Financial Services Bill

Baroness Neville-Rolfe Excerpts

Report stage
Wednesday 14th April 2021 Lords Chamber

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

My Lords, I welcome the government amendment in this group. We are seeing regulations catching up with financial innovation. As ever, it seems that the regulator is being forced to chase after advances that are screaming into the future with potentially very disturbing results.

However, I chiefly wish to speak to Amendment 35, in the name of the noble Lord, Lord Holmes of Richmond, and to offer my support for it, or at least for its principles. As the noble Lord said, we are talking about innovation, but innovation that is actually for the common good—innovation that works for people, and particularly, innovation that works for the most vulnerable in our society. The figures really are deeply shocking: estimates of 1 million unbanked people; 8 million people with debt problems; 9 million people with no access to mainstream credit. One thing that is not adequately recognised is the poverty premium: the fact that not having a bank account or access to mainstream credit means much higher costs for everything from utility bills to borrowing and very well documented impacts on health and wellbeing.

This seems like an apt time to ask the Government whether they have given further consideration to the recommendation from the Select Committee on Financial Exclusion, which reported in March 2017. It called for a Minister responsible for financial exclusion. Is this something that the Government are really going to focus on by means of this Bill? The noble Baroness, Lady Noakes, may have concerns about the structure of this, but the intentions of the noble Lord, Lord Holmes, are very clear. Are the Government going to take action?

[Baroness Neville-Rolfe (Con)]

My Lords, I offer a few words of caution on the subject matter of Amendment 35 in the name of my noble friend Lord Holmes of Richmond, who has done so much to promote financial and digital skills since we joined the House together in 2013. The amendment is concerned with the very real problem of the “financially excluded”, in today’s jargon. This problem is of long standing. Under the description of the poor, the New Testament informs us that “they will always be with us”, and similar quotations can be made from the Old Testament. More recently, as just mentioned by the noble Baroness, Lady Bennett, we have had good reports on the subject from our own committees.

Experience shows that another ancient saying is also relevant and helpful. I refer to the injunction on doctors when seeking to treat disease—“first do no harm”. Unfortunately, this latter injunction was not followed when the United States authorities sought to improve the lot of the financially excluded, which arguably led to the subprime crisis of 2008 in the United States, or at least made that crisis much worse than it would otherwise have been. Noble Lords will recall that, when it came to the attention of the federal authorities in the United States, some communities, called marginalised groups, received fewer house loans per head than others. The lenders concerned were threatened with prosecution under federal laws on discrimination. That was a major factor behind many subprime loans being made, which those receiving them had no real likelihood of being able to repay. Such loans were included in bundles sold to investors, which in many cases inevitably defaulted. The end result was a crisis in which some of the worst affected were those who had received the subprime loans in the first place—namely, the financially excluded, whom we are trying to help.

None of this argues against the amendment before us proposed by my noble friend Lord Holmes, although I note that my noble friend Lady Noakes has some reservations. We always need to listen to her because of her great expertise in this area. However, it shows that, in efforts to improve the lot of the financially excluded, we need to proceed with as much prudence and attention to the risks to them and more broadly, as we do in pursuing other wider objectives.

[Baroness McIntosh of Pickering (Con)]

My Lords, I am delighted to support government Amendment 14, and congratulate my noble friend and the ministerial team on listening to concerns expressed across the House, and in particular, in echoing my noble friend Lord Holmes, for introducing the follow-up provisions under the affirmative procedure. I will also address, perhaps more supportively than other noble Lords, my noble friend’s Amendment 35. I must say that I am increasingly envious of my noble friend Lady Noakes and, in particular, the rather splendid account that she had previously with the Bank of England. She must be torn, not wanting to destroy her rather splendid cheque book. For security purposes, she might err on the side of caution and do so.

My noble friend Lord Holmes of Richmond has done the House a great service by raising this issue. Yes, we can debate whether it should be a Bank of England account, which I understand no longer exists; perhaps this is not the right time to revisit that. I have become increasingly concerned—as, I know, have many in consumer circles with much greater knowledge than I about this—by the way in which one’s credit score can be disadvantaged. All sorts of extraordinary things seem to be happening at the moment, without us even knowing. We are apparently encouraged to do regular credit checks; I did, and was delighted to see that on one, the Experian account, my credit score was sound. But apparently the Government have discontinued Experian, so I do not know to whom to address that in future.

