Financial Services and Markets Bill

Lord Remnant Excerpts

2nd reading
Tuesday 10th January 2023 Lords Chamber

[Lord Remnant (Con) (Maiden Speech)]

My Lords, it is a great honour and privilege to make my maiden speech today on this important Bill, in which I declare my interest as a director of Prudential and chairman of Coutts. When I remarked to a friend that I was waiting to speak on a topic of which I had some knowledge, if not expertise, he rather acidly observed that it would then be a very long time before your Lordships heard from me.

I thank noble Lords from all sides of the House for their support and encouragement in the last few months. I am also extremely grateful to all the officers and staff, particularly the doorkeepers and police officers, who have been so helpful in their advice and guidance.

The first Lord Remnant was my great-grandfather. He represented Holborn in the Commons for 28 years, from 1900 to 1928. He is perhaps best known for introducing successfully—but against much opposition, I regret to say—a Bill guaranteeing members of the police force one day’s rest off duty in every seven.

My father was a more infrequent attender, but I well remember sitting on the steps of the Throne, as my son does now, listening to his maiden speech in a debate on invisible exports, which I hope meant more to their Lordships at the time than it did to me as a callow youth.

As for myself, I followed my father into the City, as a chartered accountant and then an investment banker. Since then, I have sat on the boards of major listed financial services companies and so have long been subject to the rules of our financial regulators. I have also been a regulator myself: last year, I stepped down from the Takeover Panel after 10 years as deputy chair.

At the time of the financial crisis, I was working within government as chairman of the Shareholder Executive. I then sat on the board of UKFI, which was responsible for the Government’s shareholdings in the banks, and I was also appointed to the board of Northern Rock as one of the two Government-appointed directors. I can then perhaps view this Bill through the lens of both a regulator and a regulatee, and from the perspective of government, setting a framework which strives to find the right balance between the two.

The overarching objective of this Bill must be to deliver positive change and protection for individuals and business. To achieve this, we must maintain the high regulatory standards that are a cornerstone of the current regime and boost the competitiveness of the UK globally. These two aims need not conflict with each other. Indeed, they should be complementary. Further, there is a quid pro quo for the independence of our regulatory regime which underpins its effectiveness, and that is appropriate scrutiny and accountability of the regulators and their powers.

My main focus is on the regulatory framework proposed and its implications. Of particular note is the introduction of a secondary objective for the PRA and the FCA to promote the sector’s international competitiveness to support long-term growth. This will give business the confidence to expand and invest in the future.

This is an objective which would be by no means unique to the UK. Indeed, it is established globally. My own current experience is in the Far East, where Hong Kong, Singapore and others all have the promotion of economic growth and/or competitiveness as a key objective. This leads to a congruence of interests between industry and regulators, promoting greater access to financial services and improved client offerings.

So, this is a very positive additional dimension to the conduct and capital and solvency rules which should be the prime role of a regulator. Importantly, the Bill proposes economic growth and international competitiveness as a secondary objective. I believe this to be an appropriate balance. All investments carry risk. If the system is such that it effectively mandates regulators to use their powers only to reduce, if not eliminate, risk, the result is likely to be reduced innovation, increased costs and less consumer choice.

The prime responsibility for taking appropriate risk within established risk appetite must lie with companies themselves, in accordance with rules made by regulators and those within a framework set by Parliament. This new secondary goal will mandate our regulators, in the exercise of their powers, to consider proportionality and global competitiveness.

This Bill transfers significant additional powers to our regulators, as EU regulation is transferred from the statute book to the regulators’ rulebooks. So, it is also right that there should be a commensurate increase in accountability and transparency. We need a regime which balances consumer benefits with regulatory burden and cost. Too often, rules expand in response to a perceived problem but there is little analysis of the often greater cost of regulatory intervention.

Therefore, I am very much in favour of the additional reporting requirements which have been introduced into the Bill at this stage, and the strengthening of cost-benefit analysis through the creation of new CBA panels. At a later stage there will be the opportunity to clarify and strengthen these specific proposals further, and to enhance the scope of parliamentary scrutiny. I hope that my noble friend the Minister will be receptive to this.

I believe that these proposals overall are balanced and pragmatic. The Bill lays the foundation for a more competitive financial services sector, without compromising the UK’s high regulatory standards, which can now be tailored to our own specific needs.