HC Deb 14 February 1979 vol 962 cc1232-50
Mr. Ian Stewart

I beg to move amendment no. 19, in page 38, line 8, leave out or is carrying on a banking business". I am afraid that we shall have to spend a few moments on amendment No. 19. Clause 36, which is the equivalent of clause 35 in Committee, gave us as much trouble and anxiety as any other part of the Bill. It relates to restrictions on the use of banking names and descriptions by those in the licensed sector. We had a preliminary discussion of this on Second Reading and followed that through on a number of further debates in Committee.

One of the consequences of our debates was that in Committee the Government tabled amendment no. 119, which inserted a new subsection (4) in clause 36, which is meant to allow some reference to banking services provided by members of the licensed sector. In essence, the basis of clause 36 involves the separation of the recognised banking sector from the licensed sector. It permits the free use of the terms "bank", "banker" and "banking business" only to those who are members of the recognised banking sector. A large number of bodies of varying kinds which can expect to be in the licensed sector will not be able to describe themselves as banks. Those involved will not be able to call themselves bankers and they will not be able to say that they carry on a banking business.

On Second Reading I said that I was very doubtful whether it was possible in that way to redefine the meaning of a common word by Act of Parliament, and having sat through a fairly lengthy Committee stage and given the matter a good deal of further thought, I still believe that it is not desirable—certainly not desirable, and quite likely not possible—to redefine these words and make the use of "bank", "banker" or "banking business" much stricter than it has been in the past in this country.

The bodies which will be affected have naturally welcomed the Committee amendment no. 119, which allows them provided that they carry on certain banking services, to say that that is what they are doing, but I understand that they have continued to make representations to the Treasury, as they have also to me and to other members of the Standing Committee, that that does not go very far.

The purpose of the present amendment, therefore, is to open up the question whether there is anything particularly sinful or dangerous in licensed deposit-takers describing themselves as carrying on a banking business. This does not go nearly so far as we suggested in Committee, when we argued that they should not only be able to describe themselves as carrying on a banking business but should be allowed also to describe themselves as banks or bankers so long as it was not for the purpose of taking deposits.

In the present amendment, the suggestion is much more limited. We are not saying that they should be allowed to call themselves banks or bankers, although I think that the case for that may still stand. We suggest here that when such a company is not to become a recognised bank but is in fact carrying on a banking business, it should be allowed accurately to describe what it is doing.

From conversation with a number of the institutions concerned, it is apparent that they are banks and that they will continue to be banks and will continue to carry on a banking business, but they will not be allowed to say so under the terms of the Bill as now drafted. Their difficulty will be quite far-reaching. I have said that amendment No. 119 in Committe, now subsection (4), is an advance on the way the Bill originally came forward, but after further thought I still believe that it does not go far enough.

The licensed sector will be placed at a disadvantage against, for example, foreign competition. A company which is a bank in, say another member State of the EEC may not have to satisfy nearly such strict criteria to be allowed to use the word "bank" or the equivalent in its name as British companies will have to do if the Bill remains unamended in this respect. That should always give us pause for thought. I do not believe that we should allow ourselves to put our own companies in this country at a disadvantage against foreign competitors where we have the option to do otherwise. Indeed, I could put it more strongly and say that if we were to have a bias in any direction we should try to give an advantage to our own companies as against those from overseas. Certainly, we should not do the opposite.

I return to the point made by my hon. Friend the Member for Honiton (Mr. Emery) in an earlier debate, that the prime purpose of this part of the Bill is to protect depositors. It should not be to change the meaning of everyday words such as "bank", "banker "or "banking business". I doubt that any depositors would be put seriously at risk if a company carrying on a banking business which is a licensed deposit-taker reporting regularly to the Bank of England and therefore supervised in many of the details of its business and backed up by the existence of a deposit protection fund, which, under the terms of the Bill, could be anything up to £250 million, were allowed to say what it was doing. Is there likely to be much extra risk to a depositor if the institution were allowed to say that it was carrying on a banking business when that was in fact the case?

It is possible to suggest amendments to clause 36 almost without limit by adjusting the words here or there to reduce the restrictive force of the way in which it is at present drawn. Amendment no. 19 was tabled because we felt that we did not satisfactorily resolve in Committee why we could go as far as "banking services" and not as far as "banking business". It is a modest amendment. I was tempted to return to the whole business of including the words "bank" and "banker". "Banking business" is not such a deceptive description for a licensed deposit-taker to use if he is conducting a banking business. None the less, it would be difficult, even if the amendment were acceptable, for such a body not to be able to describe itself as a bank or banker. However, the description would not be so restrictive as if the clause remained in its present form.

