Financial Services and Markets Bill [HL]

Debate between Baroness Dacres of Lewisham and Lord Pitt-Watson

Committee stage
Wednesday 8th July 2026 Grand Committee

[Lord Pitt-Watson (Lab)]

My Lords, the noble Baroness, Lady Bennett, has suggested that we inquire into the City of London’s role with the regulators and regulation. My noble friend Lady Bi summed it up well: there is no direct role there. But I wonder whether we could send a message to the City of London, perhaps a little more collegiate and, as a result, more effective. We all recognise that the role and constitution of the City corporation is quite difficult to defend from 21st-century principles. Why does one square mile of the country have these unique privileges? It has billions of pounds worth of property and investment, and the Lord Mayor of London has the status of a Cabinet Minister, apparently, when he or she goes on trips abroad. Why is it charged with the powers of a local authority but also with promoting Britain’s financial services industry? I point out that your Lordships’ House bears witness to the fact that historic institutions can—and often do—do good and important work. I wonder whether, harking back to the traditions of the City of London, there is one that we could help revive, in the spirit of what the noble Baroness, Lady Bennett, may want to happen.

Historically, the City of London was responsible for the good conduct of the trades in the city, ensuring that the goods produced could be trusted to be of high quality. Indeed, I believe that Elizabeth I even had the goldsmiths of London check that the coinage that the Mint was producing was of a high enough standard, because the goldsmiths were more professional than the people at the Royal Mint.

Over time, that role of policing good conduct has passed to professional bodies and then to regulators, but we often forget that it is the professionalism that we need. Regulators cannot replace professionalism, for which so many people from Britain and around the world come to use Britain’s financial services industry. Professionals, whether individuals or institutions, are a disciplined group possessing special knowledge and skills in a widely recognised body of learning. They are prepared to apply this knowledge and exercise these skills in the interests of others. That professionalism, both for individuals and for institutions, harks back to that old role of the City of London: not regulation but professionalism. It is and should be the core and unique selling point of the UK financial services industry. I sense that that is what we in this Room would like to achieve.

The City of London promotes financial services, but surely, if it does that, it must be sure that the services it promotes—maybe not every financial service—serve a purpose in the world. There is still enormous room for the City to identify and help to encourage good practice, not just to promote financial services generally but to ensure that all the services it promotes deliver benefit to the customer and the world. That may, from time to time, involve talking to a regulator—I do not see that as a problem—but it should seek much more to ensure that professional good practice becomes a norm. The City already does some of this, but it could be so much clearer about its focus and role. There would be no better way to promote the success of financial services in Britain.

I have one last coda on this and a more immediate thought. Spokespeople from the City of London Corporation like to explain—correctly—that they represent the whole financial services industry of Britain, two-thirds of which works outside London. But those who work to promote the industry are exclusively employed in the square mile, and it is difficult to express the level of frustration that I have felt among some that the City talks the talk about employment around the country but maybe needs to walk the walk in its own practices on where people are employed. I hope that might be a constructive suggestion about how this venerable institution might serve its country better.

[Baroness Dacres of Lewisham (Lab)]

My Lords, I fear that Amendment 172C strays beyond the purpose of the Bill, which is concerned with improving the regulation of financial services and markets. It is not, in my view, the appropriate vehicle for reopening broader questions about the role and governance of the City of London Corporation. This amendment takes us into a rather different debate—it asks us to examine the role and function of the City of London Corporation—whereas the purpose of the Bill is to strengthen the UK’s financial regulatory framework, ensuring that it is effective, proportionate and capable of supporting growth, investment and innovation, while maintaining high standards. Our focus should remain on achieving those objectives.

It is important to be clear about the respective roles of the organisations involved. The City of London Corporation is not a financial regulator. It does not authorise firms, supervise markets or enforce regulatory rules. Those responsibilities rest with the Financial Conduct Authority, the Prudential Regulation Authority and the Bank of England, all of which are independently accountable to Parliament.

The City corporation performs a different, but none the less valuable, function. It acts as a convenor of expertise, an advocate for one of the United Kingdom’s most important industries and a champion of the UK as a global financial centre. Through its international engagement, it promotes inward investment, supports exports of financial and professional services, and works with industry to help maintain the UK’s reputation for high standards and innovation.

I question whether the amendment has demonstrated that there is a genuine accountability gap requiring statutory review. Before Parliament creates a new review mechanism, we should be satisfied that there is evidence of a problem that the existing arrangements have failed to address. I have not yet heard that case made. The City corporation is already subject to established governance and oversight arrangements, while the regulators are independently accountable to Parliament.

At a time when the Government are rightly seeking to promote economic growth and strengthen the United Kingdom’s competitiveness as a leading international financial centre, I am concerned that this amendment risks creating uncertainty without identifying a clear public benefit. Our efforts should be directed towards ensuring that regulators can carry out their duties effectively, while organisations such as the City of London Corporation continue to play their distinct role in supporting the wider success of the UK’s financial and professional services. For those reasons, I believe our attention should remain firmly on the purpose of the Bill: strengthening the United Kingdom’s financial regulatory framework. I cannot support Amendment 172C.