Financial Services and Markets Act 2023 (Prudential Regulation of Credit Institutions) (Consequential Amendments) Regulations 2025

Lord Jones Excerpts

Monday 8th December 2025 Grand Committee

[Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)]

My Lords, I will also speak to the Financial Services and Markets Act 2000 (Regulated Activities) (ESG Ratings) Order 2025. That order, which the Secondary Legislation Committee has identified as an instrument of interest in its 41st report, will bring the provision of environmental, social and governance ratings, commonly referred to as ESG, within the regulatory parameters of the FCA. Regulation will raise standards, enhance investor confidence and reduce the risk of greenwashing. It has strong support from across the financial sector.

I will outline the importance of ESG ratings and their role. ESG ratings encompass a range of products that seek to assess the ESG profile, characteristics, risk exposures or impacts associated with the company, fund or other financial instrument. ESG ratings are widely relied upon by investors to guide investment decisions, in line with sustainability risks, opportunities and preferences. Of the £10 trillion-worth of assets under management in the UK in 2024, half had integrated ESG factors into the investment process. More than 5,400 firms were using ESG ratings during that period.

Work with the ESG ratings market has developed rapidly and without formal oversight. This has prompted concerns among stakeholders regarding transparency, governance, internal control and potential conflicts of interest within ESG ratings providers. In response to these concerns, the International Organization of Securities Commissions published recommendations for ESG ratings and data providers, emphasising the need for higher standards and appropriate oversight. The Government have acted swiftly to deliver progress on this important agenda. The consultation was issued by the previous Government in June 2023, and this Government ensured that the consultation response and draft legislation were published for technical comments as part of the Chancellor’s first Mansion House speech in November 2024. That draft has since been refined into the instrument before the Committee today.

I now turn to the instrument itself. It establishes a new regulated activity: the provision of an ESG rating where that rating is likely to influence the decision to make a specified investment. Providers of ESG ratings will therefore be required to obtain authorisation and will be subject to supervision by the Financial Conduct Authority. Recognising that ESG ratings are provided by a range of different persons, the scope of the regulated activity is designed to be proportionate to the risk of harm to avoid dual regulation and to maintain consistency within the existing regulatory framework.

The regulation contains specific exclusions to give effect to this—for example, where a firm provides ESG ratings as part of another regulated activity. To uphold the integrity of the UK market and ensure a level playing field, the ESG ratings provided to a UK customer by an overseas provider will fall within the scope of the regulated activity, except where such ratings are provided without remuneration or financial incentive.

The Government remain committed to open, competitive and internationally connected financial markets. In that context, further consideration will be given to market access arrangements for overseas ESG ratings providers. To allow sufficient time for industry engagement while ensuring timely implementation, the FCA launched its consultation on the specific regulations for ESG ratings providers on 1 December following the laying of this instrument on 27 October. The FCA’s consultation has been welcomed by industry, and its rules will be designed to be proportionate and tailored to address harms while protecting innovation, in line with the regulator’s secondary growth and competitiveness objective.

This legislation forms a central element of the Government’s agenda to promote growth in the UK sustainable financial market—one of the priority areas identified in the Financial Services Growth and Competitiveness Strategy.

I turn to the Financial Services and Markets Act 2023 (Prudential Regulation of Credit Institutions) (Consequential Amendments) Regulations 2025. This technical instrument makes changes to support reforms to UK banking regulation. It will keep our legislation on financial services effective and assist the Treasury in applying the FSMA model of regulation to set a prudential framework for banks. The instrument does not introduce any new regulatory requirements for firms.

Noble Lords will be aware that banks are required to follow a set of prudential regulations to manage their risk appropriately and maintain adequate levels of capital to protect against any losses. In addition, the biggest banks are required to hold additional loss-absorbing debt to ensure that they can be allowed to fail without the need for taxpayer-funded bailouts, as we saw in the global financial crisis.

A significant amount of prudential regulation is set out in the Capital Requirements Regulation, or CRR, which formed part of domestic law during our time as an EU member state. Following our exit from the EU, the Government have been tailoring the existing financial services framework to the UK’s needs. This includes the CRR, which will be removed from the statute book and largely restated in the Prudential Regulation Authority’s rulebook, providing more flexibility and allowing the PRA to set the relevant requirements. To do this, legislation has been passed to revoke the CRR, notably the Financial Services Act 2021 and the Financial Services and Markets Act 2023. Subsequently, this July the Government made commencement regulations to revoke certain articles of the CRR, with effect from 1 January 2026.

