Financial Services Bill

Baroness McIntosh of Pickering Excerpts

3rd reading & Report stage
Monday 19th April 2021 Lords Chamber

[The Deputy Speaker (Lord Haskel) (Lab)]

I call the noble Lord, Lord Davies of Brixton. Lord Davies? I call the noble Baroness, Lady McIntosh of Pickering.

[Baroness McIntosh of Pickering (Con)]

I am delighted to support my noble friends who have tabled amendments in this group, particularly my noble friends Lady Neville-Rolfe and Lord Holmes of Richmond; they are very timely contributions to this debate. I am delighted to lend my support by co-signing Amendment 28 in the name of my noble friend Lady Neville-Rolfe and co-signed by my noble friend Lord Holmes of Richmond. My starting point is with my interest in developing digital ID and proof of age through digital verification. I speak as chairman of the Proof of Age Standards Scheme board.

For the reasons that both my noble friends have so eloquently given to the House this afternoon, time is passing, and we are living in a digital age; it is extremely important that this is recognised by all departments affected. I pay tribute to the work of the working group, of which PASS is a member, which is, I think, set up under the auspices of the Home Office and the Department for Digital, Culture, Media and Sport. I hope that my noble friend the Minister will be able to confirm that the Treasury is also co-ordinating aspects of digital identification with these other departments. It is extremely important that, if it is the wish of my noble friend Lady Neville-Rolfe that we proceed initially with financial services, we co-ordinate with other aspects. It has been a huge success in terms of sales of alcohol and knives, as my noble friend expressed. In Scotland, where 16 year-olds are able to perform and purchase so many more services than 16 year-olds in the rest of the United Kingdom, the proof-of-age PASS card has been especially important in that jurisdiction.

With these few remarks, I hope that my noble friend will look favourably in particular on Amendment 28. It is important to proceed prudently but with some pace to make sure that we are ahead of the game. This is the time for digital identification—with the proviso that we have the ability to verify age. I absolutely agree with my noble friend Lady Neville-Rolfe that there is space for digital identification in the terms of the online harms Bill, but there is no reason to delay by not passing this amendment to the Financial Services Bill before us this afternoon.

His Royal Highness The Prince Philip, Duke of Edinburgh

Baroness McIntosh of Pickering Excerpts

Monday 12th April 2021 Lords Chamber

[Baroness McIntosh of Pickering (Con)]

I add my deepest condolences to Her Majesty the Queen and all the Royal Family on their loss. Today, it is a privilege to recognise and pay tribute to the lifelong service that His Royal Highness the Duke of Edinburgh gave to Her Majesty the Queen, the Crown, the country and the Commonwealth. He was a Prince of Denmark and one-time holder of a Danish passport. He was the most exemplary role model as liegeman and the most faithful follower of Her Majesty the Queen.

His Royal Highness was an early influence in my life, as chancellor of the University of Edinburgh, and even before that with his interest in the environment, expressing genuine passion and concern for wildlife and the environment long before it was fashionable to do so. He was the founder of the World Wildlife Fund and its first president. He made a huge contribution to running Her Majesty’s private estates at Sandringham and Balmoral, as well as Windsor Great Park and Home Park. His interest in the environment, wildlife and climate change was well ahead of its time. In 1970, the World Wildlife Fund established its highest conservation award in his name, the Duke of Edinburgh Conservation Award, to recognise and encourage significant achievement in the global environmental field. David Bellamy was another great influence where I grew up in Teesdale as a botanist and environmentalist, in particular in trying to protect the blue gentians. How fitting that His Royal Highness the Duke of Edinburgh organised the David Bellamy inaugural lecture in 2013 at Buckingham Palace.

His Royal Highness The Prince Philip firmly held a belief in safeguarding the planet and its resources for future generations. It is a belief we should all seek to emulate in his memory. May he rest in peace and, in the words of the Danish prayer, “Guds engel ham bevar”—may God’s angels protect him.

Financial Services Bill

Baroness McIntosh of Pickering Excerpts

Report stage
Wednesday 24th March 2021 Lords Chamber

[Baroness McIntosh of Pickering (Con) [V]]

My Lords, I am delighted to follow the noble Baroness and to contribute to this debate. I very much welcome the amendments in the name of the Minister, my noble friend Lord Howe, in this group, particularly Amendments 43, 46 and 47 onwards, requiring the FCA to have regard to the carbon target for 2050 when making part 9C rules, as set out.

I always listen to what the noble Lord, Lord Oates, says—we entered the House on the same day and are of the same vintage, so to speak—but I welcome the fact that the Government recognise the risks arising from climate change. The Minister addressed the issue of stranded assets, an issue on which I share his concern, and the transition plan out of them. I think that was addressed in Committee in so far as my noble friend said then that

“the point of the Bill is to support a flexible regulatory system that can respond to changing circumstances and developments as they arise.”— [Official Report, 1/3/21; col. 258GC.]

The noble Baroness, Lady Bennett, spoke about those technologies and forms of energy that can do harm. I am personally concerned that in Amendments 3, 22, 23 and 44, spoken to so eloquently by the noble Baronesses, Lady Hayman and Baroness Bennett, the focus is still very much on moving at the earliest possible opportunity and timetable away from fossil fuels. What worries me increasingly is our fixation on renewables, which on the face of it seem to be performing extremely well both onshore and offshore.

We on the EU Environment Sub-Committee have just completed our last piece of work, looking at the ecology of the North Sea. It is apparent from the evidence that we took that there is a lack of research on the impact of renewable energy offshore facilities on North Sea ecology, particularly marine life—dolphins, porpoises and whales—bird life and the whole sea biodiversity. A plea was made that the cumulative impact should be considered and that we should assess and value all the natural capital, not just the ability to create wind but what we are losing. In particular, it was put to us that we should consider the impact of these renewables, particularly offshore wind, on other users, such as, as in this case, fisheries and shipping.

Mention has also been made of the work going on in the Basel framework. I hope the Minister will give us an update on that. I am concerned that some of the amendments here, particularly Amendment 3, but others as well, may pre-empt and not have regard to the international work that will help us to understand how climate risk should be considered through the Basel framework and working with our international partners.

I pay very close regard to what those such as Mark Carney and the current deputy governor of the Bank of England say, but equally I was struck by the remarks of the noble Lord, Lord King of Lothbury, in the debate on the Budget Statement, where he expressed concern about the new remit requiring the Bank of England to

“reflect the importance of environmental sustainability and the transition to net zero”.—[Official Report, 12/3/21; col 1914.]

In the context of the Financial Services Bill we are seeking, as I understand it, to have a flexible regulatory system, as my noble friend explained, that will be able to respond to circumstances as they develop. I imagine that it is the role of the Government rather than the regulators to set the policy, but I stand to be corrected by my noble friend.

I welcome the opportunity to have this debate. When it comes to net zero, climate change and environmental sustainability, obviously there will be a move away from fossil fuels, but no one has yet explained to me how we are going to attempt to fulfil all our energy requirements in what will be virtually all electricity supplied to the market.

With those few remarks, I look forward to the Minister bringing together all the themes of this debate.

[Baroness Sheehan (LD) [V]]

My Lords, it is a pleasure to follow the noble Baroness, Lady McIntosh. I thank the Minister for some movement on this issue. His courtesy throughout has been an example to all of us. I thank him for his correspondence on the issues that I raised in Committee, some of which I will return to later in my contribution.

I congratulate the noble Lords who moved amendments on climate risk in Committee, without which we would not be where we are today. The amendments were cogently argued and evidently persuasive, if only partially so, which is why a number of them have been brought back, albeit slightly amended, on Report.

I support Amendment 3 in the name of my noble friend Lord Oates and the noble Baronesses, Lady Altmann, Lady Hayman and Lady Jones of Whitchurch. It makes a strong case, with support from across your Lordships’ House, for a PRA review of the risk weighting applied to investments in existing and new fossil fuel exploration, exploitation and production. Amendment 22, in the name of the noble Baroness, Lady Hayman, seeks to embed evaluation of climate-related financial risks, and consideration of the impact of such risks on the stability of the UK financial system, in the modus operandi of the FCA and the PRA. Amendment 23, also in the name of the noble Baroness, Lady Hayman, provides for the appointment of a senior manager within the FCA with responsibility for climate change—and movement on this by the regulator, as she outlined in her earlier contribution, is welcome. Amendment 44, in the name of the noble Baroness, Lady Bennett, makes huge sense in the context of the recent Dasgupta review. I hope that the Minister will give it sympathetic consideration.

