The amendments of the bill began with discussion about Clause 7, which covers the scope of regulation. The Commercial Secretary to the Treasury, Lord Sassoon (Conservative), looked at the London interbank offered rate (LIBOR), with his first set of amendments, saying: ‘LIBOR is the most frequently utilised benchmark for interest rates globally. At the end of June this year, it was revealed that LIBOR had been subject to repeated attempts at manipulation over a number of years. The government have been absolutely clear that any attempt to manipulate that important international benchmark is unacceptable.’
He continued: ‘Amendments 70 to 73 enable benchmark activities such as LIBOR and, potentially, any other benchmarks, to be brought within the scope of statutory regulation under the Financial Services and Markets Act (FiSMA).’
Baroness Kramer (Liberal Democrat), gave her support, saying: ‘All of us in this House will be absolutely delighted that there is finally an offence for which people can be investigated, prosecuted and serve time, as well as be fined. There was shock throughout the House that the manipulation of LIBOR was not subject to prosecution under existing statutes on fraud and the consequent penalties. I congratulate the government on making sure that that part of the Wheatley Review has been well incorporated into this process.’
Amendments 70 to 73 were later agreed.
Discussion moved on to Clause 10, which focuses on permission to carry on regulated activities. Lord Eatwell (Labour), moved his amendment, saying: ‘Amendment 73B reflects a concern that we have expressed at numerous stages in the discussion of the bill about the process by which entry is possible within the financial services industry and also the processes by which permissions are varied and are cancelled.’
He later withdrew his amendment, after Lord Newby (Liberal Democrat), said: ‘the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) are already required by proposed new Section 3D in Clause 6 to coordinate their regulatory processes, including the authorisation process, so this element of the amendment would have no effect... The government entirely agree with the thinking behind the amendment but we do not believe that anything further is needed to implement what it seeks to achieve.’
The debate also covered the powers of the PRA and FCA, prohibition orders and when consumers should be notified if their deposits are protected by the Financial Services Compensation Scheme.
Further scrutiny of the bill will take place in the House of Lords on 26 November 2012.
About the Financial Services Bill
The Financial Services 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 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 the report stage?
Report stage in the chamber gives all members of the Lords further opportunity to consider all amendments (proposals for change) to a bill. It usually starts at least 14 days after committee stage. It can be spread over several days (but usually fewer days than at committee stage).
Detailed line by line examination of the separate parts (clauses and schedules) of a bill takes place during report stage.
Before report stage takes place
- The day before report stage starts, amendments are published in a Marshalled List – in which all the amendments are placed in order.
What happens at report stage?
- Detailed line by line examination of the bill continues.
- Votes can take place and any member can take part.
After report stage - third reading
- If the bill is amended it is reprinted to include all the agreed amendments.
- The bill moves to third reading for the final chance for the Lords to debate and amend the bill.
- More about third reading.