Financial Services and Markets Act 2023 (Mutual Recognition Agreement) (Switzerland) Regulations 2025

Debate between Baroness Bennett of Manor Castle and Baroness Neville-Rolfe

Tuesday 21st October 2025 Grand Committee

[Baroness Bennett of Manor Castle (GP)]

My Lords, I thank the Minister for introducing this statutory instrument, which, as he said, implements the UK’s commitment to the agreement between the UK and the Swiss Confederation on mutual recognition in financial services.

I note that the explanation of the SI says that it will, as the Minister said, allow the Financial Conduct Authority and the Prudential Regulation Authority to essentially oversee and ensure that nothing is going wrong and have oversight of Swiss operations here. That is perhaps not as reassuring as one might hope. I note a report in the Times yesterday that the Financial Conduct Authority had privately shared concerns about the 79th Group with the City of London Police eight months before the group collapsed, owing thousands of people more than £200 million. It is, to quote the Times,

“suspected of being one of the largest Ponzi schemes in British history”.

I note for the record that the company denies any wrongdoing. None the less, the Financial Conduct Authority appears to have had concerns but did not share those with consumers, who are clearly now very much paying the price.

It is worth reflecting that it is a little bit surprising that, as the Minister said, this reflects an agreement that was struck in December 2023 by the previous Government. They said that this was a

“ground-breaking pact on financial services cooperation”

and that it would enable

“frictionless, cross-border provision of financial services between the UK and Switzerland”.

It is interesting that a Government who have been elected on a promise of change now appear to be delivering exactly the agenda with the same kind of terminology as that of the previous Government who they replaced.

It is important to put on the record and focus on the reality of Swiss banking, which is deeply corrupt and non-transparent. If we take, for example, the Tax Justice Network’s financial secrecy index, Switzerland ranks second, and that is not a good result—it is second worst. The UK ranks at number 20, which is relatively good comparatively. Yet we now appear to be seamlessly linking up these two systems, linking our system into a more secret system, with considerable risks. Switzerland also ranks fifth on the Tax Justice Network’s corporate tax haven index, so it is complicit in multinational companies’ tax abuse in particular. The Tax Justice Network estimates the cost to other countries of the Swiss operations to be $21 billion a year.

Perhaps this is a specific question to the Minister. As regards the worldwide rise of automatic exchange of information notes in the past decade or so, in which Governments are supposed to exchange relevant financial information with their peers to help them enforce criminal and tax laws, Switzerland has carved out exceptions to these so-called AEOI notes. So, Article 47 of the Federal Act on Banks and Article 127 of the direct federal tax Act, which still provide for secrecy, have not changed. That is going to be accessing our system and under Swiss law we will not be able to see what is happening. There has been talk of using trusts to replace some of the secrecy instead, but of course trusts are one of the issues that are a major problem.

I note in particular the work of Maria-Gabriella Sarmiento—I do not know whether the Minister has seen this, but I certainly encourage him to look at it—who completed a PhD at the University of Zaragoza about the estimated losses of between $20 and $40 billion for corruption practices, of which Switzerland is a significant destination for that money. Over 20 years,

“assets from at least 33 jurisdictions have been traced to Swiss banks … primarily proceeds of grand corruption, money laundering and other crimes”,

with their estimated values ranging between $112 billion and $514 billion.

The reality is, of course, that the UK and Switzerland are quite similar: they have expansive banking sectors, sophisticated wealth management services and market high-value assets. They are prime destinations for the corrupt to stash their money. To take one practical example from Transparency International, Carlos de São Vicente, a former CEO of a partially state-owned insurance company in Angola, embezzled more than $1.2 billion through Bermuda-registered companies; he then transferred substantial sums to Switzerland. That is one case where someone has been found out, but it is a sample of what a great many people we know are doing without being found out and without me being able to name the details.

I note also that, in 2023, Swiss regulators inspected their institutions and found that 50% had largely unsatisfactory anti-money laundering systems. I do not know whether the Minister can tell me whether there have been significant improvements in that area of money laundering since then.

