Financial Services and Markets Bill [HL]

Lord Reay Excerpts

Committee stage
Monday 6th July 2026 Grand Committee

[Baroness Lawlor (Con)]

My Lords, I will say a few words in support of my noble friend Lord Massey’s amendment. We should not forget that many of these small firms coming into the market are to be valued in Britain’s highly competitive industry—until there was too much regulation, perhaps—and we rely on them. They are what distinguishes the UK’s financial services historically. From the 16th century on, the growth of financial services and the City of London depended on small people coming together to provide for a niche in the market that people wanted.

If we continue to put too much burden on these small firms, they will not emerge. We have heard from my noble friend Lord Massey how important they are, sometimes locally. They are small firms which meet a need, so it is a very good idea to have an impact assessment of what the costs will be for ARs before the law comes into operation, for the competitiveness of the UK’s sector.

[Lord Reay (Con)]

My Lords, we support the questions that this probing amendment is asking. My noble friend Lord Massey of Hampstead has put forward a sensible and important amendment, because it asks the Government and the FCA to consider the practical effects of the Bill’s changes on appointed representatives before those changes are brought into force.

This model is used widely across financial advice, mortgage broking, insurance distribution, wealth management and consumer credit. It is particularly important for smaller advisory businesses which may not have the scale, resources or compliance infrastructure to seek direct FCA authorisation themselves. There are good reasons why businesses use this model. It can reduce regulatory costs, allow faster market entry and give smaller firms access to compliance expertise, training and regulatory support. It can also allow advisers to spend more time serving clients, rather than navigating the full cost and complexity of direct authorisation. That has real consumer benefits.

Many appointed representatives are small local firms or regional advisory practices. They often serve clients who may have more modest assets and need mortgage advice, pension advice, insurance advice or investment guidance, but who may not be attractive to larger firms focused on wealthier clients, so we should be careful. If the effect of the Bill is that principal firms face significantly higher costs or liabilities, some may reduce their appointed representative networks or withdraw from the model altogether. That could mean fewer advisers, less competition, less local provision and reduced access to financial advice, particularly for retail customers with smaller portfolios or less complex needs. That is the concern which Amendment 144A seeks to test.

That assessment would consider the number of principal firms likely to continue AR relationships, the overall number of appointed representatives, the effect on consumer access to regulated financial advice, and the impact on smaller principal firms, whose compliance costs may be disproportionate. That seems to me to be a reasonable thing to ask. The policy objective should be to improve standards and reduce harm, without undermining a model that supports competition, market entry and access to advice.

Financial Services and Markets Bill [HL]

Lord Reay Excerpts

Committee stage
Monday 29th June 2026 Grand Committee

[Lord Reay (Con)]

My Lords, I first declare that I own some shares in JP Morgan, where I used to work, and some energy shares, as set out in the register.

It will probably come as no surprise to the Committee that we broadly disagree with the approach taken in this group of amendments. Climate change is, of course, an important issue, but the question before us is not whether climate change matters but whether the answer is to place still more statutory duties, reporting requirements, disclosures and regulatory obligations on businesses and financial institutions in this country. I am not persuaded that it is.

Each of these amendments is no doubt well intentioned, but they point towards a model in which ever more public policy objectives are loaded on to regulators and then passed through into more paperwork, compliance, board time, legal advice and cost for firms. At a time when every week, the London Stock Exchange loses companies that decide to list in the US, is this really what we want to do?

Many of the businesses and organisations that would be affected by this kind of regulatory layering make very limited direct contribution to global emissions. Yet they may find themselves spending more and more time demonstrating compliance, producing reports, revising governance documents and satisfying regulatory expectations. That all has a cost. It takes resource away from investment, innovation, productivity and growth. It makes us all poorer.

We should also keep a sense of proportion. The United Kingdom’s territorial CO₂ emissions from fuel combustion are around 292 megatons a year. Those of China are around 13,125 megatons. China’s historical emissions within its borders have now caused more global warming than the 27 member states of the EU combined.

The UK can make a meaningful global contribution by developing and commercialising the technologies that reduce emissions at scale. However, we risk doing precisely the opposite if our response is simply to increase bureaucracy and the cost of compliance and regulation. Indeed, I believe that growth and competitiveness in this sector will be virtually impossible if mandatory 1.5% transition plans are introduced. At one stage, growth was the Government’s prime mission, and it is urgently needed to pay for Labour’s costly plans. It would not make sense for them to go down that path.

There is also the question of regulatory purpose. The FCA and the PRA already have substantial responsibilities. They are responsible for financial stability, prudential soundness, consumer protection, market integrity, competitiveness and growth. We should not ask them to become the delivery mechanism for ever wider public policy objectives. The more duties we give regulators, the less clear their priorities become. The more principles we add, the more difficult it becomes to know which objective should prevail when they come into tension. That does not make regulation better; it makes it more complex.

The Government should instead focus on making the UK an attractive place for climate-related innovation and investment. That means clear rules, proportionate regulation, a competitive market and an environment in which firms are incentivised to deploy capital into the technologies and infrastructure that will reduce emissions. In our view, the cumulative burden of existing kinds of climate and environmental reporting obligations placed on firms is quite high enough; the FCA and the PRA should remain focused on their core financial regulatory functions. For those reasons, we oppose the proposals in this group.

[The Minister of State, Department for Business and Trade and HM Treasury (Lord Stockwood) (Lab)]

My Lords, I am thankful to noble Lords for their contributions. I specifically welcome the noble Lord, Lord Reay, who is making his first contribution on the Bill from the Front Bench.

There is absolutely no denying that this is a critical issue. As set out by the Chancellor in her Mais Lecture, sustainable growth depends on resilient foundations. Action on climate, adaptation and resilience can help reduce exposure to future shocks and support long-term economic stability. At the 2025 spending review, this Government committed £65 billion in capital funding for clean energy, climate and nature, including nuclear, and an additional £3.6 billion in capital funding for flood defences. The National Wealth Fund has been capitalised with over £27 billion and plays a central role in mobilising private investment into priority sectors, including clean energy, and supporting the transition to a low-carbon economy, while contributing to growth and energy security objectives.

Before I turn to the amendments, I stress that sustainable finance is a core priority for the Government. It is also a key opportunity within the financial services growth and competitiveness strategy. The UK is one of the world’s leading sustainable finance centres, with London ranking first in the Z/Yen global green finance index. Our focus now is on how to evolve and expand.