The scrutiny began with discussion about Amendment 107AA, moved by Lord Eatwell (Labour), he said: ‘Amendment 107AA requires the Bank (of England) to give early warnings to the Treasury of a threat to public funds. At the moment, the bill refers to the possibility of a threat to public funds, which must be immediately notified. However, I think that this notion of possibility is far too vague... In our view, a full, continuous exchange of information between the Bank and the Treasury, and the addition of a requirement of an early warning, does just what is needed.’
The amendment was later withdrawn after Lord Newby (Liberal Democrat), government spokesperson, HM Treasury, said: ‘the Bank and the Treasury are in regular contact via non-statutory routes, as it were, which give ample opportunity for the two to discuss at great length and with great frequency any emerging issues that they feel the other should be aware of.’
Lord Eatwell then moved his next amendment, saying: ‘Amendment 107AG is very simple. It seeks to insert the word "comprehensive" before "sharing of information". The very least we can do to ensure that there is proper exchange of information between the Bank and the Treasury, particularly given the comments by the Treasury official that such information exchange does not take place.’
The amendment went to a vote and was defeated, with 201 for and 242 against.
The discussion then went on to the regulation of consumer credit, in particular payday loans. Lord Mitchell (Labour), moved Amendment 114D, saying: ‘legalised loan-sharking, or payday lending - call it what you will - has gone viral. It is out of control, dangerous and is causing great distress to many vulnerable people. Two developments have come together to cause the rapid growth of this lending industry. The first is the dreadful state of the economy... The second development has been the astronomic growth of online lending. As I said in committee, I went on to one of the most successful websites and what struck me was the slickness of the process: just some cursory information to fill in and the money would have been in my bank in 15 minutes. It is simply too easy.’
He continued: ‘We have an industry flying by the seat of its pants, observing at best the flimsiest requirements of the law and its own pathetic codes of conduct. It needs to be much more closely controlled... The Financial Conduct Authority (FCA) will need to strike a difficult balance between capping the interest rates that these companies can charge, while allowing them to earn enough profit so that they can still produce a proportionate return. It will not be easy, but the FCA requires the tools to start the process and this amendment will provide it with what it needs.’
The amendment was later withdrawn after Lord Sassoon (Conservative), commercial secretary and government spokesperson, HM Treasury, said: ‘the government believe that there is scope to go further than this amendment and to put in place stronger, automatic consumer protections and make the deterrent effect more robust by providing that a breach of these rules would make the agreement unenforceable by the lender. I will draft an amendment and discuss it with the noble Lord, Lord Mitchell, to ensure that it fully meets his concerns, as I believe it will - I believe it will go further - and I can confirm explicitly that it will cover both the total cost and total duration of credit.’
Lord McFall of Alcluith (Labour) then moved Amendment 116ZB, which ‘seeks to make the law on continuous payment authorities, sometimes referred to as CPAs, clearer and more weighted in favour of the debtor.’
The amendment was defeated after going to a vote, which resulted in 175 for and 229 against.
Third reading of the bill, the final chance to amend the bill in the House of Lords, is scheduled for 5 December.
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 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.