My hon. Friend, who was a distinguished member of the Public Bill Committee, is absolutely right. I have given assurances to the House before that we will have enough time to consider these very important matters, and we always have done. In Committee, we arranged things in such a way that we were able to consider every line of the Bill and every amendment and new clause with time to spare. When I saw the amendments that had been tabled, I made representations through the usual channels to extend what in the original programme motion had been a one-day Report and Third Reading. I had said that I would reflect on the
volume of amendments and was able to secure an extra half day of consideration. I repeat that assurance—when the amendments return from the House of Lords, it is absolutely right that this House should have the chance to consider them all at leisure and thoroughly. My hon. Friend has my assurance on that.
Let me turn to amendments 1, 2 and 3. In Committee, I gave a number of undertakings that I would table amendments on Report. One such commitment related to the effectiveness of the ring fence, which is the common denominator of the amendments in this group. The hon. Member for Nottingham East (Chris Leslie) will immediately spot that amendments 1, 2, 3 and 4 act on a commitment I gave to the Committee that in turn reflected the recommendations of the first report of the PCBS, on which the hon. Member for Edmonton (Mr Love) and my hon. Friend the Member for Chichester served.
For Members who did not have the privilege of being part of our discussions in Committee, let me set the context. The Independent Commission on Banking set three objectives for the ring fence: first, to insulate essential day-to-day banking services against shocks originating elsewhere in the financial system; secondly, to make banks more resolvable; and, thirdly, to curtail the perceived implicit Government guarantees to banks, which follows from the first two. The Bill turns those ring-fencing objectives into law by making them part of the statutory objectives of the regulators—the PRA and the FCA.
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Clause 1 amends the Financial Services and Markets Act 2000 to require the PRA to seek to ensure that a ring-fenced bank’s business is carried out prudently and protected against risks that might threaten the continuous provision of core services. FSMA is also amended to require the PRA to seek to ensure that the failure of a ring-fenced bank will not interrupt the provision of core retail banking services in the UK. Like any other bank that is poorly managed, a ring-fenced bank will be allowed to fail, but to avoid serious harm to the wider economy essential core services must be kept running, which requires the PRA to ensure that the business of a ring-fenced bank is structured in a way that allows it to be resolved in an orderly fashion, if that bank fails. Questions were raised in Committee about whether the resolvability element fully captured all circumstances in which the regulators might need to ensure that a ring-fenced bank could fail safely, so the amendments clarify the fact that the PRA must seek to minimise damage to the continuity of core services caused by not only the failure of a ring-fenced bank, but the failure of any other member of its corporate group.