This raises the issue of those who have a poor credit score and are having trouble finding a bank account. My noble friend Lord Holmes has identified the difficulties in doing so. If it is not the wish of the Government to support the terms of Amendment 35, I hope that the Minister responding to this debate will nevertheless look carefully at the circumstances by which it is becoming increasingly difficult for those with poor credit scores to access even the most basic banking services.

I understand what my noble friend Lady Noakes said about how we are coming under increasing commercial pressure to make banks’ retail services financially viable. This is causing great concern for those of us in rural areas, because it is increasingly difficult to keep small rural branches open. To me, they perform a social function as much as anything, particularly for local shops, in banking their cash, allowing them to access bank accounts and, for example, banking their money when there has been a local mart. My noble friend has identified these very real concerns and I hope that the Government look on them sympathetically.

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Moved by

[Baroness Neville-Rolfe]

24: After Clause 40, insert the following new Clause—
“Requirement to report to Parliament on impact on businesses
The Treasury must publish an annual report on the impact of measures taken by the FCA, PRA and the Government to regulate financial services, particularly on small business, innovation and competitiveness.”

[Baroness Neville-Rolfe (Con)]

My Lords, I shall speak to my Amendment 24 on reporting. I remind the House of my interests as a director of Secure Trust Bank and Capita plc.

The amendment would require the Treasury to publish an annual report on the impact of measures taken by the FCA, the PRA or the Government to regulate financial services, with a particular focus on small business, innovation and competitiveness. While there has been a great deal of excellent discussion during the passage of the Bill on holding financial services operators to account, we can lose sight of the value of smaller operators, including those based outside London. Moreover, innovation can bring huge value to consumers: just think, in our own lives, of online banking, money transfer overseas and customer share trading. Moreover, our strained economy will not recover without a proper focus on the competitiveness of the UK’s financial sector, which provides the veins and arteries of our economy.

I know from my experience in intellectual property how valuable an annual report to Parliament of this type can be in focusing ministerial and staff attention. Writing the report is a complement to the usual in-tray, the relentless focus on short-term risk and the avoidance of political banana skins; I am afraid these often exercise public servants to the detriment of more strategic thinking, and I speak as someone who used to be one. I believe that a strategic look once a year would raise thinking above the proverbial parapet and help the financial services sector to stay ahead in the new world, but can I persuade the Minister?

I will leave others to speak to their Amendments 25 and 37, but I will say that I took some comfort from the Minister’s reply to me on impact assessments in Committee, which is why I did not retable my amendment. He confirmed that both regulators, the FCA and the PRA, have a disciplined routine and a proper approach to impact assessment, and they understand that the sunlight of transparency must shine through. What is less clear is how easy it is to access those assessments, those nuggets of judgment and estimation. Could the Minister reassure us that there will be a decent system of signalling new proposals and that PRA and FCA impact assessments will be available to Parliament, perhaps through the public websites? We need to see and understand their proposals, and we need to do that routinely if we are to exercise our parliamentary scrutiny function properly, which has been an issue of great debate throughout the passage of the Bill. I beg to move.

Amendment 25 (to Amendment 24)

Moved by

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Amendment 25 (to Amendment 24) withdrawn.

[Baroness Neville-Rolfe (Con)]

My Lords, I thank all noble Lords who have taken part in this debate. I also thank the Minister for reminding us of the contribution of the financial services sector to our economy, and for his summary of the remit letters. I particularly thank the noble Lord, Lord Sharkey, for Amendment 25, and am grateful for the support across the House for the idea of ex-post reporting—perhaps bringing things together a little bit better than the existing system of reporting, which has been outlined, currently does.

I emphasize, however, that I am very flexible and would be happy to have a report less often than once a year. As my noble friend Lady Noakes said, that could encourage more depth. We should also look at some of the difficulties; my noble friend Lord Trenchard reminded us of collateral damage, for example in the case of MiFID.

In any annual report that the Treasury might bring forward—if we were able to persuade it—I am also content to see consumer protection considered and assessed, although it might perhaps be better as a separate report. I know from my own experience in banking that, at present, this is not the main problem area. There is, rightly, a focus by the regulator—particularly the FCA—on protecting the consumer. However, especially in the medium to longer term, other things matter as well: the buoyancy and dynamism of smaller firms; innovation—whoever its parent—and innovation in fraud, as we have been reminded; and competitiveness. They all feature in my amendment. If we fail to think about these things properly, the consumer—and consumer protection—is the loser.

