Lords continue to debate the Financial Policy Committee (FPC) functions under Clause Three of the bill, which enables the body to give direction to the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). They will also look at how information should be presented and published by the FPC.
They will then consider how the FPC can make recommendations and present to the Treasury on secondary legislation.
Committee stage day two: Tuesday 3 July
Members of the House of Lords continued to investigate how the Bank of England is run with changes to Clause Three of the bill.
The first group of amendments under the spotlight scrutinised various duties of the Financial Policy Committee (FPC), including a remit for growth and employment.
This included Amendment 34 (later withdrawn) moved by Lord Eatwell (Labour) and Lady Hayter of Kentish Town (Labour). Lord Eatwell introduced his suggested change: 'My amendment would balance a similar requirement on the Monetary Policy Committee to have regard to the general economic policies of the government and argues that the Financial Policy Committee should have regard to the government's growth, employment and other economic objectives.' Amendment 35 (not moved) outlined a financial stability objective for growth.
Lords voted on amendment 35AB, resulting in 197 'contents' (for) and 251 'not contents' (against) the suggested change for 'the FPC to exercise its functions with a view to contributing to the achievement by the Bank of the FCA’s integrity objectives'.
Lords discussed how supporting small and medium enterprises (SMEs) could encourage economic growth. Baroness Kramer (Liberal Democrat) argued that the FPC has a role in developing a funding supply for small businesses. 'The FPC has to be engaged and to be part of making sure that there is capacity for funding the system across the whole spectrum, whether it be small, medium or large businesses,' she said.
The LIBOR incident then came under discussion with some Lords asking if there would be an inquiry. Lord Sassoon (Conservative) responded: 'It is time for Parliament, as well as the government, to take clear leadership on these matters.The events of recent days have highlighted that the culture of banking is badly broken. The government are in the process of fixing the system, but we need to change the mindset of the profession and those working in it. This is about restoring banking to what it should be about: to be the most, and not the least, trusted profession.'
Committee stage day one: Tuesday 26 June
What is committee stage?
Detailed line by line examination of the separate parts (clauses and schedules) of the bill takes place during committee stage. Any member of the Lords can take part.
It usually starts no later than two weeks after the second reading and can last for one to eight days or more.
The day before committee stage starts, amendments (changes) are published in a marshalled list - in which all the amendments are placed in order. Amendments on related subjects are grouped together and a list (groupings of amendments) is published on the day.
During committee stage every clause of the bill has to be agreed to and votes on the amendments can take place. All proposed amendments can be discussed and there is no time limit, or guillotine, on discussion of amendments.
Last stage: Second reading
About the bill
The bill was introduced in the Lords at first reading on 23 May. Members will now debate general aspects of the bill during the second reading.
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.