Genuine Economic and Monetary Union (EUC Report)

Debate between Lord Davies of Stamford and Lord Newby

Wednesday 2nd July 2014 Grand Committee

[Lord Newby (LD)]

My Lords, I begin by thanking the committee for its work on this report and all noble Lords who have spoken in today’s debate. It has been like a high-level seminar on the subject rather than a usual parliamentary debate. Although I would love to think that students around the UK and Europe will read our debate today, I fear that it will not get the attention that it deserves. It is also quite a novelty when replying to a committee report to find that quite a lot of the speakers were not on the committee. Very often, one is faced with just the members of a committee, who have tendency to repeat what is in the report and basically say how clever they were in producing it in the first place, whereas in this case not only were they clever—naturally—but they managed to draw in star outside participants to the debate, which I for one have greatly enjoyed.

The Government have consistently said that they support closer integration in the euro area to make the single currency work. The Government agree that a stable euro area is in the interests of all EU members, not just those in the euro area but those outside it, including, of course, the UK.

The work towards creating a genuine economic and monetary union, which the European Council tasked Herman Van Rompuy to take forward in June 2012 at the height of the euro area crisis, is an important part of this process. As we have seen on banking union, the UK will fully engage in any and all discussions, as and when they are taken forward.

At the same time, the Government have been clear that we will not join the single currency and, as such, we will not be part of this closer integration. Our priority is therefore to ensure that the single market is fully protected and that measures remain voluntary for those outside the euro area. We agree with the report that this will require “continued vigilance” and we have been closely involved in the negotiations, particularly over banking union, to protect UK interests.

We also want to ensure that, as the euro area continues to integrate—

[Lord Davies of Stamford]

The Minister has said that the Government are opposed to our joining EMU or GEMU—we know about that—but will he explain why the Government appear to be against our joining the banking union alone?

[Lord Newby]

Yes, my Lords, I will come to that.

We also want to ensure that as the euro area continues to integrate, the EU continues to operate fairly for those who remain outside the euro area, whether by choice, like the UK, or because they have yet to meet the criteria to join, like some other euro-outs, although I take the point that we do not meet those criteria either at this point.

As the Chancellor and Germany’s Finance Minister Schäuble set out in their joint Financial Times op-ed piece in March, non-euro area countries must not be,

“at a systemic disadvantage in the EU”.

We must ensure that EU institutions continue to work in the interests of all member states and last week’s Council conclusions, agreed by heads of state and government, contain important text about the need to address UK concerns.

[Lord Davies of Stamford]

I apologise for interrupting the noble Lord a second time. He said that the Government feel it is important that non-euro area member states not be at any disadvantage in the single market as a result of not being part of the eurozone. Does he not accept that the burden of our report, and indeed of the BBA document which has been quoted extensively this afternoon, is that willy-nilly, whether we like it or not, we will be at some disadvantage—probably increasing disadvantage—by virtue of being outside the EMU or banking union entirely, and we cannot do anything about that if we are determined not to join those systems?

[Lord Newby]

I think that the noble Lord, Lord Lamont, explained at the start of his speech the trade-off between influence and being a member of the EMU. I will come to this later but, obviously, in certain respects, we are going to be outside the room by not being members of either the eurozone or the banking union. We have to work very hard to ensure that we maximise our influence in those areas, of which the single market is the most central, in which we have a common view with many, if not most, of our EU partners about the need to reform and the direction that reform should take.

I will attempt to deal with many of the questions that I was asked by individual noble Lords during the debate. The noble Lord, Lord Harrison, asked whether the single resolution mechanism was too complex and therefore would not be effective. By definition, all resolution processes are complicated but the role of the single resolution board is very strong. This may be a vain hope but, from our own experience, we hope that the plethora of legislation and new structures will reduce the likelihood of major crises of which we have been previously largely unaware emerging at great speed.

