Building Societies (Insolvency and Special Administration) Order 2009

My Lords, I am grateful to the Minister for setting out the purposes behind the order and regulations, together with their content. When we passed the Banking Act, we did not envisage that its first use would be for a building society, and we probably did not envisage that it would have to be used quite so quickly. I note that the noble Baroness is very concerned that we have generic provisions in front of us, rather than ones that relate specifically to the Dunfermline Building Society. However, it seems to me, particularly as the consultation that has been discussed does not finish until July, that we may well need these powers again before July. If, replacing these two orders, we had specific powers just for the Dunfermline Building Society and then another building society got into difficulties, which is by no means impossible, we would be back to square one, before the consultation was finished, debating almost identical orders. I am not sure that that would make a whole amount of sense, and I understand why the Government have proceeded in the way that they have. It would obviously have been better if the Treasury had consulted in advance, but I cannot whip myself up into a lather of indignation in this case because I think that there is general support within the financial sector, not least within the building society sector, that the Government’s action in respect of Dunfermline Building Society definitely made the best of a bad job. So far as I am aware, no one has come up with a better set of proposals for dealing with that immediate crisis. Indeed, I had a discussion with the Building Societies Association only today and that is very much its view. It made no criticism of either the substance of the way in which the Dunfermline Building Society transfer took place nor, as far as I could ascertain, the instrument before us tonight. Partly guided by that, I do not intend to subject the Minister to quite such a vigorous viva as that from the noble Baroness. However, I have one or two questions. The first relates to the consultation and ongoing application of the special resolution regime to building societies. The Treasury memo which accompanies the Merits of Statutory Instruments Committee report referred to the fact that the Banking Liaison Panel was going to advise on the application of the special resolution regime to building societies. Given that building societies are very much a world of their own, can the Minister say to what extent they are represented on the panel? Unless they have pretty strong representation, the panel is not an ideal vehicle for undertaking that kind of consideration in matters relating to building societies. I have a couple of questions about costs. The first relates to the extent to which the Financial Services Compensation Scheme is funded by the building society sector. As the Minister will know, and as I think we discussed during the passage of the Banking Bill, there is a sense of injustice among building societies about the amount—which is not based on risk—that they have to pay into the Financial Services Compensation Scheme. It seems rather extravagant that Nationwide has had to pay as much as £235 million into the scheme. That is a substantial figure for a building society, even of that size. As the Minister will know, building societies have suggested that contributions to the scheme should be based on risk, as happens with the pension protection scheme. Do the Government have a view on whether that might be a better way forward? One problem that the building society sector faces is that, whenever the societies’ affairs are discussed in your Lordships’ House, we hear warm words from the Government about what a terrific lot they are, but the truth is that they are not prospering as well as they might at the moment for a number of reasons, a contributory factor being the amount that they have to put into the scheme. As we are talking about who will meet the costs, I have a final question on that subject. One cost involved in any procedure such as that undertaken with the Dunfermline Building Society is that advisers tend to be used by +government to help with the process. In some cases, the costs that have at least been reported as being paid by the Government to advisers from the financial services sector and to lawyers appear little short of extortionate. What assurances can the Minister give us that the Government are getting good value for money from their professional advisers, who clearly at a time of stress themselves see the Government as a good cash cow when it comes to this kind of business? To a limited extent at least, I think that it undermines the good will towards some of the activity that the Government undertake in this area, and it certainly suggests that the City, in its various guises, has yet to come to terms with the fact that we live in a rather different world compared with a year ago.