Financial Services and Markets Bill

(Limited Text - Ministerial Extracts only)

Report stage
Wednesday 7th December 2022 Commons Chamber

[The Economic Secretary to the Treasury (Andrew Griffith)]

I beg to move, That the clause be read a Second time.

[Mr Deputy Speaker (Mr Nigel Evans)]

With this it will be convenient to discuss the following:

Amendment (a) to new clause 17, after “mentioned in paragraphs (a) to (ia) of paragraph 11(1);” insert—

“(aa) the effect of the Financial Services and Markets Act 2023 on financial stability, and potential risks to financial stability, in the UK;

(ab) an assessment of the delivery of the FCA’s objectives in the previous year;

(ac) an assessment of measures which could improve the delivery of the FCA’s objectives in the next year;”

Amendment (b) to new clause 17, after “mentioned in paragraphs (a) to (f) of paragraph 19(1);” insert—

“(aa) the effect of the Financial Services and Markets Act 2023 on financial stability, and potential risks to financial stability, in the UK;

(ab) an assessment of the delivery of the PRA’s objectives in the previous year;

(ac) an assessment of measures which could improve the delivery of the PRA’s objectives in the next year;”

Government new clause 18—Composition of panels.

Government new clause 19—Consultation on rules.

Government new clause 20—Unauthorised co-ownership AIFs.

New clause 1—National strategy on financial fraud—

‘(1) The Treasury must lay before the House of Commons a national strategy for the purpose of detecting, preventing and investigating fraud and associated financial crime within six months of the passing of this Act.

(2) In preparing the strategy, the Treasury must consult—

(a) the Secretary of State for the Home Office,

(b) the National Economic Crime Centre,

(c) law enforcement bodies which the Treasury considers relevant to the strategy,

(d) relevant regulators,

(e) financial services stakeholders,

(f) digital platforms, telecommunications companies, financial technology companies, and social media companies.

(3) The strategy must include arrangements for a data-sharing agreement involving—

(a) relevant law enforcement agencies,

(b) relevant regulators,

(c) financial services stakeholders,

(d) telecommunications stakeholders, and

(e) technology-based communication platforms,

for the purposes of detecting, preventing and investigating fraud and associated financial crime and, in particular, tracking stolen money which may pass through mule bank accounts or platforms operated by other financial services stakeholders.

(4) In this section “fraud and associated financial crime” includes, but is not limited to authorised push payment fraud, unauthorised facility takeover fraud, and online and offline identity fraud.

(5) In this section, “financial services stakeholders” includes banks, building societies, credit unions, investment firms, Electric Money Institutions, virtual asset providers and exchanges, and payment system operators.’

This new clause would require the Treasury to publish a national strategy for the detection, prevention and investigation of fraud and associated financial crime, after having consulted relevant stakeholders. The strategy must include arrangements for a data sharing agreement between law enforcement agencies, regulators and others to track stolen money.

New clause 2—Local community access to essential in-person banking services—

‘(1) The Treasury and the FCA must jointly undertake a review of the state of access to essential in-person banking services for local communities in the United Kingdom, and jointly prepare a report on the outcome of the review.

(2) “Essential in-person banking services” include services which are delivered face-to-face and which local communities require regular access to. These may include services provided in banks, banking hubs, or other service models.

(3) The report mentioned in subsection (1) must be laid before the House of Commons as soon as practicable after the review has been undertaken.

(4) The report mentioned in subsection (1) must propose a minimum level of access to essential in-person banking services which must be provided by banks and building societies in applicable local authority areas in the United Kingdom, for the purpose of ensuring local communities have adequate access to essential in-person banking services.

(5) The applicable local authority areas mentioned in subsection (4) are local authority areas in which, in the opinion of the FCA, local communities have a particular need for the provision of essential in-person banking services.

(6) In any applicable local authority area which, according to the results of the review undertaken under subsection (1) falls below the minimum level of access mentioned in subsection (4), the FCA may give directions for the purpose of ensuring essential in-person banking services meet the minimum level of access required by subsection (4).

(7) A direction under subsection (6) may require a minimum level of provision of essential in-person banking services through mandating, for example—

(a) a specified number of essential in-person banking services within a geographical area, or

(b) essential in-person banking services to operate specific opening hours.’

This new clause would require the Treasury and FCA to conduct and publish a review of community need for, and access to, essential in-person banking services, and enable the FCA to ensure areas in need of essential in-person banking service have a minimum level of access to such services.

New clause 3—Essential banking services access policy statement—

‘(1) The Treasury must lay before the House of Commons an essential banking services access policy statement within six months of the passing of this Act.

(2) An “essential banking services access policy statement” is a statement of the policies of His Majesty’s Government in relation to the provision of adequate levels of access to essential in-person banking services in the United Kingdom.

(3) “Essential in-person banking services” include services which are delivered face-to-face, and may include those provided in banks, banking hubs, or other service models.

(4) The policies mentioned in sub-section (2) may include those which relate to—

(a) ensuring adequate availability of essential in-person banking services;

(b) ensuring adequate provision of support for online banking training and internet access, for the purposes of ensuring access to online banking; and

(c) expectations of maximum geographical distances service users should be expected to travel to access essential in-person banking services in rural areas.

(5) The FCA must have regard to the essential banking services access policy statement when fulfilling its functions.’

This new clause would require the Treasury to publish a policy statement setting out its policies in relation to the provision of essential in-person banking services, including policies relating to availability of essential in-person banking services, support for online banking, and maximum distances people can expect to travel to access services.

New clause 4—FCA duty to report on mutual and co-operative business models—

‘(1) The FCA must lay before Parliament a report as soon as practicable after the end of—

(a) the period of 12 months beginning with the day on which this Act is passed, and

(b) every subsequent 12-month period,

on how it considers the specific needs of mutual and co-operative financial services providers and other relevant business models when discharging its regulatory functions.

(2) The “specific needs” referred to in subsection (1) must include the needs of mutual and co-operative financial services providers to have a level playing field with financial services providers which are not mutuals or co-operatives.

(3) The “mutual and co-operative financial services providers and other relevant business models” referred to in subsection (1) may include—

(a) credit unions,

(b) building societies,

(c) mutual banks,

(d) co-operative banks, and

(e) regional banks.’

This new clause would require the FCA to report annually on how they have considered the specific needs of mutual and co-operative financial services.

New clause 5—PRA duty to report on mutual and co-operative business models—

‘(1) The FCA must lay before Parliament a report as soon as practicable after the end of—

(a) the period of 12 months beginning with the day on which this Act is passed, and

(b) every subsequent 12-month period,

on how it considers the specific needs of mutual and co-operative financial services providers and other relevant business models when discharging its regulatory functions.

(2) The “specific needs” referred to in subsection (1) must include the needs of mutual and co-operative financial services providers to have a level playing field with financial services providers which are not mutuals or co-operatives.

(3) The “mutual and co-operative financial services providers and other relevant business models” referred to in subsection (1) may include—

(a) credit unions,

(b) building societies,

(c) mutual banks,

(d) co-operative banks, and

(e) regional banks.’

This new clause would require the FCA to report annually on how they have considered the specific needs of mutual and co-operative financial services.

New clause 6—Updated Green Finance Strategy—

‘(1) The Treasury must lay before the House of Commons an updated Green Finance Strategy within three months of the passing of this Act.

(2) The strategy must include—

(a) a Green Taxonomy, and

(b) Sustainability Disclosure Requirements.

(3) In preparing the strategy, the Treasury must consult—

(a) financial services stakeholders,

(b) businesses in the wider economy,

(c) the Secretary of State for Business, Energy and Industrial Strategy, and

(d) the Secretary of State for Work and Pensions.

(4) In this section a “Green Taxonomy” means investment screening criteria which classify which activities can be defined as environmentally sustainable including, but not limited to—

(a) climate change mitigation and adaptation,

(b) sustainable use and protection of water and marine resources,

(c) transitions to a circular economy,

(d) pollution prevention and control, and

(e) protection and restoration of biodiversity and ecosystems.

(5) In this section “Sustainability Disclosure Requirements” are the requirements placed on companies, including listed issuers, asset managers and asset owners, to report on their sustainability risks, opportunities and impacts.’

This new clause would require the Treasury to publish an updated Green Finance Strategy. This must include a Green Taxonomy and Sustainability Disclosure Requirements.

New clause 7—Access to cash: Guaranteed minimum provision—

‘(1) The Treasury must, by regulations, make provision to guarantee a minimum level of access to free of charge cash access services for consumers across the United Kingdom.

(2) The minimum level of access referred to in subsection (1) must be included in the regulations.

(3) Regulations under this section shall be made by statutory instrument, and may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.’

New clause 8—Stewardship reporting requirements for occupational pension schemes—

‘(1) Section 36 of the Pensions Act 1995 (Choosing investments) is amended as follows.

(2) In subsection (1) after “(4)” insert “and, for relevant schemes, (4A)”.

(3) After subsection (4), insert—

“(4A) The trustees of relevant schemes must publish information regarding their stewardship activities. In doing so they must have regard to, amongst other matters, the scheme’s—

(a) purpose, culture, values and strategy;

(b) governance structures and processes;

(c) conflicts of interest policy;

(d) engagement strategy, including escalation steps;

(e) aggregate statistics on total engagement activity;

(f) thematic engagement priorities; and

(g) engagement outcomes.”

(4) After subsection (6), insert—

“(6A) For the purposes of this section—

(a) a “relevant scheme” means a scheme with £5bn or more in relevant assets,

(b) “relevant assets” is to be calculated in accordance with methods and assumptions prescribed in regulations.”’

This new clause raises the baseline standard of stewardship for large institutional investors beyond the minimum standards set by the UK’s implementation of the Shareholder Rights Directive, drawing on the Financial Reporting Council’s Stewardship Code and ShareAction’s Best Practice Engagement Reporting Template.

New clause 9—Stewardship reporting requirements for certain investors—

‘(1) The FCA may make rules requiring some or all of those managing investments to publish information on their stewardship activities. In doing so they must have regard to, amongst other matters—

(a) purpose, culture, values, business model and strategy;

(b) governance structures and processes;

(c) conflicts of interest policy;

(d) engagement strategy, including escalation steps;

(e) aggregate statistics on total engagement activity;

(f) thematic engagement priorities; and

(g) engagement outcomes.

(2) The FCA may make rules to clarify the definition of “the most significant votes” in rule 3.4.6 of the systems and controls section of the FCA Handbook.’

This new clause would enable the FCA to make rules raising the baseline standard of stewardship for large institutional investors beyond the minimum standards set by the UK’s implementation of the Shareholder Rights Directive, drawing on the Financial Reporting Council’s Stewardship Code and ShareAction’s Best Practice Engagement Reporting Template. It would also allow the FCA to define and monitor “significant votes”.

New clause 10—Consumer Panel duty to report to Parliament—

‘(1) FSMA 2000, as amended by Section 6 of the Financial Services Act 2012 and Section 132 of the Financial Services (Banking Reform) Act 2013, is amended as follows.

(2) At the end of section 1Q, insert—

“(7) The Consumer Panel must lay an annual report before Parliament evaluating the FCA’s fulfilment of its statutory duty to protect consumers, including comments on—

(a) the adequacy and appropriateness of the FCA’s use of its regulatory powers;

(b) the measures the FCA has taken to protect vulnerable consumers, including pensioners, people with disabilities, and people receiving forms of income support; and

(c) the FCA’s receptiveness to the recommendations of the Consumer Panel.”’