One of the problems in the UK when RBS had to be effectively nationalised over the weekend was that the storm arose with great speed. If you contrast that with the position of the Co-op Bank last autumn, when it faced major, potentially life-threatening problems, a resolution was undertaken, not formally using the legislative framework but largely using the mechanisms that were envisaged there, and with the Treasury and the Bank playing a major role over a number of months in getting the Co-operative Bank into a position where it was able to resolve its own problems.

The involvement of political bodies other than the single resolution board is inevitable because of the significance of the decisions that are taken and the fact that if major banks are in real difficulty—a weakness we have seen in the UK—there is a political component and you have to take that into account as you are taking decisions. We would hope that the scope of the decisions that have been left to the Council is very circumscribed and that most interventions, even involving the single resolution board, would not require going up to that level.

The second question that the noble Lord, Lord Harrison, raised was whether the resolution fund is too small. On its own, it demonstrably is, if there were a major simultaneous problem with a number of the largest eurozone banks. The key thing here is that it does not have to bear the whole brunt of the resolution process on its own. Arguably, it does not have to bear the main brunt of it. That is the whole point of the resolution recovery directive and the bail-in procedure. The fund is not capable on its own of solving a major crisis, but it is one of a number of tools and not necessarily the largest or most important.

The final question, I think, that the noble Lord, Lord Harrison, asked related to the replacement of senior positions in the EU. As he knows, over the coming weeks, the European Council President will be taking soundings on this and I am no more able to suggest whom we might put forward, than my noble friend was at Question Time today. The UK is fully engrossed in those negotiations with the aim of making sure that we have candidates who will be able to deliver on the priorities agreed by the heads of the European Council last week.

Among other things, the noble Lord, Lord Lamont, has introduced a definition of nirvana that means that I will never think of the concept in the same way again. He ended his speech by saying, I think, that his feet tended to have to accommodate themselves to the shape of the shoe. My experience and expectation is that my shoes will amend themselves slightly to take account of the shape of my foot. I think that that is a rather important distinction in the way that we view our involvement.

This brings me to one of the central points of discussion, which was the importance of political will in terms of the future of the euro. In certain respects, the euro has defied logic because of the strength of the political will supporting it. I strongly agreed with the noble Lords, Lord Liddle and Lord Jay, about that. Once the political elites of the major eurozone countries have made up their minds that this thing was going to continue, it was going to continue barring the most unforeseen disaster. Those who predicted its demise simply did not grasp a very straightforward political fact.

The noble Lords, Lord Liddle and Lord Maclennan, asked linked questions about how we could play as full a part as we can in both the banking union and the mechanics of the eurozone. Obviously, we have ruled out membership, so the question is the extent to which we can play a role. I thought that the point of the noble Lord, Lord Kerr, about the role of informed co-operation and advice was very important here. We have very good relations with the ECB at all technical levels and UK officials are playing, and will continue to play, a big role.

The noble Lord, Lord Kerr, developed the concept of playing a bigger role in the banking union by saying that there was no logical reason why we should not be in it while remaining out of the eurozone. I am sure that that is logically the case. Why has it not happened? There are a number of reasons. First, the banking union has flowed from the eurozone crisis. I think it is inconceivable that we would have had such a banking union if all had been well with the eurozone, so the two are inextricably linked. I would also be interested, as a newcomer to the theoretical concept, to know whether there has ever been a banking union with banks that had two different basic currencies, or several currencies, because presumably the Swedes and others might also join.

The noble Lord, Lord Jay, made an important point about having more British people involved—

--- Later in debate ---

[Lord Davies of Stamford]

I am sorry to say I am not convinced by the Minister. We do, of course, have a derogation from the directive, as the Minister presumably knows.

[Lord Newby]

I remain of the view that the directive approach applies in financial services in the same way, broadly speaking, as it does in many other areas.

