Tag: Lord Myners

The below Parliamentary question was asked by Lord Myners on 2016-05-10.

To ask Her Majesty’s Government what assessment they have made of the growth in private sector credit; the use of lending strategies by banks; payday lenders and peer-to-peer lenders; and risks to family finances and financial stability.

Lord O’Neill of Gatley

Private credit growth grew at 3.7% in the year to March, below the 2003-08 average of 11.5%. Industry sources such as Nesta estimate that peer-to-peer lending for consumers and business facilitated £2.4 billion of gross lending in 2015, 85% higher than in 2014. The volume of payday lending fell 35% in the first six months after the government transferred regulatory responsibility of the consumer credit market to the Financial Conduct Authority in April 2014.

The government created the independent Financial Policy Committee (FPC) to ensure we don’t repeat the mistakes of the past, and they have judged that financial stability risks from domestic credit growth are not elevated. The FPC has already taken action on loan-to-income ratios and mortgage affordability to ensure against risks from indebted households, and interest payments as a proportion of household income have fallen to a record low of 4.7% in Q4 2015, compared to 10.6% in Q1 2008.

The below Parliamentary question was asked by Lord Myners on 2016-06-06.

To ask Her Majesty’s Government whether they will consider linking the interest rate on student loans to the Consumer Price Index rather than the Retail Price Index.

Baroness Neville-Rolfe

The Government has no plans to link the interest rate on student loans to the Consumer Prices Index, rather than the Retail Prices Index. The Retail Prices Index has been used as the basis for calculating the interest rates applied to income-contingent student loans since they were introduced in 1998.

The below Parliamentary question was asked by Lord Myners on 2016-07-20.

To ask Her Majesty’s Government what assessment they have made of the consequences for financial stability of combining four large central counterparties (CCPs), LCH.Clearnet Ltd, LCH.Clearnet SA, Eurex and CC&G, when the London Stock Exchange and Deutsche Borse merge; whether adequate recovery and resolution frameworks will be in place for each of these CCPs; and whether those frameworks will be ring-fenced from each other.

Lord O’Neill of Gatley

LCH.Clearnet Ltd, LCH.Clearnet SA, Eurex Clearing and CC&G are separate CCPs regulated under European Regulation No 648/2012 (EMIR) by their respective regulators. The London Stock Exchange Group and Deutsche Borse have publicly stated their intention that “[t]he existing regulatory framework of all regulated entities within the Combined Group would remain unchanged” following the merger. Once notified by the companies of their proposal to merge, the Bank of England will assess the proposal for a change in control of LCH.Clearnet Ltd in line with the criteria set out in EMIR.

The below Parliamentary question was asked by Lord Myners on 2016-03-21.

To ask Her Majesty’s Government what assessment they have made of (1) the impact on economic and financial stability of increasing private sector debt as a percentage of GDP and aggregate personal income, and (2) the level at which those ratios would be judged to be too high.

Lord O’Neill of Gatley

The Government does not have an explicit target for the level of private sector debt. However, we established the independent Financial Policy Committee (FPC), within the Bank of England, which is empowered to identify, assess, monitor and take action in relation to risks across the UK financial system. This includes risks from private sector debt. The FPC actively monitors developments in the aggregate level of credit extended to UK households and private non-financial corporations, and has the macroprudential policy tools required to address any risk it identifies.

The below Parliamentary question was asked by Lord Myners on 2016-04-12.

To ask Her Majesty’s Government what assessment they have made of whether the proposed takeover of the London Stock Exchange by Deutsche Börse gives rise to issues of national importance.

Lord O’Neill of Gatley

I refer the noble Lord to the investor relations section of the London Stock Exchange Group website, which contains information about the proposed merger, including some information on the combined group’s proposed structure. I also refer the noble Lord to my previous written answer HL7153.

Once formally notified of the proposed merger, the Bank of England and the Financial Conduct Authority (as supervisors of the London Stock Exchange Group’s UK-authorised subsidiaries) must assess the proposal from a regulatory standpoint.

In addition the proposed merger must be approved by competition authorities and is subject to a range of other assessments including those of overseas regulators and shareholders.

