UK-US Trade and Tariffs

Lord Hunt of Wirral Excerpts

Thursday 3rd April 2025 Lords Chamber

[Lord Hunt of Wirral (Con)]

My Lords, I regret to tell the Minister that the Statement that we heard in the other place, which she has just repeated, has only increased the level of uncertainty that British businesses, workers and families are feeling at this critical time. The announcement of new tariffs is a blow to our economy, making goods more expensive, weakening demand and devaluing the pound in people’s pockets. Tariffs make us all poorer. Free trade, not protectionism, has driven Britain’s prosperity for generations and lifted billions of people worldwide out of poverty.

At a time when our economy is already fragile, I agree with the noble Baroness and her ministerial colleagues that we need cool heads. While I welcome the Government’s stated commitment to securing a trade deal with our closest ally and largest single-country trading partner, we must surely now be honest about what has actually happened. The truth is that the Government have not secured any special treatment from the White House. The Secretary of State and the Minister speak of success, but surely there is little to celebrate. Britain now finds itself in the same tariff band as countries such as Kosovo, Costa Rica and the Congo.

The impact of these tariffs on our industries will be severe. The automotive sector remains burdened by a 25% tariff on £8 billion-worth of car and auto parts exports. Our steel and aluminium industries continue to face 25% on exports, including over £2 billion of derivative products containing high steel and aluminium content. On a volume-weighted basis, our total £60 billion in UK exports will have an effective tax of what I calculate to be 13%.

This is not a moment of triumph for the Government. It is, I suppose, a moment that vindicates those who argued for Britain to have control over its own trade policy, but let us be clear: having control over trade policy means something only if that control is used effectively and, thus far, the Government have failed to do so.

Last week, the Office for Budget Responsibility warned that tariffs such as these could knock up to 1% off GDP. This comes at a time when the UK is already in a per-capita recession and when market confidence is shaky. Our businesses, which should be driving economic recovery, are instead facing increasing headwinds caused by this Government’s decisions.

Instead of supporting businesses, this Government are placing additional burdens upon them. Business taxes have risen, business rates have more than doubled for many, the so-called family business death tax has been introduced, and flawed recycling charges are adding yet another layer of unnecessary cost and bureaucracy. With these challenges mounting, it is no surprise at all that business confidence remains at rock bottom.

Then there is the issue of energy costs, which we have just been discussing. A manufacturer in Birmingham, UK now faces energy bills four times higher than a competitor in Birmingham, Alabama. The Government should be addressing this cost disparity, which has a far greater impact than tariffs; instead, businesses are being left to struggle on their own.

Only last week, we debated the Second Reading of what I termed the unemployment Bill. Overseen by the Secretary of State, it looms large: the OBR has not even been able to quantify how damaging the Bill will be for the economy. We do not need more uncertainty, more costs or more bureaucracy imposed on businesses. I suppose the Government felt obliged to rush that Bill through in their first 100 days and are now panicking and trying to push the Bill through by secondary legislation. Well, I leave that to the Committees of this House to deliver their verdict on.

Labour will, no doubt, claim that these tariffs are beyond its control. But let us remember that the previous Government had already made significant progress towards a US-UK trade deal. When President Trump was last in office, negotiations had reached an advanced stage. However, when the Democrat Party and President Biden were elected, his Administration ended all free trade negotiations. The unfortunate reality is that we could not implement a US trade deal until we finally left the EU, which coincided with the end of President Trump’s first term.

Well, the ball is now in the Government’s court. What have they done? I would contend from these Benches that, instead of securing a deal, they have wasted months; instead of acting swiftly to engage with the US Administration, they delayed; instead of protecting British businesses, they have let them down.

Their failure means that British businesses will now lose out and British jobs will be put at risk. The burden of these tariffs will not be borne by Ministers sitting comfortably in Whitehall but by the small manufacturers, the steelworkers, the automotive engineers and the entrepreneurs who drive our economy forward.

There is another issue that the Government must address: retaliatory tariffs. The Government must recognise the harm that a retaliatory trade war would inflict on British businesses and consumers. Escalating this dispute will not help our exporters; it will only drive up costs, disrupt supply chains and make it even harder for British firms to compete globally.

