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. No insurance business transfer scheme or banking business transfer scheme is to have effect unless an order has been made in relation to it under section (Sanction of the court for transfer schemes)(1).".—[Mr. Timms.]
Brought up, and read the First time.
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§ Mr. Deputy Speaker (Sir Alan Haselhurst)With this it will be convenient to discuss the following: Government new clause 16—Insurance business transfer schemes.
Government new clause 17—Banking business transfer scheme.
Government new clause 18—Application for order sanctioning transfer scheme.
Government new clause 19—Requirements on applicants.
Government new clause 20—Scheme reports.
Government new clause 21—Right to participate in proceedings.
Government new clause 22—Sanction of the court for business transfer schemes.
Government new clause 23—Effect of order sanctioning business transfer scheme.
Government new clause 24—Rights of certain policy holders.
Government new schedule 1—Insurance and banking business transfer schemes: certificates.
§ Mr. TimmsIn Committee, the hon. Member for Arundel and South Downs (Mr. Flight) said:
There is also a lot of old law on banks, including the frequent requirement that banks get a private Act of Parliament when merging businesses. Will amendments be tabled to tidy that up in relation to the Bill?—[Official Report, Standing Committee A, 7 December 1999; c. 1185.]I gave the hon. Gentleman a slightly circuitous answer, but I can now come clean and say yes.New clauses 15 to 24 and new schedule 1 provide a new mechanism for sanctioning and giving effect to schemes to transfer business by certain kinds of authorised persons, specifically insurance companies and banks. The matter with which we are dealing is not takeovers and mergers in the usual sense. From a regulatory perspective, the relevant powers for takeovers are already in place in part XI. No other special arrangements apply to takeovers.
Instead, what is at issue is the merger of two distinct businesses into a single legal entity. That normally follows a takeover. For example, Lloyds Bank plc bought TSB plc some years ago, but it was only last year that a single company, Lloyds TSB plc, was formed and the transfer of the business took place.
In addition to transfers following takeovers, other cases might involve a situation in which a business—for example, a composite insurer—wanted to sell off its life business and concentrate on general insurance. In such cases, it would seek another insurer to which it would transfer its life business. That might be an essential part of a rescue of a failing firm.
I hope that the provisions, foreshadowed as they were by the hon. Gentleman's question to me in Committee, 993 will meet with the approval of the House. I hope that the House will welcome the rationalisation of the existing arrangements and their extension to banks, so that all deposit taking and insurance undertakings will be able to take advantage of an effective and efficient mechanism to transfer their business.
This is a positive development, which we believe will be welcomed by the industry. It should also be welcomed by customers of relevant firms—as I am sure my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins) will acknowledge—and others affected by qualifying transfers whose rights will be protected by the procedures in the new clauses and new schedule 1.
Question put and agreed to.
Clause read a Second time, and added to the Bill.