Amendment 37 in the name of the noble Baroness, Lady Bennett, is much broader in focus, but I think it has sparked some useful reflections about the benefits as well as the costs, about opportunity costs and indeed about how we cope with the great change in the financial services landscape brought upon us by the ups and downs of the internet.

We will come back to this in a future Bill. In that context, I would encourage the Treasury to listen to some of the things that noble Lords have said today, to be flexible and perhaps come forward with proposals that encourage these very important dynamics for the future. In the meantime, of course, I beg leave to withdraw my amendment.

Amendment 24 withdrawn.

Budget Statement

Baroness Neville-Rolfe Excerpts

Friday 12th March 2021 Lords Chamber

[Baroness Neville-Rolfe (Con) [V]]

Although Budgets are primarily about how we raise money, the success of our Government depends on how we spend it in the interests of the country at large. There has been criticism about support for social care, so I thought I would bring some common sense and conservative observations to the matter.

The White Paper of 11 February, Integration and Innovation: Working Together to Improve Health and Social Care for All, included some important proposals. However, it does not tackle the most critical issue of the funding of social care. This is the sort of matter that one expects to see in the Red Book, perhaps in the form of insurance or a levy or in support to local government. There has been an eye-watering amount of spending on Covid and a lot of attention to climate change, yet in the medium term a decent system of social care is more important to more people than either, given the scale of the demographic time bomb that we face, mentioned by the noble Lord, Lord Macpherson, and the erosion of pension provision.

There are a number of important strands to the issue: get the bed-blockers out of our hospitals, perhaps by allowing hospitals to run care homes; support people to recover at home, using innovative digital care and home aids; encourage people to be healthy and active and to save for their old age, reducing pressure on the state; and make care homes decent, profitable businesses or attractive to well-run charities. The current system encourages elderly people to stay in the free NHS for too long, but the “working together” strategy will not deliver unless there are the right incentives.

I welcome the new measures in the Budget that help small businesses, such as the 130% capital allowance and the Help to Grow scheme for management and digital. Will these help the care home sector? Can my noble friend the Minister kindly indicate when he will be able to set out the Government’s plans for social care funding?

I end by welcoming our five new noble Lords and the new thinking that they will bring.

Financial Services Bill

Baroness Neville-Rolfe Excerpts

Committee stage & Lords Hansard
Wednesday 3rd March 2021 Grand Committee

[Baroness Neville-Rolfe (Con)]

My Lords, I have listened with great interest to some excellent contributions on this group of amendments. I refer to my own entry in the register of interests, although my comments stem from my experience over a lifetime of support for regulatory common sense as a witness of the perverse effects of well-intentioned but sometimes ill-judged regulation, sometimes added at the last minute to Bills such as this. I support proper standards and the use of whistleblowing, which is the subject of Amendments 96 and 97, in the names of the noble Baronesses, Lady Kramer and Lady Bowles. But my conclusion is that nearly all the harms articulated in the Committee today reflect a failure of enforcement by our regulators, and/or the failure of prosecuting authorities.

European Union (Future Relationship) Bill

Baroness Neville-Rolfe Excerpts

3rd reading & 2nd reading & Committee negatived & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords & Committee negatived (Hansard) & Committee negatived (Hansard): House of Lords
Wednesday 30th December 2020 Lords Chamber

[Baroness Neville-Rolfe (Con) [V]]

My Lords, I rise to welcome this Bill, and to congratulate my noble friend Lord Cavendish on his brilliant valedictory speech. We will miss him, his historical perspectives, and his love of small business.

Virtually my whole career has been spent in EU circles, either negotiating in and with it as a civil servant and later as a Minister, operating across its single market as a retailer or, most recently, sitting on the EU Committee. I love European art and culture and travelling across the continent, but the last five years have changed my view of the viability of the UK’s position within the EU.

I warmly congratulate the Prime Minister, my noble friend Lord Frost and the rest of the UK negotiating team, and I welcome the treaty and the Bill before us today. My sister reminded me yesterday that on the day after the referendum in 2016 I told her, “It has to be Boris.” I have taken that view consistently because only he had the chutzpah, the confidence and the experience of Brussels necessary to take the hard line that would convince the EU negotiators that we might really proceed with no deal on trade if what was on offer was inadequate. Only that could shift red lines crafted when we had made the catastrophic error of agreeing a schedule of talks that separated the money and Northern Ireland from the trade provisions. Even worse, the UK negotiators had to operate against a background where some UK legislators, no doubt well-intentioned but hopelessly misguided, were actively seeking to make it a legal requirement to reach agreement, thereby fundamentally undermining their own side.

