Defence Sector Banking Services: Environmental, Social and Governance Rules

Lord Fox Excerpts

Monday 26th October 2026 Lords Chamber

[Lord Pitt-Watson (Lab)]

The FCA is saying—and I agree with it—that there are no rules that exclude financial services from a company solely because it operates in the defence sector. If an individual company wishes to take that into account, it should do so proportionately and consistently, and those rules should be clear to those who are approaching it. If any noble Lords would like me to send them a copy of what the FCA is asking to be done, drop me an email and I will make sure my office sends it to them. This is a significant step forward on what has been an important issue, and I again thank the Members of this House who have been raising it. This is the right response, and a solid one.

[Lord Fox (LD)]

My Lords, I am glad the Minister mentioned the RUSI report, because I attended the discussion on it. He is exactly right that it found that ESG constraints in banks was not a specific issue, but it is also suggested that perceived public affairs and public relations issues in the management of those banks was driving these behaviours. There is more than simply a regulatory issue here; there is a cultural one. Can the Minister explain how we might go about addressing that?

[Lord Pitt-Watson (Lab)]

Please ask for a copy of the FCA report, because it specifically addresses the issue that banks must be responsible for making sure that they are consistent and proportionate and that defence is not a reason, ipso facto, for refusing funding for companies. I would be happy to send the noble Lord that report.