Financial Services Bill

Debate between Baroness McIntosh of Hudnall and Baroness Noakes

Consideration of Commons amendments
Wednesday 28th April 2021 Lords Chamber

[The Deputy Speaker (Baroness McIntosh of Hudnall) (Lab)]

The noble Baroness, Lady Noakes, has indicated a wish to speak.

[Baroness Noakes (Con)]

My Lords, I spoke at length on this amendment on Report, and I will be brief today. The first part of the amendment proposes to cap SVRs at two percentage points over base rate. As my noble friend the Minister pointed out, this is a potentially dangerous market intervention with financial stability connotations. A recent study by the London School of Economics specifically recommended against this solution to the problem of mortgage prisoners. As my noble friend the Minister explained, it would confer a benefit on mortgage prisoners beyond what they could have obtained as customers of current mainstream mortgage lenders. The loan and borrower characteristics of mortgage prisoners often put them in the high-risk and therefore high-interest rate categories. It is just not fair to confer better terms than are available to borrowers with active lenders but in similar financial positions.

The second half of the amendment proposes that the FCA should make rules that some borrowers would be offered new fixed-rate deals, but this is probably incapable of operation given that the FCA cannot tell mortgage providers it regulates to whom they should lend and on what terms. Alternatively, if the FCA really could dictate to mortgage providers in this way, it would be a stake in the heart of financial regulation as it works in this country.

I have great sympathy for those who find themselves on high SVRs because they took out their mortgages with lenders that for whatever reason are no longer active in the market. However, we should be very wary of solutions that do not take account of the particular characteristics of these borrowers. It is a far from homogenous population with, at one extreme, borrowers who can and probably should remortgage, through to those who simply do not fit the risk appetite criteria of any active lenders. The devil really is in the detail, and across-the-board solutions such as Amendment 8 will throw up more problems than they solve.

My noble friend the Minister has explained how the Government are committed to finding practical solutions to help those trapped on mortgage terms unrepresentative of market rates on offer for equivalent mortgage situations. In the other place, my honourable friend the Economic Secretary said he was “absolutely committed” to working with the FCA to find practical solutions and to being in touch with active lenders to see to what extent they can help with this problem. I believe that he is sincere in his commitment and that we should await the outcome of the further work he now plans to carry out, which should come to fruition later this year. I urge the noble Lord, Lord Sharkey, not to press his amendment.

United Kingdom Internal Market Bill

Debate between Baroness McIntosh of Hudnall and Baroness Noakes

Report stage & Report: 2nd sitting (Hansard) & Report: 2nd sitting (Hansard): House of Lords
Monday 23rd November 2020 Lords Chamber

[Baroness Noakes (Con)]

My Lords, I thank my noble friend the Minister for the Government’s amendments in this group, which are very welcome. However, I will focus on Amendment 54, in the name of the noble and learned Lord, Lord Thomas of Cwmgiedd. Any chairman of a board, whether it is a public or private company or a public body, will say that the most important thing about the board is getting a balance of skills and experience on it. In addition, nowadays, most boards feel the need to achieve a degree of diversity, generally expressed in terms of sex and race.

Putting together a balanced board is a complex task, and trade-offs often have to be made between the different characteristics that the different candidates can bring. The more that seats on the board are allocated to particular sources or interests, the more difficult it is to achieve balance. In something like the CMA, the board is not there to bring representative interests to bear; it is there to make sure that the CMA is run properly, so it should have people who can understand whether it is achieving its objectives or running itself effectively. Those are the most important characteristics.

If one has direct appointment to a public body such as the CMA, that can actually unbalance a board—you could end up with a lack of certain skills or experience, or an overrepresentation of certain commercial backgrounds, for example. When you have a single appointor, which in the case of the CMA is the Secretary of State, the challenge of getting a balance can be worked out between the Secretary of State, his department and the chairman of the relevant body. That is what happens in most public bodies. By taking away some of the appointments, you just make that process much more difficult to achieve.

I continue to believe, despite what noble Lords said earlier, that direct appointment by the devolved Administrations will inevitably be political, because they will be seen as representatives. Indeed, the noble and learned Lord, Lord Thomas, used the word “representatives” when he introduced this amendment earlier. A representative is never completely independent if he or she feels the need to represent.

One of the changes made by the Scotland Act 2016 was direct appointment to the board of Ofcom, and that was followed by similar legislation for Wales and Northern Ireland. I was deputy chairman of Ofcom at the time, so I understand the impact that that can have on board balance—but I do not want to talk about that beyond what I have already said about the difficulties in managing a board when direct appointments are made.

I would like to draw attention to Section 65 of the Scotland Act 2016, where the devolved Administrations were allowed to appoint a member directly. However, that appointment had to be made in consultation with the Secretary of State, which allowed one avenue for conversation to try to make sure that some degree of orderly balance was maintained in relation to the appointments. Amendment 54 does not even go so far as to recognise that precedent, and it is a very extreme action to be taken in relation to the CMA. I hope that the noble and learned Lord, Lord Thomas, will not press his amendment.

[The Deputy Speaker (Baroness McIntosh of Hudnall) (Lab)]

The noble Lord, Lord Liddle, has withdrawn, so I call the next speaker, the noble Baroness, Lady Randerson.