I need say no more about the content of these amendments, as I would only be repeating the excellent contributions of those who tabled them. Suffice to say that, if adopted, all three would send the right policy signals that the Government mean what they say when they speak of a climate emergency. Those signals are sorely needed because the signals presently being received by investors and, indeed, by all sectors of society, are confusing and misleading. We have a Government leading on ending the use of coal for power generation—the Powering Past Coal Alliance—who then toy with the idea of granting a licence to a new deep coal mine in Cumbria. The Government announced in December last year that they would end UK support for fossil-fuel projects overseas. Will the Minister say whether UK Export Finance’s support for the controversial east African crude oil pipeline—EACOP—which extends from Uganda to Tanzania, will be a done deal before the new March deadline just announced?

Just today, we have a garbled press release on supporting vulnerable communities in the north-east and Scotland, which will be affected by the transition away from fossil fuels. This is justified in the press release by an unexplained decrease in emissions by the oil and gas sector. These communities deserve better. In the same press release, we are told that this decrease in emissions will be achieved by a new regime to hand out new licences to explore for and exploit as yet undiscovered fields. I am confused. Can the Minister shed some light?

Is the Minister also able to shed any light on whether the Government will bring forward legislation to align the Oil and Gas Authority’s remit to our net-zero target, thus drawing a line under the current policy of maximising economic revenue, or MER? That might serve to remove some of the confusion. How can new licences be justified when extraction of the oil and gas in our existing fields will take us over our share of emissions under the Paris agreement? Surely the Government, in a climate emergency which they themselves declared, are not relying on reducing emissions via carbon capture, usage and storage, a technology which is unproven at scale?

Meanwhile, back in the real world, the NASA website tells us that 2020 was the hottest year since records began, while the World Meteorological Organization states that 2011-20 was the warmest decade on record. The warmest six years have all been since 2015—2016, 2019 and 2020 being the top three. The World Meteorological Organization’s secretary-general, Professor Taalas, said:

“It is remarkable that temperatures in 2020 were virtually on a par with 2016, when we saw one of the strongest El Niño warming events on record. This is a clear indication that the global signal from human-induced climate change is now as powerful as the force of nature.”


That is a chilling thought.

I will end with one last thought: temperature is just one of the indicators of climate change. The others are greenhouse gas concentrations, ocean heat content, ocean pH, global mean sea level, glacial mass, sea ice extent and extreme events. All are moving in the wrong direction. I hope that the Minister will be able to give a satisfactory commitment that climate risk in the financial sector will be satisfactorily legislated for. In the absence of such assurances, I will support amendments on the issue that are put to a Division.

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[Lord Holmes of Richmond (Con) [V]]

It is a pleasure to speak to this group of amendments, and I declare my interests as set out in the register. I congratulate the noble Lord, Lord Stevenson, on the way in which he introduced this group, and on all the work that he has done in this area, not least with StepChange. More than a step change, he has done more than many marathons around this subject. Not just your Lordships’ House, but the nation, is in his debt for the work he has done on debt.

I also thank the Minister for his engagement throughout the Bill. I know that he is completely committed to this area, and I congratulate him on the engagement and the time he has spent with me and other noble Lords. It is safe to say that this is an issue that will run longer than this Bill. As with so many other issues, Covid puts a new lens on debt, and enables more people to understand that it is not necessarily just for others. Potentially, with a slight twist of circumstance, we are but a heartbeat, or a breath, away from being in tough financial straits. I congratulate the noble Lord, Lord Stevenson, and I look forward to hearing the response from the Minister.

[Baroness McIntosh of Pickering (Con) [V]]

My Lords, like my noble friend Lord Holmes, who I am delighted to follow, I am grateful to the noble Lord, Lord Stevenson, and the noble Baroness, Lady Bennett, for giving us the opportunity, with what I consider to be probing amendments, to explore in more detail how the statutory debt management plans will work. I must say to my noble friend the Minister that I am deeply uneasy, because there is very little detail in the Bill about how these provisions will work.

I am a Scot by birth, and a non-practising member of the Faculty of Advocates. Noble Lords will recall that I started my legal career as a humble Bar apprentice, working in a rather Dickensian attic along Heriot Row in Edinburgh, looking at debt collection as part of my role.

I am grateful to the Centre for Responsible Credit for its impressive briefing. What concerns me is a lack of urgency on the part of the Government. According to the Financial Conduct Authority, the pandemic has negatively impacted the finances of 20 million people. Problems are, I understand, concentrated among the self-employed, who obviously have been particularly hard hit, especially those who became self-employed in the year before the lockdown restrictions came into effect. Also heavily impacted are those on incomes of less than £15,000 a year, and BAME communities. The FCA estimates that just under one in five adults is overindebted, with 8.5 million potentially needing debt advice. According to the previous National Audit Office methodology, we can, sadly, expect the knock-on impacts of overindebtedness, such as increased mental health problems and unemployment, to cost the taxpayer in the region of £9 billion a year.

I shall ask my noble friend a question about what we could do, rather than playing for time and our not seeing any detail, with no scheme in place beforehand. As the noble Lord, Lord Stevenson, said in moving his Amendment 11 so effectively, the scheme will not be in place in England until 2024. The question must be: if there is a tried and tested scheme in Scotland, which is working, could we not therefore adapt that scheme to operate in England in the next two years? That would be a great help, and would go to the heart of how we in the United Kingdom approach the issue of debt.

Amendment 12, too, has much to commend it, and I very much look forward to hearing what my noble friend will say in summing up this little debate.

Financial Services Bill

Baroness McIntosh of Pickering Excerpts

Committee stage
Wednesday 10th March 2021 Grand Committee

[Baroness McIntosh of Pickering (Con) [V]]

I am delighted to follow the noble Baroness, Lady Bennett, and find myself in agreement with much of what she said, especially on finding a balance between regulations and introducing more fintech into financial services. I am delighted to speak to this group of amendments and must apologise from dropping out of the previous group, which goes to the question that the noble Baroness raised about the number of participants. I was participating in the Domestic Abuse Bill in the Chamber; I am sure many will be in that position, because we cannot be in two places at once, unfortunately.

I say at the outset that I yield to no one in my admiration for my noble friend Lord Holmes’s knowledge, expertise, passion and commitment in the area of artificial intelligence and fintech. I pay tribute to the work he has done in bringing forward this wide-ranging group of amendments. I am delighted to have co-signed and to support Amendments 112 and 115 and, rather than go through all the points that my noble friend raised, I shall just put a question to the Minister, when she comes to wind up this small debate. If we accept that there is a role for fintech and artificial intelligence in financial services, and accepting the competitive market, the nature of which my noble friend Lord Holmes explained, will the Minister support the amendments, or will she be able to set out today in what regard she accepts that we would like to promote the wider use of technology and artificial intelligence in the financial services sector? Given that, as my noble friend said, we have a good story to tell and do not wish to fall behind, does the Minister accept that, given the increasing number of graduates in the field of artificial intelligence, we owe it to them and to the universities that set them on this path to ensure that they have opportunities in this country to put their academic knowledge to good use? Are we not missing a trick in this regard by not ensuring that we enhance those opportunities? With those few comments, I shall be delighted to hear the Minister’s response to the amendments when she sums up.

[The Deputy Chairman of Committees (Lord Faulkner of Worcester) (Lab)]

My Lords, the noble Baroness, Lady Neville-Rolfe, was inadvertently left off the list of speakers, and I call her now.

Financial Services Bill

Baroness McIntosh of Pickering Excerpts

Committee stage
Monday 8th March 2021 Grand Committee

Moved by

[Baroness McIntosh of Pickering]

78: After Clause 40, insert the following new Clause—
“Short selling review
(1) Within the period of six months beginning with the day on which this Act is passed, the Secretary of State must commission a review of legislation relating to short selling.(2) Following the conclusion of the review, the Secretary of State must lay a report before Parliament.”

[Baroness McIntosh of Pickering (Con) [V]]

My Lords, I am delighted to have this opportunity to speak to and move Amendment 78, and to thank my noble friend Lord Holmes of Richmond for his support and for co-signing the amendment.