I am just about out of time but, briefly, the noble and learned Lord, Lord Davidson, made a point about whether the ECB had the ability to supervise. It has a big job on its hands and is taking on new responsibilities. As we have seen, getting the Bank of England fit for purpose has taken a lot of time and effort. Indeed, the only thing that will demonstrate whether it has succeeded is how it performs in a crisis. We hope it does not have to do that for some time but it is clearly taking on the job of supervising a very large number of banks, whether it is 250 or 6,000, or whatever it is. It is very big new job, and I wish it well in it.

I conclude by saying again how much I appreciate the work of the noble Lord, Lord Harrison, this committee and all speakers in today’s debate. It is clear that Europe will be at the centre of our political debate in the period ahead. That debate is often conducted in extremely depressing, ill informed and—to borrow a word from the noble Lord, Lord Hamilton—poisonous terms. During all this, I am sure that your Lordships’ European Union Committee will continue to be a voice of reason and common sense and that Governments of whatever persuasion will continue to value its reports. For my part, I look forward to participating in further debates upon them.

EU: Financial Transaction Tax (EUC Report)

Debate between Lord Davies of Stamford and Lord Newby

Tuesday 17th December 2013 Grand Committee

[Lord Newby]

My Lords, I will not go through a blow-by-blow account of which member state we spoke to at which point. The view was taken, which I believe was the correct one, that at that stage this proposal was unblockable, because of the political will to which the noble Lord, Lord Liddle, referred. We may think that other member states are misguided. History may prove they are misguided. But there is a slight tendency in the UK to believe that we always know best. We may well know best in this case, but the French and the Germans think they know best, and it is a bold UK Government—or committee of your Lordships’ House—who are unambiguously sure that they know better than a large number of major EU member states.

[Lord Davies of Stamford]

My Lords, I put it to the Minister that the Government’s position is completely absurd. He is saying that the Government did not vote against this proposal because they thought they had a majority against them. Any democratic institution would break down if no one bothered to vote because they thought that at any one time there might be a majority against them. If the Government really felt strongly about something, so strongly that they were prepared to litigate, which is a much more provocative thing to do because it would put at risk all sorts of good will, the least they could have done would have been to have voted against it when they had the opportunity to do so. By not doing so, they lost a great deal of credibility.

[Lord Newby]

As I said earlier, we will have to agree to disagree on that. I do not believe that the Government have lost credibility in the EU because of the stance they took. People believe that the Government understood the political realities.

EU: Fraud (EUC Report)

Debate between Lord Davies of Stamford and Lord Newby

Wednesday 11th December 2013 Grand Committee

[Lord Newby]

My Lords, it is a slightly flexible definition. The best I can do is draw to the Home Office’s attention the strength of feeling that clearly exists in your Lordships’ House that this decision should now be taken quickly.

Moving on to the European Public Prosecutor’s Office, the Government accept that multijurisdictional crime against the EU budget is European in nature but believe, as noble Lords pointed out, that an EPPO is not the only or the right solution to the problem. The noble Lord, Lord Rowlands, gave some of the arguments for that, but I repeat our view: a centralised European prosecutor with harmonised powers to initiate investigations and order investigative measures is incompatible with the division of responsibilities in many EU countries where law enforcement and prosecutors have different roles from that of the independent judiciary. As such, it would require fundamental changes to those member states’ legal systems and existing operational structures to implement the Commission’s vision of a supranational body with powers of investigation or prosecution within UK jurisdiction.

The Committee asked how the UK would address the shortcomings in existing processes for tackling fraud in the absence of being a participating member of the EPPO. The Government will continue to focus on preventing and tackling fraud against the budget and draw on their new approach to policing fraud. On the response to identified crimes, the Serious Fraud Office uses a similar model to the EPPO by bringing prosecutors and police together to fight serious fraud but there are differences. There are limits to the SFO’s statutory investigative powers but the existence of the SFO at national level is evidence of a domestic model that is similar to the EPPO proposal. Further, the creation of the National Crime Agency’s Economic Crime Command means that we have an opportunity to pull expertise in anti-fraud work into a dedicated policing unit. The ECC will work closely with national police forces and partners as well as the EU and international equivalents.