When the Bill is considered in another place, it may be that their Lordships will take account of what has been said not only in Committee but on Report. I shall listen with great care to what the Minister says about possible Government objections to an amendment such as No. 19 that would allow a licensed deposit-taker to use the term "carrying on a banking business".

If we draw the conditions of clause 36 so tightly that members of the licensed sector are not able to describe their activities properly and are not able to obtain an equivalent status with foreign competition on a similar level, we shall possibly be sowing the seeds for the destruction of the system upon which the Bill is based.

If the system breaks down and proves unworkable in practice, nothing will have been gained for the Government, for the Bank of England, for the recognised sector, for licensed deposit-takers or for those who have placed deposits with licensed deposit-takers. I ask the Minister yet again whether he is confident that the licensed deposit-taking sector will be able to carry on successfully its existing businesses unless the restrictions in clause 36 are loosened.

The bodies concerned range from large companies—some of them finance houses that may in some circumstances be the subsidiaries of clearing banks—to small private companies conducting a banking business that have not been operating long enough to acquire sufficient reputation or standing. It may be that they do not qualify for other reasons to become recognised banks. All these bodies, from their different standpoints, will be dramatically affected by the terms of clause 36 if it proves workable in practice.

A licensed deposit-taker which is conducting a banking business and aspires to be a recognised bank may find it exceedingly difficult to cross the boundary if in the stages before it hopes to qualify it is so restricted that it cannot accurately describe what it is doing. That is a danger area. That would apply to an amendment stronger than the one that I have tabled. It would apply to the whole use of the words "bank" and "banker" as well as "banking business". However, the essence of the argument is the same, namely, that restrictions on the members of the licensed sector under clause 36 are so severe that many of them will not be able to operate as freely as they should. That is why this is one of the major areas of contention in the Bill. I hope that it is not too late for the Minister and his advisers to think again about the implications of clause 36.

8.45 p.m.

If we decide not to press the matter to a Division tonight, it will not be because we underestimate its importance. It will be because we know that there will in a sense be a further Report stage of the Bill in another place. There will, therefore, be perhaps a rather more extended opportunity for the matter to be raised again. But before it is raised again in those circumstances it is right for the House once more to consider the implications of the clause, and in particular to ponder anything that the Minister may have to say to justify the tightness with which the clause is drawn.

Mr. Denzil Davies

The hon. Gentleman has moved his amendment, as he has indicated on several occasions, on the basis that he is not happy with the way in which the Bill is drawn, in that the Bill prevents any body except a recognised bank from describing itself as carrying on a banking business.

The amendment seeks to allow licensed deposit-taking institutions to describe themselves as carrying on a banking business". The amendment as drafted, so I am advised, would allow practically any body to describe itself as carrying on a banking business". Even a bureau de change could do so, in the way that the amendment is drafted, although I accept at once that that is not the intention of the amendment.

As I said in Committee, if we were to extend the dispensation to the description of carrying on a banking business we would be going to the heart of the Bill, which is concerned with the distinction between recognised banks and licensed deposit-taking institutions. I do not feel that it is possible for an institution to say that it is carrying on a banking business without its being a bank. Indeed, the hon. Gentleman used words to that effect in his speech when he said that institutions are carrying on a banking business and are indeed banks.

It could be argued, in relation to clause 36(1), that if we were to delete the words or is carrying on a banking business the institution concerned would still fall foul of subsection (1), because it would reasonably be understood to indicate that it was a bank or banker. Somebody who described himself as carrying on a banking business could reasonably be said to be indicating that he was acting as a bank.

Mr. Emery

The clause states quite clearly in subsection (1) that no person carrying on a business of any description may describe himself as a banker. I declare an interest. In my own company my financial director is a fellow of the Institute of Bankers. He has spent many years of his life as a banker. He is employed particularly because he gives certain banking advice. If professionally he is ever called upon, he is in the position of having the qualification of the Institute of Bankers, and he describes himself as a banker. Would he be debarred from doing so by the wording of the clause?

