The debate began with discussion of a group of amendments covering Clause 64, cases in which the Treasury may arrange independent inquiries. Baroness Noakes (Conservative) introduced her amendments, which looked to clarify the circumstances in which an independent inquiry would replace internal investigations.
She asked: ‘If there is no independent inquiry for something as grave as the financial crisis that we have recently experienced, what is Clause 64 for?’
Lord Davies of Oldham (Labour) then introduced a series of opposition amendments to the same clause, focusing on giving the Treasury the power to direct the FCA to investigate regulatory failure. He stressed that investigations were about learning lessons – ‘intervention in time is what is needed if one wants to prevent things going badly wrong... with these amendments we are merely seeking for the issues to be open and transparent.’
Lord Sassoon (Conservative), Commercial Secretary to the Treasury, responded on behalf of the government. On Baroness Noakes amendments, he said: ‘I agree with my noble friend that, if there is an overwhelming public interest in having an independent inquiry or in the regulator carrying out an investigation, the Treasury should step in to ensure that that happens. As it stands, the Bill gives the Treasury a little bit of discretion here.’
Turning to the opposition amendments he repeated the discretionary message, but gave a commitment to return to the issue during report stage: ‘The bill is drafted to give the Treasury some discretion here and, all things being equal, we had wished to preserve this. However in this instance I am somewhat persuaded by the case that the noble Lords have made.’ Both Baroness Noakes and Lord Davies of Oldham withdrew their amendments.
Among the other changes considered was Amendment 197, concerning the transferability of retail banking current accounts. Lord Flight (Conservative), who declared an interest as a director of Metro Bank, moved the amendment, introducing it as one which addressed a specific concern for both consumers and businesses.
‘It seems self-evident that a healthy banking system should be competitive, and an important ingredient of that is to make it as easy as possible for individuals and businesses to move their bank accounts from one bank to another. Historically the hassle in doing so obstructs and constrains people from moving their bank accounts easily.’
Describing his amendment as ‘essentially a probing one’ in the light of the 2011 Payments Council – a joint project undertaken by banks to simplify the switching process – he queried whether this commitment would be enforced.
He asked: ‘Does the minister feel that the FSA needs to be given some degree of statutory power to ensure that all banks participate, and that with regard to charges there is a level playing field or no charges at all?’
Treasury spokesperson Lord Newby (Liberal Democrat) gave the government response. He said he sympathised with the amendment but was unconvinced that it was needed, mainly because of the Payments council project, which he confirmed is due to deliver by September 2013.
‘The new switching service will provide a safe, hassle-free and convenient service for customers to switch their bank accounts in no more than seven working days.’
He then addressed the amendment’s second concern, stating that ‘the FCA will have a lean to require the banks to behave in an efficient and effective way.’ Following the government response, Lord Flight withdrew his amendment.
Yesterday’s proceedings concluded committee stage. The Financial Services Bill will now move to report stage. A date has yet to be scheduled.
Previous stages of the Financial Services Bill
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 (amendments on related subjects are grouped together).
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.
What is report stage?
Report stage gives all members of the Lords further opportunity to examine and make changes, known as amendments, to a bill.
Report stage usually starts 14 days after committee stage. It can be spread over several days (but usually fewer days than at committee stage).
Before report stage starts, all members' amendments are recorded and published. The day before a report stage debate the amendments are grouped into related subjects and placed in order - a marshalled list.
During report stage detailed line by line examination of the bill continues. Any member of the Lords can take part and votes can take place.
After report stage the bill is reprinted to include all the agreed amendments. The bill then moves to third reading for the final chance for the Lords to debate and amend the bill.
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.