European Regulation No 648/2012 (EMIR) sets out detailed standards on the quality of collateral that a central counterparty (CCP) can accept, and includes a general requirement that the CCP can demonstrate to its supervisor that the form of collateral in question does not present unmanageable risk to the CCP. Furthermore, CCPs are permitted under EMIR to invest their collateral “only in cash or in highly liquid financial instruments with minimal market and credit risk.”

Any proposals for inter-CCP links would need to be assessed against relevant parts of EMIR by the Bank of England, as supervisor of LCH. EMIR requires that models used to set CCP margin requirements (and any changes to them) are validated by the CCP’s supervisor. EMIR also requires that a CCP wishing to extend its business to additional products or services must obtain the authorisation of its supervisor.

The below Parliamentary question was asked by Lord Myners on 2016-04-21.

To ask Her Majesty’s Government what assessment they have made of whether the consolidation of central clearing houses will lead to an increase in risk concentration.

Lord O’Neill of Gatley

I refer the noble Lord to my written answer of 26 April (HL7583, HL7584, HL7585, and HL7586).

The below Parliamentary question was asked by Lord Myners on 2016-05-10.

To ask Her Majesty’s Government whether British banks or the public purse could be compelled to participate in a scheme to rescue a failing bank based in the Eurozone to make a new contribution of equity, accept haircuts on assets or be forced into debt for equity conversions.

Lord O’Neill of Gatley

The Government has ensured that the UK will never be required to pay for any future Eurozone bail outs.

The Bank Recovery and Resolution Directive (BRRD) requires Member States to put in place a bail-in tool, which will allow resolution authorities to write down liabilities in a failing bank and convert their debt instruments into equity. The BRRD represents an important step forward in ensuring that the EU effectively addresses the risks posed by the banking system.

The below Parliamentary question was asked by Lord Myners on 2016-06-06.

To ask Her Majesty’s Government whether the financial regulators have completed their review of the risk algorithms to be used to permit cross-margining by central counterparties to facilitate the takeover of the London Stock Exchange by Deutsche Borse; whether the results of this review will be published, and whether any further steps will be taken to strengthen confidence in central clearing houses.

Lord O’Neill of Gatley

The timings of regulatory reviews of any proposal by a CCP to make significant changes to its margining arrangements would be a matter for the company and regulators acting in accordance with the relevant legislation. The Bank of England’s 2016 Annual Report on the supervision of financial market infrastructures, laid before Parliament on 4 March 2016, provides further information about ongoing regulatory initiatives in relation to CCPs.

The below Parliamentary question was asked by Lord Myners on 2016-10-03.

To ask Her Majesty’s Government whether they will review the impact of quantitative easing on investment and on savings to determine whether it is of greater benefit to one or the other.

Lord Young of Cookham

The independent Monetary Policy Committee (MPC) is responsible for setting monetary policy to deliver its primary objective of maintaining price stability. As the MPC remit makes clear, ensuring price stability is an essential pre-requisite for economic prosperity. The MPC is accountable to both Parliament and the public, through regular reports and evidence given to the Treasury Committee. The Bank of England has previously produced analysis of the distributional effects of asset purchases on different groups in society. At the August Inflation Report hearing on 7 September the Bank committed to updating this analysis.

The below Parliamentary question was asked by Lord Myners on 2016-03-21.

To ask Her Majesty’s Government whether they have reviewed the implementation of the recommendations on public sector procurement made by Sir Philip Green; and whether they will ask Sir Philip to conduct a further review on policy options to reduce government borrowing.

Lord Bridges of Headley

Sir Phillip’s report contributed enormously to the development of the Coalition Government’s policies in respect of common goods and services. Many of the recommendations have been taken forward, including the creation of the Crown Commercial Service. The Crown Commercial Service brings together policy, advice and direct buying, providing commercial services to the public sector and saving money for the taxpayer.

The 2016 Budget announced that The Chief Secretary to the Treasury, with the support of the Minister for the Cabinet Office, will lead an efficiency review, reporting in 2018. We will set out details of this in due course.