Financial Services and Markets Bill

Debate between Lord Moylan and Lord Forsyth of Drumlean

Report stage
Tuesday 13th June 2023 Lords Chamber

[Lord Forsyth of Drumlean (Con)]

My Lords, when I went home after the last time we discussed accountability of the regulators to Parliament, my wife said to me, “I was watching you speaking on TV and, very unusually, you were praising the Minister to the skies”. Here I am having to do it again. My noble friend Lady Penn, the Minister, has listened very carefully to all the points that have been made and has come forward in these amendments with a package that makes my Amendment 101 look rather feeble, for which I am extremely grateful.

I do not propose to spend much time talking about Amendment 101 but want to make just a couple of points. First, I declare my interest as a chairman of Secure Trust Bank. Secondly, it is not just the banks causing difficulty here; it is also credit card providers such as American Express, which seems to have been particularly heavy handed.

I have had an American Express card since 1979 and yet, only recently, I got an email which I assumed was a spoof that said I had to provide copies of my passport and bank statements, details of my investments and income, and my payslips—such as they are—to American Express within a certain number of days. I assumed this was some fraudster. Then I got another email telling me that my card had been suspended because I had failed to produce this material. When I rang American Express and said: “What is going on here?”, they said: “Unless you produce it, your card will remain suspended”. Of course, there were a number of payments on my card, which caused me some embarrassment.

That is a completely disproportionate use of the regulations. I am not even sure that some of the financial institutions are even looking at this work themselves. They may be contracting it out to other people who are simply involved in box ticking.

I will give another example from some years ago. My daughter had an account at the same bank as me, Coutts, and the manager said to her: “Is there any chance that you could move to another bank because you are such a pain to look after because your dad is a politically exposed person?”. In my view, that is an absolute disgrace. Our children find it difficult to get mortgages. People find it difficult on probate. What my noble friend is proposing today goes further than my amendment and I hope it will result in change.

There is a problem, however, in that the regulator is judge and jury in their own court on this matter, although I appreciate the measures which my noble friend has put in place to hold them to account. Of course, if we set up a committee of this House or a Joint Committee, I think this will be very high on the agenda if they have not actually dealt with it.

I have one slight niggle with Amendment 97 in my noble friend’s name, which is that she gives the FCA 12 months to publish. That seems an inordinate length of time. In the previous amendment we discussed today, my noble friend reduced the time to six months from 12 months. Perhaps she might reflect on whether it really needs 12 months to carry this out. At first, I thought it might be a move in the hope that perhaps there might be a general election and it might get lost in that and there might be a change of government and it might not happen. But one thing is clear: everyone on all sides of this House feels very strongly about this issue and I commend my noble friend for having taken this action, which I know has not been easy, and for the care with which she has listened to colleagues in coming forward with these proposed changes.

[Lord Moylan (Con)]

My Lords, I shall speak to my Amendment 105 in this group. I express enormous gratitude to my noble friend the Minister for all the effort she has put in to resolving this problem in the last couple of years and now in this Bill. I have had a number of meetings with her, for which I am grateful. I have learnt much from her in the course of those meetings and in Committee. I think this is also an appropriate occasion for me to apologise for the fact that in Committee I insisted on one particular point of detail that I was right and, of course, it turned out on closer inspection afterwards that she was 100% right and I had got it wrong, so I apologise for that.

She has made sterling efforts, and what she is proposing today is welcome. None the less, those efforts—at least until we came to this debate today—have not been successful in scrapping a system which is cruel, capricious and unjust. In part, that is because of resistance in parts of the Civil Service. While I accept her proposal today, it worries me—I am wary—that 12 months is being sought in which to come forward with proposals which will resolve it definitively.

I would prefer, in principle, my Amendment 105. I am grateful for the support given to it by the noble Baroness, Lady Hayter of Kentish Town, the noble Lord, Lord Sharkey, and my noble friend Lord Forsyth of Drumlean—which I think pretty well represents most sides of the House.

The legal background, which my noble friend explained to some extent, is that this all originates with the Financial Action Task Force—an international group in which British officials play an important part. It is not binding. It is not law, but it is like a standard of good behaviour, if you like. I can understand why my noble friend and the Government at large wish to continue to adhere to those standards. I have no problem with that.

However, it is clear that the FATF—I am afraid that is the expression I am going to use for the Financial Action Task Force—recommendations make a distinction between domestic and foreign PEPs. It is difficult for the European Union to make such a distinction internally— I think the noble Baroness, Lady Bowles, who was involved with the European Union at the time, will confirm this—so when the FATF recommendations were incorporated into a European Union directive, that distinction between domestic and foreign PEPs was lost. So, as it was then transposed into UK law through the money laundering regulations, that distinction no longer appeared. However, it is clearly there in the FATF recommendations.

Since we are no longer obliged to adhere to the European Union directive, it is entirely possible for us, and entirely consistent with any sense of international obligation we have, to restore that original distinction. That is what my amendment would do in law straightaway. The FATF recommendation is that domestic PEPs should not be subject to the money laundering regulations unless they are in what is described as a “higher risk business relationship”. I have stuck very closely to that wording in my amendment.