[Lord Davies of Stamford]

I am grateful to the Minister for giving way. If, as on the Minister’s own admission, the Serious Fraud Office and the ECC have structures that are very similar to the proposed EPPO in that they combine investigative and prosecuting functions, what is the ideological objection to accepting the EPPO? It appears that we have already accepted that those two functions should be shared by the same agency. The Minister will know that there is no suggestion that the courts—the judicial function—should be combined with the EPPO. The EPPO having decided to prosecute would have to do so in front of judges who would be quite independent from it.

[Lord Newby]

As I said, among other things there are differences between the SFO’s investigative powers and the EPPO proposal’s powers. As I should have said, it was a component of the coalition agreement that the UK would not support our involvement with such an organisation. That remains our view.

[Lord Davies of Stamford]

I am grateful for what is clearly a very honest and frank statement by the Minister. That gets to the heart of it. His previous remark left the impression that he was desperately trawling around to find some minor detail of difference between the structure of the SFO and the proposed EPPO to justify a decision that cannot be justified on pragmatic grounds. As he said, it is essentially a political decision. The Committee, the House and the public will be grateful for his frankness.

[Lord Newby]

My Lords, I think that the noble Lord is slightly confused about the difference between a political decision and a sensible decision. Just because something is in a political agreement does not mean that there are not very serious substantive reasons for it, apart from any reasons that he would disapprove of. I am sure that that is the case in this particular example.

There were two final things that I wanted to pick up on. The noble Lord, Lord Bowness, asked about the relationship between OLAF and the Supervisory Committee and what could be done and might be happening. This is an extremely unfortunate dispute that has arisen, and there is a limited amount that the UK Government can do on their own to resolve it. We accept that the Supervisory Committee has an important role but, equally, it is important that it does not operate in such a way as to impede OLAF’s work. We are trying as best we can not to knock heads together—that is perhaps too strong—but to use what influence we have to get these two bodies to work together. It is extremely depressing to read that part of the committee’s report and evidence because it is the kind of thing that legitimately gets the EU and its ways a bad name.

The final issue that I want to address, which the noble Baroness raised, is on how we would engage with committees on the PIF directive. This has raised difficult issues for the UK, and Ministers across government have been considering how best to approach the proposal. Discussions within government are now reaching their final stages, and we hope to be in a position to offer the relevant scrutiny committees a fuller explanation shortly. At the same time, we will seek to address the concerns about the opt-in trigger point.

This has been an extremely useful debate on an extremely important issue. I hope that I have been able to explain how the Government are tackling it. I realise that I will not have satisfied noble Lords in every respect, but I will speak sternly on noble Lords’ behalf to colleagues in the Home Office so that we might make progress at least in that respect.

Finally, I thank the committee for its work and for holding the Government to account in this area of our work.

Payday Loans

Debate between Lord Davies of Stamford and Lord Newby

Wednesday 11th December 2013 Lords Chamber

[Lord Newby]

My Lords, a real-time database is one of the things that the FCA will be looking at. In some of the countries and US states where they have effective caps on the cost of payday loans, such systems have been seen to work efficiently and be very effective.

[Lord Davies of Stamford (Lab)]

My Lords, we heard a moment ago about the danger of lenders from other EU countries undercutting any legislation or regulation that we introduce in this country. Has the noble Lord considered discussing with the European Commission the possibility of legislating on an EU-wide basis for the single market as a whole?

[Lord Newby]

My Lords, this is a rapidly moving area. If you go back five years, it was not an issue. We are discussing with other member states the operation of the consumer credit directive, for example, and the way in which the market is evolving. As the FCA moves towards putting in place a cap of the total cost of payday loans, we will see exactly how the system is working in the majority of those member states that already have a cap and whether there is any real advantage in moving to a Europe-wide system, or whether the series of national caps is proving effective.