Clause 40 deals with subordinate legislation made under retained direct EU legislation. This is a probing amendment to look at what I consider to be a timely review of the practice of short selling. The background to this is that short selling is regulated now by the Short Selling (Amendment) (EU Exit) Regulations 2018, based on the earlier EU regulation 236 from 2012, also amended by the Technical Standards (Short Selling Regulation) (EU Exit) Instrument 2019. Clearly, there are powers for the UK to prohibit or restrict short selling or limit transactions when the price of various instruments admitted to trading on a UK trading venue, which includes shares, sovereign and corporate bonds and ETFs, has fallen more than the appropriate percentage threshold from the previous day’s closing price. In exceptional market conditions, there are also powers under these regulations to address adverse events or developments that pose a serious threat to financial stability or market confidence in the UK.

The powers are set out and include extending the scope of the notification disclosure regime to include additional financial instruments admitted to trading on a UK trading venue and requiring lenders of financial instruments admitted to trading on a UK trading venue to notify any significant change in their fees. There are other powers as well.

Most recently in the UK, the Bank for International Settlements conducted a study suggesting that fund providers offered lower-quality paper to fill redemption markets, as reported in the Financial Times, and that it was felt and alleged that bond ETFs might have short-changed market-makers during the 2020 panic—as if there was not enough going on with the Covid-19 pandemic. It is obviously deeply worrying that this happened in 2020, as confirmed by the Bank for International Settlements. This is a good opportunity to revisit this, as this is not supposed to happen. Obviously, this is a timely moment to look at this, after the collapse and then the surge in the US of the GameStop share fiasco in January and February.

I take this opportunity to ask my noble friend whether he is convinced that an event such as GameStop would not happen in the UK and that we have robust regulations, as I have set out. I am slightly concerned that they have not been tested enough and I believe that we should revisit them. If the ETFs performed in the way that was alleged and concluded by the Bank for International Settlements in 2020, that was deeply unhelpful at a very difficult time. Therefore, does my noble friend agree that this would be a good opportunity for the Government to look at this and undertake to conduct a review to ensure that the regulations, as I set out this afternoon, are fit for purpose? Are they robust enough in terms of Covid, as we saw in March 2020 in the UK, to prevent something like GameStop happening here?

I realise that anybody making an investment is taking a risk, and that we are always told that share prices can go down as well as up, but this is a very modest amendment, ensuring that, within six months of the Bill being enacted and coming into force, the Secretary of State will commission a review of the legislation relating to short selling and, at the conclusion of the review, lay a report before Parliament. I personally have deep misgivings about short selling and question whether the regulations in place are sufficient. As we have left the European Union, and were told that the United Kingdom Government would take every opportunity to revisit those regulations that we have now adopted as part of UK law, it would be a good opportunity to review them within six months of the Bill’s enactment. It gives me great pleasure to move this amendment today and look forward to the Minister’s response. I beg to move.

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[Baroness Penn (Con)]

My Lords, it is important to stress, as a number of noble Lords have done, that short selling is a legitimate investment technique that can contribute to orderly and open markets supporting many consumers. Taking short and long positions can ensure that investors are able to manage risk and volatility in their portfolio, particularly during uncertain times; for example, if a firm has purchased a large number of shares, that firm might want to short some of those shares if they have a volatile price.

As my noble friend Lady McIntosh of Pickering ably set out, the UK’s regulatory regime for short selling is predominantly set out in the short selling regulations, which were introduced in 2012 to regulate short selling practices while safeguarding companies and the financial system. Among other things, it requires persons to notify the FCA of the size of their short positions in shares traded on a UK trading venue. It also gives the FCA various powers to intervene in response to exceptional circumstances that pose a serious threat to financial stability or market confidence in the UK. These include requiring the notification or disclosure of short positions, as well as restricting short selling to periods of up to three months. Furthermore, the FCA can temporarily prohibit or restrict short selling when the price has fallen significantly during a single trading day relative to the closing price of that instrument on the previous trading day. This regime is working as intended, providing the necessary safeguards to allow the operation of a fair and effective market. The Government continue to work closely with the regulators and market participants to monitor the effectiveness of the entire regulatory regime to ensure that legislation continues to be fit for purpose and delivers on its objectives, in particular to support economic growth and maintain financial stability.

As my noble friend Lady McIntosh of Pickering noted on the example of GameStop, the UK short selling regime was not breached because it does not apply to shares admitted to trading on US trading venues. Furthermore, the regime that I have just set out that applies to short selling would mean that in such a scenario in the UK the FCA would have been able to identify short positions building up and would have been able effectively to engage with the firms holding the short positions in that case.

I am not sure that I recognise the characterisation of the Bank for International Settlements’ report set out by my noble friend Lady McIntosh of Pickering, but I will happily write to her on that matter.

A number of noble Lords have spoken, from different perspectives, in favour of a review of short selling. In response to a number of direct questions about what jurisdictions such a review would look at or whether it would look at relaxing or shoring up such regulations, at this point the Government do not see this issue as the most pressing area of financial services regulation to look at. We see no need to conduct a review of this legislation at this time, so I ask my noble friend Lady McIntosh to withdraw her amendment.

[Baroness McIntosh of Pickering (Con) [V]]

I am grateful to the Minister and to all those who have contributed. I recognise the role that the noble Baroness, Lady Bowles, played in the adoption of the current EU regulation. I am grateful to my noble friend and others who set out the arguments on one side or the other. I have a great deal of sympathy with my noble friend Lord Holmes of Richmond and his earlier amendment calling for a review of all financial regulations and regulators’ rules, and I note that my noble friend Lady Penn does not see the need for this at present.

This is something that I will personally continue to monitor. I have no doubt that my noble friend Lady Noakes, who speaks with great authority and expertise on these issues, and my noble friends Lord Sharpe and Lord Trenchard would prefer that many of the regulations would just go away, but I am rather pleased that they are not going away for the moment. My concerns have been addressed to a great extent. I will continue to support my noble friend Lord Holmes’s call for a further review of all these practices. I am grateful to have had the opportunity to debate these issues and I beg leave to withdraw the amendment at this stage.

Amendment 78 withdrawn.

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[Lord Naseby (Con) [V]]

My Lords, I am most grateful to the noble Lord, Lord Tunnicliffe, for putting down Amendment 79; I will address that first and then move on to Amendment 93.

I spoke earlier about the difference between home credit companies and payday firms, so I shall not go down that route again. Buy now, pay later reminds me of the old days of hire purchase and some of the challenges that arose then. In many ways, this is almost equivalent to gambling: it plays on people’s weaknesses, who then build up a cycle of debt, as so many noble Lords have said—and lingering in the shadows, ready to swoop, are the claims management companies. Frankly, I do not see why, in this scenario that we all know is happening and will get worse, not least with the huge temptation that will come after furlough is lifted, we cannot act earlier than the next financial year. I do not know the answer to this, but I begin to wonder whether all these payday loans are registered. If they are not, something should certainly be done about that. Finally in this area, we need to ensure that the FCA and the Financial Ombudsman Service are really watchful of the action of the claims management companies when it gets to that state.

Turning to Amendment 93 on access to cash, I thank my friend the noble Baroness, Lady Kramer. As has already been said, 1.3 million people have no access to a bank account. Cash is vital, particularly to the elderly in our society. Covid has made the whole thing even more difficult; the impression has been left that those who carry any notes in their wallet could be carrying Covid. It took some weeks for Her Majesty’s Government to put out clear statements that that cannot happen—it cannot transmit Covid; nevertheless, the rumour was out there and has stuck. The problem then comes down to the many outlets with a sign up in the door or on the cash till basically saying “Cards only”. Indeed, our own refreshment department is card only. The question in my mind is whether it is legal to trade and offer card only. I would have thought the very fact of being given a licence to trade ought to mean they can trade but must accept legal tender in whatever form it is offered.

The Post Office provides a really good service, and I pay full tribute to what it has done in these months of turmoil that we have faced. However, from the little work that I have done, I understand that the people behind the cash machines—those promoting them and the companies involved—state that they are becoming increasingly unviable. If that is the situation, it is very worrying, and I hope that Her Majesty’s Government will take this very seriously and make sure that, one way or another, cash machines are still available to the more than 1.3 million people who do not have bank accounts.