Mr. Davies

I should not have thought that in those circumstances that person could be said to be carrying on a business. I understand the hon. Gentleman to say that this person was the financial director. There has to be a business. Obviously, it is a question of fact, but I should not have thought that he was carrying on a business.

My argument is that the amendment goes to the heart of the Bill. I cannot really see the distinction between "a bank" and "a banking business". Once one accepts that argument, one has to look at the words "bank" or "banker" in the subsection itself.

As I said in Committee, we have reached a practical limit, or as far as we can go. We can say "banking services" without going as far as "banking business". Once we cross that threshold and go to "banking business", we are into the realms of a bank, and then we are into the debate as to whether the split is the right one. The split is based to some extent on present practice. We have been over the arguments previously.

Therefore, for that reason and for the technical reason that I have mentioned, I could not accept the amendment.

Mr. Emery

I see the argument that the Minister is propounding. There is a very great difficulty. Equally, I see the argument that has been put forward by my hon. Friend the Member for Hitchin (Mr. Stewart), who has led so competently for the Opposition on the Bill.

I see that there is a kernal of assistance in that "banking services" has been excluded. I am inclined to say to my hon. Friend that the Opposition ought to see whether those who have made representations to us on the aspect of excluding the banking business would not be content to structure their presentation as carrying out banking services. That, indeed, is probably what they may well be doing.

The Minister has a fair point as regards the amendment. We seem to be crossing party lines fairly frequently this evening. The moment that one structures that one has a business which is banking, I do not quite see how one can exclude oneself from being a bank or a banker.

If my hon. Friend can present arguments to substantiate any feeling that he may have that the amendment must be pressed, I shall listen carefully to what he has to say.

However, rather than press the amendment, I believe that we should go back to the people who have made representations to us to see whether the points they have made would be covered by "banking services" as opposed to "business".

Mr. Ian Stewart

When I moved the amendment, I said that I was not sure that it was in a condition in which it either should or could be pressed. However, the further debate that we have had on the very sensitive area of definitions of banking, banking business and so on has not been without its value. It would have been very difficult for anyone to draft a suitable amendment to widen the freedom within the restrictions in the clause. I know that the Minister and his advisers spent a great deal of time thinking about the precise wording of Government amendment No. 119 in Committee—which is now subsection (4). I am perfectly well aware of the drafting difficulties of making small adjustments in such a dangerous area. For that reason, if for no other, it would not be right to press the amendment.

However, I am not so sensitive as the Minister about the opportunity for using banking descriptions. It is at the heart of the Bill. It is an administrative matter. It is certainly not a party political matter. Looking at it as objectively as possible, however, it seems to me that it is not such a ghastly thing if those who are carrying on a banking business are allowed to say that they are doing so. The difficulty of the clause as it is drawn is that it is always possible to produce a tight restriction. The tighter the restriction, the easier it is to draft it.

I rather fear that, because of the difficulty in drawing a boundary between the use and the non-use of permissible banking names, refuge has been taken behind the expedient of using the narrowest definition and not the wider definition which is actually required by the circumstances of the case.

For the reason that I advanced earlier, I beg to ask leave to withdraw the amendment in the hope that there will be further stages of the Bill at which this crucial aspect can receive further attention.

Amendment, by leave, withdrawn.

Mr. Ian Stewart

I beg to move amendment No. 20, in page 38, line 32, leave out second 'the' and insert such'.

This amendment proposes a small adjustment to the subsection that was inserted by the Government in Committee. It is designed to clarify the position so that only banking services can be described as banking services by licensed institutions that are able to take advantage of subsection (4). This was a small point that I raised in Committee. I do not know the result of the Minister's deliberations, but if he is anxious for precision it may well be proper for him to accept the amendment.

Mr. Denzil Davies

I believe that the amendment would be over-restrictive. It seeks to freeze the list of services in schedule 2. But, of course, that list is not meant to be exhaustive. Further banking services may be developed in future which are not covered by schedule 2, and it would be equally wrong to prevent a licensed institution from developing banking services.

We debated this matter in Committee. The hon. Gentleman rightly said that banking and financial institutions develop, and that there is a danger when legislating of preventing natural develop- ment in the future. I think that I will use his argument against him, although I have others as well. For that reason, I cannot recommend the House to accept the amendment.

