Financial Services and Markets Bill [HL]

Lord Ashcombe Excerpts

Committee stage
Monday 29th June 2026 Grand Committee

[Lord Ashcombe (Con)]

My Lords, I declare my interest as an employee of Marsh, the insurance broker regulated by the FCA. A number of amendments in this group discuss the downgrading of the “have regard to” requirement for proportionality, which would be a backward step. At a time of intense global competition, the Bill should strengthen proportionality, not weaken it. These amendments do that by replacing Clause 17’s downgrading provisions with a clearer, more robust and more meaningful principle, based on the distinction between wholesale and retail markets.

There remains a clear need for a better balance between these two sectors. Evidence supports this. A survey of chief risk officers conducted by the City of London Corporation identified simplification of regulation as the single most important step that regulators could take to foster growth and innovation. Similarly, a recent Prudential Regulation Authority survey showed that fewer than 60% of respondents believe that its current approach to proportionality makes the UK a more attractive place to do business, with most of the remainder expressing neutrality. That is hardly a vote of confidence.

In practice, the current one-size-fits-all approach is flawed. London’s world-leading wholesale insurance market is increasingly subject to rules designed for retail consumers. These regimes impose additional compliance burdens and costs, yet offer little meaningful benefit to sophisticated corporate clients, who require flexibility to negotiate bespoke arrangements tailored to their risks. This is what I have spent my working career doing, and I have never dealt with retail consumers, other than being an insurance buyer myself. There is a massive difference between the companies I advise and seek insurance for and the consumers such as me. Indeed, their premiums are often significantly larger than what I am trying to insure. The two entities should not be regulated by a one-size-fits-all regime.

The Financial Services Regulation Committee has highlighted this issue, noting that failure to distinguish between wholesale and retail drives bureaucracy and costs. Evidence from the London Market Group revealed that one UK broker, for example, employs far more compliance staff domestically—almost four times more—than in the EU on a proportional basis. Stronger proportionality would not weaken consumer protection; it would enhance it, allowing regulators to focus on where risks are greatest. In short, we should seize this opportunity not to weaken proportionality but to make it work properly for growth, innovation and the effective protection of consumers.

[Baroness Kramer (LD)]

I very much support the two amendments of my noble friend Lady Bowles. There is often an assumption that those of us who feel that regulation plays an important role have no instinct or desire to see proportionality in place, which could not be more untrue. My history is as a commercial banker, back in the days when we used to participate intensively in writing the loan documents and creating the covenants associated with our lending, whether to small companies or to some of the largest on the globe. Frankly, covenants that were off the shelf were completely inappropriate for providing the protection we needed in many cases. They were just useless exercises in paperwork for the companies involved. We used to reshape the loan agreements on that basis and, frankly, it worked exceedingly well.

When I look at the amendments, I am glad that proportionality is being recovered from the scrapheap that would result from Clause 17. That is important, and the way that my noble friend Lady Bowles, framed it is particularly significant. Both for the PRA and the SRA, the focus is proportionate to the benefits expected to result from the imposition of the burden or restriction, recognising the difference in size, nature and objectives. I agree with her that this really needs to be considered through the lens of genuinely sustainable—as in durable as well as environmental—growth. That is a very important addition to the discussion.

I am disturbed by Amendment 81. I am not disturbed by most of it, but when I read

“proportionate to that level of risk and whether the burden or restriction enhances UK international competitiveness”,

I begin to get somewhat queasy, because the lowest common denominator is not where we should be headed. We need to genuinely assess risk—the cost of dealing with and understanding it—in a very direct way. I have always thought that a distortion was introduced by the competitiveness objective, and I am afraid that it is reflected in Amendment 81, in my reading at least.

I hope that the Minister understands that proportionality is not something for five-year strategies. It is central to the work, culture and behaviour of a regulator; as such, it clearly belongs in principles that sit on the face of the Bill.