In that context, the Government have brought forward these technical regulations to make a small number of consequential amendments to pieces of legislation that refer to specific CRR articles, to ensure that the broader legislative framework remains coherent. Specifically, they amend the Banking Act 2009 to ensure that definitions relating to share capital instruments in banks’ own funds reflect the revocation of certain CRR articles. They also make changes to secondary legislation concerning bank resolution, the bank levy and financial conglomerates to reflect the revocation of certain CRR articles.

In summary, while this statutory instrument is technical in nature and does not introduce any new rules, it is nevertheless a necessary step in continuing the reforms to our banking regulation and ensuring that our regulatory framework remains coherent. I beg to move.

[Lord Jones (Lab)]

My Lords, surely these instruments must be welcomed, and surely we all want a smarter regulatory framework. I thank the Minister for his helpful and concise outlining of the regulations and the order. There is a lot of business ahead and time is of the essence, so my brevity is guaranteed.

One can only welcome the policy context as stated at paragraph 5 of the helpful Explanatory Memorandum. Can my noble friend the Minister or his department say what the Prudential Regulation Authority is? In particular, can he perhaps give some detail on how big it is and who sits on it? Who chairs it and, on the presumption that the chair is full-time or part-time, is he or she salaried and how much are they paid? Are all the PRA membership paid or are they voluntary? How often does the PRA meet? The department may not give answers now but if not, might the Minister reply by letter?

[Baroness Kramer (LD)]

My Lords, I will take these two statutory instruments in the order in which they are on the Order Paper, which is the reverse of the Minister’s discussion. That is not a criticism; it is just to explain where I am starting from.

The first of these two SIs removes the current assimilated law on capital requirements for banks, building societies and investment firms and replaces it with rules to be set solely by the regulator—in this case, the PRA. In effect, it removes the control of capital requirements from any intervention by Parliament. As always, I want to register my concern that an issue of fundamental importance to the financial stability of the country is, in effect, being removed from any meaningful parliamentary oversight or action.

The regulators may be experts, but they got it terribly wrong in the 2000s by misunderstanding CDOs, which triggered the financial crash of 2007-08, and by not recognising the precarious state of liquidity or lack thereof in many of the big banks, which worsened the crisis. They also turned a blind eye to the manipulation of Libor benchmarks, which damaged the UK’s reputation for integrity in financial services in ways that are still with us today—never mind, frankly, the financial damage to so many clients across the globe. Recently, the PRA has been permitting an erosion of capital requirements, almost certainly to fit with the Government’s agenda for short-term growth, rather than being based on any evidence of risk reduction, which I have looked for and cannot find.

I sat on the Parliamentary Commission on Banking Standards that examined the 2007-08 crash for nearly two years. We predicted that amnesia about how risk actually works would set in. I note that the banks are using the new leeway provided by looser capital requirements to leverage private equity funds, even though they cannot assess the risks embedded in those funds, which are, by definition, not transparent. However, of course, we recognise that those funds pay the banks’ substantial fees. It is all so predictable.

The second SI makes provision for environmental, societal and governance ratings, as related to investments, to be set in the rulebook of the FCA. Once again, what is properly a policy decision will escape parliamentary oversight and intervention. Clear rules will be welcomed by investors, but this is a contentious area. Is nuclear included? Is carbon capture and storage included? Is defence green? I am not answering those questions; I am saying that those questions naturally arise. In the Commons debate on this SI, the Conservatives basically reflected a Trumpian view of oil and gas investments—the “burn, baby, burn” view. Is that the view the FCA will follow, or will the Minister say to me, as I think he must, “That’s not up to Parliament; it’s up to the FCA”? The investment market is an international one and, frankly, investors care much less about what the rules are and much more about whether they are globally consistent. How will the FCA rules sit with the new anti-green US approach? The EU has a new ESG framework, which comes into effect in 2026. How will the UK rules sit with that? How will the UK’s overseas recognition regime work—the Minister referred to it—and what will be its parameters and consequences?

Surely, Parliament should have more of a view than just being one of the many consultees, which seems to be the current position. I continue to be very concerned about the direction of travel away from legislation, with debate, oversight and parliamentary responsibility, to rulebooks in the sole control of the regulators.