Will the Minister give this House a clear, binding guarantee that Britain will not escalate the situation by imposing retaliatory tariffs on US goods? The last thing businesses need is yet another wave of uncertainty. The Government must take the responsible path, de-escalate tensions, negotiate a fair outcome and avoid worsening an already dire situation. In her Statement, she referred to the fact that the Government are now launching a consultation period on the dangers of retaliatory action. Why on earth are we embarking on such an exercise? Can we please be brought up to date with the website that has been opened specially today? Indeed, the Statement warned us that more input would be published today. Can she please bring us up to date with what has happened?

May I mention the Windsor Framework? We have to consider the effect on Northern Ireland of what has happened today. Under that framework, there is a duty reimbursement scheme available to assist businesses affected by these tariffs. However, many businesses are still unaware of that support. The Government must do more than just acknowledge its existence. They have to take proactive steps to raise awareness for businesses in Northern Ireland and ensure that the scheme is as streamlined and accessible as possible for businesses trying to navigate these challenging conditions.

Finally, has the Minister read the comments made today by the chief executive of Make UK, the director-general of the BCC, the advisers at the IoD and many other trade bodies, who say what a black day this is for British business. What help can the Government give to lift the veil of uncertainty that they have created today by this Statement?

[Lord Purvis of Tweed (LD)]

My Lords, this is my first opportunity to ask the Minister questions. I give her my belated welcome to the portfolio. She is in a new world when it comes to the unjustified and aggressive trade war that the United States has been launching. My party was forged out of a campaign for free trade. We broke with others when they introduced protectionism. Our principled position on Brexit was based on a rejection of new barriers, new costs and more bureaucracy for businesses and uncertainty for consumers. These same principles apply to our revulsion at the unwarranted and unjustified applications of the new tariffs.

They are, of course, on top of the pre-announced automotive, steel and aluminium tariffs. We should also recall the existing tariffs on UK exports to the United States. It means that, to take one example that is very close to my heart as I represented a textile-producing constituency in Scotland, the cashmere industry, the highest-quality sustainable product in the world now has a 35% tax tariff on exporting to the United States. What support are the Government intending to provide to some of our key exporting sectors now, rather than waiting until after a consultation? These Benches believe that we should have been consulting in advance of the announcement, as Canada did, not after it, so that we had a prepared proposal for a clear statement of intent, rather than a hope for the best in any agreement.

Part of the Statement today that surprised and disappointed me was the news that only if we have not secured an economic agreement with the US will we propose corrective measures. This means that the timetable of UK actions is in the hands of the Trump Administration, not in the hands of our Government, and that surely is not acceptable. It is our duty to represent the interests of British industry and consumers, not the United States.

Can I also ask for clear language? It now seems that we are simply seeking an economic agreement rather than a free trade agreement. What are we seeking from the Trump Administration? There is a world of difference between a comprehensive free trade agreement and cobbling together a number of bilateral agreements on services and goods simply to make a show of reaching some form of agreement. If the Minister could be clear in the language, I would be grateful.

Furthermore, I sincerely believe that we have showed too much of our market offer to the United States, so it can see clearly the areas where we are willing to cede decision-making: closing tax avoidance for UK companies with profits over €20 billion that are not paying their fair share of tax within the United Kingdom; aligning our AI and data regulations to what the Trump Administration want rather than what this Parliament has legislated for; and reducing agricultural and food standards. Every other country with which we may seek an FTA now knows the areas where this Government are open to ceding ground. That, surely, is regrettable.

Two responses today require more scrutiny: one from the Government and one from the Conservatives. The Statement says that the wholly unjustified tariff rate “vindicates” the Government’s “pragmatic approach”, but we know that, as far as the Trump Administration are concerned, the United Kingdom is in the same category as El Salvador, Guatemala and Uruguay—none of which even flourished a cringeworthy letter from a King in the Oval Office. The worst element of the Trump Administration applying the 10% tariffs is that we are now in the same category as Russia, for goodness’ sake. How is it a vindication of our pragmatic approach if Trump sees trading with the United Kingdom as the same as trading with Russia?

The second argument we have heard today, including a bit that we got from the noble Lord, is that we may have fared better because we are out of the EU rather than in it—but that is only if we are starting from a higher base than what the reality is, with the biggest barriers that we have erected for our near trading neighbours. But the critical point is that the United Kingdom, for goods in particular but for services too, is one of the most interconnected trading economies in the world. Nearly 70% of our exports to the EU are intermediate input to the production of other goods and services, and the majority of UK goods manufactured in the UK are intermediate. Therefore, the majority of the goods that we make source parts and components from the EU, so we are impacted by the 20%. Will the Government’s assessment of the impact be not just a sectoral analysis but a full trade analysis, including all the impacts of what will be applied to our biggest trading market?

