§ Mr. TimmsTo ask the Chancellor of the Exchequer if he will make a statement about the financial position of the Securities and Investments Board. [12326]
§ Mr. DarlingThe Treasury has today laid a minute to inform the House that the Treasury has issued a non-statutory guarantee to the Securities and Investments Board for up to £8 million.
This exceptional course is necessary to ensure that SIB is able to raise a commercial loan in order to finance work on preparation for assuming additional regulatory responsibilities after Royal Assent to the legislation announced in the Chancellor's statement of 20 May. SIB cannot use the fees that it raises under the current powers in the Financial Services Act 1986 for this purpose. The process of transition is described in more detail in my right hon. Friend the Chancellor of the Exchequer's reply of today to my hon. Friend the Member for East Ham. In particular, the documents mentioned in that reply make it clear that SIB, and its successor, will receive no support from public funds.
The guarantee will cover a loan sufficient for all SIB's preparation costs which can be foreseen now. This sum does not at this stage cover accommodation. The guarantee may therefore need to be extended at some point in the future, in which case I will notify Parliament of it.
The guarantee will remain in place until SIB obtains powers under the legislation to reform the financial regulatory system, to recoup its operational costs from the industry it regulates. This power will apply to the cost of transition as well as to SIB's on-going administrative costs. It is thus likely that SIB will need the guarantee for at least two years. I will ensure that the contingent liability continues for as short a period as possible. While the liability is outstanding, Parliament will be kept informed in the usual way.