Government Resources and Accounts Act 2000 (Audit of Public Bodies) Order 2017

Lord Jones Excerpts

Wednesday 29th November 2017 Grand Committee

[Lord Jones (Lab)]

My Lords, I thank the Minister for his exposition. I shall be very brief. Ebbsfleet Development Corporation figures largely in the draft order. Can he say in some detail what it is, what it does, who leads it and what is its budget?

[Lord Tunnicliffe (Lab)]

My Lords, I am sorry to be a bit picky, but I hope that the Minister has not moved the order; I hope that what he has in fact moved is that the Grand Committee do consider the order. The order itself, whatever his Treasury-produced paper says, will be taken on the Floor of the House after consideration by the Committee. I note the Minister nodding in agreement. I hope that his authors will get that little bit right in future.

I thank the Minister for introducing the order to the Committee this afternoon. The order provides for certain public bodies to be audited by the Comptroller and Auditor-General. In addition, the scope of audit is removed from the Comptroller and Auditor-General for a number of public bodies and companies that are no longer in operation, no longer exist or no longer meet the criteria for public sector audit. It is on the whole concept of criteria that I wish to ask one or two questions.

First, does the primary legislation that established these bodies have Henry VIII clauses that allow the changes to be made by delegated legislation? Secondly, with reference to those bodies being omitted from the scope of National Audit Office audit, why are they being omitted and against what criteria? Will the Minister outline the criteria to the Committee? Thirdly, why are the specific eight bodies being added, under what criteria are they being added and why are the Government adding them at this specific moment? Lastly, what other bodies are either waiting to or likely to be added to the list of bodies to be audited by the National Audit Office? Is there a question about the quality of the bodies waiting to be added?

Although I understand that the order is largely procedural, I would welcome a response from the Minister on those questions to give greater clarity to those who are affected by the order about why they are affected. In very simple terms, the Minister gave us an overall view that it was to add consistency, but I should have thought that that consistency must be against a general view of what should or should not be audited by the National Audit Office.

Elections (Fresh Signatures for Absent Voters) Regulations 2013

Lord Jones Excerpts

Tuesday 4th June 2013 Grand Committee

[Lord Jones]

My Lords, I thank the Minister for his introduction. His speech provided dignity, if not poetry, to the bureaucratic vocabulary and procedure. Refreshing signatures means that we wish to avoid fraud. I would say to the Minister that if we put Wales into a statutory instrument, would we not expect, for the sake of accountability, to be given the full details concerning Wales in the debate in this Committee? The Minister attempted to gain an alibi of the best kind in what he said. I picked that up and I make my protest as gently, honourably and courteously as I can, knowing that he always brings nobility and dignity to our procedures.

I want to raise a point of detail concerning the refreshment and checking of signatures. What is the process here? Does an employee of a local authority literally match the signatures, or is it done by mechanical means? Is it possible for us to be given an explanation of how the signatures are handled? After all, that is the basis of what the Minister has brought before the Committee. I am sure that his department will have spotted such a question coming from noble Lords, and I think it is a reasonable request. In order to make progress, I shall sit down.

[Baroness Hayter of Kentish Town]

My Lords, perhaps I may ask the indulgence of the Committee in order to congratulate the Minister not only on having sung at the Queen’s Coronation 60 years ago, but on his role in the Abbey today to commemorate that occasion. I am sorry that we are not seeing him in all his glory this afternoon. When I was a student, we used to move that the minister “do now sing”; maybe I should not do that.

On the two statutory instruments, including the one for Wales, one of the questions is quite similar to one raised by the noble Lord, Lord Greaves: how many absent votes does the Minister estimate are covered by each of these two SIs? In other words, how many that would normally be written out in Wales and England are covered by this?

Related to that, what is the Government’s assessment of the number of likely renewals, particularly given that these are going out in the August holiday period? That has been a worry for the Electoral Commission, and is a worry as, not only is your Lordships’ House on holiday during the first two weeks of August, but so are many other people.

Although the word “stakeholders” was used by the Minister, what is the view of the political parties of this proposal? As I mentioned before in Committee, they are rather expert on all of this, as has been evidenced by the noble Lord, Lord Greaves, this afternoon.

In the form that will go out on the mere matter of the refreshment of the signatures, will there be any advance notice about the move to individual electoral registration? In other words, is it part of the preparation that is being made? I know that the Electoral Commission still has some concerns over the October 2013 annual canvass date and what impact it might have on absent voters. We would be interested to know what the Government’s response to the issue raised by the Electoral Commission has been. In general, however, we support the regulations and the order.

