Members began by examining Clause 6 and the role of the new regulators.
Baroness Hayter of Kentish Town (Labour) suggested a code of conduct for the financial services industries. She said: 'My Lords, there can be little doubt that an enforceable code of conduct is sorely needed in this industry.'
She continued: 'The Chartered Banker Code of Professional Conduct, which sets out the ethical and professional attitudes and behaviours expected of bankers, has been endorsed by virtually every major high street bank. But there is clearly something missing. The words are there, but the behaviours do not follow. The code does not have the necessary sanctions to strike people off the register, nor does it have governing structures independent of the industry.'
She argued: 'Until we have an enforceable code of conduct across the whole of the financial sector to govern internal behaviours, we will not see the difference between the past and the future.'
Baroness Hayter of Kentish Town (Labour) went on to move two further amendments to a vote during the discussion. On Amendment 25D, she argued: 'It is what consumers, whether savers or borrowers, expect from their providers - that authorised persons, managing other people's business, have a duty to act in their clients' best interests. This means avoiding conflicts of interest, acting in good faith, not profiting unreasonably at the expense of customers without their knowledge and consent, and a duty of confidentiality.' The House voted with 186 for, and 206 against.
Speaking of Amendment 26ZA she said it will 'ensure that the Prudential Regulatory Authority (PRA) hears the views of consumers or their spokespeople.' The PRA is the second proposed regulator and will help the Bank of England to regulate banks and financial institutions. The House voted with 196 against, and 116 for.
Discussion also included how the Financial Conduct Authority (FCA) can work with the Department for Education (DfE) to include financial literacy as part of the primary and secondary school core curriculum.
Lord Sassoon (Conservative), commercial secretary to the treasury, responded on behalf of the government.
The third day of report stage is scheduled for 20 November.
About the Financial Services Bill
The bill was introduced in the Lords at first reading on 23 May.
The Financial Services 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.
Find out more about the Lords’ role in shaping laws and watching House of Lords debates.