HL Deb 09 June 1997 vol 580 cc761-4

2.52 p.m.

Baroness Turner of Camden

I beg leave to ask the Question standing in my name on the Order Paper. In putting the Question, I declare my interests. My trade union has many members working in the financial services industry. In addition, I was until last month chairman of the PIA ombudsman council and am currently chairman of an organisation known as the Financial Services Forum, concerned with independent financial advisers.

The Question was as follows:

To ask Her Majesty's Government with whom they intend to consult concerning the proposed new regulatory regime for financial services, and what timetable they have in mind.

Lord Haskel

My Lords, my noble friend's interest and expertise in financial services are well known. She will be aware that much consultation took place with practitioners and consumers during our time in opposition. Proposals emerged in favour of consolidation and integration. Work is now in hand to take those proposals forward, and there will be opportunities for all to contribute to the process. The transfer of responsibility for banking supervision to the Securities and Investments Board will be covered in the Bank of England Bill, which will be introduced this Session. The Government plan to publish a draft Bill to reform the financial services regulators for consultation in the first half of 1998.

Baroness Turner of Camden

My Lords, I thank the noble Lord for that response. Is he aware that many people working in financial services fully support the notion that there should be a thorough review of regulatory systems, many of which are fragmented, confusing and not consumer-friendly.

The industry is very complex. The unions involved came together in a body called the Alliance for Finance and would welcome the opportunity to have some input. Will there be a White Paper, with an opportunity for this House to have some input? I am well aware that there are a number of noble Lords on all sides of the House with experience and expertise in financial services.

Lord Haskel

My Lords, no decision has yet been taken regarding a White Paper. However, there will be plenty of opportunity for consultation. Indeed, the noble Baroness may have noticed that in today's Financial Times it is reported that my right honourable friend Mrs. Ann Taylor, the Leader of the Commons, says that she is keen to allow standing committees scrutinising legislation to receive submissions from outside bodies.

Lord Ezra

My Lords, will the noble Lord kindly indicate whether it will be the intention, following on from the supplementary question asked by his noble friend Lady Turner, to simplify the new regime? Does he agree that the existing regime is far too complex? Will the Government bear in mind that the simplest way of operating control of financial services is to make a distinction between wholesale operations, which are the work of professionals, and retail operations, which involve members of the public?

Lord Haskel

My Lords, it is the Government's intention to separate retail and wholesale regulation. The purpose of the reform is to simplify and streamline the whole system of regulation so that it can be more responsive and effective in the 21st century.

Lord Marsh

My Lords, does the noble Lord accept that there is a wide-ranging argument relating to the whole future of regulatory authorities in general and some fundamental issues, of which financial services are one part? Is the discussion of financial services likely to take place against the background of a general review of some of those issues and of how regulation works in modern society?

Lord Haskel

My Lords, the Government are committed to statutory regulation. They are keen that the City of London should retain its pre-eminence but that the public interest should be at the heart of regulation. Proper and clear accountability should be apparent. We do not suggest an overbearing bureaucracy but a more efficient and effective regulator to adapt for the modern financial world.

Lord Campbell of Alloway

My Lords, is it proposed that the sanctions for breaching the regulations should be civil, criminal, or an amalgam of both?

Lord Haskel

My Lords, that will become apparent when the Bill is published.

Lord Dean of Beswick

My Lords, is the Minister aware that when the Financial Services Bill passed through this House, Labour's Front Bench spokesman warned the Government that its provisions would not be sufficient to achieve the objective and that that comment, like others, was totally ignored?

Lord Haskel

My Lords, I was not a Member of this House at the time; however, I can well imagine that such comments were made. The Government are now setting out to put such matters right.

Lord Mackay of Ardbrecknish

My Lords, it appears from the replies that a little more preparation should have been done before the Chancellor of the Exchequer made his premature announcement. Will the Minister confirm his statement that a draft Bill will be published early in 1998? Does that therefore mean that a full Bill will not be presented to Parliament until the 1998–99 Session and will therefore not appear on the statute book until 1999? Is not that length of time ridiculous? Will it not lead to the equivalent of planning blight in the regulators that already exist as their people move on to new pastures in the knowledge that, some time towards the end of the century, the shutters will come down on their current jobs?

Lord Haskel

My Lords, as I said, the banking regulation Bill will be presented to the House during this Session. The Government plan to publish the draft Bill on financial services regulation for consultation in the first half of 1998. There will be some delay in the financial services regulation. However, the Government are anxious to present their proposals. In their Plans for Business presented during the general election, their commitment to reorganising financial services regulation was clearly stated and they want no misunderstanding as to the fact that they intend to proceed.

Lord Peyton of Yeovil

My Lords, given the proposed delay in introducing financial services regulation, are we to take it that the Government are actively engaged in the search for comprehensibility, and that they accept that comprehensibility in this field is a virtue?

Lord Haskel

My Lords, the Government are consulting with the practitioners and the public. The public are committed to having pensions and all kinds of financial services and it is difficult for them to change from firm to firm. It is for that reason that the Government are anxious to consult with the public and with the practitioners.