New Archbishop risks row on banks before he's even started

Justin Welby's first act since nomination is move to force lending that goes against ministers' plans

The incoming Archbishop of Canterbury risks provoking a row with ministers by claiming that planned City reforms will fail those in Britain's poorest communities.

Just three days after being named as the new leader of the Church of England, the Right Reverend Justin Welby will demand that legislation is redrafted to shame banks into lending more money to poorer regions.

The House of Lords amendment is his first political act since he was named as the next leader of 80 million Anglicans last Friday. He is currently the Bishop of Durham and takes up the new post next month.

He has joined the Liberal Democrat peers Lord Sharkey, Baroness Kramer and Lord Phillips in lodging an amendment to the Treasury's Financial Services Bill, which is debated in the upper chamber today.

The amendment demands that banks are required to publish quarterly details of their lending to small and medium-sized businesses by postcode – revealing areas where the fewest loans are issued.

The Financial Services Bill proposes abolishing the Financial Services Authority, which presided over the financial collapse of 2008, and dividing its powers between a new Financial Conduct Authority (FCA) and the Bank of England.

Mr Welby, a Cambridge-educated former oil executive, has previously railed against the Bill's lack of provision for "effective competition" among small lenders that could reduce the reliance on pay-day-loans companies in the North-east. "I fail to see this in the Bill and that gives me great concern," he said.

He has also claimed the proposals would make the Governor of the Bank of England "almost unchallengeable" in the running of three main committees that would oversee Britain's financial stability, and leave the newly formed FCA as the "runt of the litter".

In the amendment to be debated today, he writes: "The FCA must require each holder of a banking licence to publish relevant data on a quarterly basis by postcode, including the total amount of lending to small and medium-sized enterprises."

Mr Welby was unavailable for comment on Sunday. But a spokesman for the Diocese of Durham said the 56-year-old would be in London this week doing "banking-standards" and "parliamentary" work.

The Treasury said it would "consider" the amendment alongside others, and insisted it was introducing "strong incentives to boost lending". Mr Welby was brought into the parliamentary Banking Standards Commission during the summer by George Osborne to improve transparency and governance in the City following the Libor rate-rigging scandal.

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