This new clause would introduce a further level of Parliamentary scrutiny of the work of the FCA to protect consumers by requiring the Financial Services Consumer Panel to lay an annual report before Parliament outlining its views on the FCA’s fulfilment of its statutory duty to protect consumers.

New clause 11—Personalised financial guidance: power to make regulations—

‘(1) The Treasury may by regulations make provision for UK citizens to access personalised financial guidance from appropriately regulated financial services firms, for the purposes of supporting them to make decisions which improve their financial sustainability.

(2) The “UK citizens” referred to in sub-section (1) include, in particular, UK citizens who are unlikely to have access to financial advice (provided in accordance with Chapter 12 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001).

(3) In this section, “personalised financial guidance” means a communication—

(a) that is made to a person in their capacity as an investor or potential investor, or in their capacity as agent for an investor or a potential investor;

(b) which constitutes a recommendation to them to do any of the following (whether as principal or agent)—

(i) buy, sell, subscribe for, exchange, redeem, hold or underwrite a particular investment which is a security, structured deposit or a relevant investment; or

(ii) exercise or not exercise any right conferred by such an investment to buy, sell, subscribe for, exchange or redeem such an investment; and

(c) that is—

(i) based on a consideration of the circumstances of that person; and

(ii) not explicitly presented as suitable for the person to whom it is made.

(4) The provision that may be made by regulations under this section includes provisions—

(a) relating to the provision of financial advice;

(b) relating to suitability requirements under MiFID;

(c) conferring powers, or imposing duties, on a relevant regulator (including a power to make rules or other instruments).

(5) The power to make regulations under this section includes power to modify legislation.

(6) The power under subsection (5) includes power to modify the definition of “personalised financial guidance” in subsection (2).

(7) Regulations made under this section, and which modify only the following kinds of legislation are subject to the negative procedure—

(a) EU tertiary legislation;

(b) subordinate legislation that was not subject to affirmative resolution on being made.

(8) Regulations under this section to which subsection (7) does not apply are subject to the affirmative procedure.

(9) Before making regulations under this section, the Treasury must consult the FCA.

(10) In this section—

“legislation” means primary legislation, subordinate legislation and retained direct EU legislation;

“MiFID” means Regulation (EU) 2017/565 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive.’

New clause 12—Requirement to publish regulatory performance information on new authorisations—

‘(1) The FCA and PRA must each lay before Parliament a report on their regulatory performance as soon as practicable after the end of—

(a) the period of six months beginning with the day on which this Act receives Royal Assent, and

(b) each subsequent quarter.

(2) A report under this section must include analysis of data on—

(a) the number of new applications for authorisation made to each regulator during the reporting period, with a breakdown by authorisation type;

(b) the rates of approval for applications for authorisation by each regulator, with a breakdown by authorisation type;

(c) the average length of time taken from application to final authorisation decision by each regulator;

(d) the FCA or PRA‘s assessment of the time and cost incurred by applicants to comply with information requirements for authorisation; and

(a) such other matters as the Treasury considers appropriate.’

This new clause requires both regulators to publish regular reports to Parliament on their regulatory performance for new applicants for regulation.

New clause 13—Requirement to publish regulatory performance information on authorised firms—

‘(1) The FCA must lay before Parliament a report on its regulatory performance as soon as practicable after the end of—

(a) the period of six months beginning with the day on which this Act receives Royal Assent, and

(b) each subsequent quarter.

(2) A report under this section must include the average length of time taken from the initial submission of an application for authorisation by an applicant to the issuing of a final decision by the FCA for each of the following regulatory responsibilities—

(a) approved persons;

(b) change in control;

(c) variation of permission;

(d) waivers and modifications that alter compliance obligations.’

This new clause requires the FCA to publish regular reports to Parliament on its regulatory performance for existing authorised entities and persons.

New clause 14—Determination of applications—

‘(1) The Financial Services and Markets Act 2000 is amended as follows.

(2) After section 61(2) insert—

“(2ZA) In determining the application, the regulator must—

(a) assign a new application to a case handler within five working days of the application being received;

(b) complete an initial application review within ten working days of allocation to a case handler; and

(c) make no requests for additional information after a period of fifteen working days from the receipt of the application.

(2ZZA) The regulators must publish, on an annual basis, monitoring data relating to—

(a) the proportion of cases which require escalation to sponsoring firms, including summary trend data on the reasons for escalation;

(b) the average time taken to assign a case handler; and

(c) the average number of days it takes to complete determination of an application.’

This new clause would add to the regulators’ authorisation KPIs outlined in the Financial Services and Markets Act 2000 and require them to publish monitoring data related to the determination of authorisations.

New clause 15—Regulators’ duty to report on competitiveness and growth objective—

‘(1) The FCA and PRA must each lay before Parliament a report as soon as practicable after the end of—

(a) the period of 12 months beginning with the day on which this Act receives Royal Assent, and

(b) every subsequent 12-month period,

on how they consider that they have facilitated the international competitiveness of the economy of the United Kingdom and its growth in the medium to long term.

(2) Reports under this section must include analysis of data on the following—

(a) steps taken to simplify regulatory rulebooks and frameworks;

(b) the number of new market entrants to the UK;

(c) new regulations introduced in the previous twelve months;

(d) an assessment of the impact of the new regulations to UK competitiveness;

(e) comparative analysis of the number of new authorisations in the UK and other international jurisdictions in the previous twelve months;

(f) comparative analysis of product and service innovations introduced in the UK and other international jurisdictions in the previous twelve months; and

(g) such other matters as the Treasury may from time to time direct.’

This new clause would require both the FCA and PRA to each publish an annual report setting out how they have facilitated international competitiveness and growth against a range of data and analysis requirements.

New clause 16—Regulatory principles to be applied by both regulators: proportionality principle—

‘(1) The Financial Services and Markets Act 2000 is amended as follows.

(2) In section 3B(1)(b), leave out from “benefits,” to end and insert “taking into consideration the nature of the service or product being delivered, the nature of risk to the consumer, whether the cost of implementation is proportionate to that level of risk and whether the burden or restriction enhances UK international competitiveness.”’

This new clause would amend the existing regulatory principle for both regulators and require them nature of and risk to the consumer, and the service or product being delivered, must be taken into account when imposing a new burden or restriction.

New clause 21—Prudential capital requirements for specified financial institutions—

‘(1) Within six months of the passing of this Act, the Treasury must by regulations set prudential capital requirements for specified financial institutions.

(2) Regulations under this section must require financial institutions to hold in reserve £1 for every £1 used to finance assets connected with fossil fuel activities, which is liable for potential loss due to the climate risk exposure of the assets.

(3) In this section “fossil fuel activities” means the extraction, production, transportation, refining and marketing of crude oil, natural gas or thermal coal, as well as any fossil-fuel fired power plants, unless covered by an exemption.’

This new clause would give the Treasury the power to make regulations requiring financial institutions to hold capital in reserve to reflect the climate risk exposure of assets connected with fossil fuel activities.

New clause 22—FCA: Regard to financial inclusion in consumer protection objective—

‘(1) FSMA 2000 is amended as follows.

(2) In section 1C (The consumer protection objective), after subsection (2)(c) insert—

“(ca) financial inclusion;””.

New clause 23—FCA duty to report on financial inclusion—

“(1) The FCA must lay before Parliament a report, as soon as practicable after the end of—

(a) the period of 12 months beginning with the day on which this Act is passed, and

(b) every subsequent 12-month period,on financial inclusion in the UK.

(2) A report under this section must include—

(a) an assessment of the state of financial inclusion in the UK;

(b) details of any measures the FCA has taken, or is planning to take, to improve financial inclusion in the UK;

(c) developments which the FCA considers could significantly impact on financial inclusion in the UK; and

(d) any recommendations to the Treasury which the FCA considers may promote financial inclusion in the UK.’

New clause 24—Rules relating to forest risk commodities—

‘(1) FSMA 2000 is amended as follows.

(2) After section 19 (The general prohibition) insert—

“19A Specific requirements regarding forest risk commodities

(1) A person must not carry on a regulated activity in the United Kingdom that may directly or indirectly support a commercial activity in relation to a forest risk commodity or a product derived from a forest risk commodity, unless relevant local laws were complied with in relation to that commodity.

(2) A person that intends to carry on a regulated activity that may directly or indirectly support a commercial activity in relation to a forest risk commodity or a product derived from a forest risk commodity, shall establish and implement a due diligence system in relation to that regulated activity.

(3) In this section, “due diligence system” means a system for—

(a) identifying and obtaining information about the commercial activities of any beneficiary of the regulated activity and of their group regarding the use of a forest risk commodity,

(b) assessing the risk that relevant local laws were not complied with in relation to that commodity, and

(c) mitigating that risk.

(4) A person that carries on a regulated activity in the United Kingdom that directly or indirectly supports a commercial activity in relation to a forest risk commodity or a product derived from a forest risk commodity shall be subject to—

(a) the reporting requirements under paragraph 4 of Schedule 17 of the Environment Act in relation to the due diligence system required under subsection (2) of this section, and

(b) Part 2 of Schedule 17 of the Environment Act as though they are a person to whom Part 1 of that Schedule applies.

(5) Terms used in this section that are defined in Schedule 17 of the Environment Act shall have the meaning given to them in that Schedule.”’

New clause 25—Long term economic resilience and prosperity objective—

‘(1) FSMA 2000 is amended as follows.

(2) In section 1B (FCA’s general duties)—

(a) in subsection (2) leave out “function well” and insert “deliver long term economic resilience and prosperity”;

(b) in subsection (3) for paragraph (c) substitute—

“(c) the climate safety objective (see section 1E);

(d) the nature protection objective (see section 1F).”

(3) For section 1E (The competition objective) substitute—

“1E The climate safety objective

The climate safety objective is: facilitating the net UK carbon emissions target in section 1 of the Climate Change Act 2008, and the 1.5 degrees temperature goal of the Paris Agreement.

1F The nature objective

The nature objective is: facilitating alignment with halting and reversing biodiversity loss by 2030.”’

This new clause would make the FCA’s strategic objective ensuring that the relevant markets deliver long term economic resilience and prosperity, remove the competition operational objective and introduce two new operational objectives; climate safety and nature protection.

New clause 26—Prohibited regulated activity: new fossil fuel developments—

‘(1) A UK bank, or person acting on behalf of a UK bank, may not carry on a regulated activity where the carrying out of the activity would have the effect of providing financial investment in, or facilitating the financing of, new fossil fuel developments.

(2) In this section—

(a) “new fossil fuel developments” includes—

(i) any activity, in the UK or elsewhere, which enables or contributes to the enabling of, the extraction, processing and distribution of fossil fuels, and

(ii) the construction, in the UK or elsewhere, of fossil fuel-powered electricity generation;

(b) “fossil fuels” has the same meaning as in section 32M (Interpretation of sections 32 to 32M) of the Electricity Act 1989;

(c) “UK bank” has the same meaning as in section 2 (Interpretation: “bank”) of the Banking Act 2009.

(3) The FCA may impose sanctions against the relevant bank, where the prohibition in subsection (1) is contravened.

(4) The sanctions mentioned in subsection (3) includes—

(a) the imposition of a penalty of such amount as the FCA considers appropriate;

(b) suspension of variable components of remuneration;

(c) suspension of dividend pay-outs;

(d) removal of access to central bank funding; and

(e) removal of permission to carry on regulated activities.

(5) This section shall come into force on 31 December 2023.’

This new clause would prohibit banks from conducting regulated activity which may enable new fossil fuel developments from December 2023 onwards, and give the FCA powers to impose certain sanctions for non-compliance.