The Prime Minister has been admirably honest that the deal is not perfect, with which I agree but, given the background, that ought not to be a surprise. However, overall it is in our economic and political interests, and much better than many had feared. By ending in agreement we also have the chance as a sovereign state to chart a friendly path forward with the EU once the dust settles. I can foresee—correctly, I hope—a revival of interparliamentary political dialogue with the EU, as advocated by the noble Earl, Lord Kinnoull, and of collaboration on business, economics, health, digital, creative industries and climate change. However, for the first time in 50 years, we also have a chance to forge independent relationships on those matters right around the world and to create a simpler climate of control for our entrepreneurs at home. With a successful vaccination programme and Covid behind us, we can emerge from the fog and the gloom of recent times. Opportunity knocks. Thank you, Prime Minister. You have changed the weather.

UK-EU Withdrawal Agreement

Baroness Neville-Rolfe Excerpts

Thursday 10th December 2020 Lords Chamber

[Lord True (Con)]

My Lords, on the specific technical points on power of attorney and so on, I will seek very specific responses, and I undertake to write to the noble Lord on that. Obviously, the three-month grace period is to allow authorised traders—such as super- markets, but other organisations will able to partake—and their suppliers to adapt to certification requirements. Alongside that, the Trader Support Service and the movement assistance scheme will provide support across the board.

[Baroness Neville-Rolfe (Con)]

My Lords, I welcome the limited progress outlined in the Statement on arrangements for the transport of goods, food and drink across the Irish Sea and, in some cases, to or from the Irish border. This was always the job of the joint committee: “pragmatic co-operation”, in my noble friend’s words. However, I would like to know whether some trial shipments by sea and land, and by small and large business—dummy runs, if you like—using the agreed systems, the paperwork, the labelling, the VAT and the tariffs have been attempted across both borders. If so, what were the results?

[Lord True (Con)]

My Lords, so far as individual, specific, in-person dummy runs are concerned, I cannot categorically answer that, but I will find out if I can supply my noble friend with an answer. What I can assure her of is almost daily—literally daily—discussions and consideration at the highest level of the technical and specific impacts of the new regime, or regimes, that come in either on 1 January or in the course of next year. Indeed, the Government have conducted privately a number of specific exercises to test various contingencies.

Spending Review 2020

Baroness Neville-Rolfe Excerpts

Thursday 3rd December 2020 Grand Committee

[Baroness Neville-Rolfe (Con)]

My Lords, as time is short, I will eschew universals and limit myself to two points.

First, on delivering public value, I thank the Chancellor for including as a priority outcome

“a sustainable and resilient local government sector that delivers priority services and empowers communities.”

I have always believed in the value of local government as the exemplar of good and innovative management. I think of Andy Street in Birmingham, Boris bikes and congestion charging. It is nice to see this strength appreciated at last during Covid and to note the £3 billion in additional support set out on page 75.

However, I have a concern about parish and town councils, which of course vary in size, from towns such as Salisbury and Tavistock to tiny villages. These are the very backbone of local democracy, yet I hear from the National Association of Local Councils that the Covid money is just not trickling down to them from the higher-tier authorities. This is despite the fact that many parish councils carry out functions such as parking, leisure and voluntary activities, and that their income is right down. Will my noble friend the Minister undertake to look into the facts and sort this out? For example, could they be eligible for the new leisure fund?

Secondly, my noble friend knows my passion for supporting small business. Recently, I expressed my concern to him on financial services. I am still researching the letter that I promised him and would welcome examples from other noble Lords. It is clearly a serious cultural problem. The spending review mentions small business or SMEs seven times, compared with 35 references to “green” or “greener”—not including the references to the Green Book. How are we going to revive our economy without a better attitude to enterprise, green or not? What are the prospects for the 5.5 million small businesses in this country? As my noble friend Lady Noakes said, we need them now more than ever.

Future of Financial Services

Baroness Neville-Rolfe Excerpts

Wednesday 11th November 2020 Lords Chamber

[Lord Agnew of Oulton (Con)]

My Lords, we absolutely acknowledge the role of fintech in the economy. It generated some £11 billion in 2019 and employed more than 76,000 people. The 2020 report has highlighted the UK as a global leader. Likewise, in the payments landscape, we are also highly innovative because we again are a large economy. In 2018, more than 230,000 faster payments were sent every hour, compared to fewer than 3,000 10 years earlier. The noble Viscount is concerned about regulation. The financial regulators continue to provide a platform that facilitates innovation in this space. For example, the Financial Conduct Authority has accepted a significant number of DLT-based projects into its regulatory sandbox to enable the adoption of this technology to deliver better financial services with appropriate consumer safeguards.