Even the former Conservative Trade Minister Greg Hands said today that, as a result of Brexit, we now have a more complex means by which we are steering a path in the US-EU trade war. It is even harder, because the more concessions we give to the United States, the further we move away from the TCA. What is the Government’s assessment of trying to triangulate between the EU and the US? We on these Benches believe that the response has to be deeper co-ordination with the European Union.

Before I close, an element that has not been mentioned today, which is particularly close to my heart, having co-chaired the All-Party Parliamentary Group on Trade out of Poverty for so long, is that this Parliament has debated long and hard about our relationship with developing economies, many of which are being hit very hard by the Trump Administration, and the response of this Government is to cut official development assistance and technical support for trade facilitation for developing economies. Our response is to be silent to the Trump Administration but to cut trade facilitation for emerging economies. This cannot be right for the United Kingdom as a free-trading nation.

As I close, my appeal to the Minister is that we need urgent full co-ordination with Canada and the European Union, not necessarily just on the potential corrective mechanisms that may well be necessary and we believe will be justified, but to ensure that there are fully co-ordinated anti-coercion measures. These are not trade measures being introduced by the Trump Administration; they are economic coercion measures, and it was a tragedy that the previous Government dropped the anti-coercion instrument that we could have continued as a result of Brexit. We need urgent clarification on that.

Finally, we need a European Union-UK-Canada co-ordinated response—I will call it Eureka. In response to the Trump Administration, we need a Eureka moment, not just a wait-and-see approach.

US Steel Import Tariffs

Lord Hunt of Wirral Excerpts

Thursday 13th February 2025 Lords Chamber

[Lord Hunt of Wirral (Con)]

My Lords, can the Minister confirm what conversations Ministers have had with their counterparts in the US about steel tariffs? How many times have Ministers spoken with US trade representatives since last Sunday, for instance? In particular, can she confirm that the first 500,000 tonnes of steel to the US will be tariff-free as they were under President Trump’s previous Administration? And finally, can she bring us up to date on the Government’s efforts to obtain a free trade agreement with the United States?

[The Minister of State, Department for Business and Trade and Treasury (Baroness Gustafsson) (Lab)]

I thank the noble Lord for his question. I think we all agree that the US is an indispensable ally in many areas. As he may have seen, President Trump has said he has had a couple of good, constructive calls with Keir Starmer and the two enjoy a good relationship. The Prime Minister has said that he would like to work with the US to develop a trade deal, and we are keen to work with the Trump Administration to capitalise on opportunities and deepen and strengthen our relationship.

With regard to the specifics around what will happen within the steel sector, there is a lot of hypothesis and noise at the moment, but there are currently no established facts about what that will look like. The Government will make any key decisions in light of those key facts as and when they emerge, and we will not be drawn into a hypothetical conversation.

With regard to a free trade agreement, we have talked about the fact that the US is such a valuable ally, and we would love to be able to deepen those trading relationships. That said, 18% of our trade today already happens with the US. Any free trade agreement set in place would need to best represent UK interests.

Wales: Public Services

Lord Hunt of Wirral Excerpts

Tuesday 5th November 2024 Lords Chamber

[Lord Livermore (Lab)]

The noble Lord is quite right that growth was one of the biggest failures of the previous Government over the past 14 years. It is absolutely our priority to do something about that. Obviously, one Budget cannot turn around 14 years, but we have already seen its measures increasing growth throughout the United Kingdom in the medium term.

[Lord Hunt of Wirral (Con)]

Will the Minister answer the question, please? There is an urgent need for infra- structure investment in Wales. What meetings does the Minister propose to have with his Labour counterparts in Wales, to ensure that key projects—such as the third Menai bridge to Ynys Môn, and the Newport bypass—go ahead as quickly as possible?

[Lord Livermore (Lab)]

I am not sure what question the noble Lord thinks I have not answered. He asked me specifically about investment projects. Of course, under his Government, we were the only country in the G7 to have investment levels below 20% of GDP. We have introduced planning reforms, which the previous Government could have introduced at any point in the past 14 years but did not. We are doing more on investment in a few months than the previous Government did in 14 years.

Autumn Statement 2023

Lord Hunt of Wirral Excerpts

Wednesday 29th November 2023 Lords Chamber

[Lord Hunt of Wirral (Con)]

My Lords, I draw attention to my interests as set out in the register, particularly as chair of the financial services division of the global commercial law firm, DAC Beachcroft.

