Contribution
My Lords, I declare my interest as an adviser to and shareholder in Banco Santander. Your Lordships will be pleased to know that I will speak very briefly on Amendment 68. My noble friend Lady Noakes just covered the waterfront incredibly well, in her exemplary manner, and made all the key points.
I will briefly say this. The first leg of this amendment, about the FCA’s office for regulatory evaluation, is an extremely measured and well-constructed proposal from my noble friend, but I propose to set up something different: an office for financial regulatory accountability that stands outside all the regulators and looks at financial services regulation, consultations and proposals in the round. It would therefore provide an independent source for Parliament and everyone else to look at the impact of those actions, so that they could be analysed and, critically, the regulators and supervisors could be held to account.
Many said to me that they felt this office would become a back-seat driver for the regulators and supervisors, and that we would, essentially, have someone second-guessing their actions, potentially undermining the operational independence that they have been given. This proposal from my noble friend overcomes that very well. While I am very pleased that the Minister is making constructive noises about the need for greater accountability and scrutiny, I am somewhat disappointed that it seems that this proposal, which builds, as far as I can see, on the work of the cost-benefit panels within the FCA, would help Parliament hold the FCA to account with much greater independent analysis. When he sums up, I would like the Minister to give us a bit more argument about why this is a bad idea.
I turn to the second leg of this amendment, which relates to the Bank of England and the office for regulatory evaluation. It is rather sad that, at 10.05 pm, about 15 of us are debating one of the most important institutions in this country, how it is held to account and the means by which it evaluates its performance. This speaks volumes about how we in Parliament potentially need to up our game in how we hold the Bank of England to account. That criticism may be aimed at all of us rather than at the Government.
The independent evaluation office within the Bank performs, and has performed, a critical role. When you look back to see what various chairmen of the court have said about it, many of them have gone on the record over the past decade praising its work and saying that it provides valuable input to the court by analysing what the Bank is up to and making sure that the Bank is internally held to account. So when the Financial Times reported several weeks ago that the Bank of England was dismantling the IEO, I have to say that alarm bells started to ring.
When the Minister sums up, perhaps he can answer some simple questions. I realise that he is speaking on behalf of the Treasury, not the Bank of England, but what I am trying to understand is, first, what is the problem that this decision to dismantle the IEO is trying to solve? What is it that the Bank is trying to achieve? What is the progress it is trying to make by abolishing and dismantling the IEO, in particular given that so many chairmen of the court have spoken in favour of it?
The second point builds on what my noble friend Lady Noakes said. When the IEO is abolished and these external independent analysts are brought in, how many reviews does the court expect to commission? As my noble friend pointed out, the IEO has published only a relatively small handful of reviews. Is it going to be more or less? Next, if the court chooses the subjects, how will we ensure that the uncomfortable issues that the Bank needs to confront will be confronted? Finally, does the Minister think that this move will increase the accountability and scrutiny of the Bank? That is my litmus test: will it make sure that the Bank’s performance is held even more to account?
There are questions to answer here. I very much welcome what the Minister said about his wish to increase accountability and scrutiny. I think that we are disagreeing here on the means by which to do so, so I look forward to his answers.