[Baroness McIntosh of Pickering (Con) [V]]

My Lords, this group of amendments has an underlying theme of identifying the need for greater consumer protection in this area. I support the noble Lords, Lord Tunnicliffe and Lord Eatwell, in the aims of the much-needed—it would appear—Amendment 79. If he is minded to say that there is no need for such an amendment, could the Minister, in responding to this debate, point to the consumer protection regulations for those using buy now, pay later services? Many of us have seen how the level of personal and household indebtedness has greatly increased due to the lack of regulation in the area identified by Amendment 79.

I will turn to Amendment 101 before coming back to the others. I entirely support the thrust of this amendment in the name of the noble Lord, Lord Stevenson of Balmacara, supported by my noble friend Lord Holmes of Richmond. It seems extraordinary that when consumer protections apply to hire purchase of a vehicle, they do not apply to the circumstances that have been set out and so eloquently identified by the noble Lord, Lord Stevenson, so the time has come for these two Victorian statutes to be replaced. I would like the Minister to give a very good reason why this could not happen and why we cannot simply rely on hire purchase schemes, which give greater protections to the owner and the existing user of a vehicle, for this form of purchase.

Amendments 92 and 93 from the noble Baroness, Lady Kramer and Amendment 136C from my noble friend Lord Holmes identify the need for access to cash. I find cashless societies highly regrettable, particularly for elderly and other vulnerable people; I know there are some in Europe; Sweden is well down this path and Denmark is going down it. On continuing access to cash, the noble Baroness, Lady Kramer, has set out, and my noble friend Lord Holmes set out in his Amendment 136C, why it is extremely important to have proper protections in these areas.

My noble friend Lord Holmes pointed out the role of cash in Covid and why it goes to the heart of financial inclusion. Without wishing to put words in his mouth, I will take his thoughts one step further: I am deeply concerned that the Government propose that the amount available in a contactless transaction will imminently be increased to a maximum of £100. This will possibly enable many people to lose control of their finances, and it will open the door to greater fraud, even where a debit or credit card has not left your possession.

I have been the victim of such fraud. I am delighted to say that the credit card company I was with at the time reimbursed me almost immediately for the loss. What that means is that we are all paying for that loss as credit card or debit card users. The existing limit of £45 is right at the moment; I would hesitate to increase it to £100. I do not know whether there is a bottomless pit for endless frauds or what it means if the limit goes up to £100 on a contactless transaction. Are there limitless reserves? Who pays for the fraud in this regard?

In Amendment 136F, the noble Baroness, Lady Meacher, has identified an area that is timely for review: the regulation of bailiffs and bailiff firms for the purpose of taking control of goods. I would be delighted to hear from the Minister that, even if the Government are not minded to accept this amendment, he will come forward with similar provisions as set out therein and recognise that there is a need for this to take place.

On Amendment 135 in the name of my noble friend Lord Leigh, I think all of us say, “There but for the grace of God go I”. Identity theft is a compelling crime. He set out some modest requirements that the Government would do well to follow.

I find that the amendments in this group have an underlying theme of the need for greater consumer protection. Although they are disparate in what they seek to achieve, each of them has merits to commend it. I very much look forward to hearing the Minister’s response to the excellent case that has been made for each amendment in this group.

[Baroness Ritchie of Downpatrick (Non-Afl) [V]]

My Lords, it is always a pleasure to follow the noble Baroness, Lady McIntosh of Pickering.

I wish to speak in support of Amendment 79 in the names of the noble Lords, Lord Eatwell and Lord Tunnicliffe. It seeks to protect people from buy now, pay later firms that, in many instances, financially abuse people. It is important that people who find themselves in this position are financially protected. In many ways, the amendments in this group seek to do what the noble Baroness said: they are all about consumer protection.

In his introduction, the noble Lord, Lord Tunnicliffe, referred to the Woolard review, part of which clearly states the need for customer harm to be minimised and to come under the purview of the Financial Conduct Authority. From doing some background reading, I thought I learned that the Government were receptive to the review’s findings. In this regard, I wonder whether the Government, through the Minister, will bring forward on Report amendments to deal with this issue if they are not prepared to accept Amendment 79 today. However, it may be that they will accept it in view of their acceptance of the Woolard review.

At Second Reading, I highlighted this area and asked whether the Government would bring forward in Committee amendments to ensure that buy now, pay later credit services are brought into the scope of the Financial Conduct Authority to protect people from spending more than they can afford. Indeed, many people in this net take out further debt to repay initial credit, then end up with their debt spiralling out of control.

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[Baroness Noakes (Con)]

My Lords, my noble friend Lord Blackwell’s Amendment 86 identifies a very real problem that has existed since the Government decided to abolish the Financial Services Authority and split responsibility for conduct and prudential regulation.

I was never in favour of splitting the FSA. It had certainly failed as a regulator, as the financial crisis laid bare, although it must be said that other regulators around the world, whether combined or separate, fared no better. The FSA had not managed to get the balance right between conduct and prudential regulation; it had an obsession with conduct matters and treating customers fairly, which often dominated its thinking, while banks in particular were allowed to run on wafer-thin capital ratios. It needed reform rather than a wrecking ball.

When they were separated by the Financial Services Act 2012, many concerns were expressed about the possibility of a lack of co-operation. As has been said, a number of mechanisms were put in place, including the statutory duty to co-operate, the memorandum of understanding and cross-membership of the boards of the PRA and the FCA. However, as my noble friend Lord Blackwell explained, it has not always worked well in practice. There are problems of overlap and overload. Some issues, such as cybersecurity, are of interest to both the PRA and the FCA. Such an overlap comes with the split between the two regulatory peaks, but often they focus on the issues in different ways, on different timescales and with different objectives. This is often inefficient from the perspective of regulated firms.

The cumulative impact of the requirements of the PRA and the FCA can lead to significant overload. There is no real prioritisation mechanism. Regulated firms can be bombarded by each regulator and, even if the individual regulator prioritises its own demands, which is not always the case, there is no real mechanism for the competing demands of the FCA and the PRA. For example, I recall in the middle of stress testing, which is led by the PRA and tends to absorb the resources of subject matter experts specialising in credit risk, the FCA produced big data demands in exactly the same area and requiring exactly the same subject matter experts. It would not have occurred to either regulator to see regulatory demands from the other regulator as more important than its own.

I support the aims of this amendment. Whether another committee would have any impact is another matter, especially if it met only once a year. We must remember that the tripartite arrangements that failed during the financial crisis looked good on paper. It was just that they were never taken seriously and were allowed to fall into disuse. The same could happen to a committee.

My noble friend might want to look at how his amendment could be improved by incorporating an element of reporting to Parliament. On the first day of Committee, we debated parliamentary accountability more widely in the context of the new rule-making powers that are being transferred to the FCA and the PRA. The new accountability arrangements, which some of us advocated, could include examining how well the regulators are working together and co-ordinating their activities; that should be strongly considered if my noble friend chooses to bring this issue back on Report.

[Baroness McIntosh of Pickering (Con) [V]]

My Lords, I am looking closely at Amendment 86, introduced so eloquently by my noble friend Lord Blackwell, and asking myself why it would be needed in view of the comments made by my noble friend Lady Noakes and the noble Baroness, Lady Bowles.

These are both deemed to be independent bodies. While my noble friend Lord Blackwell has rightly identified a number of shortcomings, I do not really understand why a joint co-ordinating committee, as my noble friend Lady Noakes pointed out and as it says in proposed new subsection (5), would meet only at least once every year—I presume it could meet more often.

In any event, I imagine that these issues are dealt with to some degree by the Treasury Select Committee in the other place. My noble friend Lord Blackwell probably has identified issues but there are very good reasons—he set out the background to this—why the PRA and the FCA replaced the FSA. Each should be able to enjoy a degree of independence in its operation. My noble friend Lady Noakes rightly identified a number of areas of overlap and overload, but I think that this can be addressed through the functioning of the memorandum of understanding. I struggle to see why this amendment is required.

--- Later in debate ---

[Lord Hodgson of Astley Abbotts (Con) [V]]

My Lords, I have Amendment 105 in this group, which is also a probing amendment, and seeks to insert a new clause in the Bill about regulatory co-operation with the EU. In her Amendment 90 the noble Baroness, Lady Bowles, called for actions. Amendment 105, as the explanatory statement makes clear, is a reporting mechanism to report on progress towards or completion of an MoU with the EU on regular co-operation measures, which were envisaged under the trade and co-operation agreement between the UK and EU as regards financial services. The amendment flows from my chairmanship of the Secondary Legislation Scrutiny Committee of your Lordships’ House.

