Bank of England and Financial Services Bill [Lords] — House of Commons, 2016-04-19
Topic: Domestic Commerce
George Kerevan (Scottish National Party, Centre-left): I should like to speak to amendments 1 and 2, tabled in my name, and in passing to amendments 8 and 9, tabled by Labour Members. I shall not press amendments 1 and 2 to a vote, but should Labour Members move on amendment 8 and the consequential amendment 9, we will support them There is much in the Bill to commend it to us and to the House, and much that will add to the regulatory regime and its performance in the UK. However, the worst part of this legislation—the time bomb ticking away inside it—is the Government’s attempt to shift legislation that they put in place only four years ago on the reverse burden of proof for major financial infractions. That is the nub of the matter. Legislation was introduced four years ago that identified senior managers in major banks and other financial organisations and stated that if a serious infraction of regulations was encountered on their watch, they would automatically be held responsible unless they could prove that they had taken due steps to prevent it from happening That legislation had a great deal of support in the House and among the public, because it was the one sure way of ensuring that those at senior level in the financial sector would not continue to do what they had done all through the 2007-08 crisis: blame everyone else and say that it was not their fault. The legislation made senior managers responsible, just as senior managers in other organisations and utilities have become responsible for major crises Why would the Government want to change that law before it even came into operation this month? That sends out the wrong signal. When we put legislation in place that has consensus behind it, we should try it and see whether it works. However, the Chancellor, whose constant refrain is that he has a long-term economic plan, has decided to change the legislation before it has even come into operation. That change sends out all the wrong signals. The Minister will probably say that the measure is disproportionate now that the Government have widened the number of people being caught up in the senior management regime to tens of thousands, and that applying the law could become problematic. I know all the explanations, but I put it to her that by reneging on legislation that was put in place with great fanfare four years ago before it is even operational, the Government are simply signalling to the rest of the world that they are loosening the regulatory bonds. They might think that they are not doing that, but they are sending out the wrong signal The Government have been sending out another signal as well. For years, the Chancellor and other Treasury Ministers have been telling us that we should pay lower taxes, that taxes are bad, and that we should keep more of our own money. Suddenly, however, when we discover that hundreds of thousands of people are setting up secret offshore bank accounts, the Government get all holy and moral, saying, "We didn’t mean you to do that!" This Government sometimes speak with two voices. Individual Ministers are honest and sincere, but they do not understand that they sometimes speak with one voice on taxes and regulation and then do the opposite. It sends out the wrong signal. The Government cannot go on blaming other people. They are to blame if they change the rule without having put it into force for at least a few years to see whether it works. That is why we must leave the provisions in the Financial Services Act 2012 until it has been proven that they do not work.