Professional Qualifications Bill [HL]

Debate between Baroness Noakes and Baroness Hayter of Kentish Town

Committee stage
Tuesday 22nd June 2021 Lords Chamber

[Baroness Noakes (Con)]

My Lords, the noble Lord, Lord Palmer of Childs Hill, has tabled these amendments, which I know were suggested by the Institute of Chartered Accountants in England and Wales, so I felt somewhat obligated to speak on the amendment. I know that the ICAEW is pretty keen to be included in the Bill’s scope. As the noble Lord explained, its wish has been granted to some extent, but only for certain aspects where it regulates professions. The noble Lord’s amendments would actually go considerably further by making chartered accountancy a regulated profession. Amendment 64 names the ICAEW as the “chartered accountancy regulator”, thus relegating all the other chartered accountancy bodies to also-rans. If the noble Lord was even thinking about pressing his amendment, I would strongly oppose it. I hope that my noble friend the Minister will resist it.

The inclusion of chartered accountancy is not logical. The ICAEW already enters into mutual recognition agreements, so Clauses 3 and 4 would have no relevance whatever. I cannot believe that the Government would ever make a determination under Clause 2 that there is a problem with meeting a demand for accountants’ services. There is no shortage of accountants.

The ICAEW’s rather grandiose briefing to me said that it wanted to be in the Bill so that there could be

“a debate on the role of the profession in shaping global business practice, reporting and governance”.

In other words, the ICAEW wants to be seen as important. Legislation should not be used to support the egos of anybody, let alone professional bodies.

Right at the end of his remarks, the noble Lord, Lord Palmer of Childs Hill, raised whether the provision of accountancy and tax advisory services should be regulated. That is pure protectionism and not something I would ever support, even for my own profession of accountancy. I know that the noble Lord will not press his amendments, but if he does I hope that my noble friend the Minister will strongly resist them.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, my sister is not a chartered accountant, but she is an accountant. I do not know whether that is an interest to declare, but I should note that.

Unsurprisingly, I have a lot of sympathy with what the noble Baroness, Lady Noakes, said. In fact, when the noble Lord first raised the possibility of this with me, I was really interested, but we were both quite surprised that somebody actually wanted to be regulated. As someone who has worked very much on the consumer side, I have tried to get people regulated and on the whole they have resisted. However, that falls apart, because we have now discovered in the letter that the ICAEW will be there.

Earlier, I read out the note that I had had from the ICAEW as a result of the Minister’s letter on Sunday, saying that it seemed as if the Government were “rushing through the legislation”. I did not quote this, but I will say it now:

“Between this Bill’s conclusion in the House of Lords and it beginning to go through the lower chamber, it is vital that BEIS take stock of this legislation, review its intended – and unintended – consequences, and engage with those regulators and professional bodies in scope to iron out any remaining concerns.”


As I said on the previous group, I hope that we will use the time between now and Report, rather than between now and when the Bill arrives in the other House, but it sounds as though the ICAEW and the other accountancy bodies have not yet had a discussion with departmental officials. I hope that that can be put in hand. I hope the Minister will be able to confirm, although maybe not at this moment, that those meetings have taken place so that, as the ICAEW says, any intended or unintended consequences are fully understood and any problems can be ironed out. I look forward to hearing from the Minister that that will take place.

Professional Qualifications Bill [HL]

Debate between Baroness Noakes and Baroness Hayter of Kentish Town

Committee stage
Wednesday 9th June 2021 Lords Chamber

[Baroness Hayter of Kentish Town (Lab)]

My Lords, in moving Amendment 15 I will speak to Amendment 27, both of which are in my name and those of the noble Lord, Lord Patel, my noble friend Lord Hunt and the noble and learned Lord, Lord Hope.

These amendments are here for two reasons. One is that the regulators listed already have the power to recognise professionals from other jurisdictions, so they are somewhat at a loss as to why they should need to be covered at all. The other is that the maintenance of their standards is particularly crucial to the lives of patients—be they human or animal—pupils and clients. If there is any chance that they will be mandated to open up their approval system further than it is already—because they already have one—at the behest of the Government, then there must be the most thorough consultation and agreement. This really is too important to leave to chance. We need a legal commitment to consult in the Bill for the priority professions listed in the amendment.

