I apologise because again I have some technical questions to ask on schedule 7, which introduces proposed new schedule 17A into FSMA 2000.
On page 210, line 46 of the Bill, proposed new schedule 17A(6) states:
“The parties to a memorandum under paragraph 1 or 2 must ensure that the memorandum as currently in force is published in the way appearing to them to be best calculated to bring it to the attention of the public.”
I am not sure that the Minister has answered my query on that point. However, I may have missed his response in my search for areas in which I thought there was obfuscation, so I would be happy to hear the Minister’s views.
We have dealt with a number of issues on clearing houses and the regulator, so I will not press those points again in relation to the schedule, although there are still concerns about the Bank of England’s role. At the beginning of the Committee stage, we discussed at great length whether it was a twin peaks model, or given the role of the Bank of England, whether there was a further peak. I do not intend to pursue that point to any great extent now, but a question that has arisen from that is why we are not expecting an annual report from the Bank relating to clearing houses, given its role.
There were also questions about fees, because the Bank can charge clearing house fees related to the discharge of its functions. Will the FCA have the same right in terms of the investment exchanges? A pertinent question, to which I may have missed the answer in our deliberations, is who gets the fees for investment exchanges that provide clearing services? Hopefully, the Minister can give me an answer—I will allow him to think about it. If he wishes, I can press on.
That is helpful. Another couple of queries have been raised during the passage of the Bill. Back in 2011, the Law Society of Scotland, in written evidence to the consultation on the Government’s blueprint for reform, said
“with respect to the regulation of settlement and payment systems within the United Kingdom, that the Bank of England should be required by statute to give equal weighting to the needs of the consumer as opposed to the demands of the banks in relation to the regulation of settlement and payment systems.”
Has that been taken account of in the context of schedule 7, and if so, what has been done as a consequence?
The Minister raised the issue of the existing situation with the European Securities and Markets Authority around European market infrastructure regulation, and how that will impact on the regulatory framework for investment exchanges, clearing houses and so on. I will not press that point further, but will the Minister explain how he thinks banks will deal with the costs of complying with EMIR and Dodd-Frank, and the new regulation in the UK? Will they find it prohibitively expensive to use certain markets? Could that lead to fragmentation of the intermediary market? Have the Government thought through some of the unintended consequences of regulation in this area, and how will the Government deal with that?
In pre-legislative scrutiny, the issue of the gap in resolution arrangements for market infrastructure firms that may be of systemic importance was raised. The pre-legislative scrutiny Committee recommended that the Treasury should take action to ensure that that gap is closed. Again, I ask the Minister to update the Committee on the findings of the Committee on Payment and Settlement Systems and the technical committee working group of the International Organisation of Securities Commissions, which are looking at those powers? I hope that is not too much.
That is quite a lot, actually. I could speak for hours on EMIR and Dodd-Frank, but on this occasion I will not. Suffice it to say that the Government, the Bank and the FSA are closely engaged on these matters and recognise the importance of a proportionate regulatory regime for market infrastructure. It is important that the regime is stable and prudentially regulated. Proper prudential regulation would achieve the Law Society of Scotland’s goal of ensuring proper balance between the interests of banks on the one hand, and consumers on the other hand.
The MOU will be widely available to the public. I suspect that it will appear on a website, although I doubt we will get it down to Twitter.
The hon. Lady also asked about the annual report. Paragraph 31 of schedule 7 refers to the need for the Bank to report along similar lines to the PRA. I hope that reassures her.
Briefly, I am sure that EMIR and Dodd-Frank could take up a whole debate, although there might not be a great audience and people might not rush to the Public Gallery. I do not mean that to be disrespectful to the Minister, but obviously a lot of this is extremely technical. I thought he might have a bit more to say. I am sure, however, that we will return to the subject during the course of our consideration of the Bill and no doubt he will have the opportunity on Report or beyond, if not to speak for hours, to speak for slightly longer. I heard his helpful comments on reporting, and I do not propose to oppose the schedule.