Financial Services and Markets Bill [HL]

Lord Carlile of Berriew Excerpts

Committee stage
Monday 6th July 2026 Grand Committee

This would be a practical way forward. It is possible that an even faster way forward or a stepping stone might be to make litigation funding a designated activity, but this issue cannot be left resolved. I beg to move.

[Lord Carlile of Berriew (CB)]

My Lords, Amendment 172B is in my name. I declare two interests. First, I was formerly, for several years, a part-time chair of the Competition Appeal Tribunal, which hears most collective actions; I heard several collective actions there. Secondly, in my professional life, I accepted membership of consultative panels in relation to two current collective actions in which litigation funding agreements are in place. As an aside, I can offer noble Lords a third, fascinating interest. If they are really bored between football matches, they can read my article on this subject in the Law Society Gazette of 30 June. I know that, as a distinguished lawyer, the noble Lord, Lord Holmes, will read it with fascination.

The points raised by the noble Baroness, Lady Bowles, and the points raised in my amendment are mutually exclusive. I am going to talk mainly about the PACCAR case, to which she referred. I do not disagree with her that there may be scope for further regulation, but I disagree with her on two points. First, paragraph (d) of proposed new subsection (2) and proposed new subsection (3), which would be inserted by the noble Baroness’s Amendment 142D, would give the Treasury the opportunity to fix the fees that are charged by litigation funders in litigation funding agreements. One has to bear in mind that that would potentially raise a massive conflict of interest because some of these collective actions are being, have been or will be brought against the Government. The idea that the Government could impose a low fee—indeed, too low a fee—to try to kill off one of those actions is not something that I would expect, but it is implicit in the noble Baroness’s amendment.

I turn to my Amendment 172B. I was in this Room on 29 April 2024 when Committee on the Litigation Funding Agreements (Enforceability) Bill was heard in its entirety in one day. I have that Bill in front of me. It is not a long Bill; in fact, it runs to a single page. The idea of that Bill was to reverse the decision of the Supreme Court in the case called PACCAR, which had damaged the working of litigation funding agreements. Second Reading had occurred only two weeks earlier, on 15 April 2024, and I hope I will be forgiven for referring to the excellent speech made in it by the noble and learned Lord, Lord Stewart of Dirleton, who was the Minister in charge of the Bill. Before I get to that speech, I remind your Lordships that, by the time we finished Committee, all parts of your Lordships’ House agreed that that Bill should become law, but it did not, because it was not dealt with in wash-up, probably because it had not reached Report, even though that stage would probably have gone through in a shorter time than Report on your Lordships’ House on the National Security (State Threats) Bill in which I was involved a few days ago.

It is my belief that the change in the litigation funding agreements Bill has waited for far too long. I believe we will find that the Government are not opposed to it. I do not expect to hear that from the Minister, because it may be more to do with the Ministry of Justice, but my belief is that the Government will try to find an opportunity soon to push a separate Bill through.

However, it is a bit puzzling. I tried to table as an amendment to this Bill the page that I have just held out, slightly altered to fit into the Bill. I had a fascinating discussion with helpful officials in the Public Bill Office about scope. I was told that putting in that page was out of scope but that tabling my Amendment 172B, which calls for a review of litigation funding agreements, was in scope. I find that difficult to reconcile. I think it is a circular argument. If Amendment 172B is in scope, then I cannot understand why my one-pager is not, but there we are. If a decision has been made that something is not in scope, it is difficult to challenge it. I believe that has only ever been done successfully once in the hundreds of years of existence of this Parliament. So, brave as I am sometimes in legal matters, I thought I would give that one a miss and try a different route.

I remind your Lordships of the importance of this. As the noble and learned Lord, Lord Stewart, said on 15 April 2024, the Supreme Court ruling in the case of PACCAR

“rendered many third-party litigation funding agreements … unenforceable by bringing them into scope of the regulatory regime for damages-based agreements, or DBAs”.

The result was that third-party litigation looked as though it might lose much of its important role in litigation in this country. When I was a baby barrister doing personal injury cases, small contract cases and so on, I used to do masses of small claims for which legal aid was given, and every month I received a cheque—yes, a cheque, a piece of paper—from the Legal Aid Board, with 10% deducted because it was publicly-funded work, and all those actions were paid for by legal aid. Now, in reality, none of them are paid for by legal aid, so litigation funding agreements are here to replace legal aid.