New clause 27—Refusal to provide services for reasons connected with freedom of expression—

‘(1) No payment service provider providing a relevant service (the “provider”) may refuse to supply that service to any other person (the “customer”) in the United Kingdom if the reason for the refusal is significantly related to the customer exercising his or her right to freedom of expression.

(2) Where a customer has prominently and publicly exercised his or her right to freedom of expression, it is to be presumed that any refusal by a provider to supply a relevant service was significantly related to the customer exercising his or her right to freedom of expression unless the provider can provide a substantial basis for believing there was an alternative good and proper reason for the refusal.

(3) Where a customer has prominently and publicly exercised his or her right to freedom of expression and has been refused a relevant service by a provider on application by the customer, the FCA must within 5 working days issue an order to the provider immediately to recommence supply unless the FCA considers it clearly inappropriate to do so.

(4) An order issued pursuant to subsection (3) must last until the FCA is satisfied that there was or there has subsequently arisen an alternative good and proper reason for the refusal.

(5) Upon considering an application by the customer under subsection (3), where the FCA decides not to issue an order to the supplier, the FCA must give reasons in writing to the customer explaining its decision not to issue an order.

(6) Where the FCA is satisfied that there has been a breach by a provider of the obligation in subsection (1) or the failure to comply with an order issued pursuant to subsection (3), the FCA may impose a penalty on the provider of such an amount as it considers appropriate. The FCA may, instead of imposing a penalty on a provider, publish a statement censuring the provider.

(7) The FCA must within three months of the coming into force of this section prepare and arrange for publication of a statement of its policy with respect to—

(a) the circumstances the FCA will consider under subsection (3) in deciding whether it is clearly inappropriate to issue an order; and

(b) the imposition of penalties and statements of censure under subsection (6).

(8) A breach by a provider of the obligation in subsection (1) and the failure to comply with an order issued pursuant to subsection (3) are actionable at the suit of the customer, subject to the defences and other incidents applying to actions for breach of statutory duty.

(9) In this section—

(a) a “relevant service” means a service which is (in whole or in part) directed at users in the United Kingdom and constitutes—

(i) any service provided pursuant to any regulated activity; or

(ii) any service in relation to a payment system for the purposes of enabling the transfer of funds using the payment system as referred to in section 42(5) of the 2013 Act;

save for any service expressly excluded by regulations;

(b) a “payment service provider” has the same meaning as under section 42(5) of the 2013 Act;

(c) the right to freedom of expression has the same meaning as under Article 10 of the European Convention on Human Rights—

(i) save that it includes the right to campaign for or seek to protect the right to freedom of expression of others; and

(ii) save as excluded by regulations;

(d) “the 2013 Act” means the Financial Services (Banking Reform) Act 2013.

(10) Regulations under this section may be made pursuant to the provisions of section 428 of FSMA 2000 save that—

(a) before preparing regulations under this section, the Secretary of State must consult the FCA and such other persons as the Secretary of State considers appropriate; and

(b) they must be adopted using the affirmative procedure before Parliament.’

New clause 28—Regulation of buy-now-pay-later firms—

‘(1) Within 28 days of the passing of this Act, the Secretary of State must by regulations make provision for—

(a) buy-now-pay-later credit services, and

(b) other lending services that have non-interest-bearing elements

to be regulated by the FCA.

(2) These regulations must include measures which—

(a) ensure all individuals accessing services mentioned in sub-section (1) have access to the Financial Services Ombudsman,

(b) ensure that individuals applying for services mentioned in sub-section (1) are subject to credit checks prior to the service being approved, and

(c) ensure that individuals accessing services mentioned in paragraph (1) are protected by Section 75 of the Consumer Credit Act.’

This new clause would bring the non-interest-bearing elements of bring buy-now-pay-later lending and similar services under the regulatory ambit of the FCA, as proposed by the Government consultation carried out in 2022.

New clause 29—Cost benefit analyses to include assessments of economic crime risks—

‘(1) FSMA 2000 is amended as follows.

(2) In section 138I(7), at end insert—

“(c) an assessment of economic crime risks posed by the proposed rules”’.

This new clause would require cost-benefit analyses to include assessments of the risk of economic crime arising from the proposed rules.

New clause 30—Establishment of Financial Regulator’s Supervision Council—

‘(1) The Secretary of State must, within six months of this Bill receiving Royal Assent, make provision for the establishment of a body to be known as the Financial Regulator’s Supervision Council (“FRSC”).

(2) The role of the body established under subsection (1) is to provide independent scrutiny and oversight of the work of the FCA and its fulfilment of its duties and responsibilities, particularly its consumer protection objective.

(3) The responsibilities of the body shall include, but not be limited to—

(a) overseeing the performance of the FCA from a consumer perspective, including undertaking annual appraisals and commissioning or undertaking periodic reviews as appropriate; and

(b) appointing, reviewing annually the performance of and, where appropriate, dismissing—

(i) the Chair and Chief Executive of the FCA (jointly with HM Treasury);

(ii) the non-Executive Directors of the FCA appointed by the Department for Business, Energy and Industrial Strategy;

(iii) Members and Chair of the Financial Services Consumer Panel;

(iv) the Financial Regulators’ Complaints Commissioner;

(v) the directors of the Financial Ombudsman Service and its Independent Assessor;

(vi) the directors of the Financial Services Compensation Scheme; and

(vii) such employees as the FRSC requires to perform its statutory role.

(4) The body is to be funded by a 1% levy on the FCA’s revenue.

(5) Membership of the body shall be selected through open competition and must include individuals representing the interests of financial services consumer groups.

(6) The Secretary of State may by regulations, following consultation with consumer groups, make further provision for the body’s responsibilities, powers, constitution and membership.

(7) Any reports published by the body must be laid before Parliament.’

New clause 31—Regulators’ duty of care—

‘(1) Individuals and organisations undertaking activities within the remit of the FCA and PRA shall owe a duty of care to consumers.

(2) The “duty of care” means an obligation to act towards consumers with a reasonable level of watchfulness, attention, caution and prudence.

(3) An individual or organisation in breach of this duty of care may be subject to legal claims for negligence.’

New clause 32—Regulators’ immunity from civil damages action—

‘(1) Relevant regulators may be the subject of civil damages actions in cases where—

(a) a consumer has suffered material financial loss,

(b) the loss has occurred since 1 December 2001,

(c) the activity in the course of which the consumer suffered material financial loss is within the remit of the relevant regulator, and

(d) the relevant regulator was aware, or could reasonably be expected to have been aware, that the consumer would have been at risk of suffering financial loss and negligently failed to take sufficient action to prevent the consumer from suffering such loss.

(2) Any recommendations made by the investigator appointed under section 84(1)(b) of the Financial Services Act 2012 following the upholding of a complaint made against a regulator by a consumer who has suffered financial loss, which may include the providing of material financial redress, shall be considered binding on the regulator.

(3) The Limitation Act 1980 shall not apply in relation to any civil actions brought under this section until six years after this section has come into force.’

New clause 33—Reporting requirement: Green agenda—

‘(1) Within six months of the passing of this Act, and every twelve months thereafter, the PRA and FCA must jointly lay before the House of Commons a report setting out their assessment of—

(a) the ways in which the PRA and FCA have incentivised and promoted green finance for the period covered by the report,

(b) the impact of the UK financial system in incentivising green investment for the period covered by the report, and

(c) the ways in which the PRA and FCA have supported the Secretary of State’s ability to meet the duty set out is section 1 of the Climate Change Act 2008.

(2) For the purposes of this section, “green finance” means financial products or services which aim to reduce emissions, and enhance sinks of greenhouse gases, and aim to reduce vulnerability of, and maintain and increase the resilience of, human and ecological systems to negative climate change impacts.’

This new clause would place a requirement on the PRA and FCA to report on ways in which they have promoted and incentivised green finance and green investment.

New clause 34—Investment duties of occupational pension schemes—

‘(1) Section 36 of the Pensions Act 1995 (Choosing investments) is amended as follows.

(2) In subsection (1) remove “(4)” and insert “(4A)”.

(3) After subsection (4), insert—

“(4A) The trustees must act in the way they consider, in good faith, would be most likely to be for the benefit of the beneficiaries as a whole and to be fair as between the beneficiaries, including as between present and future beneficiaries and in doing so have regard (amongst other matters) to—

(a) the likely consequences of any decision in the long term,

(b) the impact of their investments on society and the environment,

(c) environmental, social and governance risks and opportunities (including, but not limited to, climate change),

(d) the desirability of the trustees maintaining a reputation for high standards of business conduct,

(e) the need to act fairly as between beneficiaries and members of the scheme, and

(f) in relation to investments that provide money purchase benefits, the views of beneficiaries and members of the scheme.

(4B) The trustees shall publish a policy statement of its understanding of benefit as relevant to its beneficiaries and of how it has regard to the matters in subsection 4A(a) to (d). The Secretary of State may make regulations regarding such policy statements.

(4C) The trustees shall report to beneficiaries the performance of the portfolio in delivering the benefit as defined in the policy statement and shall do this at the same time as it reports on the financial performance of the portfolio.

(4D) A fiduciary investor shall take all reasonable steps to ensure that all of its delegates and advisers comply with this section.”’

This amendment broadens the investment duties of trust-based pension schemes and FCA-authorised personal pension providers to require specified investors to make investment decisions in the “best interests” of beneficiaries.

New clause 35—Investment duties of personal pension providers—

‘(1) The Financial Services and Markets Act 2000 is amended as follows.

(2) After section 137FD insert—

“137FE FCA general rules: pension investment

(1) The FCA must make general rules requiring managers of some or all relevant pension schemes to invest the assets in the best interests of members of the scheme and in the case of a potential conflict of interest, in the sole interest of members and survivors. In doing so they must have regard (amongst other matters) to—

(a) the likely consequences of any decision in the long term,

(b) the impact of their investments on society and the environment,

(c) the desirability of the managers maintaining a reputation for high standards of business conduct, and

(d) the need to act fairly as between members of the scheme.

(2) The FCA may make general rules requiring managers of relevant pension schemes to report publicly on how they have met the requirement in sub-section (1)

(3) In this section “relevant pension scheme” means—

(a) a personal pension scheme within the meaning of an order under section 22, or

(b) a stakeholder pension scheme within the meaning of such an order.”’

This amendment broadens the investment duties of trust-based pension schemes and FCA-authorised personal pension providers to require specified investors to make investment decisions in the “best interests” of beneficiaries.

New clause 36—Duty to report fraud—

‘(1) Financial services providers must, upon the detection of fraudulent activity or suspected fraudulent activity, report such activity to a relevant investigating authority.

(2) Financial services providers must publish an annual report which includes information on levels of identified fraudulent activity and steps taken, or planned to be taken, to reduce and prevent such or further fraudulent activity.’

Government amendments 8 to 11.

Amendment 19, in clause 29, page 41, line 12, at end insert

‘, and also to financial inclusion.

‘(2A) For the purposes of this section, “financial inclusion” means the impact on those who might be prevented from accessing financial services as a result of the new rules made by either regulator, or from accessing them on the same terms as existed before the making of the new rules.’

Government amendments 12 and 13.

Amendment 1, in clause 40, page 54, line 29, at end insert—

‘(c) be provided with any information or data that the Panel requires in order to fulfil its duties;

(d) publish the agendas and minutes of meetings of the Panel; and

(e) make publicly available its recommendations in full including, but not limited to, the evidence base and analysis it used to make its recommendations, the assessed costs and benefits of the FCA’s activities and the range of representations made by Panel members regarding those recommendations.’

Amendment 2, page 54, line 36, at end insert

“at least two of whom must be representatives of FCA authorised firms.”