--- Later in debate ---

The noble Lord, Lord Jones, asked about the process. It is IT-based. The original postal voter identifiers from the applications are scanned into a system designed for this. When a postal vote is sent in, the postal vote statement with it has space for a signature and a date of birth. It is scanned and the signature and date of birth are electronically matched or not matched. If they are not matched, a person then checks them manually to confirm whether there is a mismatch, and by “manually” I do not mean, as Peter Sellers once said, once a year.

[Lord Jones]

The noble Lord’s speech is coming to a conclusion, but I mentioned Wales to him. Has he had any consultation with the Government in Cardiff about how they would respond to this debate?

[Lord Wallace of Saltaire]

My Lords, we have regular consultation with the authorities in Cardiff, and I am sure that we will continue to interact with them and, indeed, with the Scottish authorities in a rather different capacity. I discovered over the course of dealing with the Bill, and now the Act, that there is a very tight sub-community of electoral administrators who love talking to each other, who love talking to visitors at some length about the work they do and who work extremely hard, which means that interaction with them is very easy because they are very willing to help and explain.

--- Later in debate ---

[Lord Jones]

The Minister now speaks poetry.

[Lord Wallace of Saltaire]

I thank the noble Lord. There were a number of questions and some of the answers are coming at me from the Box faster than I can absorb them. I was asked whether it would be inconvenient for the signature refresh to be run during August. We recognise that it is not ideal, but it is essential that absent voter signatures are refreshed before the earliest time that EROs may start the 2013 annual canvass, which we have previously agreed will be from 1 October. For reasons that I have explained, the Electoral Commission has indicated that it is content with the policy objective and the drafting of the signature refresh regulations. We will, of course, monitor very carefully how this goes through, and if there is too much difficulty or too much failure to respond, we may have to adapt and try again. I rehearsed previously the reasons why we wish to start the household canvass earlier.

We are managing this transition very carefully and actively. I stress again that we see this as an all-party concern. We all want to achieve a new register that is as accurate and complete as possible in England, Scotland and Wales.

Charities (Incorporated Church Building Society) (England and Wales) Order 2013

Lord Jones Excerpts

Wednesday 27th February 2013 Grand Committee

[Baroness Hayter of Kentish Town]

My Lords, I thank the Minister for introducing a very welcome statutory instrument. As he indicated, the National Churches Trust, the only national, independent charity supporting religious buildings, does a great deal of valuable work. As he outlined, for two centuries it and its predecessor have been key players in the construction and maintenance of a great number of churches and chapels. Its work has provided places for worship, as well as supporting church buildings of historical and architectural value. In recent years, the charity has given Christian places of worship an average of £1.5 million a year in grants, allowing them to conduct vital repairs and modernisation, including increasing access, which clearly we welcome.

The work of the charity goes beyond religion and benefits the whole community. Every year, millions of people use church buildings for a range of activities, including classes for art, music and health—and even Labour Party meetings. The churches are also spaces for people to seek help. More than half of all Alcoholics Anonymous meetings take place in churches, as do 40% of Women’s Institute meetings. I am sure that the Minister, wearing one of his other hats, knows that one polling station in six at the most recent general election was in a church building. I fear that, for some of us, it is the only time we cross the threshold of a church. With pubs, social clubs and libraries closing, churches are often the last remaining community buildings. Therefore it is clear that the Incorporated Church Building Society provides a great deal for people of all faiths and of none.

As the Minister explained, as time rolled on, its constitution sometimes got in the way of its good work. As he suggested, by the 1980s its activities had shrunk and the trustees discovered, as had those of many other charities, that a greater administrative burden and awkward membership arrangements took up a lot of time as they tried to maintain it as an independent charity. The cost of administration became disproportionately high. We hope that the new scheme will address that. The statutory instrument, drawn up at the request of the current trustees, will allow the charity to update its structure. Importantly, as the Minister said, it will make the trustees the sole members, as opposed to the current arrangements which include anyone who donates a guinea. However, I realise that some people will not have his and my age and I thought I should explain that that is £1.05p. Or they could make a single donation of 10 guineas, which I worked out was £10.50p. The change would modernise the trust’s governance arrangements, simplify the administrative requirements and help to free up the charity to concentrate on its core business. I take this opportunity to congratulate the National Churches Trust on its work. We wish it well and are grateful that this SI has been introduced.

