Bank of England and Financial Services Bill [Lords] — House of Commons, 2016-04-19
Topic: Domestic Commerce
Helen Catherine Goodman (Labour, Centre-left): I am pleased to follow the hon. Member for Broxbourne (Mr Walker) who made an excellent speech on an important subject. He showed his characteristic bravery and forcefulness in addressing an issue that many other hon. Members wanted to address, but were unenthusiastic about putting themselves in the firing line The Minister said earlier that everybody is happy with this Bill, but now that we are discussing the regulation of financial services, she may discover that Labour Members are not quite so happy with this part of the Bill. I wish to speak in support of amendments 8 and 9, and I am also sympathetic to amendment 2 tabled by the Scottish National party. Getting the senior management regime right is vital for reducing the risk of further irresponsible behaviour in financial institutions, particularly the banks. We all know the devastating impact that the behaviour of the banks had on rest of the economy—anyone who is in any doubt about that should see the film "The Big Short", which wonderfully describes that episode, albeit from an American point of view The clauses on the senior management regime are a retreat from the sensible legislation introduced in 2012, following the Parliamentary Commission on Banking Standards, which recognised that one way of changing behaviour and culture is to make those people at the top of the banks accept their full responsibility. The clauses in the Bill no longer do that. It is completely sensible for people to be expected to have the same responsibility for the behaviour of those who work for them that other institutions have for health and safety We have heard a number of arguments for the Government’s decision to reverse the reversal of the burden of the proof—rather an awkward mouthful—and one of the main arguments is that the regulatory approach that was legislated for in 2012 is too burdensome. This, however, misses the whole point, which is that we want people to spend more time looking at how to reduce risk rather than spending a great deal of time on how to make lots and lots of money irrespective of the risks posed to the economy. The risk does not apply ultimately to themselves on their own account, but it infects all other financial institutions I attended a seminar in the City last week, and senior practitioners from law firms, accountancy firms and from some of the big asset managers were in attendance and proved to be supportive of the original parliamentary commission approach. I expressed my feeling that it was disappointing that the Chancellor was going back on this, and suggested that he was not doing it as a whim, but because he had been lobbied to do so. I asked why they thought he had been lobbied in this way. It was, of course, a naive question, and I had no idea what the answer would be. They all roared with laughter and said, "Well, it’s obvious. It’s a way to facilitate people making millions of pounds without facing any downside risks." We cannot put ourselves in that situation again. The cost of the bail-out in 2008 was £133 billion. We really must take seriously the lessons that can be learned from that, which is why the amendments tabled by my Front-Bench team and by the SNP should be taken seriously and accepted by the Government.