Like many other speakers, albeit in varying degrees, I warmly welcome the Autumn Statement. I have known the Chancellor of the Exchequer, Jeremy Hunt, for many years and I am confident that the economy is now in safe hands again. His presentation of the Statement was characteristically unflashy, and the reassuringly calm response of the markets spoke volumes.

Speaking as a solicitor still practising in the City of London, the one message I hear all time is that businesses crave certainty. In this world, especially now, there can be no certainty, but Governments can still strive to create stability and productivity—that is how we encourage businesses to invest and innovate. That, it seems to me, is the hallmark of this Government’s approach.

The House does not need me to remind it of the storms the UK economy has had to navigate in recent times. The political decision taken was to leave the European Union, but the direct consequence was to leave the single market, which many of us still regard as one of Margaret Thatcher’s greatest achievements. For that, shall we say, reorientation of the economy to coincide with the first pandemic in a century would test any economy, Government or society. That now we find ourselves in relatively calm waters is quite an achievement, and the Prime Minister and Jeremy Hunt deserve much credit for that.

What I hope to hear more of now is a renewed determination to tackle the red tape that continues to stifle innovation and enterprise. Some is a legacy from our European Union years—the committee I chair is working its way through that as I speak—but so much is either homegrown or gold-plated. Of course, I am not saying that all regulation is bad, just that it must always be proportionate and targeted. The Digital Markets, Competition and Consumers Bill is an excellent example of how statutory intervention in a market can both protect consumers from unacceptable market behaviour and foster competition. I look forward to our debates on that Bill and hope for more of the same, especially as the latest innovations in financial services regulation bed down.

Buried away at the end of the Autumn Statement is a very welcome proposed consultation on a UK regime for captive insurance companies. I applaud many of the comments of the noble Lord, Lord O’Neill, on that; I think it was number 99 on the list of measures. Two years ago, the London Market Group produced an excellent plan for the future, pointing out that the UK lacks a specific regulatory regime for captives, which, by definition, present relatively low risk to the overall financial system. This is another example of regulation that is not fit for purpose, because this is a fast-growing market, estimated at over $100 billion, and we have a golden opportunity to see a repatriation of UK company captives and to be a competitive location internationally.

A bespoke UK captive regime would be consistent with the new international competitiveness objectives in the Financial Services and Markets Act, strengthening the UK’s position in the international reinsurance market. The London Market Group has worked with HM Treasury to produce a detailed implementation plan setting out the legislative and regulatory changes required. Importantly, this could be done entirely through a single statutory instrument.

I therefore hope that my noble friend the Minister, whom we warmly welcome to her new role, can commit tonight to launching the consultation quickly, with a view to implementing it as soon as possible. This could have major economic benefits, and there is no time to waste. In summary, I welcome the Autumn Statement and hope for more of the same for many years to come.

Financial Services and Markets Bill

Lord Hunt of Wirral Excerpts

2nd reading
Tuesday 10th January 2023 Lords Chamber

[Lord Hunt of Wirral (Con)]

My Lords, I draw attention to my financial services and legal interests as set out in the register, and that I am co-chair of the All-Party Parliamentary Group for Insurance and Financial Services.

As many speakers have pointed out, this Bill represents a golden opportunity to adapt to the new reality of post-Brexit and, we hope, post-pandemic life. Financial services provide over a million jobs directly across the UK, amounting to 8% of GDP. It is a success story and vital to our welfare. However—we must stop deluding ourselves about this, if any of us still do—the UK is not pre-eminent in the world of financial services. Too much of the big reinsurance work in particular is going elsewhere. There is far too weak a partnership between government and the sector, if indeed there is any meaningful partnership at all. We still await a definitive sustainable financial services deal with the European Union. We also need the right infrastructure and the right tax system.

It is all about having a vision, but it is also about regulatory culture. I use “culture” advisedly. If this legislation fails to address not only the letter of regulatory law but the culture of the regulators, it will have failed. Effective, proportionate, efficient and good regulation is about having the confidence to strip away unnecessary redundant regulation as well as policing necessary regulation. That in turn is about having the right people and the right relationships. I refer not to cosy deals over the third cognac in the Reform Club but to brisk, efficient, timely, professional, mutually respectful regulation, with each side having a lively but robust appreciation of how the other operates.