Mr. Stewart

By leave of the House, Mr. Deputy Speaker, may I say that the Minister has a fair point, but I think that I also had one. Perhaps I should have suggested that the subsection should read "to any banking services provided by it". But I do not want to continue this semantic discussion, and, therefore I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Denzil Davies

I beg to move amendment no. 22, in page 39, line 24, at end insert— (7A) Subsection (1) above does not pro hibit the use by a licensed institution which has its principal place of business in another member State of the name under which the institution carries on business in that member State if the name is used in immediate conjunction with the description "licensed deposit taker" and, where the name appears in writing, if that description is at least as prominent as the name.'.

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

With this we may take Government amendments nos. 24 and 25.

Mr. Davies

This amendment is consequential on the deletion of the old clause 35(2). This occurred as a result of debates in Committee, when the Committee accepted that a non-EEC financial institution should not be allowed to describe itself as a "bank" if it was a licensed deposit-taking institution.

In effect, the amendment is consequential on that vote in Committee, except that we have taken the opportunity to redraft it. Now an EEC body which will be able to call itself a "bank", because of the EEC directive, will immediately after its name have the description "a licensed deposit taker" if it does not qualify as a recognised bank in the United Kingdom. That will be displayed prominently after the name. To some extent, that is an improvement on the original legislation.

For example, any body incorporated in France which calls itself a "bank" but which does not qualify as a recognised bank in this country will have to state immediately after its name the fact that it is a licensed deposit-taker. That at least will provide some safeguard in respect of competition with British institutions.

Amendments nos. 24 and 25 are similar except that they apply to a representative office where it does not take deposits. The amendment amends the original clause again as a result of that decision of the Committee.

9.0 p.m.

Mr. John Moore

A couple of comments are relevant at this juncture because, as the Minister of State quite fairly said, we had a lengthy debate in Committee on this whole clause. It might be interesting for those hon. Members who were not present in Committee to glance at this clause, which was clause 35 in Committee. They will see that an inordinate number of amendments have been brought in at this late stage. It is clearly a clause of great significance. It concerns the degree to which the Minister of State argued in Committee, quite rightly, on the importance of the use of the word "bank".

One of our difficulties is that we have had this amendment for 36 hours only and have not had an opportunity to take soundings and discuss what is obviously an important factor concerning the relative competitive position of EEC member State institutions which will not be recognised banks but will be licensed deposittakers, in comparison with the competitive position of similar British institutions.

I call the attention of the House to what was discussed in Committee, because it is important. The Minister of State quite rightly said that we won, in a key division in Committee, the withdrawal of such advantages that non-EEC member State banks and EEC member State banks had in comparison with licensed deposit-taking institutions in the United Kingdom. What we have now done is to restore the EEC banks. I hope that in another place this can be explored at some length because we have created almost an absurdity. That is understandable. I understand the Minister of State's position. He is seeking to put back, according to the directive, the EEC member State banks.

But let me try to illustrate what I think has now occurred. This is only on a first reading, and we have had no time to scrutinise this matter. Suppose that an EEC bank, not capable of being described as anything other than a licensed deposit-taker in the United Kingdom, seeks to do business in the United Kingdom in competition with similar United Kingdom institutions. Let us suppose that it is called a "respectable bank". The term "respectable bank" becomes "respectable bank/licensed deposit-taker". It could be suggested that that almost adds a further degree of respectability and credibility to the institution as opposed to a limitation. It may be absurd, but it could equally be said "Why do we not call it "respectable bank—not a recognised bank, but a licensed deposit-taker?" That is what it is according to the character of the legislation. In that way we would not have deprived it of its rights under the EEC legislation of describing itself as a bank, while under our own new banking legislation it would be a licensed deposit-taker.

I understand the Minister of State's dilemma, but I think that more reflection is needed because we are likely, with the acceptance of this amendment, to put a greater degree of respectability or a greater degree of commercial advantage —not to put it too strongly—on foreign institutions as opposed to United Kingdom institutions. We are trying, in many ways, to reconcile the irreconcilable, in so far as "bank" is an important word. I should have thought that in another place we could do even better in our choice of words. I am not suggesting that they should be in the category "respectable bank—not a recognised bank but a licensed deposit-taker", but at least we ought not to part finally from this clause without ensuring that we do not put a foreign institution in a position of advantage vis-a-vis British licensed institutions and to some extent create the possibility of disadvantage to United Kingdom depositors. I do not think that it is a very satisfactory position for us to be in. I hope that the Minister of State will enable us to return to the matter, if possible, especially after discussions in another place.