Amendment 21, page 54, line 38, at end insert

“, at least three of whom must have experience and expertise in the field of economic crime, with one each drawn from the public, private and third sectors respectively”.

This amendment would require the FCA’s Cost Benefit Analysis Panel to include individuals with expertise in economic crime.

Government amendment 14.

Amendment 3, page 54, line 41, leave out from “must” to end of line 42 and insert

“within 30 days of the receipt of representations made to it by the FCA Cost Benefit Analysis Panel, publish a response to such representations, including a statement of actions it will take as a result of the representations.”

Amendment 4, page 55, line 20, at end insert—

“(c) be provided with any information or data that the Panel requires in order to fulfil its duties;

(d) publish the agendas and minutes of meetings of the Panel; and

(e) make publicly available its recommendations in full including, but not limited to, the evidence base and analysis it used to make its recommendations, the assessed costs and benefits of the PRA‘s activities and any dissenting representations made by Panel members regarding those recommendations.”

Amendment 5, page 55, line 2, at end insert

“at least two of whom must be representatives of PRA authorised firms”.

Amendment 22, page 55, line 29, at end insert

“, at least three of whom must have experience and expertise in the field of economic crime, with one each drawn from the public, private and third sectors respectively”.

This amendment would require the PRA’s Cost Benefit Analysis Panel to include individuals with expertise in economic crime.

Government amendment 15.

Amendment 6, page 55, line 32, leave out from “must” to end of line 33 and insert

“within 30 days of the receipt of representations made to it by the PRA Cost Benefit Analysis Panel, publish a response to such representations , including a statement of actions it will take as a result of the representations.”

Government amendment 16.

Amendment 7, in clause 64, page 78, line 20, at end insert—

“(5A) The relevant requirement referred to in subsection (5) must specify that reimbursement in qualifying cases cannot be refused on the basis that a victim, or victims, ought to have known that the payment order was executed subsequent to fraud or dishonesty.”

This amendment would prevent reimbursement for victims of fraudulent or dishonest payments being refused on the basis that that they should have known the payment was fraudulent or dishonest.

Amendment 20, page 78, line 20, at end insert—

“(5A) The relevant requirement mentioned in subsection (5) must set out clearly that—

(a) those to which the requirement applies have a duty to ensure that reimbursement is made in all qualifying cases, and

(b) the penalty imposed by the Payment Systems Regulator, under section 73 of the Financial Services (Banking Reform) Act 2013, for failure to comply with that duty, will be not less than £100,000 in each instance of failure.”

Amendment 23, in schedule 2, page 119, line 19, leave out sub-paragraphs (2) and (3).

This amendment would maintain the regulator’s duty to establish appropriate position limits in commodity speculation, to ensure the effective functioning of commodity markets and prevent potentially risky speculation.

Amendment 24, page 119, line 2, leave out “that paragraph” and insert “paragraph (1)”.

This amendment would maintain the regulator’s duty to establish appropriate position limits in commodity speculation, to ensure the effective functioning of commodity markets and prevent potentially risky speculation.

Amendment 25, page 119, line 32, leave out sub-paragraph (5).

This amendment would maintain the regulator’s duty to establish appropriate position limits in commodity speculation, to ensure the effective functioning of commodity markets and prevent potentially risky speculation.

Amendment 27, page 120, line 4, leave out paragraph 48.

This amendment would remove the proposed amendment to the FCA’s power to intervene, to maintain transparency in commodity markets and reduce the scope of so-called “dark pools”.

Amendment 26, page 120, line 10, leave out sub-paragraph (4).

This amendment would maintain the regulator’s duty to establish appropriate position limits in commodity speculation, to ensure the effective functioning of commodity markets and prevent potentially risky speculation.

Government amendments 17 and 18.

Amendment 28, page 155, line 7, at end insert—

“(1A) When exercising its functions under this Part, the FCA may issue a direction to a designated person, for the purpose of establishing a banking hub.

(1B) A designated person must comply with a direction under subsection (1B).

(1C) A “banking hub” is a facility which—

(a) provides cash access services,

(b) is facilitated jointly by multiple providers of such services,

(c) contains private consultation spaces at for users of cash access services, and

(d) is established for the purpose of ensuring reasonable provision of cash access services where there would otherwise be a local deficiency of such provision.”

This amendment would require designated persons to comply with direction given by the FCA for the purposes of establishing banking hubs.

[Andrew Griffith]

The financial services sector is central to our Government’s ambition to bolster our global competitiveness and boost growth in all parts of the United Kingdom. This Bill delivers on our ambition by seizing the opportunities of our departure from the European Union, tailoring financial services regulation to UK markets and delivering better outcomes for the economy, consumers, victims of fraud and businesses. There are many amendments for consideration today, so I will be as succinct as possible, and I look forward to having time to respond to hon. Members’ contributions later.

In Committee, I heard from colleagues on both sides of the House about the importance of holding the operationally independent regulators to account regarding their performance—in particular, that there should be regular reporting on their performance to support scrutiny, beyond just the annual report. Regulation is about not just the contents of the rulebook, but how effectively and on how timely a basis those rules are enforced and implemented.

The Government and regulators are both committed to the highest standards of operational effectiveness. That is why last week we published an exchange of letters with the regulators, making clear the intention to publish more detailed performance data in relation to their authorisation processes on a more regular basis. However, I also noted the clear consensus in Committee on the need to enhance the existing statutory provisions. In particular, I thank my hon. Friends the Members for Wimbledon (Stephen Hammond) and for North Warwickshire (Craig Tracey) for raising this important issue.

As a result, new clause 17 provides a new power for the Treasury to require the regulators to publish additional information on a more regular basis, where that is necessary to support this House’s scrutiny of their performance in discharging their general functions.

[Richard Fuller (North East Bedfordshire) (Con)]

I have seen the exchange of letters—that is very welcome—and I have read new clause 17. Both lack any specificity about what those metrics may be. I do not expect the Minister to respond now, but perhaps in his summing up, to reassure those of us on the Back Benches, he could provide some comfort about how specific he and the Treasury will get.

[Andrew Griffith]

I thank my hon. Friend who, as one of my predecessors, has made a significant contribution to getting the Bill to where it is today. I will try to indulge him, but he will also recognise that the Bill is about putting enabling powers in place, and there will be opportunities on future occasions to discuss how we deploy those.

New clause 18 introduces a requirement for the regulators to ensure that all members of their statutory panels are external and independent of the Treasury, the Bank of England and the regulators. That will codify the current approach taken by regulators, putting it in statute, building confidence in their independence and ensuring that it is maintained on a long-term basis.

New clause 19 introduces a new requirement for the regulators to publish a list of respondents to their public consultations, provided that the respondents consent. The requirement is limited to the financial services regulators and their specific statutory consultation in existing financial services legislation. New clauses 18 and 19 also address points raised by my hon. Friend the Member for North East Bedfordshire (Richard Fuller) and the hon. Member for Richmond Park (Sarah Olney).

I also note the interest of my hon. Friend the Member for Harrow East (Bob Blackman) in enhancing regulator accountability through his new clauses on a new regulators’ supervision council and ending regulators’ statutory immunity from civil damages. I understand where he is coming from, and I note that he chairs the all-party parliamentary group on personal banking and fairer financial services, but the Government’s position is that a new supervisory council would duplicate existing accountability structures. Indeed, none of the representations that I receive from industry says that the biggest thing that will help growth and competitiveness is another layer of regulators. There is also a great deal of existing accountability structures, including the role undertaken by this House and its various Committees, which is why that position was supported by the Treasury Committee in its July 2021 report. Removing the regulators’ statutory immunity from liability and damages would risk regulators over-regulating to avoid the risk of liability. There are already mechanisms for holding regulators to account, including the complaints scheme. That scheme is overseen by the independent complaints commissioner, who has powers to recommend redress.

[Peter Grant (Glenrothes) (SNP)]

I certainly appreciate the Minister’s concern that we might see precautionary regulation, but is the best way to avoid that not simply to restrict the removal of liability to cases in which the regulator has clearly and negligently failed to act to deal with a situation in which an already regulated activity was being carried out in an unacceptable way? That is what happened with Blackmore Bond. It was not an unregulated activity; it was an activity that fell within the scope of the Financial Conduct Authority, but it failed to act and £46 million was stolen from people as a result.

[Andrew Griffith]

The hon. Member draws our attention to the very tragic cases that occur when financial regulation goes wrong and does not do its job in the way every Member of this House would like to see. He also talks about a legal threshold for that. He will perhaps appreciate that I do not have the facts of that particular case before me and that we are not drafting things here and now. I have heard from Members on both sides of the House about some of the problems in what we are talking about, which is essentially the conduct of the regulator, and I understand colleagues’ desire to look at legal liability as one remedy, but there are many powers in the Bill, and as I say, the Bill will not constrain the ability of this House or Ministers going forward.

The hon. Member for Kingston upon Hull West and Hessle (Emma Hardy), with whom I spent a lot of time in the Bill Committee—I suspect we will hear from her later this afternoon—has tabled a new clause on considering economic risks in regulators’ cost-benefit analysis panels. I would like to reassure her that the regulators already take steps—and, to assuage her concerns, they could perhaps do more—to think about economic crime when they do that. They have the power, of course, to consult experts where they consider it relevant.

I thank my hon. Friend the Member for North East Bedfordshire again for raising the issue of regulatory proportionality. I wish to reassure him that the Government are clear that the burden of any regulation should be proportionate to its benefits, and that is set out in existing legislation. I am very happy to reiterate again today that I expect the regulators to fully and proactively embrace that principle, which is embedded in statute. That is particularly important, as the Bill confers on them greater rule-making responsibilities. I suspect we will hear from my hon. Friend later on.

I will now turn to Government amendments 8 to 11 —I apologise, but there are quite a lot of amendments to crack on through. Clause 6 already enables the Treasury to exempt regulators from the statutory requirement to consult on rules when they are replacing retained EU law repealed by the Bill without making material changes. Amendments 8 to 11 go further. They create a blanket exemption from the statutory requirement to consult in situations in which the regulators remove EU-derived rules from their rulebooks without replacement. The amendments also allow the Treasury to exempt the regulators when they are amending EU-derived rules or replacing retained EU law in their rulebooks, and when the only material effect of the change is to reduce regulatory burdens. That ensures that the regulators can take that proportionate approach to consultation, accelerate the repeal of retained EU law, and not let the requirement to consult be an obstacle or delaying factor. It is a long time since the British people voted for Brexit, and it is time to start delivering those benefits. Nothing in the amendments changes the obligation on the regulators to act to advance their statutory objectives, so any reduction in regulatory burdens must be compatible with those objectives.

Let me briefly cover the two remaining Government amendments, and I will then move on. New clause 20 ensures that a new type of fund vehicle currently being explored—the unauthorised contractual scheme—would be commercially viable if it were introduced. The proposed fund has the potential to improve the competitiveness of the UK by filling a gap in the UK’s existing fund offering and supporting the domestic growth agenda by facilitating greater investment in UK real estate by UK funds. Amendment 17 is a minor and technical amendment to rectify an inadvertent omission in drafting.

I will now address the amendments tabled by other Members. I am conscious that I am speaking before Members have had a chance to introduce their amendments, so I look forward to responding in more detail, where necessary, at the end of the debate. Let me start with the important issue of access to cash. I represent a rural constituency with a higher-than-average proportion of elderly and vulnerable residents, so I am acutely aware of the very real concerns around this topic. As of today, there remains extensive access to cash across the UK as a whole—over 95% of people live within 2,000 metres of a free cashpoint. I want to be clear that it is not acceptable for people to have no option but to travel large distances or pay ATM fees to access their own money.

