Financial Services Bill

Baroness Bennett of Manor Castle Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Thursday 28th January 2021 Lords Chamber

[Baroness Bennett of Manor Castle (GP) [V]]

My Lords, I join the House in universally welcoming our two outstanding maiden speakers. Given that the noble Lord, Lord Hammond of Runnymede, discovered a long-hidden rebellious streak in the other place, and that his title has links to the Magna Carta, I hope that we will be seeing even more rebellion on the Benches opposite with his arrival. I also welcome the noble Baroness, Lady Shafik, who is clearly a powerful new voice on our Cross Benches. I was very glad to hear her mention green finance. I hope we will be hearing a lot more from her on that, as we just powerfully heard about those issues from the noble Baroness, Lady Sheehan. I will, as you might expect, be backing many of the amendments to which the noble Baroness, Lady Sheehan, referred.

However, on the Bill, I must begin by thanking Macmillan Cancer Support for its extremely useful briefing. I shall take its conclusions and extend them far more broadly than it ventured to do. Macmillan calls for an amendment to the Bill requiring organisations to have a statutory duty of care for customers. The charity suggests that that is the best way to ensure that financial service providers take a pre-emptive approach to ensure that they act in the best interests of their customers.

As you might expect, Macmillan focuses on the financial difficulties of people with cancer but also notes that the Financial Conduct Authority concludes that one in two people will become financially vulnerable at some point in their lives. I suggest that, in a complex and fast-changing world, overloaded with pressures on time and attention, with so many people stressed by the struggle for mere survival and the fear of rampant insecurity, the sensible approach would be for everyone to be treated as vulnerable and to acknowledge that our whole society is acutely vulnerable. If we created a system that works for the most vulnerable, it would be one that will work securely, resiliently and safely for everyone.

We know that our current system is not working for many at an individual level. Just look at the practical and topical example of the disastrous performance of the insurance sector when it came to business interruption insurance for small businesses in relation to Covid-19. The financial sector is utterly failing at a structural level to meet the collective needs of our whole society, acutely vulnerable as the Covid-19 pandemic has shown us to be. A system that works best for everyone would involve a financial sector that it a utility: a provision of essential services for the real economy—the economy that feeds us, builds our shelter, clothes us and provides the other essentials of life.

Instead, following decades of financialisation of everything from the care sector to the so-called water industry, we have a financial sector as parasite, sucking funds out of the real economy—all too often to tax havens—and loading essential provisions and services with unsustainable debt. If noble Lords think that I am being radical here, I invite them to read the extensive coverage in the Financial Times of the impact of financial engineering on the water companies.

We are more than a dozen years on from the 2008 financial crash, when the cash machines nearly stopped working. In the age of Covid-19, we are surely more aware now of the need for resilience and stability in this age of shocks. Yet I note that an Oxford University Faculty of Law conference held in 2018 on financial regulation concluded:

“We are safer, but not as safe as we should and could be.”


And that was just the thinking in the financial sector’s own terms.

I listened carefully to the Minister’s typically detailed and careful introduction and heard quite a bit about limiting risk. However, I did not hear the words “climate” or “nature” once. But we know that we need a financial sector that does not continue to fund the trashing of the planet and societies, supply funds to fossil fuel operations that are destroying the planet, pour money into the destruction of the rainforest, stuff the oceans with plastic or spread poverty and inequality through funding sweatshops and outright slave labour.

On 25 January, the US Federal Reserve and the European Central Bank simultaneously said that they would make climate considerations a central part of finance, the importance of which the noble Baroness, Lady Hayman, highlighted. It appears that we are not world-leading but world-trailing, yet again.

We are, of course, world-leading in dirty money, as explained earlier in considerable forensic detail by the noble Lord, Sikka. The issue was also mentioned by a number of Members of the House in an earlier question session on our relationship with Russia. We are a major global centre of corruption. The City is an Augean stables and the Bill is clearly sparing in its distribution of shovels. I give the House notice that I intend to support a proposed amendment to create a new corporate criminal offence for companies or bodies regulated by the FCA of failing to prevent economic crime. I also look forward to working with the noble Lord, Lord Hendy, on the issues of liability that he raised.

In summary, we obviously need a Financial Services Act, but the Bill is nothing like what we need. We are seeing increasing numbers of communities around the world understand that the model of economy, society and finance needed is one that allows us to live within the doughnut, as the saying goes—in the essential space that respects planetary limits while meeting human needs, thereby ensuring that everyone is treated with respect and given dignity, as defined by the economist Kate Raworth in her book Doughnut Economics. We need a Financial Services Act that sets out how our financial sector can meet the need to do that—a very differently structured sector that takes care of all our needs, instead of risking our security and future. We are in an emergency state in 2021. Your Lordships’ House has a responsibility to act to transform our planet-trashing, poverty-creating financial sector, as the other place has very clearly failed to do.