Last autumn, the committee considered a number of statutory instruments, which have granted equivalence to oversight and regulatory arrangements in the EU in the area of financial services. Mostly they were laid by the Treasury but some were laid by another departments. It was not clear to our committee whether the SIs were all part of a potential agreement with the EU or whether they were unilateral individual decisions. We wrote to John Glen, the Economic Secretary to the Treasury, as follows:

“Equivalence in relation to the regulation of financial services is an important aspect of our future relationship with the EU. In several of the instruments that we have considered, the UK appears to have granted equivalence indefinitely, while the EU has not yet completed its assessment of the UK’s equivalence (for example in relation to the regulatory regime for auditors) or has granted only time-limited equivalence (for example limited to 18 months in the case of the supervisory arrangements for central counterparties).”


Against this background, we asked for further and better particulars on three points:

“A list of the equivalence decisions made by the UK Government in the different areas of financial services regulation. Whether the EU has reciprocated and granted equivalence to the UK and its regulatory arrangements in these areas. Whether equivalence by the UK and EU has been granted indefinitely or is time limited.”


The reply on 7 January, which I referred to in my speech at Second Reading, was not a model of clarity and precision. Phrases like

“a package of equivalence decisions”

and “the majority of decisions” do not help critical analysis. The correspondence between the noble Lord, Lord Butler, and my noble friend Lord Agnew at Second Reading, which followed this and circulated among all who participated in that debate, seemed to follow the same generalist approach.

However, John Glen’s letter did make one thing clear, that

“there are no decisions made by the EU that have not been reciprocated by the UK.”

As such, to date, it has been a one-way street. That is not necessarily a bad thing, but Parliament and the country are entitled to, and should, know about the development of our relationship with this most significant and geographically proximate market in a sector of particular importance to the United Kingdom—hence my tabling this amendment.

[Baroness McIntosh of Pickering (Con) [V]]

My Lords, I am delighted to follow my noble friend, and I thank him and the other authors of the amendments in this group.

This is a particularly appropriate moment to state that “taking back control” has possibly worked less successfully in the financial services sector than in any other since we left the European Union, with Amsterdam having overtaken us as the largest share-trading centre. There are generally understood to be four options for trade in financial services with the EU. First, there is passporting, which we enjoyed and was very beneficial not just to the London Stock Exchange but, I venture to add, other centres, such as Edinburgh, Leeds and other financial centres in the United Kingdom; it was the most seamless form of trade in financial services. Secondly, there is trade on World Trade Organization terms and, thirdly, free trade agreements, such as that agreed between the EU and Canada, although I am not convinced that it covers financial services or services as a whole. Finally, there is equivalence. If we are not able to revert to passporting, and I understand that we are not, that would be a good way forward. My understanding is that equivalence is where a decision is made by one state to recognise another state’s legal requirements for regulating a service, even though they may not be the same—so, clearly, it is not as good as passporting.

I very much enjoyed the introductory remarks of the noble Baroness, Lady Bowles, and I support each of the amendments in this group for differing reasons. Obviously we will not have the chance to hear from the noble Lord, Lord Tunnicliffe, until he speaks to his amendment, but all three of the amendments in this group would, I believe, further the case for equivalence with the European Union.

Time marches on, and we obviously realise that the trade and co-operation agreement with the European Union left out this major sector of financial services. So I take this opportunity to ask my noble friend the Minister to say, in summing up this debate, precisely where we are with the negotiations and whether we have any chance of reaching an agreement on equivalence under the circumstances and the further particulars as set out by my noble friend Lord Hodgson of Astley Abbotts. I find it deeply regrettable when our own Minister cannot answer three very simple questions in a letter so that our understanding is better. However, with those few remarks, I am minded to support Amendments 90, 100 and 105 for the reasons given.

Financial Services Bill

Baroness McIntosh of Pickering Excerpts

Committee stage & Committee: 2nd sitting (Hansard) & Committee: 2nd sitting (Hansard): House of Lords
Wednesday 24th February 2021 Grand Committee

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

My Lords, it is a great pleasure to follow the noble Baroness, Lady Hayman, who is such a champion of climate and other environmental issues in your Lordships’ House. As she said, it is astonishing that the Bill, in the year 2021, presented by the Government with the responsibility of chairing COP 26, who talk so often about being “world-leading” on climate, could have got so far without any mention of the climate emergency.

The noble Baroness and, in introducing the amendment, the noble Lord, Lord Oates, have set out extensively the detail of the range of climate amendments and the need for their incorporation in the Bill, so I shall focus the bulk of my words on Amendment 17 in my name. It is distinct in that, while all the others address the climate emergency, this is the only amendment that also brings in the crucial issue of our nature crisis, and the collapse in biodiversity and bio-abundance that is obviously of concern to the Treasury given its commissioning of the recently-released Dasgupta Review.

I doubt that many noble Lords taking part in the debate on this group need an outline of it, but it is important to highlight that the Dasgupta Review identifies nature as “our most precious asset”. It says that we need vastly more protection for our scant remaining natural world—on this, one of the planet’s most nature-depleted lands—which means making sure that money is not going into destructive actions. That should be of concern to the Financial Conduct Authority. It says too that we should begin to implement large-scale and widespread investments that address biodiversity loss—again, a matter for the Financial Conduct Authority.

While it is great to see in the Dasgupta Review these critical issues to all of our futures expressed in terms that even mainstream economics can understand, being comfortable for those whose philosophy is embedded in growth-orientated, 19th-century politics, it falls down in trying to apply the same unrealistic, abstract mathematical models, driven by financial calculations, to provide tools to guide what to do. We have so little left of biodiversity and bio-abundance, with 50% of our species in decline and 15% at imminent risk of extinction, that we cannot be calculating what we can afford to destroy or write off in this land. We have to preserve everything that is left, while acknowledging that the destruction that we have wrought has given us an insecure, poverty-stricken society that is frighteningly short on resilience, as the Covid-19 pandemic has demonstrated and, as we have just seen on the global scale in Texas, precious little ability to endure the climate shocks inevitably coming our way.

I point noble Lords and the Government to the recent, crucial United Nations Environment Programme report, Making Peace with Nature. In his foreword to it, the UN Secretary-General, António Guterres, says that

“our war on nature has left the planet broken”.

That is where we are. The often piecemeal response to the climate crisis, biodiversity loss and pollution is

“not going to get us to where we want”,

according to Inger Andersen, executive director of the United Nations Environment Programme.

Just considering the remit of our international climate obligations as a central part of the FCA’s responsibilities is not nearly enough, as crucial as that is. Adding our equally binding and important obligations through the Convention on Biological Diversity is a significant improvement, and I give notice to your Lordships’ House that this is an issue that I intend to pursue strongly at the next stage of the Bill. I will listen carefully to today’s debate, and any responses we get from the Government, and consider where best to place this amendment among the range of amendments, although I hope that the Government will pre-empt any need for me to do that.

Yet this is still not nearly enough, as the UNEP is highlighting. We also need to consider pollution as a key concern, and a circular economy, on which the European Union is leading. We need a systems thinking approach—a complete view of how we stop treating this planet as a mine and a dumping ground and treasure its immensely complex systems of life, of which we still have so little understanding. Of course, we also have to consider the billions of people—millions in the UK alone—whose basic needs are not being met while we trash our planet. As a species we are using the resources of 1.6 planets every year; in the UK, our share is three planets.

This morning I was present at a briefing about New Zealand’s modern, 21st-century living standards framework, on which there has been wide public and expert consultation. It provides a guide for Treasury decision-making on all government spending. That is truly world-leading, and I hope that the UK Treasury is looking urgently at developing a similar system. In the meantime, however, the inclusion in this Bill of our climate emergency and nature crisis—the understanding that our financial sector is 100% contained within it—is at least progress.

The other place has before it the Climate and Ecological Emergency Bill, which could help to create a framework for such a structure. Given that it is “oven-ready”—to quote a once-familiar phrase—and the continuing delays to the Environment Bill, the Government should be looking at a rapid delivery of whatever emergency steps could be taken—as many as have been taken over Covid.