If hon. Members have a concern in their local area, as I know many have, I strongly recommend that they reach out to LINK, which is leading the industry-led initiative to see what can be done to help constituents. LINK is delivering, for example, a new free-to-use ATM in the Pollards Hill estate in the constituency of the hon. Member for Mitcham and Morden (Siobhain McDonagh)—I have already made a commitment to her to visit and open it.

[Siobhain McDonagh (Mitcham and Morden) (Lab)]

May I say to the Minister that I am delighted that LINK is providing that machine? That part of outer London is, as many Members here will know, inaccessible apart from by limited public transport. There are two paid-for machines in the terrace, but a free one has been refused for years and years and years. I believe that this machine may be coming because of this very amendment—new clause 7. Unless it is there in writing, how can anybody in this House feel confident that free cash machines will be kept? Their numbers are reducing at pace.

[Andrew Griffith]

The hon. Lady probably proves each of our points, including my point that we start from a position where there is an industry-led solution, and I am sure that many colleagues will be auditioning for these new industry-led free cash machines.

[Dame Andrea Leadsom (South Northamptonshire) (Con)]

Will my hon. Friend give way?

[Andrew Griffith]

I was just about to mention my right hon. Friend.

[Dame Andrea Leadsom]

The Minister and I had a very good conversation about this very subject. He is aware that back in the days of a former Treasury Committee and an earlier Government, there was a huge move away from ATMs per se, let alone free access to people’s own cash. Can he therefore make it clear at the Dispatch Box what he said to me, which is that the Government are entirely behind free access to cash and will make that clear in the guidance?

[Andrew Griffith]

My right hon. Friend is just one of many colleagues—many in the Chamber today, but also my hon. Friends the Members for Newton Abbot (Anne Marie Morris) and for Don Valley (Nick Fletcher)—who have made precisely this point. It is the Government’s expectation that the industry-led initiative must deliver. As I will come on to clarify, the powers we are taking in the Bill—we are not mandating them, because we do not support the amendment from the hon. Member for Mitcham and Morden (Siobhain McDonagh)—give us the flexibility in future, by means of a direction statement to the industry, to mandate free cash machines.

[Siobhain McDonagh]

rose—

[Andrew Griffith]

Let me finish this point, because I know many Members are vexed by this issue and we understand how important it is. Work has been done since my right hon. Friend the Member for South Northamptonshire occupied my position. A further 47 communities represented in this House will benefit from similar cash facilities funded by the banks, as part of that LINK assessment process. I urge all colleagues to take advantage of that, and my office is happy to help to do that.

[Several hon. Members rose—]

[Andrew Griffith]

I am going to finish this point, and then we will hear from more Members. We must not underestimate the significance of what the Bill is doing: it is taking legislative action for the first time in the more than 1,000-year history of the Royal Mint, where the UK pioneered paper banknotes in the 17th century and since we introduced the world’s first ATM in 1967. This Government—right now, today—are putting on the statute book and protecting access to cash, to safeguard the needs of those who need it.

[David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con)]

Like my right hon. Friend the Member for South Northamptonshire (Dame Andrea Leadsom), I had a very useful conversation with the Minister. Will he confirm what I think he just said, which is that if it becomes clear that people do not have free access to cash across the United Kingdom, the Government will proactively intervene to make sure that they do?

[Andrew Griffith]

We talked about my right hon. Friend’s relative munificence of 53 free cash machines in his constituency—I think it was that at the last count. What he says is the case. The Bill gives the Government the ability at any point in time to give direction to the Financial Conduct Authority, the relevant regulator—this is the basis on which we regulate all our financial services in this country—through a policy statement that will set out the Government’s policy on such matters as cost and location. I am being clear that it is our expectation that the industry will deliver on this important issue for our constituents. If not, the Bill gives any future Government the ability to mandate that.

[Kit Malthouse (North West Hampshire) (Con)]

Notwithstanding the support that the Minister is giving to the notion of free cash, he will recognise that the Government cannot sit there like King Canute, and that between 2010 and 2020 the number of payments made in cash went from 50% to 17%. That has fallen yet further during the pandemic. There are significant advantages to cashless transactions, not least in the elimination of crime. Actually, it is a bit of a myth that there are sections of society that struggle, and we see that most apparently in the advent of cashless parking. There are hardly any councils left in the country now that use cash for their parking. They are all using apps on smartphones. When we introduced it when I was at Westminster City Council, we did not have a single complaint from an elderly person—quite the reverse. They often found it much easier than fumbling around for coins and notes to be able to park, as well as having the ability to extend the time using the phone. There are great advantages to the elimination of cash in society too.

[Andrew Griffith]

My right hon. Friend is right and illustrates well the Government’s desire to achieve the right balance in this debate, rather than operate at either extremity. He will know from his former role the significant move in relation to Oyster and the ability to be cashless.

[Siobhain McDonagh]

Is the Minister aware that we have lost 12,599 free-to-use ATMs since 2018? That is a reduction of 24%. Who in this House, understanding that trajectory, would believe that the numbers are not going to fall further?

[Andrew Griffith]

I will repeat my previous point, and the hon. Lady will have her chance to speak later. It is the objective of the Government, in the course of the transition that my right hon. Friend the Member for North West Hampshire (Kit Malthouse) talked about, to protect the vulnerable and ensure that protection of access to cash. The hon. Lady’s statistic is right, but I reiterate that more than 95% of people today live within 2,000 metres of a free cashpoint, and I hope she recognises that.

[Anthony Browne (South Cambridgeshire) (Con)]

I want to follow up on some of the comments from my right hon. Friend the Member for North West Hampshire (Kit Malthouse). Cash is being used far less than it was previously. That is good and convenient for many people. I fully support the Government’s moves and the ambition across this House to ensure that we have access to free cash, but there is no point in people having access to free cash if they cannot spend it on essential items. I just flag that many retail outlets no longer accept cash. It is not just parking; there are cashless bars and so on. That is fine, but there is a scenario where outlets that sell essential items such as food shops and chemists might at some point be required to accept cash, because if they do not accept cash, lots of people will be excluded.

[Andrew Griffith]

My hon. Friend makes another important point, and I fear we are in danger of previewing the debate that we shall have this afternoon. When we talk about access to cash, we are not just talking about withdrawals; we are also talking about the deposits that are so vital. If our small businesses in particular are to continue to take cash, they need to be able to deposit that securely, safely and conveniently.

[Dr Rupa Huq (Ealing Central and Acton) (Ind)]

I just want to broaden the debate from ATMs to bank hubs. These were promised as a panacea for towns where the last bank has gone, such as Acton. It is not just about rural communities. Acton was one of 10 places that were promised a bank hub last December, but nothing has happened. There is a lack of will, and they are under-resourced and voluntary. Perhaps there is an argument for more regulation to make them happen, because The Daily Telegraph and the Daily Mail were saying in the autumn that none of these—zero—has happened, but I understand that since then two of them have. In the meantime, Acton is a cash desert. In 2018 we lost our post office, never to be replaced. What advice does the Minister have for me? How can he compel that bank hub to open?

[Andrew Griffith]

The bank hub initiative, just like the new voluntary initiative on LINK cash machines, has an important role to play. Frankly, these initiatives have started relatively recently, and as well as making sure today that we get the right balance in statute, we also need to see them delivered. I will take that case forward for the hon. Lady, and I will write to her. The bank hubs programme is now being deployed at pace. My hon. Friend the Member for Totnes (Anthony Mangnall) boasts of his bank hub, which I suspect will not make the hon. Lady delighted, but it shows that they can deliver, and that is what we want.

I will clarify for the record what we are saying, if I may. Under the Bill, the FCA, when acting to ensure reasonable access to cash, has to have regard to the Treasury’s policy statement in this area. That is the statement that will set out from time to time the Government’s position on matters such as cost and location, and the FCA will have to have regard to that when setting the detailed prescriptive regulations.

That gives time—I am putting the industry on notice—for those industry-led schemes to prove that they can deliver, and to ensure that the Government have a robust regulatory framework: a belt-and-braces framework. I believe that is the right and flexible way of dealing with the matter, rather than right now locking it in statute for all time. I will ensure that we reflect the House’s views on that when we craft the policy statement.

[Emma Hardy (Kingston upon Hull West and Hessle) (Lab)]

The Minister is being very generous in giving way. The point made by the right hon. Member for North West Hampshire (Kit Malthouse) makes clear the need for free access to cash to be provided for in the Bill. As the number of people making cash transactions falls, it becomes more expensive to distribute cash freely. There is, however, as I hope we all understand, a vulnerable group in our society who still need free access to cash. As cashless transactions increase, the need to maintain free access to cash for the most vulnerable people in our society increases. That is why we are asking for it to be provided for in the Bill.

[Andrew Griffith]

I agree with the hon. Lady’s point that it becomes a pressing issue. The justification, having successfully transacted in cash since the first Roman emperor decided to dispense pieces of metallurgic value with his head on them, is precisely that we see the transition and we want to get it right, in the interests of the vulnerable. The Bill also contains powers to regulate the wholesale distribution of cash—those people who trunk cash up and down cash centres across the United Kingdom.

[Kit Malthouse]

Will the Minister give way?

[Andrew Griffith]

We have spent a long time on cash, so I will take one final intervention on this. Then I will make progress, simply to allow other Members the chance to make the points that they are here to make.

[Kit Malthouse]

I am grateful to the Minister. He may not be old enough, but some of us will remember the moment the cheque started to go out of usage. There were lots of claims of damage to certain sections of society, and that lots of people would be outraged when the cheque disappeared. Now people operate without chequebooks on a daily basis, and no retailers, as far as I am aware, accept cheques. On the idea that we should mandate that cash be accepted, we cannot stand in the way of the fact that consumers are voting not to use cash. The market is telling us that cash is running out of use, and let us scotch the myth that there is such a thing as a free ATM. The network at the moment costs about £5 billion to operate. That is paid for by every user of the bank, whether they use the ATM or not.

[Andrew Griffith]

My right hon. Friend makes his points very well. As he said earlier, there are significant benefits in relation to fraud, traceability and the environment from dematerialising, but it is not the position of the Government to advocate for it.

[Siobhain McDonagh]

rose—

--- Later in debate ---

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I reiterate what the Minister said: a lot of Members wish to speak in the debate, and he has been on his feet for about half an hour. If we are to have time for the amendments and other contributions, we need to cut back on interventions.

[Andrew Griffith]

Thank you, Mr Deputy Speaker; you are as wise as my right hon. Friend the Member for North West Hampshire is flattering. We will make some progress and allow others to contribute.

Let me move on to access to banking and payment services. Just as we have said about cash, they are the essential ingredients of modern life and for many businesses. The new clause tabled by my hon. Friends the Members for Hastings and Rye (Sally-Ann Hart) and for Northampton South (Andrew Lewer) raised the important issue, to all of us in this House, of free speech, and the crucial role of payment service providers in delivering services without censorship. Since Committee stage, I have met with my hon. Friend the Member for Hastings and Rye, the FCA and PayPal regarding its recent temporary suspension of some accounts. I draw hon. Members’ attention to my letter deposited in the House, in which I set out the Government’s position on that important matter. I also circulated the letter from PayPal that sets out that it re-evaluated and reversed its decision in a number of the specific cases raised. It says that it was never its intention to be an arbiter of free speech, and that none of its actions was based on its customers’ political views.

