Financial Services and Markets Bill

Debate between Lord Holmes of Richmond and Lord Naseby

Committee stage
Monday 6th February 2023 Grand Committee

[Lord Naseby (Con)]

My Lords, I thank my noble friend Lord Moylan for tabling these amendments and digging fairly deep in this area. There is a lot happening in the City of London and in the whole financial world. There are opportunities for people who want to stay but, at this point in time, the windscreen is pretty misty as to what exactly is out there and whether or not it is regulated. What my noble friend has done is draw attention to this important area.

I talked to my two granddaughters, who take an interest in financial affairs, about what they think about their savings. What is interesting to me is that, for sixth-formers today, maths is absolutely key to their progress. Secondly, somebody is making them take an interest in their futures. That says a lot.

I support Amendment 55; I am very much behind it. I should mention—I think the Committee already knows this—that I have been deeply involved in the mutual movement, which wants to go into new waters to look at what is available and sensible within its clienteles. The same applies to the credit unions.

Noble Lords have spoken about financial inclusion. It is very important. However, I am not sure that there needs to be a report every 12 months. I can see that it should be so initially, but it seems like quite a burden on the authority to produce what I assume would be a long and detailed report.

As regards Amendments 228 and 241, I will wait to hear what my noble friend the Minister says but, in my experience, the joint-stock banks and anything with the Royal Bank of Scotland are in a pretty disastrous state at the moment. Branch after branch is being closed. People are not answering the phone. Emails are not being responded to. The banks do not even tell us when a branch will be closed; they forget then apologise afterwards. It is an absolute, unmitigated disaster; I hope that my noble friend on the Front Bench will try to get a grip on it.

I make no comment on Amendment 241 other than to say that I am really interested to hear the answer on it from my noble friend on the Front Bench.

[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to take part in day 4 of the Committee’s deliberations on the Bill. I declare my financial services interests as set out in the register.

I agree with all the amendments in this group. My noble friend Lord Moylan’s amendments are clear, and I ask my noble friend the Minister to answer him in the affirmative when she comes to respond and to say that legislating in this area would be helpful on whatever agenda it was measured against. He also reminded us of Sid, who was the poster child for British Gas. It seems only appropriate, in that I find myself sitting next to a former prima ballerina, for me to say that I seem to remember BT using the music from “Swan Lake” for its initial public offerings—all to the good. It must be right that people have an opportunity to take part, with all the correct safeguards and rails around it, in these activities. I very much support Amendments 55 and 241.

Similarly, I support the amendments around the “have regard” duty for the FCA. My noble friend the Minister will be familiar with these arguments; we talked about them very much in our debates on the 2021 Bill, now an Act. We have had Oral Questions and Written Questions on the subject, so she will be well rehearsed in her answer on a “have regard” duty.

For this reason, I tabled Amendment 67A. It is time for the FCA to have a financial inclusion objective. That is in no sense to fetter the regulator’s independence or existing objectives. The financial inclusion objective could only be additive and assistive to its existing objectives on consumer protection, market integrity and competition, and to any potential future objectives as set out in the Bill.

Following the intervening two years since we last discussed financial inclusion in detail on the 2021 Bill, are there now more or fewer bank branches and ATMs? Is there more or less cash acceptance and financial inclusion? Whatever government agenda we consider—growth, levelling up, or increased connectivity and creativity for our citizens, communities, cities and country—a financial inclusion objective for the FCA makes sense. Will my noble friend agree that it is now time to enable the FCA to play a spearheading role in financial inclusion, and to accept Amendment 67A?

Financial Services and Markets Bill

Debate between Lord Holmes of Richmond and Lord Naseby

Committee stage
Wednesday 1st February 2023 Grand Committee

[Lord Naseby (Con)]

My Lords, I will not repeat what the noble Earl has said, but I thank him for the depth of his proposal and the work that he has done in tabling these amendments.

I remind the Committee that I have chaired two quoted companies. I have been chairman of one friendly society and seen through both Houses the Mutuals’ Deferred Shares Act, so I think that I have some heritage, in particular in the mutual movement, which I think is really important to our society and our economy. I take a deep interest in that mutual movement and, indeed, I know that my noble friend on the Front Bench and the Government are particularly concerned about helping the mutual movement move forward. This group of amendments is there to help that.

For me, these two amendments are central to the Bill. I have said this before and will say it again: growth in financial services is dependent on, and an extension of, what is happening in the financial world. There are some really exciting new developments happening, but they need help and occasionally a little persuasion. The FCA has a major challenge on its hands. I welcome that, as I am sure it does, but there is an understandable danger that having an increased spectrum of activities is new to the FCA. It should be reminded to look around the corner, do a little investigation and find out what is happening underneath and therefore what is coming forward. I am sure it will do that, but it needs prompting and these amendments do that.

I say finally to my noble friend on the Front Bench that the mutual movement, both the friendly societies and the credit unions, is looking for new ways to raise capital. That is fundamental to both those mutuals. I therefore hope the Government will look at the noble Earl’s amendment with an open mind and accept it.

[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to take part in day 3 of Committee. In doing so, I declare my financial services interests as set out in the register. I will speak to Amendments 66, 115, 116, 196 and 222 in my name. Before doing so, I give more than a nod to the amendment in this area that has already been so eloquently and eruditely set out.