It is very sad that this important statutory instrument is getting so little attention and focus and that it is happening in this Room, because it is crucial. We have to situate this in the context of the grave concerns—it is not just me who is expressing them—about the state of financial stability in our current system, for all kinds of reasons that I will not go into here. This is about linking up two systems that have great problems with corruption and a lack of transparency—two of the biggest systems in the world—and I cite a former Conservative Minister saying that 40% of the world’s dirty money goes through the City of London and the British Crown dependencies. I do not have a comparable figure for Switzerland, but I have no doubt that it is significant. We are linking up these two sets of money flows, which has to be a concern.

[Baroness Neville-Rolfe (Con)]

My Lords, this statutory instrument gives legal effect to the mutual recognition agreement between the UK and Switzerland known as the Bern financial services agreement. As the Minister has so clearly outlined, the agreement enables the UK and Swiss financial firms to provide services to each other’s markets, particularly in wholesale sectors, such as investment services, insurance and banking, without needing to establish a local presence or duplicate regulatory approvals.

The UK’s position as a global financial centre depends on maintaining strong transparent relationships with trusted international partners. We therefore welcome this agreement with Switzerland, developed on our watch. Mutual recognition, when accompanied by effective supervision and regulatory co-operation, can deliver meaningful benefits to both markets. Under this agreement, Swiss firms will be able to operate in the UK under the supervision of Swiss regulators, with the FCA and PRA granted powers to step in if issues arise—as the Minister explained. The same applies to UK firms offering services in Switzerland.

With that in mind, I would be grateful if the Minister could address the following points. First, I would like to probe the Swiss end. Has Switzerland yet put in place what is needed there to allow UK firms to benefit from mutual recognition? If not, when will this be done? What are the nature and scale of benefits to the UK financial institutions? That seems an important point.

Secondly, turning to our end, how confident are the Government that UK regulators have the necessary tools to monitor Swiss firms’ activities and act swiftly if concerns emerge? What protections are in place for UK clients—not only high net-worth individuals but small firms—should something go wrong?

Thirdly, on timing, why has it taken nearly two years from signing the agreement in December 2023 to putting this framework in place? Has there been a problem with the regulators not being ready or is the Treasury not working at pace?

I was grateful for the reply of the noble Lord, Lord Livermore, to my Question on 16 September, reporting that, by July this year, 51% of assimilated EU law—most of it in financial services—had been repealed, amended or replaced. This was a much lower figure than I had hoped for, given the importance of financial services to growth. I am not sure whether the Swiss regulations—the one set that we are debating and the negative set that is not being debated—will be included in the count in that definition, but the point about pace generally is important. The Official Opposition have been supportive of the transformation process, and there is no excuse for delay.

No doubt the Minister will respond on some of the reservations of the noble Baroness, Lady Bennett, and perhaps explain how things have improved in Switzerland over time. But I note that there will be information sharing as part of the deal, which is important. However, how will Parliament be kept informed of the operation of this agreement, particularly in the event of regulatory diversion or dispute, or a bad case of the kind that was asked about?

In conclusion, we support efforts to deepen co-operation with trusted international partners in financial services, but it is vital that it is done without compromising consumer protection or financial stability, and that it delivers the trading benefits that we all hope to see. I look forward to the Minister’s response, ideally today but otherwise in writing.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Debate between Baroness Bennett of Manor Castle and Baroness Neville-Rolfe

Committee stage
Tuesday 21st January 2025 Grand Committee

[Baroness Neville-Rolfe (Con)]

My Lords, on growth, and indeed on the hospitality industry, it is particularly good to have the practical experience of the noble Lord, Lord Londesborough. I agree with him that it would be helpful to understand today’s employment decline a little better in the Committee.

According to the ONS, there are 8.4 million people working part-time in the UK, which is approximately one-quarter of the workforce. They work in large and small firms and include many young people, students and carers, as well as disproportionate numbers in hospitality, tourism and retail. I know from my days at Tesco how important part-time workers are to big employers as well as small employers, and, in particular, to 24/7 businesses—retail is a 24/7 business. That includes a lot of employment of elderly people. Also, as was said, part-time workers are not only the lowly paid—I had several part-time directors working for me—and good employers offer proper training to their part-time teams. It is an extremely important part of the economy.