I want to be extremely clear that the Government are committed to ensuring that the regulations respect the balance of rights between users and service providers’ obligations, including in respect of freedom of expression, whether of the Free Speech Union, the trade union movement, law-abiding environmental movements or anyone else expressing lawful views. To ensure that the existing regulatory regime is operating as it should in that respect, I will seek further evidence through the Government’s review of payment services regulation in January. To continue this transparent dialogue with colleagues on an important subject, I will provide an update to Parliament in the form of a written ministerial statement before the formal closure of that review, and table amendments to the relevant regulations using the powers in today’s Bill, if necessary.

We recognise the value that the mutuals sector brings to the UK economy in providing a door to affordable credit. The Government are committed to the health and prosperity of the mutuals sector, which is why we supported the private Member’s Bill of the hon. Member for Preston (Sir Mark Hendrick), which would allow co-operatives, mutual insurers and friendly societies further flexibility in determining for themselves the best strategies for their business. As I said in Committee in response to amendments tabled to today’s Bill by the hon. Member for Hampstead and Kilburn (Tulip Siddiq), the Government consider that the Financial Services and Markets Act 2000 already ensures that regulators consider mutual entities as they exercise their regulatory functions.

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[Mr John Baron (Basildon and Billericay) (Con)]

On the FCA and financial inclusion, it is very wise that we ensure that good financial advice is imparted by the powers-to-be. In referring Members to my entry in the Register of Members’ Financial Interests, may I say that when it comes to things such as investment trusts, we are still trying to throw off the yoke of well-intentioned but misguided EU regulation when it comes to information that could lead to a misunderstanding about risk? The FCA seems somewhat reluctant to carry that forward. Will the Government ensure that the regulators, including the FCA, are doing their job?

[Andrew Griffith]

My hon. Friend makes a very fair point. To be clear, the purpose of good financial regulation cannot be to extinguish risk, but is to give people choice and indeed allow them to reap the rewards of taking risk in an appropriate and informed fashion, so I completely agree with him.

On the theme of reporting, I assure the hon. Member for Blaenau Gwent (Nick Smith) and my hon. Friend the Member for The Cotswolds (Sir Geoffrey Clifton-Brown) that the consumer panel, like all other statutory panels, already produces an annual report with the panel’s opinion on matters that it has engaged with the FCA on; however, following new clause 10 being tabled, I recognise the need to ensure that reports are brought to the attention of the House. I have engaged with the FCA, which has agreed with me that in future it will notify the Treasury Committee, as the relevant Committee of this House, on publication of the consumer panel’s report, to ensure that Members of this House are aware of and can fully engage with it. I hope that that goes some way to giving the hon. Members the satisfaction that they seek.

Before I speak about the financial advice guidance boundary, raised in new clause 11 in the name of my hon. Friend the Member for West Worcestershire (Harriett Baldwin), the Chair of the Treasury Committee, let me congratulate her on her relatively recent election to that role—although I hope that we have worked well together even during her short time in it.

[Nick Smith (Blaenau Gwent) (Lab)]

I congratulate the Minister on his earlier remarks about seeking to improve the performance of the FCA. Many people on both sides of the House want that to happen. It is pleasing that the Treasury Committee will hear information on reporting from the consumer panel of the FCA; however, a number of financial scandals have affected the constituents of Members across the House in recent years. While I hear what the Minister says, I am really looking for a greater opportunity to challenge the FCA through its consumer panel than he has so far suggested, but I hope that we can work together to strengthen that point.

--- Later in debate ---

[Andrew Griffith]

I thank the hon. Member for his point. I had that conversation with the FCA precisely to try to achieve that purpose. If there are other ways to do that that will help him, I am happy to do so.

I was talking about the financial advice boundary, which is a real concern and speaks as much to financial inclusion as to the work of the advisory sector. My hon. Friend the Member for West Worcestershire, when she was in this role, undertook some important work on the comprehensive financial advice market review, which led to some important improvements in the market at that time. Unlike me, however, she was not blessed with the Brexit freedoms of being able to influence our own rulebook.

I completely agree with my hon. Friend that it cannot be right that only the wealthiest can access financial advice. The situation today is a good example of the unintended consequence of well-meaning regulation that we should be alive to. I thank the Investing and Saving Alliance and others for their efforts to promote reform in this area, and it is something that I will take forward and see what I can do to progress. We will revisit the issue and work closely with the FCA and the industry. I assure her that there is nothing in the Bill that would impede any of the things that she seeks to do.

[Harriett Baldwin (West Worcestershire) (Con)]

The Minister is making some encouraging sounds about new clause 11. In addition to the commitments that he has just made, will he instruct officials to look at the matter with the greatest urgency?

[Andrew Griffith]

I am happy to confirm that we will pursue it with great urgency, as the Government should be doing with everything in this important domain. Although the Government will not be supporting new clause 11 today, it goes some way to address the issue, so I will look at it as a basis for potentially moving forward. The Bill enables us to do that, so we do not have to do it today. I commend the other amendments tabled in relation to preventing consumer harm.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

The Minister has been talking about the importance of regulation. He will know that one area that is not regulated at all is buy now, pay later, and he will have seen new clause 28 in my name. A poll published today says that 40% of the British public will do their Christmas spending with a buy now, pay later loan. A quarter of those who use buy now, pay later are missing other payments, because they are getting into a cycle of unaffordable debt. We have been talking about regulating these companies for nearly three years now; the Government’s proposals talk about regulation possibly coming in another year’s time. Can he see a way to at least introduce the protection of the ombudsman, so that this Christmas does not leave families with a nasty wake-up call come 1 January?

[Andrew Griffith]

I will try to respond to the hon. Lady’s points further when I sum up, so I can make some progress. We had that debate several times in Committee. We have to be slightly cautious about the unintended consequences of taking into scope a much wider set of transactions that involve an element of deferred payment, but I am sympathetic to her points.

I thank my hon. Friend the Member for Harrow East for raising the topic of a statutory duty of care for consumers. Ensuring that consumers of financial services get the right protection they need remains a priority. The FCA comprehensively analysed the options for improving that, which led to the consumer duty that will come into force in July.

The hon. Member for Bath (Wera Hobhouse) tabled new clauses 34 and 35 to require trustees of occupational pension schemes and fund managers to act in the best interest of beneficiaries, which is indeed the position as it stands today, although I will listen carefully to her points. Trustees and fund managers will be subject to the FCA’s consumer duty, which puts on them a focus of delivering good outcomes for customers.

I turn to amendments relating to frauds and scams. The Bill is a huge step forward in tackling the growing problem of authorised push payment scams. I will be clear that, as I set out in my response to the hon. Member for Hampstead and Kilburn in Committee, the Government are committed to tackling fraud far more widely than in just financial services. She may like to know that the Home Office has now confirmed that a national fraud strategy will be published early in the new year.

Specifically for financial services, UK Finance publishes a half-year fraud update, which sets out how the industry is working together to respond to the fraud threat and to support customers. In relation to the amendments concerning the reimbursement of victims of authorised push payment scams, the payment systems regulator has already signalled its intention to deliver a higher degree of consumer protection.

On sustainable finance, no Government have done more on the climate. We have legislated to reach net zero greenhouse gas emissions by 2050. We support strengthening the UK financial services regulatory regime’s baking in of the climate, as underlined by clause 25, which requires the regulators in discharging their functions to have regard to the need to contribute to achieving compliance with net zero. The regulators will be required to report annually on how they have considered that regulatory principle. That is a significant step in our goal of making the UK a net zero-aligned financial centre, and builds on our green finance and net zero strategies across the whole gamut of regulatory activity. The Government committed to updating our green financial strategy and will announce further information on timing imminently.

[Dame Andrea Leadsom]

I am delighted to hear that from my hon. Friend. Does he agree that that not just gives the UK a competitive edge but creates many new jobs and opportunities for the UK to lead the world in green finance, as well as other green industries in future?

[Andrew Griffith]

Absolutely; it is a strategy that pays back on many levels. It is biased towards left-behind communities and parts of the United Kingdom, it creates jobs and prosperity, it safeguards the prospects of the City of London and our financial and professional services and, of course, it ensures that we deploy capital in pursuit of the transition to a clean, low-carbon world.

[Olivia Blake (Sheffield, Hallam) (Lab)]

How does the Minister square the language that he has just used about how great the UK is with two major banks that are based here providing £107.44 billion to the top 50 companies expanding upstream oil and gas? Is that not exactly why we need some of the sustainable finance amendments that have been tabled?

[Andrew Griffith]

I beg to differ with the hon. Lady, because it is important to finance the transition to achieve a just green financial future. While we are making all these efforts and coming forward with things such as the taskforce on nature-related financial disclosures, we will therefore make sure that we are not defaulting to divestments and boycotts, because that is not our view of the way that the Government will finance the clean energy revolution.

[Caroline Lucas (Brighton, Pavilion) (Green)]

The Bank of England’s climate stress test, published in May, showed that banks need to take climate action immediately or face a hit to annual profits of up to 15%. This is not just about airy-fairy words about the transition, but about banks that, as we have just heard, are bankrolling the fossil fuel industry, which will bring real risks to the finance sector as well as to the rest of the world. Can the Minister say whether he will support new clause 25?

[Mr Deputy Speaker (Mr Nigel Evans)]

Before the Minister does, I will just say that he has been speaking for three quarters of an hour now. A lot of people want to contribute to the debate.

[Andrew Griffith]

On this side of the House, we are about action not words. I listened with great care to what the hon. Lady said, but action starts at home. In her constituency, the Green party leader flew on a jet aeroplane to COP and the level of recycling is half that of neighbouring West Sussex. People should get their own house in order before coming to virtue-signal about others’.

New clauses 8 and 9 in the name of the hon. Member for Sheffield, Hallam (Olivia Blake) raise the important issue of financial stewardship. The Department for Work and Pensions, which is responsible for that, has already made a public commitment to review stewardship disclosure requirements. That will be done during 2023.

Finally, the Government believe that effective commodities market regulation is key to ensuring that market speculation does not lead to economic harm. The current regime we have inherited from the EU is overly complicated and poorly designed. To ensure that this is calibrated correctly, the Bill delegates the setting of position limits from the FCA to trading venues themselves. The amendments in the name of the right hon. Member for Hayes and Harlington (John McDonnell) seek to reverse this. The Government’s position is that this would place unnecessary restrictions on investors, to the detriment of all market participants. It would place the UK at a disadvantage compared with other international financial centres, such as the EU, that apply restrictions only to contracts that genuinely pose a risk.

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[Sarah Olney (Richmond Park) (LD)]

The Liberal Democrats recognise the importance of good regulation. Well-designed, effectively administered, properly enforced regulation creates a level playing between competitors and instils confidence in consumers and players in all markets. As the Liberal Democrats’ Treasury and business spokesperson, I have spoken to many businesses in many sectors, including in the City, and I have not found anywhere an appetite for the sweeping away of regulations often advocated by Members on the Conservative Benches. Everywhere I hear calls for effective regulation, properly administered.

[Andrew Griffith]

Would the hon. Lady be able to identify any Member of this House who has talked about the merits of sweeping away regulation? That is not the position of the Government.

[Sarah Olney]

With respect, I did not say it was the position of the Government, but the Minister cannot deny that it has been advocated for on many occasions during the referendum campaign and on many occasions since. I think he is being disingenuous.

Although the Liberal Democrats welcome some aspects of the Bill that will update the regulatory framework for financial services, we remain concerned by the lack of accountability of the regulators to Parliament and by the potential impact of this Bill on financial stability. The Government have described this Bill as a once-in-a-generation opportunity to reshape financial regulation, but as currently written the Bill lacks ambition and inspiration. In particular, it is a missed opportunity to create a regulatory framework that turbocharges the green agenda and strengthens protections for victims of fraud.