I revert to the Bill before us. I was told that the 2020 Pension Schemes Bill was the first financial legislation in British history to contain a reference to climate change—no doubt the first to refer to the natural world. Listening closely to the briefing that I referred to earlier, I sense that the Government are at least prepared not to step backwards in this 2021 Bill, and to include some reference to climate change. But if it is to progress it also needs to include biodiversity.

In concluding this section of my comments, I ask the Committee to listen to a short quote:

“Obviously it is right to focus on climate change, obviously it is right to cut CO₂ emissions, but we will not achieve a real balance with our planet unless we protect nature as well”.


That was a quote from Prime Minister Boris Johnson’s speech of 11 January as he announced that £3 billion of UK climate finance was to be spent on supporting nature. I ask the Minister how, given the Prime Minister’s words, he could not have included an amendment such as Amendment 17, in addition to one or more climate change amendments.

Allowing money to pump the systems that are wrecking the natural world is, to put it mildly, not a good idea. It is something that should be considered in every action and every regulation of every government body, particularly the Financial Conduct Authority, given the extreme financialisation of our economy, whereby almost every element is now regarded as a potential profit source. Those profits, which go to the few, must not be at the expense of the living future of all of us.

I turn briefly to the other amendments to which I have attached my name, the first of which is Amendment 23, in the name of the noble Lord, Lord Oates, also signed by the noble Baronesses, Lady Kramer and Lady Hayman. This amendment simply ensures that regulation is compliant with the amended Climate Change Act and the Government’s much-trumpeted 2050 net-zero target. That is a bare, indeed inadequate, minimum, because it fails to acknowledge the need for urgent action now to achieve major cuts in emissions in the 2020s. Not waiting but acting now should be at the forefront of every government action.

I backed Amendment 75, in the name of the noble Baroness, Lady Hayman, and supported by the noble Baroness, Lady Altmann, because of the need for expertise in these issues within the FCA. Its many failings in traditional areas were powerfully outlined earlier by the noble Lord, Lord Sikka. It certainly needs a specialist, expert voice at its heart to address environmental issues.

I also attached my name to Amendment 98, in the name of the noble Baroness, Lady Hayman, and also signed by the noble Baroness, Lady Jones of Whitchurch, which focuses particularly on climate risk. I would suggest that this falls, in the terms of the Paris climate agreement, in the areas of both climate mitigation and adaptation. The need for mitigation is a risk in itself. We heard the astonishing news this week that local government pension funds still hold £10 billion in fossil fuel investments, despite large numbers of local councils having declared climate emergencies. That is astonishing in terms of money being invested in trashing the climate in ways already hitting close to home—flooding, heatwaves and biodiversity damage—but it is also as though the term “carbon bubble” had never been invented. Perhaps we cannot blame local government for the oversight when our current Government have continued to put money into fossil fuel assets and to subsidise the operation of existing ones to the tune of billions. These are issues that certainly need to be considered.

However, there is also adaptation. I do not feel like I need to stress so much—as the Green Party has for years—that the climate emergency is a current reality, not a problem for future generations. I think, finally, the Government and even parts of industry and finance have got that fact. I note that, today, Fitch Ratings warned that the rising cost of natural catastrophes arising from climate change could mean that insurers withdraw from the market, leaving it to Governments to pick up the pieces. Amendment 98 would be a modest step towards ensuring that the FCA has rules fit for operating in such an environment.

[Baroness McIntosh of Pickering (Con) [V]]

My Lords, I am delighted to follow the noble Baroness, Lady Bennett of Manor Castle, and pay tribute to her green credentials and the work that she and her colleague, the noble Baroness, Lady Jones of Moulsecoomb—both my friends—have done, as have so many others who have contributed to this debate so far today. I look forward to the other contributions.

This group of amendments has much to commend itself, as do many of the individual amendments. It helps to green-proof, if I may say that, the provisions of the Bill. I am sure that my noble friend Lord Howe will tell me if I am wrong when he comes to reply, but I cannot find anything else in the Bill that covers the provisions set out in these amendments. I pay tribute to the noble Lord, Lord Oates—I celebrate, again, the fact that we joined the House together; I always look forward to debates in which he and I contribute—and to the noble Baronesses, Lady Hayman and Lady Bennett. My slight concern with this group is that while the focus and main thrust of their amendments is on climate change I am slightly confused that they have chosen that form of words—as they also have in other amendments—because so much progress has been made in investment generally. I personally believe that that should extend to banking and financial services as well as other investments, but there is general recognition now of ESG investments. The Wikipedia encyclopaedia tells us that:

“Environmental, Social, and Corporate Governance”


are generally recognised as measuring

“the sustainability and societal impact of an investment in a company or business.”

It goes on to say that:

“Threat of climate change and the depletion of resources has grown, so investors may choose to factor sustainability issues into their investment choices.”


We are increasingly seeing a move in general investments towards individual small shareholders buying very small, limited shareholdings in a company precisely for the purpose of raising these issues at the AGM. I think we will see this trend continue. This must extend, as I said earlier, to banking and financial services as well. I believe that there should be a place for ESG provisions and regulation by the FSA in the Bill, and these amendments identify where they should go.

However, I am mindful of the fact that ESG covers all sorts of possibilities, such as climate change, greenhouse gas emissions, biodiversity, waste management and water management, so I put to the authors and to my noble friend the Minister that ESG provisions would encapsulate this and would perhaps be a neater—and recognised—way of introducing this into the Bill.

In many instances, particularly in all the work that we have done on rural affairs, we rural-proof legislation as it goes through and I am very keen that we green-proof new legislation as it comes online. I therefore welcome the main thrust of these amendments. I repeat to my noble friend the Minister that if this is an omission, these amendments, or something along the lines of ESG terminology, should find a place in the Bill and a role for the regulators specified in it to follow. If these amendments do not fit the Government’s thinking or should we follow more of an ESG terminology, will he consider coming forward with amendments of his own at the next stage?

Covid-19: Road Map

Baroness McIntosh of Pickering Excerpts

Tuesday 23rd February 2021 Lords Chamber

[Baroness Evans of Bowes Park (Con)]

As I have said in response to a number of other questions, we have the Budget next week. We have been clear that we will provide support to the country through Covid, and our actions speak as much as our words. Details of the next phase of the plan for jobs and support for businesses will be announced. I can assure my noble friend that the announcements in the Budget will reflect the steps in the road map, so that businesses will be supported as we move through the steps. Obviously, some businesses will perhaps be able to welcome people in sooner than others. That is clear from our discussions today.

[Baroness McIntosh of Pickering (Con)]

My Lords, the aviation sector has taken a bigger hit than even the hospitality sector and I applaud the help that the Government have given to hospitality. IATA is preparing a Covid travel pass that is expected to be operational within weeks. Is that something that the Government would encourage those of us who wish to travel within Europe to use, once it is available?

[Baroness Evans of Bowes Park (Con)]

I can say to my noble friend that there will be a review on international travel. The Department for Transport will be leading a successor to the Global Travel Taskforce, working with the industry to develop a framework that can facilitate greater travel while still managing the risk from imported cases. That taskforce will report on 12 April with recommendations aimed at facilitating travel as soon as possible, although not before 17 May, while still managing the risk from imported cases and variants.

Financial Services Bill

Baroness McIntosh of Pickering Excerpts

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Monday 22nd February 2021 Grand Committee

In conclusion, the FCA currently has the power to ensure that all lenders advance only loans that are affordable and sustainable. This is clearly not happening, with so many individuals defaulting or becoming overindebted. The Woolard review touches on this, but, again, the argument is made that the reason that loans become unaffordable or unsustainable is that individuals’ circumstances change after the loan has been agreed. I do not believe that this is always—or even most often—the case. In fact, that is why the Financial Ombudsman Service has adjudicated time and time again against providers and in favour of individuals. Unaffordable and unsustainable loans are being forwarded all too often. Amendment 4 will help strengthen the FCA and hopefully rectify this issue.

[Baroness McIntosh of Pickering (Con) [V]]

My Lords, I am delighted to follow the noble Lord. I would like to support the case for introducing a duty of care and look forward to hearing from my noble friend as to why in the Government’s view it may not be needed.