Mr. Denzil Davies

No doubt the hon. Member will return to this point. I must point out that this has occurred as a result of hon. Members not accepting my arguments in Committee. Had the Committee accepted my arguments, as it usually does, we would not be in this turmoil. I await with interestto see whatever amendments the hon. Member tries to put down to resolve this state of affairs. It is not quite as easy as hon. Members thought at one time.

Mr. John Wells (Maidstone)

Will this rule apply to all foreign banks in whose British name the word "bank" does not occur? There are a large number of highly reputable, large and middle-sized foreign banks trading in the City of London—I have in mind a number of Spanish institutions—in whose name the word "bank" does not occur. Let us imagine the case of a bank calling itself "Respectable Company Limited", which everyone would recognise to be a bank in its national State. Would it have to have the words "Licensed Deposit Taker" tacked on to its name when it traded in the United Kingdom?

Mr. Davies

No. We are concerned with foreign institutions which use the word "bank" in their name. Under the original provisions of the Bill we decided that they would be allowed to use the word "bank", although the Bank of England might not designate them as recognised banks. The Committee took exception to that and said that it was unfair to British institutions which would not be allowed to use the word "bank". Then the Committee accepted an amendment to confine that to EEC countries. We could not do otherwise because of the directive. Therefore, our position at the moment is that an EEC bank which wants to use the word "bank" in its name but which is not recognised by the Bank of England will have to describe itself as a licensed deposit-taker. The problem arises with the use of the word "bank".

Amendment agreed to.

Mr. John Moore

I beg to move amendment no. 23, in page 39, line 24, at end insert— '(7A) Subsection (1) above shall not prohibit a stockbroker or a dealer in securities licensed under the Prevention of Fraud (Investments) Act from describing himself as an investment banker or from describing his business as "investment banking" where in the context in which such description is used it refers or would reasonably be understood to refer to transactions concerning securities.'. This is an important point. Without seeking to disturb the tranquillity of our discussions, I think that the Minister seems quite genuinely and legitimately to be unaware of the point we have been trying to make. I can only deduce this from the comments that he made in Standing Committee on clause 36 in relation to the term "investment banking". It is important to get on the record the very important distinction relating to this term, especially in so far as it might seek to create difficulties for British, as opposed to foreign, institutions.

I declare an interest as I am the chairman of an investment banking institution but a foreign-owned one, and to that extent I am speaking against my own personal commercial interests. However, on this matter we must put the interests of British institutions first. We are liable to create difficulties for them.

It is crucial for the House to know that in banking there is a functional area called investment banking where specifically in many cases much of the activity is disconnected from deposit taking. It is important to describe why. Essentially the reasons are linked with the changes in banking structure in the United States in the late 1920s, 1930s and into the 1940s which related to the successful attempts to break up the monopolistic position that existed in that country between corporate or investment banking, on the one hand, and commercial banking, on the other. Those activities were segregated so that institutions could not be involved in both sorts of banking. That is, I accept, a simplistic description of the history of he matter. The reason why it is important to our debates and germane to this part of the Bill is that in so many of those areas the United States is a dominant feature in the world investment banking scene.

The Minister of State seemed in Committee to concern himself more with stockbroking activities. I do not suggest that there are not investment banking institutions that are not connected with stockbroking as well as with other investment banking activities, but that is not the prime area with which we are concerned. An institution in the United Kingdom or overseas could be involved in investment banking without having an involvement in stockbroking. It may be involved in underwriting new issues, dealing in the Euro-dollar market, whether in a primary or secondary sense, or in advising corporations involved in private placements.

It is crucial to remember that we are trying to concern ourselves with the ability of British institutions to compete with foreign institutions. There is a series of firms, such as Goldman Sachs, none of which has "investment banking" in its title but all of which, because of their dominance in the United States market and their ability to communicate there through publicity and advertising, are very well known for their investment banking functions.

On this side of the Atlantic, a United Kingdom institution may be seeking to do business in investment banking in competition with such organisations. The United Kingdom institution may not be involved in deposit-taking and may want to establish its investment banking activities in the United Kingdom in order to provide jobs and to add to the already dominant position of the United Kingdom as a financial and banking centre.