As the noble and learned Lord, Lord Stewart, said:

“The restoration of the previous funding position is needed urgently to reduce uncertainty for both the future of litigation funding and for”


litigation funding agreements

“that had been entered into previously. By rendering many”

of them unenforceable, the PACCAR judgment

“risks undesirable satellite litigation, an increased burden on the courts, and creating an unfavourable market for litigation funding, which, in turn, threatens access to justice”.

As he added:

“Third-party litigation funding plays a key role in enabling ordinary people and small and medium-sized enterprises to bring large, costly claims against better-resourced companies and institutions”.—[Official Report, 15/4/24; col. 798.]

Financial Services and Markets Bill [HL]

Lord Carlile of Berriew Excerpts

Committee stage
Monday 22nd June 2026 Grand Committee

[Baroness Noakes (Con)]

My Lords, I disagree with what my noble friend Lord Blackwell has just said. He has fallen into the trap of believing that an accountability process can be effective within Parliament. The experience that I and my committee have had is that there are limits to what can be achieved in terms of parliamentary accountability. That is one of the reasons why there are other amendments later in this Bill to find other mechanisms for improving accountability.

It is important to differentiate between those areas where Parliament has a right to be democratically involved in the decisions and those areas that can safely be left to the regulators to carry out the detail and to be held accountable for that. It is the balance that we are concerned about. I would probably end up with a different decision on whether certain of the protections in the existing legislation need to be retained as well as on improving the way in which the legislation works by updating it to a modern digital age. There is genuinely a case for looking again at whether the sanctions that exist in the consumer credit legislation are right for today’s world. I believe that some of them are too severe or can be disproportionate to the issues that are involved in practice—for example, minor breaches in relation to enforcement notices.

I would not necessarily end up with the view that what is currently in the legislation must be preserved for all time, but I think that Parliament needs an involvement in some of those key decisions about the parameters of where liability exists and what sort of sanctions can be applied. That is why I think that we must constantly differentiate between democratic oversight and parliamentary accountability. They are complementary but different things.

[Lord Carlile of Berriew (CB)]

My Lords, I speak with diffidence on this matter, as I am not an expert on consumer credit. I have been involved in many cases over the years when consumers have been dissatisfied with the consumer credit arrangements that they have undertaken and have felt that there was a serious breach of contract. I am concerned that we are suggesting here that parliamentary process is the answer to many consumer credit complaints, even though parliamentary process is just about the least living instrument in our possession. It seems that the purpose of Clause 1 and Schedule 1 is to ensure that what is created is a living instrument that will modernise the consumer credit framework—not weaken consumer protection—and will become more effective because it sits in FCA rules rather than in primary legislation. It has been suggested that FCA rules are not subject to the courts, but there is already an elaborate system in place in the FCA rules.

In this debate so far, no one has mentioned the Consumer Duty, an extremely detailed document that has been in existence for three and a half years and that has, in my view, served the FCA well. If you look at the comments from law firms, which one can find all over the internet, the result is that there has been a much more informal resolution of difficulties than relying on the old system before the Consumer Duty was created. Therefore, I believe that FCA rules are part of a living instrument: they are binding, enforceable and subject to consultation and scrutiny. At the end of the day, if someone breaks the law, they are of course subject to the courts as well. That goes without saying and to suggest the contrary would be nonsense.

[Baroness Lawlor (Con)]

My Lords, I hesitate to follow the noble Lord, Lord Carlile, who, although he is not a specialist in this area, is a lawyer. I will speak in support of this group of amendments; I would have done the same for the first group, had I been here. It is important that businesses and consumers alike have the protection of a law that is predictable and transparent and where no doubt arises about its interpretation. Many doubts have arisen around the judgments and rulings of the FCA and its lack of consistency. Therefore, I am sympathetic to the wish of the noble Baroness, Lady Bowles, to have something done on paper, so that we can see something before putting it through.

Both businesses and consumers are used to having a legal surround for such transactions. They go back to the 1850s in the Bills of Sale Act 1854, which was modernised throughout the end of the 19th century and then followed by the Money-lenders Act 1900, obliging the registration of moneylending and allowing the courts to be involved. It is important that we have judicial oversight, not just by updating the process—although I agree with noble Lords on that—but with a legal framework that is transparent and consistent and that allows people to see what is expected.

I am also concerned about the impact of rushing through legislation to empower an as yet uncertain regime of rule-making, about which nothing of substance is known. The FCA appears to be as unprepared for this as others. In its response last month to the Treasury’s announcement of the reform of the Consumer Credit Act, the FCA said that such reform

“is an important step towards a more flexible regime that supports effective competition and innovation, while maintaining appropriate consumer protection both now and in the future”.