Financial Services (Banking Reform) Bill

Debate between Lord Davies of Stamford and Lord Newby

Tuesday 26th November 2013 Lords Chamber

[Lord Newby]

It is not saying a huge amount, but it is saying something, and I hope that because we are talking about a much smaller number of amendments we will be able to concentrate the entire brainpower of the Treasury on them so that we can bring them forward with the maximum possible notice.

[Lord Davies of Stamford]

Does the noble Lord agree that if we are to make a real difference this time—and he will sense a scepticism about that, which we face in this country and even in this House as a result of the appalling situation that we have had—we will need to emphasise, and really substantially emphasise, the issue of personal responsibility? Would it not in that context be necessary that individuals in this country should in future be subject to fines for regulatory breaches, as happens elsewhere?

[Lord Newby]

My Lords, that is the key focus of the senior managers regime—that, for the first time, senior managers and their banks will have to tell the regulators what the specific responsibilities of those people are, and we are introducing enhanced penalties if people do not stick to those responsibilities and break the rules. I think that we are indeed doing what the noble Lord requires us to do. I hope that when the noble Lord, Lord Lawson, and the most reverend Primate see our amendments, they will feel that we have done everything we can to meet their requirements.

Amendment 21, proposed by the noble Lords, Lord Eatwell and Lord Tunnicliffe, is an amendment which we saw in Committee. As I explained on that occasion, it would really just rename the existing approved persons regime as a “licensed” persons regime. The only extra feature in the proposal is for annual validation of competence by the regulator. This would have the effect of increasing the number of approved person applications from around 30,000 to around 150,000 a year. This would mean an unnecessary and costly extra burden on firms and regulators.

The Official Opposition’s amendment would not deliver the real reforms proposed by the parliamentary commission, which Clauses 14 to 26 of the Bill deliver and which we will enhance. It would just add to regulatory burdens without producing any real improvement in standards of conduct in the industry. I hope, therefore, that the noble Lords, Lord Eatwell, will agree to withdraw his amendment.

Sterling: Exchange Rate

Debate between Lord Davies of Stamford and Lord Newby

Tuesday 25th June 2013 Lords Chamber

[Lord Newby]

My Lords, the Government have no policy in terms of the exchange rate. Equally, the MPC does not target the exchange rate. However, the Governor of the Bank of England, before he retired in recent months, said on a number of occasions that he thought that the level of sterling is, in his view, now about right.

[Lord Davies of Stamford]

Is it not the case that under the brilliant economic management of this Government we have got the worst of all possible worlds? We have had a devaluation and the classic cost of that—an inflation rate which is about twice the eurozone average—but we have had none of the advantages: the balance of payments has got worse; the deficit has increased not fallen; growth has been imperceptible; we have the third lowest rate of capital investment in the EU; and under the most recent growth and employment figures, it appears that productivity is either static or declining.

[Lord Newby]

I do not agree with the noble Lord. The April trade figures show a deficit in goods and services of £2.6 billion, compared with a figure of £4.6 billion 12 months ago.

European Banking Union: EUC Report

Debate between Lord Davies of Stamford and Lord Newby

Thursday 24th January 2013 Lords Chamber

[Lord Newby]

Yes, of course. It will not be a comprehensive letter in the sense that not all the countries have expressed a position, as I said, but one or two have and we can collate those relatively easily.

The noble Lord referred, as I did in my introductory remarks, to the importance of the MoU between the Bank and the ECB. We agree with him that it is crucial in setting the tone for the supervisory relationship. The Bank and the FSA are already working with their ECB counterparts and both sides, as it were, are keen to ensure that we have a robust approach to supervision of cross-border banks and cross-border financial services activities.