I strongly welcome the new objectives on competitiveness and growth. Effective regulation should enable the sector to burnish its reputation for efficiency, innovation and integrity. It can also reduce costs, thereby improving access to goods and services. I hope that the necessary metrics can be crafted to provide reassurance that the regulators really do act on these new secondary objectives. I acknowledge and respect the concerns of those who feel that the commitment to growth feels a little bald and even old-fashioned in the light of climate change. I reassure the noble Baronesses, Lady Sheehan and Lady Hayman, that I am constantly struck by how seriously climate change is being taken by a sector that is literally, as well as figuratively, right in the eye of the storm. Financial services growth is increasingly, of necessity, green growth.

Finally, as senior independent director of LINK, I welcome the fact that for the first time ever the concept of access to cash and a right to access it will be enshrined in law. As the noble Baroness, Lady Twycross, pointed out, and the right reverend Prelate the Bishop of St Albans has just mentioned, for millions of people cash is a vital part of day-to-day life. Younger consumers may brush off credit card fraud and the panoply of pins and passwords as a necessary if tiresome aspect of modern life, but for many older citizens all that is an undiscovered country, and one that will remain undiscovered. Sadly, there is no such thing as a free cash withdrawal. The banking hubs have been slow to get moving, bank branches continue to close, and the economic situation squeezes the independent ATM providers more and more.

This Bill barely marks the end of the beginning for this task. I hope that it will be seen as an important milestone. I wish it safe passage and a successful arrival in port.

Credit Unions

Lord Hunt of Wirral Excerpts

Tuesday 3rd February 2015 Lords Chamber

[Lord Newby]

Yes, I agree with the noble Lord that those are both important issues. In the response to the call for evidence, the Government have committed to considering changes to the common bond legislation. The noble Lord will be aware that credit unions maintain their exemption from the consumer credit directive only if they have a restricted potential market. It is important that we do not expand the definition of the common bond in ways that could jeopardise that exemption.

[Lord Hunt of Wirral (Con)]

In declaring my interest as chair of the Credit Union Expansion Project, I point out to my noble friend the Minister how much I welcome the measures that this Government have taken to reform credit union legislation and the recent commitment made to produce proposals for further reforms in the next Parliament. I join the noble Lord, Lord Kennedy of Southwark, in welcoming that. I hope that it will receive support from all sides of the House. Will the Minister agree that legislation is only part of the answer? Helping credit unions to co-operate and to become more competitive and attractive will be key to growing this sector sustainably.

Credit Unions

Lord Hunt of Wirral Excerpts

Thursday 16th October 2014 Lords Chamber

[Lord Newby]

My Lords, I would be happy to do that. The Government are keen that civil servants should join credit unions where possible. Some work has been undertaken on how we could do that at reasonable cost. In the mean time, civil servants are being encouraged both to join credit unions and to get involved as volunteers. For example, an accountant at DWP is the treasurer of a credit union in Sheffield. That is a good example of how civil servants can use their experience and benefit the credit union movement.

[Lord Hunt of Wirral (Con)]

My Lords, I declare an interest as the independent non-executive chair of the Lending Standards Boards and as having agreed to take a similar role with Cornerstone and this particular project. I join the noble Lord in welcoming the recognition of today’s International Credit Union Day. I congratulate my noble friends in the coalition Government on the project itself. Will the noble Lord join me in urging all credit unions, all parties and everyone in the financial services sector to make this project a success and to raise awareness of the great work done by credit unions, not only in the UK but throughout the world?

[Lord Newby]

My Lords, I absolutely agree with my noble friend. I am myself hosting a reception in the Treasury this afternoon to mark International Credit Union Day. At that event I will be having discussions with, and we will be hearing from, Paulino Rodrigues, the chief operating officer of Sicredi, a very successful Brazilian credit union movement from which we are attempting to learn some lessons on common branding and operating standards to give a real boost to the sector.

Financial Services Bill

Lord Hunt of Wirral Excerpts

Monday 11th June 2012 Lords Chamber

[Lord Hunt of Wirral]

My Lords, I declare my interests, set out in the register, as chair of the Lending Standards Board and the Press Complaints Commission, as well as being a practising solicitor and partner in the global commercial law firm DAC Beachcroft for nearly 45 years.