The world of investment banking is a market of great mobility. The organisation of the market does not have to be in any one place. With existing communications, it could be in Frankfurt, Bonn, Paris, Geneva, Zurich or London. A marginal distinction creating a disadvantage could lose for the United Kingdom and our institutions the possibility of an organisation establishing its headquarters or its European headquarters in the United Kingdom. That is an important issue for many British institutions.

What have we been told since the Committee stage about the ways in which a United Kingdom institution can or cannot communicate its ability competitively with similar United States institutions when it seeks the business of Los Angeles or companies in other American cities for which it wishes to raise money in, say, the Euro-dollar market? In his letter of 12 February, the Minister of State said: I have looked again at the use of the term 'investment bankers' and see no reason to alter what I said in Committee. It is relevant that nothing in the Bill prevents an institution based in London from describing itself as an investment banker abroad. An institution in London is reaching the stage of absurdity where one of its members visiting Los Angeles or San Francisco can give a business card or write on a piece of stationery with the title "investment banker" describing his capacity or the capacity of his organisation, but when seeking to do business with overseas corporations visiting London, or even when writing from London, he is unable to use the title "investment banker" on his stationery. We are clearly producing a potential disadvantage for United Kingdom institutions.

9.15 p.m.

Mr. Denzil Davies

It is the American position which is absurd in describing as bankers people who by no stretch of the imagination are bankers.

Mr. Moore

With respect, we live in the real world and I should have thought that we were seeking to create legislation which would enable our organisations dealing in a world which now performs a function known as "investment banking" to compete on all fours. Whether the dominant factors in investment banking are following our traditions is irrelevant.

We have not heard a sound argument from the Minister to counter our propositions. If there is a sound argument which does not limit the intention of the Bill in seeking to protect depositors, we understand it. But, essentially, we say that we are not putting on all fours with its overseas competitors a United Kingdom institution which seeks to provide a different kind of banking service from those of the clearing banks seeking deposits. The investment banking institutions are quite different, and I do not feel that we have had the beginning of an answer. I hope that the Minister will make one in response to my comments tonight.

Mr. Denzil Davies

The answer is the same as the one which I gave in my intervention and the one which I gave in Committee. As I understand it, a banker is someone who at least takes deposits. I am sure that we can agree about that. We had long arguments in Committee about what a banker was.

For someone who does not take deposits and who merely carries out the corporate finance side of merchant banking to be described as a "banker" is absurd. I quite understand that this is investment banking in the United States, but really it is the American description which is the absurd one. To call a body which is merely giving financial advice, acting as an underwriter and arranging new issues a "banker" seems absurd, and I do not think that we should legislate for an absurdity.

There are plenty of problems in the Bill without going further and saying "Here is someone who does not take money at all and who possibly does not lend money, either, but is merely giving financial advice, and we believe that he should be described as a 'banker' in this country". What happens in the United States depends on United States law. If a British institution of this type is operating in the United States, it can call itself an investment banker according to American law. But we are framing the law of the United Kingdom.

After all our debates about the meaning of "banker" and "banking", it would be absurd for us now to say that someone who does not even take deposits should be allowed to call himself a banker.

Mr. Peter Brooke (City of London and Westminster, South)

This is only my second intervention in the deliberations on this Bill, and both have come late in its stages.

I attended the Second Reading debate, when I held a kind of watching brief on behalf of certain of my constituents in case any rude comment was made about them. I intervened briefly in the speech of the hon. Member for Thornaby (Mr. Wrigglesworth) when I asked him about the Edge Act. The hon. Member is not here, so I feel a little unkind about saying it, but the record shows that perhaps he did not fully understand my question. The Edge Act is relevant to a degree to what we are discussing in this amendment. Therefore, I hang my second interjection on the hook of the first.

I was unlucky in that in the week in which we took the Second Reading of this Bill we also took the Second Reading of the Companies Bill and I was selected to serve on the Standing Committee which is considering the Companies Bill and, therefore, did not have the opportunity to serve on the Committee stage of this one. However, I am perhaps unique amongst those hon. Members present who did not take part in the Committee stage in having read the report of the proceedings with the greatest possible assiduity. I must say that it is a great deal more interesting and exciting than the Companies Bill. One or two of the speeches—I remember especially a speech by the hon. Member for Stoke-on-Trent, Central (Mr. Cant)—seemed to cover the ground at great length, but they have made extremely good reading and they are valuable to anyone coming to the Report stage in this way.