[Baroness Neville-Rolfe (Con)]

I refer to my interests in the register. Unlike some others, I congratulate the Chancellor and my noble friend on getting ahead and providing as much certainty as possible in financial services, despite the ongoing difficulties with the EU. We need this innovative £130 billion industry, especially as we start to pay for Covid. How does my noble friend think that this package will help the large number of smaller financial services providers—and indeed the businesses they serve—outside London and outside the leading-edge areas of fintech and green finance, which will of course take time to grow?

[Lord Agnew of Oulton (Con)]

My Lords, we absolutely accept that small businesses are the backbone of the wealth-creating part of our economy. One of the answers I gave earlier was looking at the listing rules in this country to see whether we can make it more accessible for smaller firms. I mentioned that I think that you have to issue a full prospectus for anything in excess of €8 million, whereas in the US it is $50 million, so we certainly will be looking at that.

On a slightly unrelated element, but connected to SMEs, the rules reform that we are working on now, post transition, on procurement opens up an enormous opportunity for SMEs, because it will allow us to set our own rules and not be controlled by the EU regime. That covers some £290 billion-worth of government expenditure each year, and we will be making sure that SMEs get a good slice of that.

EU: Non-financial Services

Baroness Neville-Rolfe Excerpts

Wednesday 2nd September 2020 Lords Chamber

[Lord True (Con)]

My Lords, in the interests of time, I will write, if I may, to the noble Lord with a detailed response on that point.

[Baroness Neville-Rolfe (Con)]

My noble friend will be aware that the withdrawal agreement does not protect the rights of representation of UK trademark and design professionals in the European Union Intellectual Property Office, while it does protect the rights of EEA professionals to work in the UK for an extended period, when there will be a great deal of new work at the UK IPO. What plans do HMG have to make these arrangements reciprocal?

[Lord True (Con)]

My Lords, the Government are committed to protecting IP to a very high level and are proposing a chapter in the free trade agreement based on precedence to reflect this. Both the EU and the United Kingdom are IP-intensive economies and we need to make progress. My noble friend is right in relation to rights of representation that flow from the single market, and I assure her that these issues are currently very much in the mind of the Government.

Northern Ireland Protocol

Baroness Neville-Rolfe Excerpts

Thursday 21st May 2020 Lords Chamber

[Lord True]

My Lords, I may stand corrected, but I believe that the mechanism of the consent is set out in the protocol. That is the mechanism that will apply.

[Baroness Neville-Rolfe (Con)]

The Statement covers one of the knottiest aspects of Brexit. As a member of the EU Committee, I think it represents a reasonable balance. However, the devil will be in the detail. The new business engagement forum may help. As someone who used to operate across the island of Ireland, I say this: we need a proper physical trial soon, for traders from some different sectors to transport goods from England to Northern Ireland, to the south and then back to England. Please can the Minister consider this further?

[Lord True]

My Lords, as my noble friend said, we will engage with businesses and traders about the requirements of the protocol. That will certainly be a priority in the coming weeks. She makes a very interesting and practical suggestion and is right that this will need to take account of how those traders move their goods in practice today, so that we ensure the system is as streamlined and efficient as we are clear that it must be. I certainly take note of her point.

Covid-19: Economic Package

Baroness Neville-Rolfe Excerpts

Wednesday 13th May 2020 Lords Chamber

[Lord Agnew of Oulton]

To answer the right reverend Prelate’s question, what we have always done through this crisis over the past few months is take a flexible approach and respond as events confront us. If we see that different regions are suffering more than others, we will, of course, look on that as sympathetically as we can.

[Baroness Neville-Rolfe (Con)]

Could my noble friend explain in more detail what the Chancellor meant when he said he would ask employers to share with the Government the cost of paying people’s salaries under the furlough scheme from August? In spite of what he said, I hope he can give us an idea of some of the thinking going on. For many reasons, I support the aim of weaning people off government support, but businesses need to quantify this extra cost very soon to determine their route ahead.

[Lord Agnew of Oulton]

In response to my noble friend, unfortunately I cannot give any more information at the moment, but businesses will be made aware within the next 10 days to two weeks.