Treasury Committee press notice no.88

Session 2006-07, 16 October 2007

Treasury Committee invites written evidence on Financial Stability and Transparency and announces arrangements for initial oral evidence from the Chancellor

Invitation to submit written evidence

The Treasury Committee invites written evidence as part of its inquiry into Financial Stability and Transparency. The inquiry will examine the events surrounding the liquidity crisis at Northern Rock, potential changes to the depositor protection scheme, and more general financial market issues relating to financial stability. Suggested areas which written evidence might address in relation to each of these topics are given later in this press notice. Written evidence should reach the Treasury Committee by 12 noon on Wednesday 7 November 2007.

Further oral evidence

The Committee also announces that it will take oral evidence from the Chancellor of the Exchequer, the Rt Hon Alistair Darling MP, as part of this inquiry on Thursday 25 October at 11.00 am. The Committee expects to ask questions relating to Financial Stability and Transparency for the first 30 to 45 minutes of the evidence session, after which questions will relate to the 2007 Pre-Budget Report and Comprehensive Spending Review. The Committee expects to take further oral evidence from the Chancellor of the Exchequer at the conclusion of its inquiry into Financial Stability and Transparency.

The meeting on 25 October will be held in a Committee Room in Portcullis House. Those wishing to attend the meetings should check the venue by contacting the House of Commons Public Information Office on 020 7219 4272 on the day before the hearing.

Further information about topics for written evidence

The Committee would welcome, in particular, written evidence that relates to the following topics:

1. Northern Rock

• the reasons for the difficulties faced by Northern Rock, and the events that led up to the run on the bank;

• the role of the Board of Northern Rock;

• the functioning of the Tripartite system, including the memorandum of understanding, and the actions undertaken by the Tripartite authorities during the crisis, both in relation to the overall market, and the situation regarding Northern Rock;

• possible modifications to the insolvency regime for deposit taking institutions, including shareholder notification requirements, transparency requirements, the Takeover Code and the Market Abuse Directive;

• changes that may be required to the regulatory requirements regarding liquidity;

• lessons for Lender of Last Resort operations conducted by the Bank of England;

• any other regulatory changes that may be required in the light of recent experience within the financial system.

2. Depositor Protection

• the current position regarding Northern Rock’s depositor guarantees, and the Government’s balance sheet;

• possible modifications to the Financial Services Compensation Scheme, including, but not limited to, limits of deposit protection, funding of the scheme and payout times, in the light of the publication by the Tripartite Authorities on 11 October of a document entitled  Banking reform – protecting depositors: a discussion paper;

• possible comparator schemes operated by other countries, and assess their suitability for the UK financial system.

3. Overall functioning of financial markets

• lessons learnt from the effect of US sub-prime mortgage lending defaults on financial institutions and financial stability;

• the effects of highly leveraged transactions, including those relating to private equity, on financial institutions and financial stability;

• the effect of complex financial instruments on financial stability, and the need for greater transparency in regard to such instruments;

• the role and regulation of ratings agencies;

• the role of hedge funds in the recent financial disturbance.

1. Written evidence should be in Word or rich text format—not PDF format—and sent by e-mail to [email protected] The body of the e-mail must include a contact name, telephone number and postal address. The e-mail should also make clear who the submission is from. The deadline is Wednesday 7 November 2007 at 12.00 noon.

Submissions should be in the format of a self-contained memorandum. Paragraphs should be numbered for ease of reference, and the document must include an executive summary. Further guidance on the submission of evidence can be found at

Submissions should be original work, not previously published or circulated elsewhere. Once submitted, your submission becomes the property of the Committee and no public use should be made of it unless you have first obtained permission from the Clerk of the Committee. Please bear in mind that Committees are not able to investigate individual cases.

The Committee normally, though not always, chooses to publish the written evidence it receives, either by printing the evidence, publishing it on the internet or by making it publicly available through the Parliamentary Archives. If there is any information you believe to be sensitive you should highlight it and explain what harm you believe would result from its disclosure; the Committee will take this into account in deciding whether to publish or further disclose the evidence.

For data protection purposes, it would be helpful if individuals wishing to submit written evidence send their contact details in a covering letter. You should be aware that there may be circumstances in which the House of Commons will be required to communicate information to third parties on request, in order to comply with its obligations under the Freedom of Information Act 2000.