My fundamental concern with the drafting of the Bill is how it undermines the role of Parliament while extending significant new powers to both regulators and the Treasury. As ever, the devil is in the detail, which will be largely hidden within secondary legislation that will not receive parliamentary scrutiny or oversight. Accountability and transparency are the cornerstone of effective regulation. It is vital that those principles are upheld to maintain national and international confidence in the UK’s financial services sector and to improve the operational performance of regulators.

The Bill did not previously contain sufficient powers to require the regulators to report on their performance against their objectives. I am therefore pleased that the Government have made some steps towards improving accountability and transparency though the addition of new clause 17. However, the new clause still does not go far enough in establishing parliamentary oversight of the regulators. Regulators’ powers are granted by Parliament, and that is who they should be accountable to—not to a Minister who may only be in place for a matter of weeks.

I remain concerned that the new statutory objective on international competitiveness could increase risk-taking in the financial services sector. We do not need to be reminded of just how damaging that sort of behaviour can be. I am particularly concerned that the secondary objective of competitiveness will negatively impact the regulator’s delivery of its primary objective of ensuring financial stability.

Our amendments (a) and (b) to new clause 17 would place additional requirements on the regulators to report on the delivery of their objectives, including with an assessment of the impact of the Bill on financial stability. If the last few months have proved anything, it is that volatility in financial markets has a very real and direct impact on households, so I urge the Government to think about how the Bill can be strengthened to ensure that financial stability remains at the forefront of regulators’ activities.

I am pleased to see that a number of amendments on green finance have been tabled, but it is disappointing to see the Conservatives’ lack of ambition in that area. We have such an opportunity to be a leading global centre for green finance, but the Bill does nothing to facilitate that. There is an increasing appetite among investors to support the green transition, but British businesses often struggle to access the green capital they need. New clause 33, tabled in my name, would place a requirement on the regulators to report on ways in which they have promoted and incentivised green finance and green investment. Time is running out for us to lead the world on this, and I urge the Government to commit to a green finance strategy and to start thinking seriously about how a regulatory framework can mobilise green finance.

--- Later in debate ---

[Mr Baron]

I very much welcome the Bill and congratulate my hon. Friend the Minister on listening to and engaging with the points raised by many of us on the Back Benches.

I support new clause 11 in particular—I was heartened to hear what the Minister had to say about it—but may I perhaps reinforce a very simple message about the urgency required on financial advice? We in this country have been blessed with the City of London and many other world-leading financial institutions around the UK. I think I can say with some confidence that London is the financial capital of Europe, if not the world. The world comes here to do business on a variety of fronts. Yet we have very little good access to advice. In fact, if anything, we have a widening advice gap.

On the one hand, we have wealth managers raising their minimums, banks withdrawing from the high street and withdrawing fully from providing investment advice; we also have the retail distribution review, which I supported because it was ending the backhand commission for unit trusts—that was bad for the consumer—but it has resulted in independent financial advisers having to charge more and few of them being used. On the other hand, with all that advice in retreat, we have the Government and all parties saying that we must take greater control of our finances, there are greater pension freedoms and there is a great demand for good advice.

A lot of people of modest means who have no access to good advice fall into that void. They may be tempted, for example, to leave cash in the bank earning a pitiful rate of interest while inflation erodes its value. This is where the law of unintended consequences comes in, because all that regulation that had to be met before one could offer full-blown advice is fine when we are talking about full-blown advice, but there is a middle ground that needs to be covered. I offer a basic statistic that might interest or help those willing to take a particularly long-term view to their financial planning: instead of leaving money in cash, if they invest in equities over the long term—25 years, for example—they stand a very small chance of losing money. There will be volatility, but because they are investing, hopefully, in growing businesses, they will do well, and 97 times out of 100, that will beat cash deposits. That is the sort of advice that banks, building societies and many others could give, without getting too complex about financial planning. It would offer consumers a choice, rather than just letting their cash sit in banks and get eroded. Will the Minister therefore give impetus to the assurance he has given on new clause 11 and really get the Treasury looking at this issue, because there is a halfway house, and we must not stop regulation being the enemy of the good? That is what we are asking for.

I will add one other thing quickly in the minute I have left. Please make sure that our regulators listen to the various trade bodies when it comes to regulation, because we are inheriting—I very much welcome this Bill—a lot of powers from the EU. We are in control of our own destiny, but I take issue with the FCA on a number of points. One of them is that when it comes to investment trusts, there are such things as key information documents. They are an invention of the EU and are misleading about risk and putting consumers at risk of losing money—it is as simple as that. The Association of Investment Companies has said that. By the way, it has also said, in relation to those key information documents, “burn before reading”. Despite that, there has been no meaningful action from the FCA on that issue, and that is wrong. I ask the Minister to make sure that our regulators do not rest on their laurels, realise the greater freedoms they have got and rise to the occasion.

[Andrew Griffith]

I thank Members from all parts of the House who have spoken today for their valued and often very informative and sometimes passionate contributions. I sense a tone of disappointment in the hon. Member for Hampstead and Kilburn (Tulip Siddiq), my shadow on the Opposition Front Bench. I will try to endeavour not to disappoint her in return for her party’s support for this important and landmark Bill. I spoke at length in my opening remarks. I hope I was generous in taking interventions, and perhaps colleagues will indulge me if I try to get through this as quickly as possible.

We heard from my right hon. Friend the Member for Chelmsford (Vicky Ford), my predecessor, who contributed so much to this Bill. We also heard from my hon. Friend the Member for North East Bedfordshire (Richard Fuller) and from my hon. Friend the Member for North Warwickshire (Craig Tracey), who served on the Bill Committee. They all spoke to a greater or lesser degree in support of new clause 17 and about how we can make that better and better hold the regulators to account.

We heard about the specific metrics suggested in new clauses 12, 13, 14 and 15—my hon. and right hon. Friends are very productive. I can say that I will consider things very carefully. In those amendments, they gave specific examples of how we could potentially deploy the powers in new clause 17, and I undertake to consider carefully whether those are the right way forward. We heard from my right hon. Friend the Member for Chelmsford about that sense of urgency, and we got that again in new clause 11. Again, it is potentially a good way forward that I would like to consider.

We all understand that it comes down to financial inclusion, for which the hon. Member for Kingston upon Hull West and Hessle (Emma Hardy) rightly never fails to agitate. If, however, the consequences of our financial regulation exclude, as I think we heard, 92% of people from getting basic guidance on the sorts of products that are right for them, that is a problem for inclusion and for the industry. It is something that I was asked to take away with due urgency, and I commit that once we have the Bill on the statute book that is absolutely what I will do. Technology can be our friend there as well. We heard that from my hon. Friend the Member for West Worcestershire (Harriett Baldwin), the Chair of the Treasury Committee.

--- Later in debate ---

[Andrew Griffith]

My hon. Friend is absolutely right that that is a critical priority. We heard the figures—no one disputes them—about the growing prevalence of fraud, much of which is displacement as people go online. We need to give people the tools to protect themselves and we need to ensure that it is a high priority for those who seek to protect us.

We will empower the public with information. The hon. Member for Kingston upon Hull West and Hessle talked about financial inclusion. As we know, there is a slight difference of opinion, in that the FCA considers that that is already within its remit. It is absolutely something that I would like to see greater transparency on, and perhaps that is somewhere we can make common cause.

[Sir Geoffrey Clifton-Brown]

On fraud, about which I gave the figures to the House earlier, we had a hearing of the Public Accounts Committee the other day. I suggested two things: first, fraud should be made a strategic priority for every police force; and secondly, every police officer in the country should receive at least some basic training in the likelihood of fraud crimes.

[Andrew Griffith]

Fraud is of course a shared responsibility between the Treasury and my hon. Friends in the Home Office, and when it comes to the report that the hon. Member for Hampstead and Kilburn is quite rightly challenging us to produce as quickly as possible, we want that report to be right rather than quick, but we do need to bring it forward as quickly as possible. We will use the time wisely to engage with expert stakeholders, which could well include the training of which my hon. Friend speaks, and we will come forward with that early in 2023.

In addition, this Bill is a seminal moment in protecting victims of authorised push payment fraud. It will ensure swift protections for the vast majority of APP scam victims, reversing the presumption and making sure they receive swift reimbursement so that they are no longer victims of this crime. The measure enables the Payment Systems Regulator to take action across all payments systems, not just faster payments, which is where the fraud occurs most, so that it does not merely get displaced. The Government expect protections for consumers across all payments systems to keep pace with that.

[Richard Fuller]

My hon. Friend has not yet had an opportunity to talk about the Government’s initiative on stablecoins and digital currencies. Given that he has just talked about scams and some of the concerns with cryptocurrencies, is he reassured that what is in this Bill relating to stablecoins remains absolutely front and centre of the Government’s attention?

[Andrew Griffith]

I again thank my hon. Friend, who did so much work on this Bill. It is absolutely right that the Government keep an open mind to new technologies, and my hon. Friend the Member for Devizes (Danny Kruger), who is always very thoughtful, talked about this, but we have to understand the risks. While the risks to consumers of scams in the crypto-space, among others, is extremely high and has been well telegraphed, when it comes to looking at different payment systems—with the power of distributed ledger technology to solve issues such as settlement to make our financial markets cleaner, faster and more efficient—it is absolutely right that the Government consider looking at that, and we will be looking to do more in that domain.

[Tulip Siddiq]

I thank the Minister for his response, and he is making encouraging noises about the forward strategy, which I look forward to seeing, but I have not yet heard him mention anything about data sharing. The fact is that frauds and scams have moved on from what they might have been in the past. Is he going to give some indication of whether there will be a data-sharing arrangement that goes beyond just banks and takes into account social media companies, crypto-asset firms and other platforms that criminals are exploiting, because our vulnerable constituents are falling prey to frauds and scams? It is no good just going back to the old ways on frauds and scams—I am sure he understands that—so could I hear a bit more about data sharing, please?

[Andrew Griffith]

He does indeed understand that. We are addressing legal challenges to data sharing in the Economic Crime and Corporate Transparency Bill, which will introduce provisions to protect firms from civil liability. As was discussed earlier, it is important to regulate the online world, which my colleagues in the Department for Digital, Culture, Media and Sport are doing in the Online Safety Bill.

[Danny Kruger]

Will the Minister give way?

[Andrew Griffith]

I will not give way to my hon. Friend this time.

To conclude, financial and related professional services play a crucial role, as we have heard from many speakers. They contribute nearly £100 billion in taxes and, as my right hon. Friend the Member for Chelmsford reminded us, that pays for more than the cost of the salaries of every nurse in this country. The Government have an ambitious programme for an open, outward, sustainable, technologically advanced and internationally competitive sector that will unleash the most opportunities not just for those who work in it, but for communities across the United Kingdom.

[Stella Creasy]

I am sorry to interrupt the Minister in his final flow, but he did promise he would give me a direct answer. With 40% of people saying they are going to put their Christmas spending on buy now, pay later loans, and they have no regulatory protection, what is going to do to help them this Christmas?

[Andrew Griffith]

The hon. Lady knows from our conversations in the Bill Committee our ambition to look again afresh at the regulations in the consumer credit market. That is outwith this Bill, but it is a commitment that remains and that we will bring forward at the earliest opportunity.

Do not underestimate the power of this Bill. This is an unlock for our financial services. This is the start of delivering our Brexit freedoms. It is giving us back the opportunity to make ourselves competitive—a more prosperous economy, jobs for our children and grandchildren, tax revenues that will pay for our high-quality services, and higher GDP growth. All of that is contained in this Bill, at the same time as protecting the consumers that Members opposite talk about, and delivering on the ambition to put this on the statute book.