It is also my view that when the Government come back in a year’s time, or maybe sooner—I hope it will be sooner; it does not have to be a year—they will end up more or less with my amendment. If they want to stick to the FATF recommendations and yet alleviate some of the burden on domestic PEPs, this is more or less where they will have to be. That is what I would prefer, but I am clearly not going to see it today.

I will add a few other points. As I say, I think my amendment is the standard against which within a year we will be judging what the Government come back with. There are a few other points not captured in the amendment that I think the Government have to address in the course of the review. First, at the moment, banks claim that the tipping-off provisions in the money laundering regulations mean that they cannot tell us when they are investigating us as PEPs. So, one gets these bizarre requests, as described by my noble friend Lord Forsyth, but if you try to have an intelligent conversation with them about what is going on, you are completely blanked and no explanation whatever is forthcoming. They claim that this is mandated upon them. I think that is possibly a misinterpretation, but in either event, it has to go. We have to be able to talk sensibly to people who are trying to make such inquiries if we are indeed within scope of them at the end of this process.

Secondly, it must be made clear to the banks that the closing or freezing of accounts should be very much a last-resort action, and only if there is already evidence of a suspicious transaction. It cannot be resorted to in the way that some banks have been doing. It is simply unconscionable that perfectly ordinary people who are family members—not necessarily Members of this House—are having their accounts closed down or frozen while investigations take place, when there is no evidential basis for doing so. It is simply, “Your turn has come round on the agenda to be inquired into”. Can my noble friend say whether we can look forward to any alleviation in practice during the next 12 months while we are waiting for this to happen, or is the full rigour of this unjust system to be persisted with while we are waiting?

Animal Welfare (Sentience) Bill [HL]

Debate between Lord Moylan and Lord Forsyth of Drumlean

Committee stage
Tuesday 6th July 2021 Grand Committee

[Lord Forsyth of Drumlean (Con)]

My Lords, tempted as I am to make all the same arguments about why we need details of how the committee is to be composed and its terms of reference, and the regulations under this clause having to be made by statutory instrument, we have probably done these arguments to death. I hope my noble friend will take them on board.

I am conscious of the hour—it is 5.50 pm—and I thought it was pretty optimistic that the Government thought they could conclude this Committee today. I am always happy to help the Government and assist the Whips in their efforts, so I do not propose to add anything further to what I have said in support of the principles contained in Amendment 4. I beg to move.

[Lord Moylan (Con)]

My Lords, there are two amendments in this group with my name on them. The first is Amendment 8, which is also supported by the noble Earl, Lord Caithness, and the noble Lord, Lord Hamilton of Epsom, and which goes to the question of the composition of the committee. I have some sympathy with what my noble friend Lord Forsyth just said, but I would like to develop a slightly different point on the basis of this. One can say that there is almost universal agreement across the Committee that this topic should be addressed in the Bill. The question would be what it should say, if there were questions of difference. However, I do not think there is support on the Committee for the idea that the Government should simply have a clear run and be able to make it all up when it suited them.

The proposal here is that at least 50% of the members of the committee should have recent commercial experience of animal husbandry, livestock farming, the management of abattoirs and the management of game and fishing stocks. It may be thought that this is a sort of ignoble attempt to stack the committee in one direction rather than another, but it is not at all. I want to make a rather different point.

We will have an opportunity in the penultimate grouping, whenever we get to it, to discuss the science and indeed the metaphysics of sentience. However, I want to make this point now, anticipating that. One can approach sentience as a neurological phenomenon: that is, the central nervous system of the animal, the brain and the other features work together to create something which can be tracked by way of the movements of electrical signals, changing chemical compositions and things like that. All that can be tracked to some extent by science. However, it is also the case that sentience as we talk about it is a lived experience; it is the experience of pain and the undergoing of suffering. We as humans, ourselves undergoing pain and knowing that suffering, can sympathise with it when we see it in animals, vertebrates and mammals—different classes of animal.

For us to understand and for a committee to benefit from a real understanding of sentience, it is terribly important that people who have a direct experience of working with the animals that are in the scope of the Bill should be fully represented on the committee. Otherwise, we risk the possibility that it simply ends up as a sort of neurological exercise, and the direct and lived experience of sentience is ignored by the committee as it is packed with all these scientists. That was the point I wanted to make about that. It is not a question of stacking the committee but of trying to understand what sentience is and how we translate it into policy.

While the Minister wants to move away from this topic, and I understand that, he must realise by now that, given the almost total absence of any definition of what the committee is doing or any constraint on its activities, the question of who is sitting on it is about 90% of the meat of the Bill. Therefore, it is not possible for him to carry on brushing this away.

My second amendment, Amendment 9, concerns the term limit. Again, there seems to be almost universal acceptance that the Bill should impose some term limits on the membership of the committee, and there seems to be a sort of consensus that three years is a good idea for a term. If there is a matter of difference, it is simply on the question of whether it should be non-renewable, which is what my amendment says, or whether it should be perhaps renewable for one single further term, as the noble Baroness, Lady Bakewell, said. I am sure that some consensus on that point can be achieved by the Committee, even if the Government themselves do not want to do so. That was simply the second point; it is a sensible amendment, and I hope that the Government respond to the widespread views on this topic in the Committee.