It acknowledged that it would put

“greater emphasis on FCA rules and guidance rather than prescriptive requirements set out in legislation”.

It states that it intends

“to consult on the key elements of the … framework … set out in legislation”.

One problem with being flexible—or moving to what the FCA calls

“a more flexible regime that supports effective competition and innovation, while maintaining appropriate consumer protection both now and in the future”—

is that flexibility can be inconsistent and lack transparency. What is appropriate for one firm may not be so for another. It brings doubts into the minds of businesses. We have heard of businesses being concerned about the arrangements run by the FCA. For example, given that many of the requirements to disclose information in the CCA and associated regulations are to be repealed, how transparent will the rules be? How consistently will they operate? Will the FCA’s rulings be published? If they are to be less prescriptive and more in line with the FCA’s consumer duty principle, how certain can businesses be about what counts as being in scope?

Before closing, I would like to mention another concern: the considerable compliance costs. Most of the disclosure of information obligations on the CCA, and in the linked regulations being repealed and replaced by FCA rules, will bring costs. I am grateful to Addleshaw Goddard LLP for its analysis, published on its website, which suggests:

“Reforms in relation to arrears, default notices & in-life information are likely to create major operational impact for collections and arrears handling. Given the high litigation risks attached to these requirements firms should carefully consider these changes and monitor how these requirements will be re-designed in FCA rules”.


Here, we should think of the start-up costs for this new system, along with the continuing compliance costs, which will be considerable. Take, for instance, the information requirements. How will they affect the estimated 30,000 firms that will have to amend documentation that does not align with the consumer duty?

With those thoughts, I support the thinking behind the stand part notice in the name of the noble Baroness, Lady Bowles, with its question mark around the wholesale transfer of such powers without any information on how they will be operated or regulated—or, indeed, what they will be now.

Financial Services and Markets Bill [HL]

Lord Carlile of Berriew Excerpts

2nd reading
Monday 8th June 2026 Lords Chamber

[Lord Carlile of Berriew (CB)]

My Lords, it is a privilege to speak in a debate with those who have such deep understanding of financial services and markets, including a Minister with transformational business experience, which we all respect. My own experience as a lawyer has been limited in this area largely to providing unwelcome and pessimistic advice in relation to large frauds, some of which have enriched the egregious fraudster to an extent that he—and it is usually a he—has gone on to lead a very successful financial life. This is not good for the reputation of the financial services industry.

In that context I remind your Lordships of something that my profession, the legal profession, does rather successfully and in an increasing amount as part of the informal part of financial regulation. That is the increase in private prosecutions which are used to bring fraudsters to justice. I remind your Lordships who are interested in this rather narrow subject of the successful prosecution in 2018 in what is called the Allseas case, in which the Director of Public Prosecutions at the time had twice refused to prosecute, but that private prosecution was successful.

To turn to the generality of this interesting Bill, I say that financial markets are living instruments, in the most literal meaning of that phrase. When we legislate, there is an imperative to provide flexibility to meet need, rather than waiting for reactive new legislation when something has to be done because it has gone wrong. This is a very important legislative opportunity, in which we have a duty to enact the new law with due anticipation of potential unpredictability—a difficult but important task.

Intrinsic to the Bill is the relationship between Parliament, regulators and the citizen. Over recent decades, we have witnessed a significant shift in the way that financial services are regulated. Increasingly, Parliament has established broad frameworks while regulators are entrusted with responsibility for detailed implementation. There are understandable reasons for this, and in this area, although I am rather against having regulations rather than a main Act provision, I think there is room for quite a lot of regulation so that that living instrument can survive, for technological innovation proceeds at extraordinary speed. Parliament can enable; the regulators are there to provide expertise and experience, which use the statutory foundation to enable proportionate reaction to whatever future challenges may arise.

I turn to three specifics. First, Clause 7 in Part 2 reforms the Financial Ombudsman Service. I support those changes in the round, but I urge the Government to give thought to enhancing them so that entities themselves have the ability to request a referral to the Financial Conduct Authority for advice on rule interpretation, rather than leaving it to the Financial Ombudsman Service on a case-by-case basis. Important principles can arise and it should not take so long to resolve them.

Secondly, I urge that additional attention be paid to authorised push payment fraud. This is a major and egregious fraud for consumers, costing about £450 million in losses annually, mostly to unsophisticated people. I hope that the Bill can be amended to strengthen safeguards to prevent that kind of fraud at source, specifically by requiring online marketplaces to apply know your customer checks to sellers and to have on-platform, traceable payment methods to defeat the cruelty of fraudsters.

