Financial Services and Markets Bill [HL]

Lord Blackwell Excerpts

Committee stage
Monday 22nd June 2026 Grand Committee

[Lord Goodman of Wycombe (Con)]

My Lords, I will speak briefly as a member of the Delegated Powers Committee, which has produced a report on this Bill. That report concerns especially Clause 3, but it raises general issues that fall within the scope of the amendment that my noble friend has moved from the Front Bench. My noble friend is essentially asking what the purpose of the Bill is and what it will do.

On the committee we have heard again and again, where government Bills are introduced, quite correctly, that this is a fast-moving world, that the Government need the flexibility and room to move quickly, and that it is therefore appropriate to do these manner of things and those manner of things by regulation. That is far from being a contemptible argument. The Government have a good point, and I suspect that Ministers in other political parties have made the same point from the Dispatch Box in the past. However, there are some important general issues to consider.

First, as my noble friend indicated, it is not generally a good thing to bring in legislation if you do not know quite what the intention is and you propose to proceed by regulation. Secondly, Ministers at this point tend to say, “Trust us”, which is fine, but the Minister may change. Another Minister may come with a different approach, and we are about, I read, to have a change of Prime Minister, and the Government may decide that there is some alteration in their approach to these matters. Thirdly, you may have a change of political party, and quite another Government of a different complexion deciding what to do. I do not want to anticipate the debate on Clause 3, but, if I read the Bill rightly, as noble Lords will find when we get there, power is given to the Minister by regulation to pretty much close every bank account in the country.

Why is all this happening? The reason is that, down in the other place, things are changing. Members of the other place are besieged by WhatsApp messages all day in their groups and are drowning in constituency correspondence from people besieging them with matters that often would be better addressed by priests and psychiatrists. They are being drawn away from the Chamber by dealing with this on social media, at a time when, as my noble friend Lady Noakes has pointed out, the burden of what they consider has had to increase because of Brexit. Whether one is pro-Brexit or anti-Brexit is not the point here; the point is that there is simply more to do.

In short, there is a general attention deficit problem in our culture, which I am sure affects this House as much as anyone else but is particularly affecting the other place. Poorly drafted legislation is rushed through, it is then challenged successfully at judicial review, and then we all blame the judges. Why should we do that when the fault is literally and almost completely in our own House? I am grateful for the chance to raise these general issues and look forward to the Minister’s reply.

[Lord Blackwell (Con)]

My Lords, I declare my interests as a significant shareholder in Lloyd’s Banking Group, of which I was formerly chairman.

Although I recognise the concerns raised by my noble friends, it is important that we tackle the confusion caused by the dual roles of the courts and the regulator in the regulation of consumer credit. The regulation of consumer credit is not a black and white issue. A balance has to be made all the time between the level of protection offered to consumers and the costs of compliance borne by the institutions, and the risk that, if the courts are unpredictable in the way they interpret the Consumer Credit Act, suppliers will either withhold products or build an insurance premium into the costs.

We have had too many incidents over the past few years where what financial institutions thought was a settled issue, as determined by the regulator, has been altered retrospectively by decisions in the courts. We can have a choice one way or the other, but it is important that we tackle the confusion caused by the dual responsibility. As I see it, the Consumer Credit Act is an outdated piece of legislation, as the Government have set out. It was based on conditions that have changed radically. We have since set up the financial services regulator, with devolved responsibilities for regulation. We may or may not think that the regulator is doing well or want to increase supervision of it, but the Government should try to make it clear through these amendments to the Consumer Credit Act whether the result will be, as I hope, to make it clear that there is a single definitive source of regulation for the Consumer Credit Act, which is the balance struck by the Financial Conduct Authority, and that the courts, so far as possible, no longer have a role.

[Baroness Bowles of Berkhamsted (LD)]

My Lords, this and the following group dwell on the same territory; I will make my main intervention in the next group alongside my detailed amendments. I am sorry that I had to separate them out, but that was only because of the Chief Whip’s speaking-time restrictions on non-movers, which ironically mean that the debate will take longer overall. I have both general points and points on the substantive amendments. I agree very much with many other speakers, and in particular the noble Baronesses, Lady Neville-Rolfe and Lady Noakes. Overall, the Bill is extraordinary for the manner in which it does and undoes many things with questionable process.

My general approach on the point about the Consumer Credit Act is straightforward: I do not object to using the FCA to modernise and speed up redress mechanisms. We are already seeing that in practice with the motor finance commission cases, but that experience also contains a very clear warning. Here I depart from what the noble Lord, Lord Blackwell, would wish to have. In the first instance, the FCA made rules that were not in line with statute. It said that commission did not have to be disclosed unless asked about. We have ended up with a situation where firms which thought they were following the rules have been caught out because the statute said something different.

The moral lesson is simple: if you find yourself thinking, “Oh good, I don’t have to tell them about this nice little earner”, something is already unfair. In practice, some car salesmen discussed bonuses, quotas and commissions with customers, sometimes linking them to discounts. I have personal experience of that. But if the statute had not existed, what would have happened? The logic is that the old way, non-disclosure, might have continued because the FCA rules permitted it and it had not spotted the unfairness. For all that we have some very capable regulators, we have been shown that they are not infallible and they are not legislators—a point we will return to repeatedly as we go through the Bill. From time to time, they hit the barriers of their remits, perimeters and institutional roles.

Our system is not to delegate unconstrained power to regulators. Parliament sets the framework, regulators operate within it and, when necessary, the court interprets. Yet here, we are being asked to legislate for an automated substitution to set in train an unseen process that Parliament can no longer influence, that has no predetermined scope and whereby courts lose jurisdiction. That is constitutionally unsound and unsupportable. I will return to the detail in the next group but the principle is clear. As the noble Baroness, Lady Neville-Rolfe, said, Parliament should not sign away rights and protections without knowing what will replace them.

--- Later in debate ---

[Lord Blackwell (Con)]

My Lords, I am more sympathetic to the approach that the Government are taking here. I think that we need to be careful what we ask for when we interpret parliamentary oversight as potentially meaning Parliament being involved in the drafting and redrafting of every detailed regulation. Not only is that time-consuming and likely to lead to long delays, but I fear that the political process will inevitably mean that it is weighted to the highest level of consumer protection regardless of the costs or the side consequences. There are other ways of having parliamentary oversight of the regulator. The Government can appoint the chairman, the chief executive and the board members. It does not have to be ex ante writing and approval of all the rules in primary legislation or committee. Parliament can excise oversight by holding the FCA ex post to account on whether it is fulfilling its remit in a sensible and proportionate manner.

We have chosen this system of having regulators. We should allow those regulators to operate properly and then hold them to account. When Members refer to the long list of protocols that consumers are led through in order to buy products, a lot of that is belt-and-braces protection that the financial institutions have been forced to put in place because of the complexity of the regulation and the risks of action against them if they do not ensure that the consumer has satisfied every detail of the consumer protection. The role of the regulators here is to exercise proportionate regulation. I think that we should hold them to account ex post rather than trying to insert Parliament in the process ex ante.