Question put and agreed to.

New clause 17 accordingly read a Second time, and added to the Bill.

6 pm

Proceedings interrupted (Programme Order, 7 September).

The Deputy Speaker put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83E).

New Clause 18

Composition of Panels

‘(1) FSMA 2000 is amended in accordance with subsections (2) to (8).

(2) After section 1M (FCA’s general duty to consult) insert—

“1MA Composition of Panels

(1) A person who receives remuneration from the FCA, the PRA, the Payment Systems Regulator, the Bank of England or the Treasury is disqualified from being appointed as a member of a panel established under any of sections 1N to 1QA or 138IA.

(2) Subsection (1) does not apply in respect of a panel mentioned in that subsection if regulations made by the Treasury provide for it not to apply to that panel.

(3) Regulations under subsection (2) may make provision in respect of a panel—

(a) generally, or

(b) only in relation to such descriptions of persons or cases as the regulations may specify (but the power to make such regulations may not be exercised so as to specify persons by name).”

(3) In section 1N (FCA Practitioner Panel), after subsection (5) insert—

“(6) Subsections (4) and (5) are subject to section 1MA.”

(4) In section 1O (Smaller Business Practitioner Panel), after subsection (6) insert—

“(6A) Subsections (5) and (6) are subject to section 1MA.”

(5) In section 1P (Markets Practitioner Panel), after subsection (6) insert—

“(7) Subsections (4) to (6) are subject to section 1MA.”

(6) In section 1Q (Consumer Panel), after subsection (4) insert—

“(4A) Subsection (4) is subject to section 1MA.”

(7) After section 2L (PRA’s general duty to consult) insert—

“2LA Composition of Panels

(1) A person who receives remuneration from the FCA, the PRA, the Payment Systems Regulator, the Bank of England or the Treasury is disqualified from being appointed as a member of a panel established under any of sections 2M, 2MA or 138JA.

(2) Subsection (1) does not apply in respect of a panel mentioned in that subsection if regulations made by the Treasury provide for it not to apply to that panel.

(3) Regulations under subsection (2) may make provision in respect of a panel—

(a) generally, or

(b) only in relation to such descriptions of persons or cases as the regulations may specify (but the power to make such regulations may not be exercised so as to specify persons by name).”

(8) In section 2M (the PRA Practitioner Panel), after subsection (5) insert—

“(6) Subsections (4) and (5) are subject to section 2LA.”

(9) In section 103 of the Financial Services (Banking Reform) Act 2013 (regulator’s general duty to consult) after subsection (5) insert—

“(5A) A person who receives remuneration from the FCA, the PRA, the Payment Systems Regulator, the Bank of England or the Treasury is disqualified from being appointed as a member of a panel established under subsection (3).

(5B) Subsection (5A) does not apply in respect of a panel mentioned in that subsection if regulations made by the Treasury provide for it not to apply to that panel.

(5C) Regulations under subsection (5B) may make provision in respect of a panel—

(a) generally, or

(b) only in relation to such descriptions of persons or cases as the regulations may specify (but the power to make such regulations may not be exercised so as to specify persons by name).”’—(Andrew Griffith.)

This new clause disqualifies those who are paid by a regulator, the Bank of England or the Treasury from being appointed to a statutory advisory panel, subject to any exemptions the Treasury may set out in regulations.

Brought up, and added to the Bill.

New Clause 19

Consultation on Rules

‘(1) In section 138I of FSMA 2000 (consultation by the FCA), after subsection (4) insert—

“(4A) The FCA must include, in the account mentioned in subsection (4), a list of the respondents who made the representations, where those respondents have consented to the publication of their names.

(4B) The duty in subsection (4A) is not to be read as authorising or requiring such processing of personal data as would contravene the data protection legislation (but the duty is to be taken into account in determining whether particular processing of data would contravene that legislation).

(4C) For the purposes of this section, the exemption relating to functions conferred on the FCA mentioned in paragraph 11 of Schedule 2 to the Data Protection Act 2018 (exemption from application of listed GDPR provisions) does not apply.”

(2) In section 138J of FSMA 2000 (consultation by the PRA), after subsection (4) insert—

“(4A) The PRA must include, in the account mentioned in subsection (4), a list of the respondents who made the representations, where those respondents have consented to the publication of their names.

(4B) The duty in subsection (4A) is not to be read as authorising or requiring such processing of personal data as would contravene the data protection legislation (but the duty is to be taken into account in determining whether particular processing of data would contravene that legislation).

(4C) For the purposes of this section, the exemption relating to functions conferred on the PRA mentioned in paragraph 9 of Schedule 2 to the Data Protection Act 2018 (exemption from application of listed GDPR provisions) does not apply.”

(3) In section 104 of the Financial Services (Banking Reform) Act 2013 (consultation requirements), after subsection (5) insert—

“(5A) The Payment Systems Regulator must include, in the account mentioned in subsection (5), a list of the respondents who made the representations, where those respondents have consented to the publication of their names.

(5B) The duty in subsection (5A) is not to be read as authorising or requiring such processing of personal data as would contravene the data protection legislation (but the duty is to be taken into account in determining whether particular processing of data would contravene that legislation).

(5C) In this section “data protection legislation” has the same meaning as in the Data Protection Act 2018 (see section 3 of that Act).”’—(Andrew Griffith.)

This new clause would require the FCA, the PRA, the Payment Systems Regulator and the Bank of England to publish the names of respondents to their consultations on proposed new rules, where those respondents have consented to such publication.

Brought up, and added to the Bill.

New Clause 20

Unauthorised Co-ownership AIFs

‘(1) FSMA 2000 is amended as follows.

(2) In section 261E (authorised contractual schemes: holding of units)—

(a) before subsection (1) insert—

“(A1) This section sets out requirements for the purposes of section 261D(1)(a) (authorisation orders).”;

(b) in subsection (1) for “a contractual” substitute “the”.

(3) After section 261Z5 insert—

“Chapter 3B

Unauthorised co-ownership AIFs

261Z6 Power to make provision about unauthorised co-ownership AIFs

(1) The Treasury may by regulations make provision about unauthorised co-ownership AIFs that corresponds or is similar to, or applies with modifications, any of sections 261M to 261O and section 261P(1) and (2) (rights and liabilities of participants in authorised co-ownership schemes).

(2) Regulations under subsection (1) may make provision about unauthorised co-ownership AIFs generally, or about unauthorised co-ownership AIFs of a description specified in the regulations.

(3) In this section “unauthorised co-ownership AIF” means a co-ownership scheme that—

(a) is an AIF, and

(b) is not authorised for the purposes of this Act by an authorisation order in force under section 261D(1).”’—(Andrew Griffith.)

This new clause would enable the Treasury to make provision about the rights and liabilities of participants in unauthorised co-ownership AIFs which is similar to that made in relation to authorised co-ownership schemes in Chapter 3A of Part 17 of the Financial Services and Markets Act 2000.

Brought up, and added to the Bill.

New Clause 1

National strategy on financial fraud

‘(1) The Treasury must lay before the House of Commons a national strategy for the purpose of detecting, preventing and investigating fraud and associated financial crime within six months of the passing of this Act.

(2) In preparing the strategy, the Treasury must consult—

(a) the Secretary of State for the Home Office,

(b) the National Economic Crime Centre,

(c) law enforcement bodies which the Treasury considers relevant to the strategy,

(d) relevant regulators,

(e) financial services stakeholders,

(f) digital platforms, telecommunications companies, financial technology companies, and social media companies.

(3) The strategy must include arrangements for a data-sharing agreement involving—

(a) relevant law enforcement agencies,

(b) relevant regulators,

(c) financial services stakeholders,

(d) telecommunications stakeholders, and

(e) technology-based communication platforms,

for the purposes of detecting, preventing and investigating fraud and associated financial crime and, in particular, tracking stolen money which may pass through mule bank accounts or platforms operated by other financial services stakeholders.

(4) In this section “fraud and associated financial crime” includes, but is not limited to authorised push payment fraud, unauthorised facility takeover fraud, and online and offline identity fraud.

(5) In this section, “financial services stakeholders” includes banks, building societies, credit unions, investment firms, Electric Money Institutions, virtual asset providers and exchanges, and payment system operators.’—(Tulip Siddiq.)

This new clause would require the Treasury to publish a national strategy for the detection, prevention and investigation of fraud and associated financial crime, after having consulted relevant stakeholders. The strategy must include arrangements for a data sharing agreement between law enforcement agencies, regulators and others to track stolen money.

Brought up.

Question put, That the clause be added to the Bill.

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18:01

Division 116

Ayes: 205

Noes: 282

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18:16

Division 117

Ayes: 204

Noes: 278

New Clause 7

--- Later in debate ---

18:30

Division 118

Ayes: 206

Noes: 271

--- Later in debate ---

[Andrew Griffith]

I beg to move, That the Bill be now read the Third time.

It has been a privilege to lead on this Bill’s progression through the House, and I extend my thanks to hon. Members on both sides for their collaborative engagement, challenge and scrutiny. I extend particular thanks to the Chairs of the Public Bill Committee, my right hon. Friend the Member for Basingstoke (Dame Maria Miller) and the hon. Member for Ealing, Southall (Mr Sharma). On the Opposition Benches, I extend my particular thanks to the hon. Members for Hampstead and Kilburn (Tulip Siddiq), for Wallasey (Dame Angela Eagle), for Kingston upon Hull West and Hessle (Emma Hardy), for Glenrothes (Peter Grant) and for West Dunbartonshire (Martin Docherty-Hughes) for the constructive way in which they have approached the scrutiny of this Bill and for their support where they felt it was appropriate.

On the Government side, I am particularly grateful for the contributions from my hon. Friend the Member for West Worcestershire (Harriett Baldwin), who was plucked from the Bill Committee to her position as Chair of the Treasury Committee, and my hon. Friends the Members for Wimbledon (Stephen Hammond), for North Warwickshire (Craig Tracey) and for Hastings and Rye (Sally-Ann Hart). I also pay tribute to my predecessors, my right hon. Friend the Member for Salisbury (John Glen) and my hon. Friend the Member for North East Bedfordshire (Richard Fuller), for their efforts to prepare and introduce this Bill.

The Bill is a culmination of more than 30 consultations published by the Government over many years and follows extensive engagement. I thank all the stakeholders with whom we have consulted. Before the Bill moves to the other place, I wish to extend my thanks to the significant number of Treasury officials and lawyers for their work in preparing such a substantial Bill, my parliamentary counsel, the witnesses who gave evidence to the Public Bill Committee, the parliamentary Clerks, in particular Bradley Albrow, without whose efforts we would not have got to this point, and those who have helped Members of the Opposition support their work on this Bill.

Finally, as is customary, I wish to thank the Bill team from the Treasury: Matt Molloy, Ciara Lydon, George Guven, Nicola O’Keefe, Charlotte Bennett, Mathilde Durand-Delacre, Maithili Jayanthi, Rohan Lee, Catherine McCloskey and my assistant private secretary, Harry Coloe, who have supported me throughout this process.

We have already discussed at length the significance of this Bill. It is important to remember that our scrutiny does not end with the Bill moving on to the Lords. When the Bill receives Royal Assent, it will kickstart a wide-ranging and ambitious programme of secondary legislation and regulator rules to replace retained EU law, get back our freedoms and move to a comprehensive, domestic model of regulation. I look forward to seeing this important piece of legislation come into force. I commend the Bill to the House.