that there are four executive directors and nine non-executive directors is not unreasonable. Different boards in corporate structures will have a different ratio, but it is important that there is a majority of non-executive directors.
The hon. Gentleman talked about the issue of the non-executive directors committee of the Bank of England. There are minor modifications to the role of NedCo in the Bill and we will come to one of the hon. Gentleman’s amendments—an amendment to subsection (5) of clause 9B of the proposed new part 1A of the Bank of England Act 1998—in a later grouping of amendments. The oversight committee, which was referred to earlier, is different from NedCo. NedCo has particular statutory purposes, and the oversight committee is set up on a non-statutory basis and will determine its own composition. That deals with the issues raised by the hon. Gentleman.
However, let me reiterate the central point of many of the reforms that are set out in the Bill. It is about the clarity of purpose, the clarity of roles and the clarity of responsibilities, and by ensuring that there is a deputy governor for prudential regulation there will be very clear responsibility for the role that he undertakes, just as the deputy governor for monetary policy has clear responsibility for the role that he undertakes and the deputy governor for financial stability has a clearly distinct role. Those responsibilities are enshrined in clause 1 and when we discuss the FPC, the PRA and the Financial Conduct Authority, we will discuss how the different responsibilities of the different deputy governors are enshrined.