I was not able to participate in the Public Bill Committee or the parliamentary commission, but I have followed their work from a distance. We must recognise the important progress that has been made over recent weeks and months.
I praise my hon. Friend the Member for Chichester (Mr Tyrie), Chairman of the Treasury Committee and of the parliamentary commission. He has taught me a lot during my time in Parliament. Tim Knox, the director of the Centre for Policy Studies, has said of my hon. Friend that
“he’s quite prepared to argue half the night over whether a comma should be a semi-colon—which is reflective of the seriousness with which he takes his work.”
My hon. Friend is prepared to do a lot more than that. He is prepared to debate and work tirelessly for months on end with colleagues on both sides of the House and with Ministers to move matters forward.
The huge progress that has been made in recent months on this important subject is also a credit to the Minister and his colleagues on the Front Bench. The Government’s response, which was published yesterday, moved the debate forward. On page 22, it summarises the failure that took place at HBOS. I worked at HBOS from 2005 to 2007 and saw at first hand the problems with the federal structure at the bank. I hasten to add that I worked in the general insurance side of the business, which was performing particularly well. It was clear that there was a problem with managing risk across the entire business. It was also clear from my interactions with the Financial Services Authority that it did not have a grip on the regulation of the smaller parts of the business or the business as a whole. It was clear that my business friends in Yorkshire who worked outside the bank recognised that the bank was involved in very racy deals. They kept asking me how the bank could support them. The FSA clearly was not paying sufficient attention to what was going on.
The Bill is vital. It is critical to bringing about the individual accountability that many of us want to see across our financial services sector, with the tough senior persons regime, reversing the burden of proof and criminal sanctions for reckless misconduct. All those steps are vital, as is the ring fence and the attempts to electrify it. They will bring about a meaningful distinction between what goes on in retail banks, which are vital for individuals and small businesses, and more risky investment banking. In my interaction with other banks, such as HBOS and Barclays, it was clear that they had very different cultures and needed to be brought under control. The ring fence will help to do that.
It is important to bring about enhanced competition. I helped to launch Asda’s introduction to financial services, and other retail brands have moved into financial services too. As my hon. Friend the Member for Hexham (Guy Opperman) said, we need new entrants. That will encourage greater competition and help us in our task
of building trust in our financial services sector. It is good to see, in recommendation 4.22, that the Government will be initiating an independent study into the feasibility of the costs and benefits of full account portability. Bold, radical steps are required to move things forward and build the trust we want to see in our financial services sector. I commend the work of the parliamentary commission and the Government in taking these steps forward.
5.16 pm