In answer to the question posed by the noble Baroness, Lady McIntosh, during our debate on an earlier amendment, the Government had a list—the Minister sent it in a letter to the noble Baroness, Lady Noakes—of all the regulators covered, but this group of healthcare and personal care professionals already have the ability within their statutes to do the necessary for international. So there is this two-way reason why we put them in the amendment: their clients or patients are particularly vulnerable if standards fall, and they already seem to have this power. Therefore, for the Government to take a power to ask them to do something outwith what they want to do seems to require a particularly high level of consultation. I beg to move.

[Baroness Noakes (Con)]

My Lords, I will be brief. The requirement in these amendments for regulations to be published in draft form and consulted on is sensible, for the reasons that the noble Baroness has given. I just do not see why they are confined to this so-called priority list, because any profession that could be brought within the ambit of Clause 1 or Clause 3 should be treated in the same way. While we can sympathise with the medical professions and vets being priority groups over such mundane things as auditors and farriers, in practice any profession that might be impacted by these sorts of regulations, and could therefore have its standards impacted, ought to be covered in a consultation process.

I do not think the consultation process, as drafted in these amendments, should be confined to the regulators, because it is not just the regulators themselves that would be impacted by any regulations made under these clauses; so would the professionals operating in those regulated professions and all the other groups affected by them. I support consultation being in the Bill because of the unusual nature of the powers the Bill is taking, but I do not think it should be confined to the so-called priority groups.

Enterprise Bill [HL]

Debate between Baroness Noakes and Baroness Hayter of Kentish Town

Monday 2nd November 2015 Grand Committee

[Baroness Noakes (Con)]

My Lords, I have not spoken before on this Bill and, indeed, I would not have spoken had I not seen the amendments tabled by the noble Earl, Lord Kinnoull. I was very happy to see Clause 20 in the Bill and I would not have spoken had it not been threatened in some way. I should explain that I was a member of the Special Public Bill Committee which considered the Insurance Bill which became the Insurance Act 2015. As noble Lords may be aware, that was a Law Commission Bill, which is handled under the special procedure in your Lordships’ House, which means that the Law Commission produces technical amendments to the law and they go through on the basis that they are uncontentious.

Clause 20 that we have before us appeared in the draft legislation which the Law Commission put forward, but when the Government tabled their Bill for consideration by the Special Public Bill Committee it did not include that clause. We examined that very carefully as part of the Insurance Bill Committee. I believe the Government deemed the clause was contentious because of lobbying by the Lloyd’s Market Association and the International Underwriting Association. At the final stage of the Special Public Bill Committee, I introduced an amendment in precisely the terms in Clause 20, which is not my cleverness in drafting but the drafting of the Law Commission in the original Bill. I should say that the Law Commission contacted me last week, and it remains of the view that this is an important change to the law which it fully stands behind.

Needless to say, in the Special Public Bill Committee—which is a version of Grand Committee, in effect—that was not pressed. I was then leaned on—noble Lords may be shocked at this—by the powers that be in my party organisation not to move the amendment again on Report. The Government then managed to schedule the business on a day when I was not able to be in the House, so that was an end to it, so the Insurance Bill went through without properly considering the issue. While the Lloyd’s Market Association and the IUA remain against the clause, others in the insurance industry are quite content for it to go through, and we were quite clear in the Special Public Bill Committee that the weight of opinion in the insurance industry, setting aside the two organisations that the noble Earl mentioned, was in favour of this amendment, even though the Association of British Insurers thought that there might be a possibility that it would lead to claims management company activity, which is one of the scourges of the financial services industry at the moment. While that might have an undesirable consequence, it was not a good reason not to legislate for something that was right.