Thirdly, there is the important issue of collective actions. Collective actions are funded by litigation funders, who are now part of financial services and recognised as such. I have played some part in collective actions and still do. Sometimes they may involve a dozen claimants; sometimes they involve 10,000 claimants. These are collective actions that give the opportunity for ordinary people to recover damages for frauds committed upon them—some by the financial sector, I am afraid—that they would not otherwise be able to recover from.

Litigation funding has been very damaged, inadvertently, by a Supreme Court case called the PACCAR case. Legislation was introduced in the previous Parliament, with the agreement of all three main parties, to push it through quickly, but the election came and that was not done. I and other noble Lords are happy to discuss with the Minister the PACCAR situation in the hope that it could be dealt with in this Bill, in which I believe it is in scope.

I return to more general matters. Parliament should never lose sight of the distinction between creating rights and administering those rights. The House must therefore carefully examine any provisions that may have the effect of transferring important questions of consumer protection from primary statute into a wood which we cannot see through for the trees. I illustrate this concern through the issue of consumer redress. One of the recurring themes in modern financial services regulation has been the recognition that consumers require effective mechanisms through which to enforce their rights. I have been waiting years to say this, but a right without an effective remedy qualifies as what the eminent jurist Hohfeld strikingly described as a no-right. The Bill should avoid no-rights.

Children: Age Verification and Virtual Private Networks

Lord Carlile of Berriew Excerpts

Thursday 4th December 2025 Lords Chamber

[Baroness Lloyd of Effra (Lab)]

My noble friend makes a very important point about the role of all of us in using the technology available to protect ourselves and to equip ourselves to be safe online, and for parents to do that in respect of their children. It is also very important that the Government support literacy campaigns, both for digital skills and online safety. The Government will play their part in supporting parents in that domain.

[Lord Carlile of Berriew (CB)]

On the Radio 4 “Today” programme this morning, Ofcom admitted that none of the three fines levied so far has been paid. Is it not right that Ofcom should be encouraged to take much stronger enforcement action against those who do not pay by making it clear that within a very short time, they will lose their right to appear on any screen in the United Kingdom unless their enforcement is fit for purpose?

[Baroness Lloyd of Effra (Lab)]

I think we all agree that enforcement is an incredibly important part of the Online Safety Act. Ofcom’s enforcement powers include fines of up to £18 million, or 10% of qualifying worldwide revenue. The Government have been very clear to Ofcom that it has our full backing to take enforcement action. We are standing right behind it to do that as effectively as possible.

US Tariffs on EU Goods

Lord Carlile of Berriew Excerpts

Tuesday 18th March 2025 Lords Chamber

[Baroness Jones of Whitchurch (Lab)]

I would like to reassure my noble friend that we will always act in the best interests of all UK businesses, which of course includes those in Northern Ireland. We continue to look closely at the details of the retaliatory tariffs announced by the EU and any impact they might have on businesses. We are in regular contact with our partners in the US and the EU, as well as businesses in the UK. An important mitigation is already in place under the Windsor agreement. Where goods do not subsequently enter the EU, the duty reimbursement scheme enables traders to reclaim EU applicable duties in full without any limit on total claims. The customs duty waiver scheme also allows duties to be waived entirely, subject to an overall limit.

[Lord Carlile of Berriew (CB)]

My Lords, bearing in mind that the issues raised by the noble Baroness are seen by Northern Ireland business as raising huge complexities, will the Minister consider the practical step of issuing a weekly bulletin in Northern Ireland so that tariffs and other regulations appear to business- people to be less like an anarchic board game?

[Baroness Jones of Whitchurch (Lab)]

Comprehensive guidance is available on GOV.UK and businesses can contact HMRC for more information about the reimbursement schemes. I will take back the noble Lord’s general comment about how we can improve those communications.

Post Office Horizon Scandal: Compensation Payments

Lord Carlile of Berriew Excerpts

Monday 19th February 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

A company’s culture is set by the board and the management. There has not been a prosecution since 2015, and no one on the board of the Post Office today was involved in the prosecutions. The current board is completely different, and we are now dealing with getting the culture right for this company going forward. We always start with the chair, because that is the top position in the company.

[Lord Carlile of Berriew (CB)]

My Lords, can the Minister explain why in 2023, of all things, the Horizon contract was extended?

[Lord Offord of Garvel (Con)]

I am rather relieved to say that I have no idea, so I shall write to the noble Lord.