Financial Services and Markets Bill

Debate between Lord Bridges of Headley and Baroness Penn

Committee stage
Wednesday 1st March 2023 Grand Committee

[The Parliamentary Secretary, HM Treasury (Baroness Penn) (Con)]

My Lords, I thank my noble friends Lord Bridges of Headley and Lord Lilley for tabling these amendments, and for their contributions to this discussion.

I will speak first to Amendments 160 to 166, tabled by my noble friend Lord Bridges. The Government agree, and have been clear, that more responsibility for the regulators should be balanced with clear accountability, appropriate democratic input and transparent oversight. The proposed creation of a new regulatory body to oversee the regulators—a so-called regulator of the regulators, although I know that my noble friend set out why he thought that term did not apply—raises further questions about how the accountability structures for the various regulatory bodies would operate. The Government would need to carefully consider how to ensure clear accountability to both government and Parliament under such a model.

The noble Lord, Lord Hunt, talked—it feels a long time ago—about the need for greater clarity on where accountability lies in this system. I am not sure whether it is clear that the addition of a further body to the system would provide greater clarity on where accountability lies.

[Lord Bridges of Headley (Con)]

How does the OBR undermine accountability? Surely it just provides independent analysis and assessment, and I see no problem there.

[Baroness Penn (Con)]

I believe that is sometimes subject to debate. What I was saying to noble Lords is that it raises questions in this area that we need to consider. If I look back to the creation of the OBR, it was in the Conservative manifesto at the 2010 election; indeed, it was set up in shadow form in 2009. It was first established not in statute and operated without statute after 2010. The provisions for its establishment in statute were then brought forward in a Bill, where there was sufficient time to consider those questions.

I am not saying definitively one way or another, but it raises questions that we would need to consider more carefully about who this body is accountable to and the interactions with parliamentary accountability that we have discussed today; the need for clarity on accountability, raised by the noble Lord, Lord Hunt; and, for example, the remarks by the noble Baroness, Lady Bowles, on the role that the body could have in filling the space that allows industry to make private submissions to the new body, rather than public submissions as happened through Select Committees, and how that marries with the provisions in the amendments on the need for this body to operate transparently.

These are questions that are raised in considering how such a body would operate in this landscape. There is the potential that it could duplicate or dilute the roles within the regulatory framework of government and Parliament to scrutinise and hold the regulators to account.

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[Baroness Penn (Con)]

That is a similar question to that of the noble Baroness, Lady Bowles, and it is probably because I did not answer it satisfactorily that it has come up again. Noble Lords are right that there was not a question on those specific proposals in those consultations. I endeavour to point out, however, that does not prevent the respondents to those consultations, where they believe it to be a good idea, to use them to put forward their support for such an approach. Perhaps I could write to noble Lords specifically on the areas within both those consultations that touched on accountability measures.

[Lord Bridges of Headley (Con)]

To be absolutely clear and just to put it on the record, therefore, the proposal in my amendment has not been consulted on? Is that correct?

[Baroness Penn (Con)]

It would be best to set out in writing for noble Lords the specific areas of the consultation that sought to address the issues we are discussing today. As I have said, in response to those consultations, certain respondents put forward proposals in this area, so it is not right to say that it was not a topic for consultation. However, as my noble friend wants clarity on the record, I think that would be best delivered in writing.

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[Baroness Penn (Con)]

I have set out why the Government have concerns and that we should have further conversations to explore the issues that have been raised. I believe that is neither a “yes” nor a “no”.

[Lord Bridges of Headley (Con)]

My Lords, I will conclude this two and a half hour debate on just the first group and my amendment. I am delighted and thankful to noble Lords on all sides of the House who have supported it. The amendment is mine; the concept belongs to others. I am extremely grateful to my noble friend the Minister for offering to engage. However, I question the word “further”; I have not had any engagement and, so far, all I have heard is three things.

The first is that the Government believe that the measures in the Bill are sufficient. I think there is unanimous support, on both sides of the Committee, that, as far as accountability and scrutiny go, the measures are insufficient and need to be improved. The second is that the Minister is actually against the measures in my amendment today and the third is that they have been consulted on, whereas we have established from the earlier interventions that the specific amendment I propose, with this concept, has not been consulted on and that it was up to others to come up with that. In my view, that is not a consultation.

The Committee has stressed just how important this issue is, not just by the fact that we have been debating it for two and a half hours but because of what my noble friend Lord Hill and others said about the importance of ensuring that our regulators are truly accountable. The noble Lord, Lord Eatwell, made this point extremely well, as does my noble friend Lord Hill in an article in the Financial Times which was published just this afternoon. My noble friend says that

“what regulators decide directly affects our ability to compete and grow”

and that it follows that getting a regulatory framework right

“is central to our national wellbeing”.