Mr. Moate

My hon. Friend is not unique in not having served on the Standing Committee, but I am sure that he is unique if he has studied the report of the Committee's proceedings with assiduity.

Mr. Brooke

It is clear from a reading of the report of the Committee proceedings that the case from this side of the House has been handled with extreme competence. I am full of admiration. I have not read the letter from the Minister of State to which my hon. Friend the Member for Croydon, Central (Mr. Moore) referred. I am at some disadvantage intervening on this amendment without seeing it. However, having read what was said in Committee and in listening to the debate, I feel we are in some danger of making fools of ourselves if heed is not paid to the amendment.

Those of us who have spent our lives doing business on both sides of the Atlantic are aware that there are alternative languages and vocabularies. By and large, it does not matter. It is possible to explain that a prep school in one country is different from a prep school in another. At the same time, my hon. Friend the Member for Croydon, Central is right to say that the phrase "investment banker" is widely used in the United States to describe the people to whom he makes reference. I make no apology for intervening on behalf of my constituents in the City who have to compete in an international world and not a purely domestic world.

I have spent my professional life outside this House in a consulting firm. When we set up our office in the United Kingdom in 1961, we were required to state on our letterhead that we were licensed. As an activity that had started off in the United States, we had the greatest difficulty in persuading the licensing authority that we should be able to state our licence in a particular form of words which would not be misleading on both sides of the Atlantic. We eventually did so but it took an enormous amount of time.

Following that experience, I have great sympathy for those who would be affected if the phrase "investment banker" was ruled out at this stage. It would be singularly unfortunate if the City of London, which has prospered and thrived over the last 30 years in circumstances of extreme foreign exchange control, was to be shackled by semantic differences of this sort.

I fear that the Minister does not understand the issues being put to him. An elaborate amount of debate has occurred on the word "bank", which is also affected by directives from the European Community.

This issue applies to the United States rather than to the United Kingdom. My colleagues involved in consulting would be deeply surprised if, as a consequence of the Bill, it was not possible to use the term "investment banker" in the common patois way it has been used across the Atlantic. The Minister of State says that the American situation is absurd. Perhaps that it right. The fact remains that it is a reality. That is the manner in which we conduct our affairs. The City of London does a remarkable job in competing in that international world, given the limited financial resources of this country in terms of economic strength. It would be unfortunate if the City of London, which has built up a reputation over many years, was to be hobbled by a restriction of this sort. I strongly support my hon. Friend for Croydon, Central in bringing this amendment back to the House on Report.

Mr. Ian Stewart

I do not expect the Minister to make a further reply but I want to make two points before we leave this debate. The first is a technical one. My hon. Friend for Croydon, Central (Mr. Moore) quoted from the letter of 12 February, which, unfortunately, my hon. Friend the Member for the City of London and Westminster, South (Mr. Brooke) has not seen, in which the Minister says: It is relevant that nothing in the Bill prevents an institution based in London from describing itself as an investment banker abroad That may be the case, but it is not how I read clause 36(1). That subsection says: … no person carrying on a business of any description in the United Kingdom"— other than certain exceptions— may use any name or in any other way so describe himself". It does not say that no one "may in the United Kingdom" use any name. If a representative of a business in this country went to North America, I would think that that description still applied. I raise that point so that the Minister may give it thought.

The Minister is not sufficiently aware of the difficulties which confront those in British firms who have to take the world as it is. Investment banking is not a form of banking as "banking" is defined in the Bill, but that is the fault of the Bill.

Mr. Denzil Davies

It is not banking by the ordinary common rules, either.

Mr. Stewart

I was just about to say that technical terms are often invented in which all the parts are not strictly logical in the original sense of the words used, but this term is used widely. I was taught at school that the Holy Roman Empire was neither holy, Roman nor imperial, but no one has thought of calling it anything else.

If a term such as "investment banking" exists in international business, we should not needlessly put our nationals at risk by refusing to use it. This is another example of the Government's excessive preoccupation with terminology rather than reality.

Amendment negatived.

Amendment made: No. 24, in page 39, line 27, leave out 'which consists of a name'.

No. 25, in page 39, line 29, leave out from 'Kingdom' to 'and' in line 30 and insert 'if the name is used in immediate conjunction with the description "representative office" and, where the name appears in writing, if that description is at least as prominent as the name'.—[Mr. Denzil Davies.]

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