[Lord Jones]

My Lords, I thank the Minister for his commanding introductory remarks and my noble friend for her youthful remarks. I have read the helpful policy background in the Explanatory Memorandum which the department has composed, and for which I am grateful. Paragraph 7 of the Explanatory Memorandum, headed, “Policy background”, states:

“The purpose of the Charity is to provide for the better collection and application of voluntary contributions for the purpose of enlarging, building and repairing Church of England churches and chapels situated in England and Wales”.

It has occurred to me that those churches and chapels in Wales are not Church of England, they are Church in Wales. So the question I have for the Minister is: has the department come forward with this order not knowing that there is an error in the Explanatory Memorandum? Is it therefore proceeding in error on that basis?

It was nice to hear the Minister refer to churches in Saltaire. St Ethelwold’s of the Church in Wales is a splendid church in north-east Wales in the town of Shotton. Would this order enable the tower of St Ethelwold’s to be completed or allow for that possibility?

[Lord Wallace of Saltaire]

My Lords, I thank noble Lords for their welcome of the order. I particularly welcome the comments of the noble Baroness, Lady Hayter, on the translation of churches into spaces for the local community. I have experienced shock on one or two occasions when going back to churches in which I had worshipped, or in whose choirs I had sung as a boy, to discover that all the pews had been removed, including one very old-fashioned church which we went to when my father was the local bank manager. The bank manager’s pew was the second one from the front on the right-hand side, and one had to sit in the bank manager’s pew. Thankfully, that has now all gone. The pews have all been removed and it is an open space for all sorts of purposes. As we know, that has happened all over the country. I think that that is part of the transformation of the Church of England in making sure that it does continue to hold together local communities for people of all backgrounds and all faiths.

On the question of churches in Wales, there is a separate Welsh Religious Buildings Trust, which was founded in 1996 to care for redundant historic places of worship of all faiths in Wales. To avoid duplicating the work of the Friends of Friendless Churches, those of the Church in Wales are excluded from this. The trust currently cares for six buildings and is in discussion with regard to a seventh, but I am very conscious, as I know the noble Lord will be, that there are a great many churches and chapels in Wales which are open to the desirability of assistance. There are other comparable charities. I happen to know the Historic Chapels Trust very well because I have good friends in Yorkshire who are actively engaged in that. There is a Scottish Redundant Churches Trust, a Scotland’s Churches Trust and an Ulster Historic Churches Trust, so this is dealing with England partly because the devolved Administrations have parallel and comparable bodies.

Having answered those questions, I welcome the general acceptance that this is a desirable and useful adjustment of an early 19th century charity. We have to modernise charities from time to time and it is entirely within the principle of the public interest of charities that this amendment should be made. I hope that we all welcome the extent to which churches, which are often at the historic centre of communities, are being restored, opened and transformed to provide places where members of the communities can get together. I commend the order.

The Big Society

Lord Jones Excerpts

Wednesday 11th May 2011 Lords Chamber

[Lord Jones]

My Lords, the Prime Minister’s declaration could lead to an enhancement of British civic society but I hope that his inspiration is neither cavalier nor formulaic; a hopeful declaration is insufficient.

Our society today is shot through with an almost universal materialism and with a veneration of celebrity—for example, with television studio high priests and priestesses such as Messrs Norton and Ross and the ubiquitous Cheryl Cole. However, the positive is that the big society is already in part on the way. Britain has a great army of volunteers who serve others willingly; they seek to give, to help, to serve, to lead, to encourage, to teach, to reassure and to inspire.

We speak as we find. I pay my own tribute as a Flintshire president of our hospital’s League of Friends, of the branch Alzheimer’s Society, of the Neighbourhood Watch, of our arthritis care group and of the history group. It is humbling to see these brilliant volunteers at work. They are wonderful people who are selfless, loyal, able and courteous; they are exemplary, unselfish citizens who put others first. I hope that the Prime Minister’s big society already acknowledges and praises them. This army of voluntarism keeps our complicated civic society show on the road.

Perhaps the Prime Minister’s big society might acknowledge the excellence of the well led voluntary service councils; might engage the undoubted experience of town and community councils; might consult the Salvation Army as well as chapel and church; might interest sixth forms and FE colleges; and might involve Rotary, Lions, golf and cricket clubs, for example. The expertise and idealism are there and ready to be enhanced.