He then says that we risk creating

“a new system of unaccountable British regulation”.

I repeat: unaccountable British regulation, and that is despite the measures that my noble friend says are in the Bill to increase accountability and scrutiny. I think we agree that they are completely insufficient.

As the noble Lords, Lord Eatwell and Lord Tyrie, said, this is not a question of just one or another of the little things that we have debated over the last few weeks on the Bill. A package needs to be brought together and it should address three points. One is improving the data that the regulators themselves provide. The second is arming Parliament with independent analysis, and I do not buy for a moment what my noble friend says about it undermining the independence of regulators. It is about arming Parliament and others with independent analysis of what the regulators are up to. The third is improving parliamentary accountability and scrutiny; my noble friend Lord Trenchard and others have made this point, as my noble friend Lady Noakes did in a previous session. These three things hang together.

I am delighted that my noble friend the Minister is willing to meet us, but I very much hope that she comes there with an open mind and a constructive attitude, not just a sense of no. I will obviously not press this amendment to a vote now but I can absolutely assure her that if the outcome of those conversations is not one that meets the challenge at hand, I will have absolutely no hesitation in pressing this to a vote at Report.

Spring Statement Affordability Test

Debate between Lord Bridges of Headley and Baroness Penn

Wednesday 23rd March 2022 Lords Chamber

[Baroness Penn (Con)]

My Lords, the Government have done a significant amount of work in helping households manage their debts, for example, through the breathing space programme and the statutory debt repayment programme. It is important that the Government manage public money well and, where possible, ensure that where money may have been overpaid or mispaid it is paid back.

[Lord Bridges of Headley (Con)]

My Lords, in light of the answers that my noble friend has given, I think we all agree that one of the best ways to help those with low incomes is to give them job security. Can she please explain why the Government are proceeding with this jobs tax—the national insurance rise—on employers, given that the Institute of Directors has said that it

“adds needless complexity to the tax system, encourages self-employment rather than employment, and”—

this is the key point—

“hits hardest the labour-intensive sectors that suffered most from Covid”?

Why are they ploughing ahead with this at the very time when people need job security, not a jobs tax?

Investments: Environmental, Social and Governance Criteria

Debate between Lord Bridges of Headley and Baroness Penn

Wednesday 2nd March 2022 Lords Chamber

[Baroness Penn (Con)]

The work that we are doing to green finance and green our economy means that there will be far greater transparency on the impact of firms on climate change and the wider environment. This will allow firms to make those kinds of decisions. The noble Lord talked about divestment. In terms of our approach or view on that with regard to climate activities, we expect investors to use SDR disclosures to integrate climate into stewardship activities. That may eventually lead to divestment, but beforehand, they may use their position as investors in major companies to encourage them to greener positions before considering divestment altogether.

[Lord Bridges of Headley (Con)]

My Lords, I declare my interest as an adviser to Banco Santander and apologise because I probably should have mentioned that when I spoke on the previous Question. Can my noble friend clarify, in the Government’s approach to the green taxonomy and ESG, how nuclear and certain types of gas power stations will be classified? Will they be classified as green and environmental?

[Baroness Penn (Con)]

My Lords, the Government set up a specific panel to look at those very questions, and I cannot pre-empt the outcome of its work.

Cryptocurrencies

Debate between Lord Bridges of Headley and Baroness Penn

Wednesday 2nd March 2022 Lords Chamber

[Baroness Penn (Con)]

I hope the third time is at least in part the charm. It is a criminal offence for a crypto asset exchange provider or custodian wallet provider to operate in the UK without anti-money laundering registration, and the FCA is empowered to take enforcement action against such a firm and its offices. The FCA is contacting firms on this list to establish whether they are operating in the UK, and it will take appropriate follow-up action.

[Lord Bridges of Headley (Con)]

My Lords, I would like to pick my noble friend up on the Answer she gave to the noble Lord, Lord Haskel. My understanding is that the Government have consulted on the Financial Action Task Force’s recommendation that international standards be brought in to clamp down on crypto- currencies being used for money laundering, terrorist financing and sanctions busting. There was a consultation last summer, and my understanding is that it ended on 14 October. Can she be very precise, given the current international situation and crisis we are in: when will the Government implement these recommendations?

[Baroness Penn (Con)]

My Lords, I will have to write to my noble friend with the precise answer to that question, but I can say that there were discussions at the G7 yesterday, in part on this issue, following which we are considering how the UK along with its allies can prevent crypto assets emerging as loopholes to evade sanctions. Also, at an international level we will seek to intensify our lobbying efforts to drive improved anti-money laundering and counterterrorist financing regulation, licensing and supervision across other jurisdictions, as well as the UK.