Amendment 66 is on reporting on competitiveness, which is essential. As drafted, Clause 26 in effect enables the regulators to mark their own homework—“in its opinion”. Does the Minister agree that it would be far better for accountability to government and Parliament for there to be a criterion for measurement of adherence to the competitiveness objective? Amendment 66 sets this out. I would be grateful for her thoughts on each of the paragraphs proposed in Amendment 66.

Amendments 115 and 116 look at reporting the regulators’ activities in making authorisations for new and existing firms. There are many elements set out in these amendments and I would be grateful for the Minister’s response on all of them because we are really talking about the time and cost to firms and prospective firms. We need a lot more transparency and clarity, and Amendments 115 and 116 are focused in that direction.

Amendment 196 looks to reporting on determinations. Significant concerns have been raised on this issue across the industry. I point the Minister to the joint report of the City of London Corporation and HMT on the state of the sector. Does she agree with its conclusions on declining levels of responsiveness and the need for the regulator to up its game in this respect?

Similarly, when this Bill was in Public Bill Committee in the Commons, we heard of it taking nine months for an overseas CEO to receive authorisation and that it has been 15 years since a new insurance firm was established in the UK—a sector in which we have such heritage and past success. That evidence to the Public Bill Committee is a clear indication that heritage and past success are no guarantee of future performance. The regulator has played a key role in that being the current state of affairs.

I think we need to revisit the timelines for determinations and have a greater level of specificity and streamlining. A number of concerns have been expressed about the appropriateness of questions that people have found themselves on the end of. Rather than just seeing the 90-day statutory time set out, would it not be better to revisit this whole process and see how we could have a far more effective and efficient means of determination related to the type of determination that was being sought?

Pension Schemes Bill [HL]

Debate between Lord Holmes of Richmond and Lord Naseby

Report stage & Report stage (Hansard) & Report stage (Hansard): House of Lords
Tuesday 30th June 2020 Lords Chamber

[Lord Naseby (Con)]

My Lords, it is entirely appropriate that I should first declare my interest. I am a trustee of the Parliamentary Contributory Pension Fund; I have been one for the best part of 20 years. I am also 83, and all I can say in reflection is that I was formerly the chairman of three financial companies, and I have been a pension trustee on two schemes prior to the one—the only remaining one—that I am on now. It is not my intention to comment too much on the Bill; rather, I see my role in the interests of the membership—I am a member and there certainly will be others in Parliament who are members—to keep a watching brief and, if appropriate, to make some comments to my noble friend on the Front Bench. I should also say to her that I was the Chairman of Ways and Means in another place and I too was not in favour of the negative procedure for really serious things. She has taken a very wise decision on Amendment 1; I am sure that it is the right one and should be applauded on all sides.

I will listen to my noble friend’s answer on Amendment 2 because, if it is right in the round, there would need to be a specific reason for its not being appropriate in leaving out subsection (8). Amendment 33 is in this group and has been commented on. I have given my age and I think that my gender is obvious, as is my ethnicity. It is appropriate that every set of trustees should have a range of people as regards age, experience, gender and so on, but in my judgment the key issue is commitment. We are very lucky on the Parliamentary Contributory Pension Fund because the members, almost to a man and a woman, turn up regularly to meetings, ask good questions and are good advisers, so that, at the last point, as a fund we were very much in positive territory. As I say, I am not going to make too many comments, so without further ado I once again congratulate my noble friend on the Front Bench.

[Lord Holmes of Richmond (Non-Afl) [V]]

My Lords, I congratulate my noble friend on the Front Bench on the clarity with which she has introduced this Report, and I thank her and the Bill team for the time, effort, care and consideration they have taken with Members, which is best illustrated by the number of government amendments which have rightly been brought forward at this stage in our proceedings. She has clearly demonstrated what can be achieved collaboratively in the legislative process when it is approached with such openness. She and her team absolutely epitomise a truth that everyone should constantly remind themselves of: two ears, one mouth.

The pensions proposition is one of the greatest creations of civilisation, but just in my lifetime—without giving away my age, I am only slightly younger than my noble friend Lord Naseby—we can see that the proposition has changed, not so as to be unrecognisable but significantly. It started out with a commitment by employers to have defined benefits where they would take the risk. The fund was rightly separated from the employer under the governance model of a trust. That clear separation of powers was eminently sensible because something as significant as someone’s retirement nest egg should be separated from the corporate entity so that if, God forbid, anything should happen to the corporate entity, the pension fund would remain. What has occurred in recent years is an extraordinary shift of that risk, if not a wholesale one, from the employer to the employee, hence the explosion of defined contribution schemes. In reality, neither position is where an individual, a group or even a society would wish to be, given that so much of the risk falls on to one or other of the parties. That is why CDCs have a lot to recommend them, not just in the combining of resources and the pooling of risks, which is a great advantage, but in the positive implications that the initials “CDC” have in other areas of our lives. Let us consider the Commonwealth Development Corporation and the United States Centers for Disease Control and Prevention. We should take something from the positivity of the acronym because it has a lot to recommend it.

This would certainly not be necessary had we not seen some of the changes, not least to how schemes were funded and how the funds were treated, particularly from the taxation point of view. That was one of the biggest nails in the coffin of defined benefit schemes. However, that is water long under the bridge. CDC schemes will become increasingly significant to pension provision as we go forward. They are a positive contribution to this area and I wish this Bill a speedy passage through your Lordships’ House, and its equally speedy consideration and passage through the other place.