While the rise in the national insurance rate to 15% will no doubt hit part-time workers, it is the huge reduction of the threshold to £5,000 from £9,100 that will have the most detrimental consequences for those who work part-time. It is yet another blow to the sector, alongside the increase in the minimum wage that comes into force in April.

As a result, a company that employs a part-time worker over the age of 21 who works just eight hours a week on the minimum wage—I think the noble Baroness, Lady Kramer, said it was down from 14 hours a week —will be hit with this jobs tax for the first time, and the hospitality sector will be disproportionately affected. I think Kate Nicholls used the word “eye-watering”. The industry has warned that the measures announced in the Bill will cost it £1 billion overall. My noble friend Lord Ahmad quoted that figure as well. He is right about the adverse consequences of this and the need for consultation on such changes. How can you adjust your business model and be ready if you do not know what is coming?

It is really difficult for these companies. For the first time, they will have to pay tax on the wages of thousands of part-time hospitality workers. UKHospitality has estimated that a company employing a part-time worker doing 15 hours a week will see a 73% increase in its national insurance bill. It goes without saying that business will have to make tough decisions, as employing part-time workers is soon to become much more expensive. The trouble is that part-time work provides a flexible form of employment for so many—I have mentioned students and carers, but parents are also affected. It can be very useful in juggling what families do. These are people who rely on the flexibility of part-time contracts and might not otherwise be able to work at all.

Can the Minister tell the Committee what assessment the Government have made of the effect of the changes enabled by the Bill on part-time workers? Perhaps he could also comment on the levels of employment within the hospitality sector and how he sees that panning out. How do the Government intend to support industries that will be most impacted by these changes to national insurance contributions? How can he give them hope and how can we be sure that they continue to play their part in growth? It is difficult and we need to try to find some comfort.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I apologise for speaking after the Tory Front Bench, but I thought the noble Lord, Lord Londesborough, was continuing after the voting break.

I will speak briefly in favour of Amendments 58 and 59. In doing that, perhaps I should declare an interest. I was on the board of the Fawcett Society in 2010 when it brought a judicial review against the emergency Budget of that year for its failure to honour its legal duty under the Equality Act to do with gender impact assessment. In that case, although Fawcett lost the overall case on legal grounds, it was said that the gender impact assessment requirements applied to the Budget and should have been carried out on a couple of aspects of that Budget.

With that in mind, I draw attention to the final page of the policy paper of 13 November, which I think we are regarding as an impact assessment. Under the heading “Equalities Impacts”, in this five-page document that my sub-editor’s eye tells me is in 16-point, it states:

“Secondary Class 1 NICs are levied on employers rather than individuals. There are therefore no direct equalities impacts”.


I would like to question the Minister on how it can be claimed that there are no equalities impacts. Some figures have already been raised, but I point out that 74% of part-time workers are female, 57% of involuntary part-time workers are female, 6 million women are working part time and 10 million women are working full time. According to the Resolution Foundation’s analysis of ONS data, 63% of UK workers under the £9,100 threshold are female. We are seeing national insurance charges increasing the cost of employment by nearly £700 a year for someone working 15 hours a week on the minimum wage. An additional 600,000 women workers are being brought within scope of national insurance. As others have said, on the minimum wage you need to work fewer than eight hours a week to stay below the new threshold.

Analysis of this has suggested that women workers are particularly affected by this change. Some of them may want to raise their hours, so this might turn out positive. Some of them may have caring responsibilities that mean that they cannot lift their hours and may then have to leave employment because they are being offered more or nothing. It is also worth pointing out that the Women’s Budget Group has highlighted how the overall impacts of the national insurance changes are likely significantly to increase childcare costs. That is of immediate relevance to working women with direct childcare responsibilities, but, as the Women’s Budget Group pointed out, there are also issues around grandparents, very likely grandmothers, who may find themselves being pushed, and feeling obligated, to leave employment so that they can take up childcare responsibilities. I do not think that that equalities impact can be justified and would appreciate the Minister’s comments.