Financial Services (Banking Reform) Bill

Debate between Emily Thornberry and Cathy Jamieson

Wednesday 11th December 2013 Commons Chamber

[Cathy Jamieson]

My hon. Friend makes a valuable point. It would have stood us in good stead had we had such an opportunity. I have only been a Member of Parliament for a relatively short time, and others will have much more experience, but it seems to me unusual to have so many amendments at this stage of a Bill. External bodies have made significant representations at this stage, which is also unusual and shows the strength of feeling about the issue of banking and its culture. It also shows that people have been thinking about how to future-proof the Bill, not simply to repair damage done in the past, but to ensure that we do all we can for the future. Some people may feel that this has been a tick-box exercise and a part of the process that does not matter as much, and it is rather sad if that has been the case.

We know that we have a huge amount more to do. Only today we have seen the latest news about Lloyds bank being fined again. It is also fair to say that as the weeks and months have unfolded during the Bill’s passage, we have seen various situations emerge. I have written to the Minister on the recent issues on forex, and we have also had the sad events at the Co-operative bank and the outcome of investigations into the LIBOR rigging. Those all show that more issues may arise that will have to be dealt with properly, and we want to ensure that the legislation we put in place is able to do that.

[Emily Thornberry]

Is my hon. Friend satisfied with the definition of senior bankers as those who would be liable to be prosecuted? Is it sufficiently clear and is it felt that it covers those people who really would be directing proceedings?

[Cathy Jamieson]

My hon. Friend makes another interesting point. She has already raised the likelihood of criminal proceedings, and in that context the Minister made comparisons with other legislation. I was concerned about the comparison with legislation on corporate manslaughter, which my hon. Friend obviously knows a considerable amount about. We have to ensure that definitions are as tight as possible, so that things do not slip through the net at a later stage. I hope the Minister will be able to provide clarity on those concerns.

We wish to ensure that Lords amendment 41, on professional standards, stays in the Bill. Earlier this year, the Government committed to implementing the main recommendations of the Parliamentary Commission on Banking Standards. Those recommendations included the creation of the new criminal offence of reckless misconduct by senior bankers. We want to ensure that that is as tight as possible. As the Minister outlined, the Government also agreed to introduce a new two-tier authorisation process for bank staff.

Our concern is that the Government have consistently failed to go far enough on the professional standards required of bankers. When the Bill was first introduced, Ministers resisted, on three separate occasions, Opposition attempts to put tougher professional standards in the Bill. Introducing the proposal at an early stage would have allowed us the opportunity to debate and finesse it, if required. At that stage, we included proposals for an annual health check on senior bankers. Indeed, Labour first pushed for a licensing regime with an annual validation of competence during the Committee stage of the Financial Services Bill in March 2012, so we have been pressing this case for a lengthy period of time.

Lords amendment 41 states that there needs to be

“minimum thresholds of competence including integrity, professional qualifications, continuous professional development and adherence to a recognised code of conduct.”

The recognised code of conduct is important. The then Minister, the hon. Member for Fareham (Mr Hoban), opposed the amendment, saying:

“I…argue very strongly that the amendment is not necessary. In fact, it could have unintended consequences.”––[Official Report, Financial Services Public Bill Committee, 1 March 2012; c. 235.]

I cannot recall what those unintended consequences he feared were. Given that the Government have now seen fit to change their view, I am sure they no longer have those concerns.

A similar amendment was tabled again in April 2013 to this Bill and once again it was voted down by the Government. We on this side of the House never give up: if we think something is the right thing to do, we will come back and come back again. We tabled the same amendment again in July 2013, and again the Government failed to support it. We tabled the amendments because we believe that the persons we are talking about must have adequate standards of competence and integrity. The debate on managing the process and legislating for it may seem technical, but it is important for people in the real world to know that we are trying to introduce reforms. There has been a degree of discussion across the House, and I accept that, but people need to know that we are trying to introduce reforms that complement the attempts to change the culture of the banking sector.