The debate began with discussion about Clause 1, which concerns the appointment of deputy governors of the Bank of England. Lord Eatwell (Labour) moved Amendment 2A which states: ‘The directors of the Bank of England shall only be appointed if Her Majesty is satisfied that they have the relevant knowledge and experience, and that their appointment will enhance the mix of skills and experience of the court.’
The amendment was later withdrawn after the Commercial Secretary to the Treasury, Lord Sassoon (Conservative), said: ‘Even without a prescriptive legislative obligation, in order to build an effective court the Treasury is mindful of the need to seek not only an appropriate depth but breadth of skills and experience. Ministers can and do take this into account in forming their recommendation without the need to further impose a duty on Her Majesty to form a view as to the candidate's knowledge or experience before she makes the appointment.’
Lord Eatwell went on to move Amendment 3A, he said: ‘In committee, the government took an important step by creating the oversight committee. But... there is a notable absentee. Nowhere does there appear the verb "to oversee". We have an oversight committee that does not oversee. In fact, a careful reading of the designated activities of the oversight committee reveals that all its key responsibilities are retrospective.’
He continued: ‘The amendment introduces the verb "to oversee". It gives the oversight committee the power of oversight. This will have a number of beneficial consequences. The governor and the executive will, as in all good governance systems, be accountable to the non-executives for their activities and their policies. As in all well run organisations, the non-executives will not design the strategy or tactics of the bank - that is the job of the executive - but they will be the advisers and the arbiters. They will oversee.’
Baroness Noakes (Conservative), expressed her confusion over the amendment, saying: ‘The noble Lord says that there is no oversight in the new section dealing with the oversight committee. If I were to define oversight I would say it is about reviewing and monitoring; that is the very nature of what is involved. The noble Lord suggests it means some real-time involvement by the non-executives in what happens on a daily basis within the bank. That simply cannot be - it seems to me the noble Lord misunderstands the role of non-executive directors.’
Lord Eatwell put his amendment to a vote, which resulted in defeat, with 158 voting ‘for’ and 237 ‘against’.
Baroness Noakes later moved Amendment 7, saying it: 'deals with the parliamentary procedure for approving the Treasury's direction to the Financial Policy Committee (FPC) setting out the macroprudential measures that the FPC can impose on the Prudential Regulatory Authority (PRA) and the Financial Conduct Authority (FCA).’
Her amendment was later withdrawn after Lord Sassoon replied on behalf of the government: ‘this is another issue that was discussed at some length in committee. The government recognise the importance of proper public and parliamentary scrutiny and accountability for macroprudential tools. That is why the bill requires that macroprudential orders be subject to the affirmative procedure.’
The debate also covered the establishment of a financial stability advisory panel, immunity provisions to regulators and the Financial Policy Committee.
Further line by line examination of the bill - a second day of report stage - will take place in the House of Lords on 12 November.
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, returning to parts of the bill that need more work.
- 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.
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