The scrutiny began with discussion over the role of the Court of Directors of the Bank of England. The Commercial Secretary to the Treasury, Lord Sassoon (Conservative), moved a group of amendments, saying: ‘I asked my officials to look right through the bill again to see whether there were... key decisions for which responsibility should lie unequivocally with the Court. This group of amendments is the result.’
He continued ‘Amendments 4, 5, 6 and 7 confirm that the Court will decide whether oversight committee reviews should be withheld from publication in order to protect the public interest... Amendments 1, 12 and 26 to 31 make the same change to confer a number of other responsibilities directly on the court. These are the power to delegate additional functions to the oversight committee, responsibility for being consulted on the Prudential Regulation Authority’s (PRA) strategy, and the power to appoint non-executive members to the PRA board... Amendment 25 puts beyond all doubt that the court may not delegate any functions that are explicitly given to it in legislation.’
The Amendments were later agreed after Lord Sassoon clarified that ‘...the Court is the governing body of the Bank. So unless specified in some other way, it is ultimately the decision of the court as to whether it takes a decision or delegates it.’
Discussion moved onto payday lending, Lord Sassoon moved Amendment 17, saying: ‘The government's amendment spells out in detail the kind of rules that the (Financial Conduct Authority) FCA may make to prevent lenders from imposing excessive interest rates or associated charges on borrowers, and clarifies that the FCA would be able to specify the level of the cap in rules and also to define which charges, in addition to interest, should be captured. The amendment also allows the FCA to impose limits on the duration of the agreement, and to specify the detail of the cap and other restrictions in its rules.’
The amendment was later agreed after Lord Mitchell (Labour) expressed his support, saying: ‘This provision will go forward and become a new law but I believe that it will also become a statement of intent. This amendment is simple, symbolic and now stands alone. This industry is going to be controlled. For many people out there, the world is now a slightly better place.’
Lord Newby (Liberal Democrat) then went on to move Amendment 19, covering the power of the Bank of England to direct UK clearing houses, saying: ‘the power of direction relates only to the recognised clearing house itself. The Bank of England cannot use the power of direction to require shareholders, members or clients to recapitalise or otherwise fund a failing recognised clearing house, with one exception: where the UK clearing house already has recapitalisation arrangements and agreements in place with its shareholders.’
The amendment was later agreed after Lord Newby commented that: ‘these powers now go beyond any resolution powers of which we are aware elsewhere in the EU, and they are part of our drive to ensure that London is the safest place in the EU, at least, if not globally, to do financial services business.’
The bill will now be passed onto the Commons where MPs will consider the Lords amendments.
About the Financial Services Bill
The bill was introduced in the Lords at first reading on 23 May.
The bill will amend the Bank of England Act 1998, the Financial Services and Markets Act 2000 and the Banking Act 2009 to make provisions about financial services and markets. It will also exercise certain statutory functions relating to building societies, friendly societies and other mutual societies.
The Financial Services Bill will amend section 785 of the Companies Act 2006, enabling the Director of Savings to provide services to other public bodies.
Catch up on the Financial Services Bill
What is third reading?
Third reading in the chamber is the final chance for the Lords to debate and change the contents of a bill. At least three sitting days usually pass between report stage and third reading.
The day before third reading starts, amendments (proposals for change) are published in a marshalled list – in which all the amendments are placed in order.
Unlike the House of Commons, amendments can be made at third reading in the House of Lords, provided the issue has not been fully considered and voted on at an earlier stage.
Amendments at third reading in the Lords are used to clarify specific parts of the bill and to allow the government to make good any promises of changes to the bill made at earlier stages.