CONSEQUENTIAL AMENDMENTS (Hansard, 14 February 1979)

§ Mr. Denzil Davies
I beg to move amendment No. 37, in page 67, leave out lines 5 to 7 and insert— 'in paragraph 7 for the words "Companies which have satisfied the Secretary of State" there shall be substituted the words "Recognised banks, within the meaning of the Banking Act 1979, and any other companies as to which, immediately before the repeal of the Protection of Depositors Act 1963, the Secretary of State was satisfied"'.

§ Mr. Speaker
With this we are to take Government amendment No. 38.

§ Mr. Davies
The amendment provides saving provisions in respect of institutions that at present come within the definition of lending and saving institutions for the purpose of the Home Purchase Assistance Act and the Northern Ireland order but would be excluded by virtue of the amended definition, namely, those saving institutions that do not gain recognition under the Bill. The amendment ensures that there will be no break in continuity of savings notwithstanding the fact that an institution had not received recognition from the Bank of England. If there were a break, there would not be qualification under the assistance given under 1259 the Home Purchase Assistance Act. We have ensured that there will be no problems arising from the Bill in respect of that legislation.

§ Mr. Denzil Davies
I beg to move, That the Bill be now read the Third time.
We have had long and important debates on the Floor of the House and in Committee. I hope that we have covered most of the difficulties We have not been able to resolve all the difficulties or to reach agreement on them all, but we have given the Bill a good airing. I hope that it is a better Bill than when it went into Committee. I believe that it is.
I gave various undertakings in Committee. There is a slight problem concerning British overseas banks. We hoped to introduce an amendment on Report to deal with the problem. There were some difficulties on account of the EEC directive. The difficulties have now been resolved and a suitable amendment will be introduced in another place.
There was some discussion about the exemptions in schedule 1, the order-making provisions and stockbrokers and solicitors. We are now confident that we can put into the Bill, as opposed to proceedings by order, an exemption for stockbrokers. That will have to be done by amendment in another place. We were not able to complete our consultations in time to allow us to introduce an amendment on Report. As I have said, the exemption for stockbrokers will be written into the Bill. The exemption for solicitors will have to be introduced by order as it is not possible within the Bill to meet all the points that arise.
We have been in discussion with Lloyd's and the insurance brokers to ascertain whether there is any problem. We do 1260 not yet know whether there is a problem because the information that we have received is not sufficient to enable us to form a judgment. If there is a problem, we shall exempt those bodies. The Law Society has agreed that we may exempt solicitors under the regulatory provisions.
The Bill protects depositors. It also provides a statutory form of supervision of banks and licensed deposit-taking organisations. It gives the Bank of England considerable discretion, as we have to in legislation, but it provides legislative backing, which is important, so that people may know what their rights are and so that they have some redress through the appeal provisions in the Bill against decisions taken by the Bank.

§ Mr. Ian Stewart
First, I congratulate the Minister of State on the careful and constructive way in which he has handled the proceedings on this long and rather difficult Bill, both in Committee and on Report. The right hon. Gentleman has brought his considerable abilities to bear on it and it is the better for it. I thank him for the way in which he kept my hon. Friend and me and other members of the Committee informed of the Government's intentions as regards amendments and other matters and for keeping us similarly informed in the past few days.
As I said on a point of order at the beginning of today's proceedings, we have been in some difficulty because it was not clear until recently how the Government wished to proceed on a number of outstanding matters. The Minister has properly said on Third Reading that there were certain matters that it was not possible to cover by amendments in time for Report and that these matters could be and would be dealt with by regulation or by amendments when the Bill goes to another place.
One item which has received a good deal of comment during our proceedings is the letter to me from the Minister dated 12 February, which has been circulated to all members of the Standing Committee. It contains five pages of important comment on several points which were raised in Committee. I suggested in conversation that it would be helpful if such letters could be published as an annex to the report of Committee proceedings. It may very well be that 1261 the rules of the House are such that only the spoken word can be reported. An alternative was suggested to me. It was that if I tabled a parliamentary question to the Chancellor of the Exchequer, asking for the text of the letter to be printed in the Official Report, it would be likely to receive a favourable answer. I have tabled such a question today and I hope that within a day or two the contents of this invaluable document will be available to other hon. Members and to those outside this House who may be interested in it.
I should also like to thank my hon. Friend the Member for Croydon, Central (Mr. Moore), who most gallantly took up the running with me part-way through the Committee stage, when I unexpectedly found responsibility for the Bill falling on my shoulders. He has been of the greatest possible help to me. In particular, I congratulate him on his first appearance at the Dispatch Box this afternoon. I thought that he conducted himself most excellently, and he has greatly assisted our deliberations on the Bill. I also extend my thanks to my hon. Friend the Member for Honiton (Mr. Emery), who brought his knowledge and ministerial experience to bear, both in Committee and today. They have both been of great help.
As the Minister said, the Committee and Report stages of the Bill have brought about some considerable improvements in the Bill. The most significant amendment that we carried in Committee was, I think, in regard to clause 35(2), where we dealt with the problem of foreign competition, whereby the free use of banking names was available to some branches of foreign businesses. By carrying that amendment in Committee I think that we have redressed the balance in favour of British-based firms in the banking sector. That was a useful amendment to have carried. Government amendments have also been tabled, and I am sure that the arguments so excellently advanced by my hon. Friends, as well as the representations which were made, have played a strong part in bringing this about.
The main amendments were, first, the amendment to clause 35, as it then was, now clause 36, on banking services. That, as I said earlier, although not going as far as I or many other hon. Members outside this place would think necessary, 1262 is a considerable improvement for the licensed deposit-taking sector as compared with the way in which the Bill was first drafted. There was also the new clause, which is now clause 33, regarding the tax treatment of contributions to the deposit protection fund.
That was a matter which had caused anxiety to the banks, which felt that they might have to make their initial contributions to the fund without their being tax-deductible. It has, indeed, lessened the irritation felt by many banks that they have to have a physical fund as well as a strong system of supervision, backed up by guarantees of enormous figures, running into hundreds of millions of pounds. The fact that the contributions are now tax-deductible lessens that irritation. I do not feel that it was necessary to have a fund, but that was not the main point at issue, and we do not dispute that there should be the deposit protection scheme. It was a matter of the technical arrangements which involved the need for a fund.
We debated earlier today the matter of the Giro, and there was a close vote on that. There is a difference of emphasis between the two sides here, and I am sorry that, after further reflection, the Government still find themselves unable to put the Giro exactly on to all fours with institutions in the private sector. We have had that debate already and I do not, of course, wish to repeat it at this hour.
I should like to say a further word on what seems to be the main continuing problem raised by the Bill—the difficulty, for those who will fall into the licensed sector, with the restriction on banking names, discussed this evening under amendment No. 19.
I said in Committee—I repeat it now—that we realise that one has to have different tiers or categories whatever supervisory system is brought in. We have a two-tier system—

§ Mr. Ian Stewart
We recognise that some form of categorisation is essential if we are to have a system of banking supervision. In the Bill as it stands, there is a two-tier system. Although doubts were expressed on Second Reading, that is the system with which we have had to deal.
I think that it is perfectly acceptable [...] have two tiers for the purposes of supervision, but not for names and terminology. We have been over this ground earlier on amendment No. 19. I do not wish to repeat the arguments. However, I think that it may cause serious difficulties, perhaps in some cases a crippling handicap, to the business of certain licensed deposit-takers. The alternative to that is that the Bill may well be flouted in regard to this important pro-