Baroness Noakes (Conservative) began the debate by moving Amendment 190ZE, looking at the ‘power of direction that enables the Treasury to direct the Bank of England when public funds are at risk.’ She expressed concern that: ‘the government have sided with the Bank and have restricted the power of direction’, and continued, ‘the Treasury Select Committee believes that this power should be broader and future-proofed.’
Lord Sassoon (Conservative) responded that: ‘the Treasury already has a very broad power of direction over the Bank’, and the powers are ‘designed to allow the chancellor to intervene to require the Bank to take specific action in a crisis management situation where public funds are at risk. That is why the power covers only the Bank's crisis management functions, specifically the provision of liquidity and the operation of the special resolution regime.’
The amendment was withdrawn by Baroness Noakes, but she stated that: ‘The chancellor ought to be able to get his way on things. On that basis the government have drafted too narrow a power, but I shall not pursue it any further.’
The debate then continued on the issue of crisis management. Lord Tunnicliffe (Labour) tabled Amendment 190ZEE, asking how a ‘temporary Stability Committee would be convened and function in a crisis’. He said: ‘Very serious scenarios in the banking world have proved all too probable. They really happen and cause enormous damage. This amendment seeks to encourage the government to set out what planning they are doing, how they would convene the committee... what functions it would have and how it would involve the main players.’
Lord Newby (Liberal Democrat) responded: ‘Each financial crisis situation is different, and sometimes the circumstances will mean that a formal committee process would not be appropriate’. He continued, ‘officials are spending quite a lot of time in crisis management planning and that that is the appropriate way of making sure that we are ready to deal with a crisis, rather than having the formal structure that his amendment would require.’
Lord Tunnicliffe later withdrew the amendment, but said: ‘Anything the Minister can do to add to our understanding of the depth and height of this preparedness and who is involved would be reassuring.’
Topics also under discussion included communications with international financial institutions, and the role of the Financial Policy Committee.
The next debate is scheduled for Wednesday 24 October (business dates are subject to change).
Previous stages of the Financial Services Bill
• News: Lords committee stage day seven
• News: Lords committee stage day six
• News: Lords committee stage day five
• News: Lords committee stage day four
• News: Lords committee stage day three
• News: Lords committee stage day two
• News: Lords committee stage day one
• News: Lords second reading
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.
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.