HC Deb 29 January 2004 vol 417 cc374-5
5. Mr. Alex Salmond (Banff and Buchan)(SNP)

What representations he has received on the performance of the Financial Services Authority; and if he will make a statement. [151546]

The Financial Secretary to the Treasury (Ruth Kelly)

Treasury Ministers have received a large number of representations, particularly in the context of the two-year review of the Financial Services and Markets Act 2000, on the performance of the FSA.

Mr. Salmond

Is the hon. Lady fully satisfied with the performance of the Financial Services Authority in terms of its recent and ongoing discussions with Standard Life? First, is any credence at all to be given to suggestions that information about those discussions was briefed to the press by sources within the FSA? Secondly, has she considered whether there is anything inherently anti-mutual in the new liquidity requirements that are part of those discussions? Do the Government have a position on whether companies should be in mutual ownership or be plcs?

Ruth Kelly

The hon. Gentleman makes a number of detailed points. As I set out in my written answer to Parliament, the FSA has total operational responsibility for regulatory decisions and independence under the Financial Services and Markets Act 2000. However, the FSA has kept the Treasury regularly informed of developments at Standard Life, under the terms of the memorandum of understanding between the Treasury, the FSA and the Bank of England. Of course I cannot comment on press speculation, but I can confirm to the hon. Gentleman that the Treasury has consistently supported the development of the mutuals sector by supporting private Member's Bills, which updated the legislation for industrial and provident societies. The new realistic accounting rules have been widely welcomed by the industry—by mutuals and non-mutuals alike.

Mr. Barry Sheerman (Huddersfield)(Lab/Co-op)

Does my hon. Friend agree that the FSA should take a lead on personal finance education and that even the increased amount, £120,000—out of a budget of £200 million£is not very much? As it is a priority identified by the FSA, surely the industry and the FSA should be putting serious money into educating the people of this country about personal finance.

Ruth Kelly

My hon. Friend makes an important point. Indeed, that was one of the issues raised by Ron Sandler when he looked at the functioning of the long-term retail savings market. The FSA has taken his recommendation seriously. It has set up a financial capability steering group, of which I am a member, to look at such issues from first principles. I am sure that the FSA will now take forward a proactive agenda on those issues.

Dr. Vincent Cable (Twickenham) (LD)

Did the Minister see the comments last week by Callum McCarthy, the chairman of the FSA, who talked about what he called dangerous levels of household debt? Can the Minister say precisely who is responsible for determining sustainable levels of household debt and new flows of credit? Is it the FSA, which has identified the problem but disclaims responsibility? Is it the Bank of England, which meets next week and has also disclaimed responsibility for asset markets and debt? Who is responsible for the problem?

Ruth Kelly

The Treasury and the Government have responsibility for the macro-economic environment in which consumers and the industry operate. The FSA has a specific responsibility for financial stability, but the Government's record on economic matters is one of which I am proud.

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