I find it difficult to understand why there could be an objection to a clause which just states,

“the insurer must pay any sums due … within a reasonable time”,

with reasonable time being well defined to cover what one would think would be a reasonable prospect of excuse for non-payment and therefore not imposing any particular amendment. The noble Earl’s amendment seeks to knock out reinsurance contracts—I rather take the view that they are between consenting adults and need not form part of this—and large risks. Large risks might sound as if they are huge things that are of no concern to small companies, but they are well within the ambit of many medium-sized companies in this country. One piece of the evidence that the Mactavish Group produced in the context of the Special Public Bill Committee and for the Treasury when it was considering what to do with this showed that in the previous four years 40% businesses with a turnover of more than £50 million had suffered strategically significant losses, that 45% of their claims were disputed and that the average time for resolution was three years. If you are a medium-sized company with a strategically significant claim which is being held up and takes a long time, it could be the difference between survival and business failure. It seems only right and proper that we should have within insurance law, fully in line with the Law Commission’s recommendations, an implied term of reasonableness of payment. I hope very much that the Minister will resist these amendments.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, like the noble Baroness, Lady Noakes, we were rather sorry to see these amendments tabled by the noble Earl, Lord Kinnoull, as we support Clauses 20 and 21, which help consumers and businesses facing delayed payment of insurance claims to get damages for resulting losses. We certainly do not want to see these provisions watered down. Indeed, as the noble Baroness, Lady Noakes, recalled, it was the Law Commission and the Scottish Law Commission which recommended that insurers should be under a legal obligation to pay valid claims within a reasonable time. I thought it was the Law Commission which drafted these clauses and I am delighted to be in the Room with the true author.

The Bill puts the current FOS practice, which is to award compensation for unfairly refusing or delaying insurance claims, on to a statutory footing. Importantly, it will provide small businesses with recourse to the courts to claim such damages. As we have heard, Amendments 52A and 52C would remove the insurance of large risks from the provisions of Clause 20. That would effectively exclude many SMEs and their risks from the very protections that the Government—in our view, quite rightly—are seeking to introduce.

As we have heard, it is not just the Opposition who resist these and indeed the later amendments, which bring insurance contracts into line with any other normal contract. Some 80% of those responding to the Law Commission’s consultation agreed that insurers should be under a legal obligation to pay valid claims within a reasonable time. Our understanding is that not a single member of the ABI was against the clause. Indeed, some were strongly supportive, pointing out that for their SME customers, a claim being paid in a few months can be the difference between survival and failure.

It is almost a legal fiction which means that the normal contract law—that is, if one party breaks a contract, the other can claim damages—does not apply to insurance law in England. It is time to change this. The Law Commission is clear that this is appropriate for the London market and it opposes the attempt in these amendments to exclude it. Any carve-out for “large risks”, as defined in Solvency II, would exclude many consumer and SME risks. I leave the Minister to take the Committee through the finer details of the Law Commission’s argument, should she feel it necessary. I would just add that, in regard to excluding some forms of large risk, the Law Commission found that stakeholders were keen to see a single regime for all non-consumer contracts and did not support defining somewhat arbitrary boundaries, which add to transaction costs.

Financial Services Bill

Debate between Baroness Noakes and Baroness Hayter of Kentish Town

Wednesday 25th July 2012 Lords Chamber

[Baroness Noakes]

My Lords, in moving Amendment 128BC I shall speak also to Amendment 143B in this group. These amendments are in the name of the noble Lord, Lord McFall, and myself and are part of the suite of amendments we have tabled to ensure that the views of the Treasury Select Committee in another place are given a proper hearing and receive a proper government response.

Amendment 128BC introduces a new Section 1SA which requires the FCA to review its own policy and performance, if requested by the Treasury Select Committee, and to send a written report of the review to the TSC. We have just debated the Government’s powers to initiate value-for-money reviews of the FCA. This amendment goes further and allows Parliament, through the TSC, to require reviews.

The cause célèbre which underpins this amendment is the FCA’s review of the failure at RBS and its own role in that. I should remind the Committee that I am a director of RBS, but, thankfully, I was not involved at all during the period covered by the report. It took huge pressure from the Treasury Select Committee to get that report into the public domain.