I will focus my remarks on Amendment 72, so ably moved by the noble Baroness, Lady Bowles, and in particular on subsection (2) of the proposed new clause. It concerns me greatly that there is still a huge area of unregulated provision of financial services here, in particular in the case of young people who, after they have graduated and are looking to pay off their student loans, will be relying on their banking facilities. It does seem that we need either a duty of care or, as the noble Baroness, Lady Bowles, set out in subsection (2) of the proposed new clause, some means by which we indicate to potential consumers and customers exactly what the situation is. I find that this area is compellingly in need of greater regulation—or, if not that, then the pointing of actual customers or potential future customers towards acting in this regard.

I find it extraordinary what information is provided to any of us, and in particular to young people. The noble Lord, Lord Sharkey, did a great service in setting out not just PPI but a number of other irregularities—at the very least—that have come to light in the last five or 10 years that need some form of redress in order to close this particular loophole.

We are in an extraordinary situation where there are a number of non-regulated financial services. In particular, Amendment 72 would seek to redress this. But also, Amendments 1 and 4 imposing a duty of care have many strengths to commend them. I look forward to my noble friend in summing up giving the reaction of the Government to the proposal for such a duty of care in the circumstances set out therein.

[Lord Blunkett (Lab) [V]]

I am very pleased indeed to join in this important debate. The noble Lord, Lord Sharkey, set out the situation in the macro field extremely well and I am pleased to support the speeches that have already been made by a number of noble Lords.

I will concentrate on two things. The first is the issue of protection from exploitation with the development of cybercrime. I hope we will be able to come back to this in Committee and on Report with respect to the risks that people are put into because of the lack of care within the whole of the financial services sector. Secondly, very small businesses and partnerships are excluded from redress, as the noble Baroness, Lady Bowles, mentioned. This is also is relevant to Amendment 129, moved by the noble Lord, Lord Holmes of Richmond.

On the first issue, in relation to cybersecurity, there is a growing trend that those who are affected keep quiet rather than reveal what has happened. This is a real danger. If, as I hope, we come out of the present dip in relation to financial services globally because of Brexit, we will be able to present to the world a marketplace which is both effective and forward looking—and is also secure. A duty of care to both individual customers and to small and medium-sized enterprises is a critical element in taking this Bill forward and strengthening the measures that exist there. I will not egg the measures that I think are necessary this afternoon, because there will an opportunity to come back to them. But I will just say that this is a growing area of real concern. An improved mandate for those operating in the financial services sector from the FCA would be very welcome indeed.

On the issue of small and medium-sized businesses and small partnerships, and the relationship between them and individual consumer, it is little known that access to the Financial Ombudsman is confined to individuals rather than small businesses and partnerships. What was said by the noble Lord, Lord Holmes, and also the noble Baroness, Lady Bowles, was highly relevant here. It backs up the need for clarity in terms of how we deal not only with prevention but with redress.

I give one small example, which I took up the with the noble Lord, Lord O’Shaughnessy, when he was at the Department of Health. To his credit, he saw the wisdom of trying to bring about change. As the noble Lord, Lord Holmes, has described, it was not received well at the time because of the struggle that was going on post the Brexit referendum and because of the difficulties the Government were facing. We have dealt with banks and financial services, but we need to concern ourselves with insurance as well. Perhaps now is an opportune moment to deal with the situation where an insurance company is taken over and the new provider offers a slightly revised agreement which is sent out without highlighting the key changes that have been made.

For instance, in cover for physical ailments and physical damage because of accident, there is no change, but in terms of absence from work and insurance by a partnership with more than 10 partners insuring together, the mental health clauses are changed to make any payment dependent on having to gain, within 12 weeks, the sign-off of a psychiatrist and a clinical psychologist. Anyone with any knowledge of this area will know that that is an impossible ask. Had it been highlighted to the partnership, it would have been able to look elsewhere for an insurer that was not going to exploit the market as this company did.

The partnership could not go to the ombudsman. It would have been entitled to if each individual partner had insured themselves, but because there were more than 10 of them signed up to the insurance contract, that was not possible. We need to put right nonsense of this kind and ensure that those making enormous amounts of money, which they will continue to do, do not do so at the expense of individuals or small and medium-sized enterprises.

--- Later in debate ---

[Baroness Bowles of Berkhamsted (LD) [V]]

My Lords, Amendment 5 builds upon Amendment 4, tabled by the noble Lord, Lord Tunnicliffe, which was discussed within the first group and in turn built upon Amendment 1, moved by my noble friend Lord Sharkey. I will not revisit the “duty of care” part of the amendment, as it has already been well discussed, but the point about Amendment 5 and the similar Amendment 73 is to bring small businesses within the non-exploitation principle—defined by the noble Lord, Lord Tunnicliffe, in his amendment—and to highlight some things that regularly happen in contractual terms and which can be exploitative. Amendment 73 is more explicit and would allow the FCA to intervene where there is “Unconscionable conduct”, even if a consumer or small business has entered into a contract.

The issues that are highlighted as wrong behaviour, although within an exemplary list, are: patterns of conduct that rely “upon unequal power”; terms of notice

“or other compliance … which make it impractical … to comply”;

the use

“of notice terms to coerce … unfavourable contracts”;

compliance terms that are “not reasonably necessary”; and risks that the larger supplier should have realised would not have been

“apparent to the customer or small business”.

This is not a random list of points—there are rather more in my Private Member’s Bill on the same subject—but a key list of matters that were used by GRG in the exploitation of small businesses, and which the FCA said it could do nothing about because they were outside the regulatory perimeter.

Once more I must look to other countries to see how we compare, and once more I find that Australia has tried harder. It has a general law of unconscionable conduct in commerce that deals with all these issues and more, and which extends to not only consumers but business to business. I do not know how many noble Lords read the various detailed contracts that one is forced to sign as an individual or small business to access almost anything nowadays. In the earlier group, these were similarly referred to by the noble Lord, Lord Eatwell. I have seen barely one that is reasonable. It is only getting worse as everything becomes a leased service rather than a product.

With these amendments I make the point for small businesses as well as individuals, and in the context of financial services, which are among the most fundamental of services, that bullying contracts must stop. They must be within the regulatory perimeter and the FCA must be prepared to intervene. Excuses about GRG and what the FCA did not do there hold no power. We saw what happened; we need strong measures that mean it must not happen again and that imitations of it must not be tolerated in day-to-day operations. I beg to move.

[Baroness McIntosh of Pickering (Con) [V]]

My Lords, I find myself in some sympathy with the noble Baroness, Lady Bowles, on Amendment 5 because this is a grey area where small businesses are perhaps not well served. My noble friend Lord Howe claimed, in his full and comprehensive response to the last debate, that this was not the right time or place to look at the regulatory objectives, as this would better take place under the Government’s future regulatory framework review. I would argue, in support of the noble Baroness, Lady Bowles, that small businesses are not well served by the current provisions. If you look at some of the work of the Financial Ombudsman Service, which the Committee has referred to, I would not hold out much hope for a small business claiming redress and a decision under that agreement. I would be delighted if my noble friend were to prove me wrong in summing up this debate.

Amendment 5, in particular, has strengths to commend it and I would very much like to lend it my support. I look forward very much indeed to hearing what my noble friend will say and whether the Government might look favourably on it, a lacuna having been identified in the regulatory framework.

[The Deputy Chairman of Committees (Lord Russell of Liverpool) (CB)]

I call the next speaker, the noble Baroness, Lady Bennett of Manor Castle. Baroness Bennett? We appear to have lost the noble Baroness, so if—

--- Later in debate ---

[Lord McNicol of West Kilbride (Lab) [V]]

My Lords, I will be brief, as I set out many of my concerns and issues when speaking earlier on the first group.

I support Amendment 8, proposed by my noble friend Lord Stevenson of Balmacara. Before I start, I would like to make the Grand Committee aware of my financial interests, as set out in the Lords register.

As touched on in Amendment 4 earlier, low financial resilience and overindebtedness are a huge problem for both individuals and the country at large. We should all do all that we can, especially under the current circumstances, to push back against those issues.

Either we are saying that there is a problem and we need to do something about it, or we are saying that there is not a problem and we just carry on as before. With the figures and the personal stories of overindebtedness and unaffordable, unsustainable financial predicaments, I believe that there is a problem that does need resolving.