The Bill establishes a new framework for financial regulation in the United Kingdom. I share the determination of colleagues to improve the Bill, including that of the noble Baroness, Lady Cohen of Pimlico, whose expertise and experience in this matter I greatly respect. I warmly welcome her emphasis on proportionality. However, I would like to concentrate my remarks on the regulation of consumer credit. I support the move from the OFT to the Financial Conduct Authority. This will result in all retail banking products becoming the responsibility of one statutory regulator, bringing benefits for consumers and firms and avoiding the problems of split regulation. I am, however, concerned that there is still no decision about what type of statutory regime is appropriate for consumer credit—the regime which existed under the Financial Services and Markets Act or the Consumer Credit Act or, as is now proposed, a combination of the two.

I want to make it clear to the House that I strongly believe in self-regulation, particularly effective self-regulation. It has concerned me that to date little consideration appears to have been given to what role self-regulation through industry codes might play in the new regime. I do not believe that it should be a choice between statutory regulation or self-regulation; they both have a place. I strongly believe that the best outcome would be for them to continue to co-exist. We should take the best of what each has to offer to achieve an appropriate and proportionate balance between consumer protection and the commercial needs of a properly functioning competitive market. The new regime has to be demonstrably better than the sum of the current constituent parts; otherwise, why on earth are we incurring the considerable transitional costs and risks? Therefore, in my view, self-regulation remains important and relevant. In consumer credit, The Lending Code sponsored by the British Bankers’ Association, the Building Societies Association and UK Cards Association, and enforced by the independent Lending Standards Board, which I have the honour to chair, has an excellent track record and I believe is seen by consumer bodies and other stakeholders as efficient and effective. Of course, industry can and should take a lead in rebuilding the trust and confidence of its customers, but this will not be achieved overnight and I support action on a number of fronts. However, one of these must be effective self-regulation.

There are five principles of good regulation and, for me, the most important is proportionality. Regulation should be proportionate to the risks posed and costs should be identified and minimised. Vast tomes of very prescriptive statutory rules will usually add little to consumer protection. There is increasing concern about the potential costs of moving to and complying with the proposed new regime—costs that will, of course, ultimately have to be borne by the consumer. I strongly agree with the noble Baroness that at the moment the Bill is not user friendly. However, I was very pleased to see reference to the principle of proportionality in Clause 5 in new Section 3B(1)(b) at the bottom of page 28 of the Bill.

I would like to see self-regulation in the following form. I want there to be strong codes of practice with effective independent monitoring and enforcement that would not only be proportionate to the perceived problem or risk but score highly against the other four principles of good regulation—consistency, accountability, transparency and targeting. What do I mean? Self-regulation can set higher standards than statutory rules. One such example is the latest set of provisions introduced into The Lending Code whereby banks must retain responsibility for the fair treatment of customers after a debt has been sold to a third party. Voluntary codes can also avoid super-equivalence problems where they set standards that go beyond European regulations such as the EC consumer credit directive.

I could give many examples. Codes offer a vehicle to embody industry best practice and can cover areas that are not appropriate for inclusion in statutory rules. Self-regulation is more flexible and responsive to change and emerging issues. Codes provide a level of conduct of business detail that supports high-level statutory rules and can help industry better to interpret and apply the statutory requirements. It is better to have one externally visible code than myriad different lender-specific internal codes. Codes can also be market-focused or product-focused, as compared with the broad generic approach that is symptomatic of statutory regulation. That would produce much better consumer outcomes.

Improvements to self-regulation must be part and parcel of this approach. A number of codes of practice currently operate in the consumer credit market. Not all have standards that are as robust as those contained in The Lending Code or the FLA code to which my noble friend Lady Noakes referred. These codes are followed by the major banks, building societies and credit card providers. In promoting the case for self-regulation as a component of the future regulatory regime for consumer credit, Governments should encourage the sponsors of these codes to look at strengthening their rules, as has recently happened in the payday lending market. Most importantly, they should ensure that the codes are independently monitored and enforced.

The new regime would benefit from a close working relationship between those enforcing such codes. Ideally, there should be some provision for recognition or endorsement of codes by the FSA. Endorsement could provide a degree of protection for firms if they were to follow the codes’ provisions. That would encourage commitment on the part of the industry. I do not think that the statutory regulator would be abrogating ultimate responsibility; it could work along the lines of the OFT’s compliance partnership approach.

In conclusion, self-regulation is the right way forward—complementary self-regulation policed by an independent regulatory body that would protect the consumer without destroying the creativity and competitiveness of the market. Unfortunately, statutory regulation tends to be very heavy-handed, whereas self-regulation can supply not a light hand but a firm hand—and sometimes even a helping hand.