Page last updated at 17:15 GMT, Monday, 12 November 2012

Peers reject financial code call

The government has narrowly avoided a defeat in the House of Lords over its plans to overhaul regulation of the financial services sector.

A Labour amendment to the Financial Service Bill calling for an industry code of conduct was rejected by just three votes, on 12 November 2012.

Making the case for the amendment, opposition spokeswoman Baroness Hayter of Kentish Town said a code was needed following the Libor rate-fixing scandal and the mis-selling of Payment Protection Insurance (PPI).

Treasury Minister Lord Sassoon acknowledged the need to restore public trust in the banking sector but insisted the government was already working on this.

Banks have found themselves embroiled in cases such as the alleged manipulation of the Libor inter-bank lending rate, which affects mortgages and loans, and the mis-selling of interest swaps to small businesses.

Lord Sassoon said an enforceable code of conduct would "pre-empt and undermine" the outcome of the report of the commission on banking standards, due to be published by the end of the year.

The government would bring forward a banking reform bill in the new year which would provide an appropriate means of legislating on any recommendations made by the commission, he added.

Labour insisted on testing the opinion of the House but peers rejected the proposal by 187 votes to 184.

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