The noble Lord, Lord Hamilton, was the gloomiest voice in the debate. I would like to comment on two of the points that he raised. The first was about accountability and the extent to which there is a democratic deficit. The ECB is accountable to the European Parliament and the European Council. National parliaments of participating member states will be able to hold it to account through questions. I think that for the foreseeable future national parliaments will play a larger role in terms of the profile of the accountability than does the European Parliament, given its low profile. This debate here is an example of the kind of thing that one hopes would be happening across the EU.

The noble Lord, Lord Davies of Stamford, raised a number of issues and came up with three logical outcomes in terms of our supervision compared with that of the ECB: either we do what it says or it will be more or less strict—I paraphrase the noble Lord. That is slightly misleading, given that we are working towards a common rulebook. So the supervisory approach will be broadly common. For example, the recovery directive is one way in which there will be a broadly similar approach across the EU, with or without the banking union.

[Lord Davies of Stamford]

I am very grateful for the Minister’s comments. Of course, the rules themselves—such as those relating to liquidity ratio, capital ratios, capital adequacy and so forth—will be set up by the EBA, and there will be a common rulebook. However, supervision is about how strictly the banks’ activities are looked at, and that affects authorisation, licensing and review of the asset quality of the banks concerned. In these areas potentially there will be very considerable scope for a difference of approach by different supervisors. That is exactly what I meant by more and less strict approaches.

[Lord Newby]

To the extent that there will be, in effect, two major supervisors—ourselves and the ECB—I think that the MoU will help in that respect.

The noble Lords, Lord Dykes, Lord Flight and Lord Liddle, all talked about the role of London and what the impact of this will be. Undoubtedly for many companies, particularly financial services companies, the City is their entry point to Europe and to capital markets more generally. Regardless of whether they are successful in actually trading in Europe to the extent that they want, that is undoubtedly the way it is seen. It is very important that we work extremely hard, as we go forward, to make sure that the single market is embedded and strengthened and that we protect the City at the same time. I would love to have a long debate with the noble Lord, Lord Desai, about the future of the eurozone economy, but I fear today is not for that.

The noble Lord, Lord Liddle, asked whether we had looked at being a member of the banking union. The truth is that once we had decided that we were not going to join the euro, that was off the table. All parties have agreed in recent years that joining the euro is not for the UK at this time; sadly, that is where we find ourselves. I agree with the noble Lord that there is a real problem about social and political consent for the austerity packages across the EU. Nevertheless, in some countries—Ireland is probably the best example—there is a real sense of a corner having been turned and major new foreign investment in that country, which suggests that foreign investors also think so.

The Government support comprehensive banking union in the eurozone, and we will do what we can to promote its development while safeguarding the UK’s role as a regional and global banking centre. We look forward to being informed and influenced by the noble Lord, Lord Harrison, and his committee.

Financial Services Bill

Debate between Lord Davies of Stamford and Lord Newby

Tuesday 20th November 2012 Lords Chamber

[Lord Davies of Stamford]

My Lords, I was struck by my noble friend’s amendment. In reading it, I wondered whether this was already a provision which applied, quite outside the passporting context in which she moved it, to deposits in this country. I cannot see any reference to a rule of this kind elsewhere in the Bill. It may be that it is already part of statute law or part of the rule book of the FSA—and the FCA to come—but, looking back on my own experience, I do not normally have deposits which are greater than the threshold, which I believe is £85,000. On any such occasions when I have, I do not recall a bank telling me that part of my deposit was not subject to the national retail insurance scheme or to consumer protection. That seems to be a great weakness in the system and I would be grateful if the Minister could tell me what the rules are relating to the taking of deposits. Is this or is this not an obligation of a bank taking a deposit now which is in excess of that ceiling? I may be wrong in saying it is about £85,000, as it may have increased since I last heard a figure. If not, such an amendment should be made and this Bill presents us with an opportunity to do so.