The Government’s response has been that such reviews and their publication are a matter for the Executive, rather than Parliament. However, the problem that the Government have is that it did not work in the case of the RBS report, which leaves Parliament without any direct means of dealing with any similar cases in future. It is not always self-evident that the Government of the day have the same interest in transparency and accountability as Parliament, especially when the Government have themselves been so closely involved in a particular event or series of events.

Amendment 143B features another aspect of the role of the Treasury Select Committee—this time in relation to the appointment of the chief executive of the FCA. Under the new Schedule 1ZA of FiSMA the chief executive is to be appointed by the Treasury and the amendment would add the words,

“following consideration by the Treasury Select Committee of the House of Commons”.

On our first Committee day, which I was unable to attend, there was much discussion of the role of the Treasury Select Committee in relation to the appointment of the Governor of the Bank of England. The Government’s position appears to be that the Treasury Select Committee is to have no role whatever in the appointment but that it may hold pre-commencement hearings. My noble friend Lord McFall—sorry, he is not my noble friend; it feels like he is my noble friend but he is actually the noble Lord, Lord McFall—asked the Government to think again about that.

The reasons usually trotted out by the Government are unproven assertions. In particular, the role of the governor is said to be so market sensitive that it has to take place without any parliamentary involvement. I am not sure that there has been any empirical evidence to back that up, but it is much more extraordinary that the Government are citing market sensitivity for the appointment of the chief executive of the FCA. The Treasury Select Committee does not accept this assertion, and it calls into question exactly how the Government think that markets work in practice.

The age of parliamentary examination of candidates for major public offices is already upon us. In general, they go well; but there have already been reports of cases from committees in another place which have not gone well. In at least one pre-appointment hearing the candidate withdrew because the hearing did not go well. Provided that this can be handled with dignity, it seems to me that this is a sensible part of a parliamentary democracy. However, post-appointment and pre-commencement hearings raise quite different issues. I recall a distinctly lukewarm if not completely damning report by the Treasury Select Committee in respect of one of the MPC appointees. It did not invalidate the appointment but it got off to a difficult start and certainly undermined the credibility of the individual involved.

If the Government stick with post-appointment hearings only for posts such as chief executive of the FSA, it is only a matter of time before the Treasury Select Committee, or a similar committee, reaches a different conclusion from the Government and makes its views plain, as indeed it should do. Where does that leave the position of an appointed but disapproved of chief executive of the FCA?

The Government need to think this through again. If, as I suspect, the evidence which stacks up shows that the case for market sensitivity is not convincing, it would be wise to ensure that Parliament’s view is taken fully into account before executive decision-making. I beg to move.

[Baroness Hayter of Kentish Town]

My Lords, I rise to give particular support to the second amendment to which the noble Baroness has spoken. I shall not repeat the very strong arguments that she made about the need for this to be pre rather than post-appointment. I would just add a few comments about the importance of the role of the chief executive of the FCA to consumers—as may be a bit expected of me now. After all, consumers are the people on whose savings, or need to borrow, this industry depends.

The Financial Conduct Authority has been called the consumer champion, albeit the word “consumer” no longer appears in the title. That is how, I am delighted to say, the newly appointed chair described it to me. I know that that is what consumers will want it to be. We need this new architecture to have the confidence of the public—some of whom undoubtedly hold financial products at the moment, while some may have done so in the past, and some might do so in the future. Without the confidence that this sector will behave and conduct itself in their interests—with integrity, professionalism and high standards of behaviour—what chance is there that those individuals will save for their homes or pensions, or that small businesses will borrow to produce growth and jobs?

The people who can hold the FCA to account and to scrutiny on behalf of all those millions of small savers, borrowers and those with simply a bank account are, of course, our Members of Parliament. They should, therefore, through their Treasury Select Committee, hold a pre-appointment hearing of the chief executive. This will establish in successful candidates’ minds that they are responsible to the people for the performance of their organisations. Chief executives will know that they will return to the Treasury Select Committee from time to time to account for their record and explain their decisions. That will be a healthy relationship. It does not give the Treasury Select Committee a veto, but it makes clear that the candidate needs to establish the confidence of that committee before taking up the post, and that before appointment she or he has the capability and the vision to stand in the shoes of clients and safeguard their interests. That is not too much to ask.