The FCA recently found that the number of people suffering from low financial resilience had increased by one-third to 14.2 million people. That is one-quarter of the UK adult population. |In earlier amendments, we heard a number of noble Lords, and a little from the noble Baroness, Lady Neville-Rolfe, saying that any increase in regulations, bringing in a duty of care or a duty to promote financial well-being, was either not the responsibility of the FCA or, in some earlier comments, would put more costs on individuals in increased fees and on businesses with increased administration. I do not believe that that is the case with the amendment as laid out by the noble Lord, Lord Stevenson. If you look at the text of it—and I understand it is a probing amendment—you see that the power of the FCA to make general rules includes a power to require authorised persons to promote the financial well-being of consumers in carrying out regulated activities under this Act.

I am very new to this sector and I may be a little naive, but I believe that one of the most significant drivers of costs to the industry is from non-repayment or defaulting on loans. We need financial well-being and literacy to be increased. The noble Baroness, Lady Neville-Rolfe, is right that it needs to start in schools and carry on through employment and employers, but that should not preclude the Financial Conduct Authority being able to step in and help. There is a benefit to businesses as well. If financial well-being can be increased, the number of defaults from people falling into indebtedness or failing to pay reduces, thus increasing profitability of a product, then in turn reducing the cost of that product to individuals and businesses. There is a lot in where the amendment proposed by my noble friend Lord Stevenson is trying to take us.

We touched a little on the Woolard review and its 26 proposals, and I hope that we will see a bit more of those. The noble Lord, Lord Holmes, touched on fintech. With the increase in open banking and the ability to look at individuals’ accounts, better and more detailed decisions can be made on how a product or a business moves on. My noble friend Lord Stevenson referred to the University of Edinburgh Business School report, which it carried out for Salad Projects, looking at the health and well-being of NHS workers who had applied for a loan. The report provides a unique insight into their financial lives, based on millions of individual transactions. What came out of that was information about their low financial resilience—the ability of those working in the NHS to deal with a financial shock to their lives. Often it was just a small shock, but they were unable to tap into the bank loans that many of us can take; they were forced into the high-cost credit loans market.

If we have the development and promotion of financial well-being, I hope we will see a reduction in those who are driven into that sector. This amendment will help to deliver that, but it does not preclude delivering that in schools or the workplace. The FCA is a powerful body that can help push it even further.

[Baroness McIntosh of Pickering (Con) [V]]

My Lords, I am delighted to support this group of amendments. I take this opportunity to pay tribute to the noble Lord, Lord Stevenson, and my noble friend Lord Holmes for their huge contribution to this field of financial inclusion. I single out the noble Lord, Lord Stevenson, not just for his role on the Front Bench but previously in chairing StepChange. He will be greatly missed from his Front-Bench responsibilities, and I am sure it will not be long before we see him return.

I also congratulate my noble friend Lord Holmes on being indefatigable in his campaigning for financial inclusion and bringing our attention to fintech. I join the authors of these amendments in identifying a need to address this issue, and I hope that my noble friend, in summing up, will answer this point. The noble Lord, Lord Stevenson, has asked for a high-level response, and I shall use that expression later—I like it. Perhaps we might get something more from my noble friend.

No less of an authority than “You and Yours”, of which I am an avid listener—I think there are two compulsory programmes we should listen to, one is that and the other, I have momentarily forgotten what it is, is the one that gives us all the figures and responses—spent the best part of a programme looking at credit ratings. What struck me is that often it is through no fault of an individual that they find that their credit rating has been so badly affected that they can no longer qualify for any credit. It can take months, if not years, to redress this.

I am concerned that if my understanding is correct Expedia is no longer acting for the Government in this regard. Can my noble friend confirm that we are down to two credit rating agencies? Do the Government share my concern that we should address this area of financial inclusion, financial awareness and each of us being aware of what our credit worthiness and credit ratings are? Amendments 8, 9 and 134 have identified issues that are worthy of attention in this Bill and I look forward to the response from the Minister.

[Lord Blackwell (Con) [V]]

My Lords, I have a lot of sympathy for the importance of inclusion. Financial services are clearly important to everyone, and I endorse the comments from my noble friend Lady Neville-Rolfe about the critical importance of financial education in achieving that. However, I have some difficulties with Amendment 8 on the definition of and requirement to consider financial well-being. Those reservations are similar to the ones that I expressed on Amendment 1 on the general duty of care.

Of course, the objective of well-run financial services companies is, and should be, to promote financial well-being. That is what their business is. That is the purpose of financial products. Financial services firms lend in order to allow people to buy houses and cars and to spread the purchases out over time. They help people to save in order to cover emergencies and to provide pensions in old age. They support businesses to help them create wealth. Financial well-being is the business of financial services companies. However, to impose a regulatory requirement to promote financial well-being runs the risk of extending the boundaries of what a regulated individual might be expected to do beyond what is reasonable to expect.

Despite the comments from the noble Lord, Lord McNicol, I am afraid that the amendment would create huge compliance costs and complexity. Of course, we need rules and regulations that protect consumers from unscrupulous firms that seek to exploit customers, but we should do that—as we do—through penalties for improper behaviour rather than by extending a general obligation on financial well-being. Having said that, I understand the motive behind it and I certainly support the objective of improving financial well-being through the financial services industry.

Covid-19

Baroness McIntosh of Pickering Excerpts

Thursday 28th January 2021 Lords Chamber

[Baroness Evans of Bowes Park (Con) [V]]

I am sure the department continues to work on these issues. They are very important, but I am afraid I cannot give an update on publication.

[Baroness McIntosh of Pickering (Con) [V]]

My Lords, I congratulate my noble friend and the Government on the vaccination programme and for sticking to the advice of the JBC. It is vital for people to have confidence in the integrity of the vaccination programme. Does my noble friend share my concern about the South African mutation? If this was a seasonal variation, it would respond to the heat and climate of South Africa at this time of year, so it is deeply disturbing. What research is going into this variation at this time to ensure that it can be defeated and managed at the earliest opportunity?

[Baroness Evans of Bowes Park (Con) [V]]

I assure my noble friend that much work is going on in our scientific community to analyse the new variants. As she will know, the UK has one of the most extensive genomic sequencing capabilities in the world. We have offered a new variant assessment platform to work with the WHO to offer our expertise in genomic sequencing to other countries. Indeed, we have sequenced over half of all viral Covid genomes that have been submitted to the global database. I assure her that we are at the forefront of work on these variants.

The one thing that I hope will give her some comfort is that all the current evidence continues to show that both vaccines we are currently using remain effective against both UK and South African variants. Moderna has said that it expects its vaccine to protect against the South African variant as well. It has also said that the reduction in antibody levels suggests that immunity could wane more rapidly, so Moderna is having a further look at its vaccine. That shows how much work is going on, both within the companies developing vaccines and more broadly, to make sure we stay ahead of these new variants.

Covid-19

Baroness McIntosh of Pickering Excerpts

Wednesday 23rd September 2020 Lords Chamber

[Baroness Evans of Bowes Park (Con)]

I have made it clear that the military will not be rolling out but may be called upon to help with certain back-office duties, so I do not accept that characterisation by the noble Baroness. Of course, she and others have correctly talked about the need for clear messaging and guidance, which is, and will continue to be, at the forefront of our minds.

[Baroness McIntosh of Pickering (Con) [V]]

My Lords, I thank the Minister for the Statement and for responding this afternoon. She will be aware of the massive investment that restaurants, pubs, clubs, bars and casinos have made to be Covid secure, so the devastation to the night-time economy following the announcement of the 10 pm closure will be considerable. The Prime Minister said that it is true that the number of new cases is growing fastest among those aged between 20 and 29. How are the Government specifically targeting that group to ensure that they stay safe, maintain a safe distance and are not super-spreaders?

[Baroness Evans of Bowes Park (Con)]

Obviously, we continue to put out as much public messaging as possible, and we are looking at social media and other ways of getting the attention of that group of people. The other issue we need to recognise is that unfortunately, cases are now rising throughout all age groups, which is a concern. The package of measures we have put together is an attempt to stop the rise in cases while ensuring that the economy continues, albeit in a somewhat restricted fashion. We do not want another full national lockdown. We hope that, added together, this package of measures, as well as everyone sticking to the basics of social distancing, good handwashing and wearing face coverings, will help to stop the rise that we are seeing at the moment, before we have to take further and more unpalatable measures.