I think we all agree that a balance needs to be struck here. No one is suggesting that the state should guarantee all banking deposits. That would be a massive moral hazard and would mean that depositors no longer had to interest themselves in the quality of the banks with whom they are investing. Equally, I think we all agree that it is unreasonable for small depositors to make a credit assessment of the banks with which they are depositing small amounts of money. It is not just a question of looking at the solvency ratios or capital adequacy ratios. You need to look beyond that if you want to assess the credit-worthiness of the bank. You look at the quality of the assets of the bank and the quality of its deposits. These are areas where it is not only difficult for an individual to come to a judgment but where we know that there has been fantastic regulatory failure throughout the world, particularly in this country.

The FSA’s behaviour in this matter was negligent to an extraordinary degree. It never seemed to interest itself in the declining quality of the assets of many British banks, which were buying more and more CDOs, for example. It never seemed to interest itself in the deteriorating quality on the liabilities side of the Northern Rock balance sheet and the fact that Northern Rock was becoming excessively dependent on wholesale deposits. If the regulators fail so badly, it is all the more important that the protection available for small or medium depositors is great.

It is very important that people should know because, as I have explained, even though I try to take an intelligent general interest in these matters I do not know exactly where the threshold currently lies. In my experience, I have certainly not had a notification from a bank that I may be placing deposits with it that are not in any way subject to such a guarantee. That is an enormously important aspect of the risk involved in such a transaction and, clearly, it ought to be brought to the attention of retail depositors. Is this currently part of statute law? Is it currently part of the rule book and, if not, is this amendment an opportunity to make it so or should we take another opportunity in this Bill to bring forward an amendment of that general kind?

[Lord Newby]

My Lords, I think everyone is agreed that the regulators should require banks to make their customers aware when their deposits are not covered by the Financial Services Compensation Scheme.

[Lord Davies of Stamford]

Did I hear the noble Lord say that it is a requirement from regulators that banks should notify their depositors when they are covered? If so, that is quite wrong. They should be notified when they are not covered. That is the important thing. It is no use notifying them when they are covered and saying nothing at all when they are not covered, for that is when the risks arise.

[Lord Newby]

My Lords, as I was saying, the regulators make considerable existing requirements in this area and I will explain what they are. Firms from the EEA that passport into the UK are covered by their home-state compensation scheme rather than by the Financial Services Compensation Scheme. It is obviously right that consumers are made aware of it but, as we have said before, this already happens. The FSA already has rules requiring this in the COMP 16 section of its handbook. Explicitly, EEA firms passporting into the UK are required to inform their customers that they are covered by their home state scheme. This is already included on customers’ bank statements and notices are prominently displayed in their branches.

This is what the text says:

“Your eligible deposits with [insert name of firm] are protected up to a total of 100,000 euro by [insert name of compensation scheme]”—

depending on which country is involved—

“… and are not protected by the UK Financial Services Compensation Scheme”.

Any deposits you hold,

“above the 100,000 euro limit are not covered”.

This wording is already being displayed and circulated to potential customers of these branches. In tandem, the FSCS has launched a programme to raise awareness of the scheme in general and to inform consumers how they can check whether they are covered by the scheme, so it is clear to us that this amendment is simply unnecessary. The FSA and FSCS are taking action in this area already and we strongly believe that that will continue once the new regulatory system is in place. It is right that the regulators and the FSCS have the flexibility to address this issue in the way that they see as most appropriate. On this basis, I trust that the noble Baroness will feel able to withdraw her amendment.

[Lord Davies of Stamford]

The noble Lord has read out the text of the communication which banks in this country must make to depositors who are resident in other EEA countries when they deposit more than the threshold amount of €100,000. Can he read out the text of the communication that banks in this country are obliged to make to depositors resident in this country when they deposit with them amounts over the threshold of £85,000 or whatever it is?

[Lord Newby]

I will check what I said, but it may have covered what the noble Lord is looking for. If it does not, I shall write to him with the relevant wording.