Financial Services Bill

Debate between Baroness Noakes and Baroness Hayter of Kentish Town

Tuesday 10th July 2012 Lords Chamber

[Baroness Hayter of Kentish Town]

My Lords, Amendment 96A stands in my name and that of my noble friend Lord Eatwell. Despite the increasing importance and powers of the new European Systemic Risk Board and its three ESAs—including, on occasion, the power to override our own regulators—the Bill’s new architecture does not map with theirs. So while Europe cuts by area—with a committee for banking, one for securities and markets and one for insurance and occupational pensions—the Bill divides between prudential and conduct. As AXA warns,

“There is a significant danger that the new structure will diminish the UK’s capacity to influence European regulators as”,

our,

“new ... bodies will be organised along different lines to the European Supervisory Authorities”.

London First, which represents over 200 of London’s leading employers, including many in the financial world, expresses similar concerns about the new framework not mapping onto that of Europe. While it welcomes the establishment of an international co-ordinating committee, it remains worried about the committee’s effectiveness unless it is appropriately resourced and staffed.

We have ceded powers to the EU on many areas of financial services regulation, but there are areas where we may want to retain powers; for example, to impose higher capital requirements on banks. There are also areas for future negotiation where it is imperative that we give leadership and have a good negotiating stance and team in order to have a good outcome. That depends on good preparation within domestic regulators—and that will require considerable co-ordination, which we will rely on a committee to produce.

Our own European Union Committee warned about the mismatch between our new structure and that of the ESAs last July, but the Government did not appear to take much heed of the potential problem. Perhaps the Government are right, and whichever way one cuts and divides, there will not be a brilliant fit. However, given the Government’s commitment to,

“ensuring that the UK authorities … take a leadership role in the ESAs”,

and given the importance of Europe in regulating, in standard setting and in influencing our financial regulators, it might be wise to have a built-in review to check whether we have got it as good as it could be, and to give this House and the other place a chance to see whether any adjustments are called for in the light of experience.

The Governor of the Bank of England has said that the new architecture is,

“a bit by way of an experiment”.

He went on to say that we,

“need to experiment and see how it evolves”

in regard to the whole schema, which he thought should be revisited after five years. In the case of our relations with the European bodies, however, we cannot wait that long. Decisions are being taken even as we meet.

These overlaps—or underlaps—are not theoretical. We know that Michel Barnier, the EU Commissioner overseeing financial services, is to amend EU market abuse rules in the light of the LIBOR scandal. Much of this work will overlap with the probe led by Martin Wheatley of the FCA which is examining almost the same issues. While the EU initiative is likely to complement Mr Wheatley’s conclusions on whether to apply criminal penalties to the manipulation of LIBOR or any other indices, there is potential for a clash over whether to regulate this or other indices.

Clear, focused input into EU thinking is therefore essential for the UK markets. We must ensure that we have the processes and structures right to make sure that those decisions suit our needs. This amendment seeks the information needed to help us assess what adjustments might have to be made to ensure that the decisions taken both here and in Europe really are as good as they can be. I beg to move.

[Baroness Noakes]

My Lords, I completely take the main thrust of the noble Baroness’s amendment, which is that the lack of mapping of our structure onto the European regulatory structure potentially creates problems. We have certainly heard from bodies in the City that they also are concerned that the particular issues that arise in their areas might not be well represented. There is a particular concern about the FCA and ESMA, given the FCA’s inevitable consumer centre-of-gravity and the perceived problem of issues relating to proper representation of the markets in Europe. So I completely buy the need to keep this under review. I question, however, whether the Bank of England is the right body to do that. If we need to hard-bake some kind of review process into the Bill, the review ought to be done by the Treasury, because it is the Treasury that could do something about it if it is not working well.