Financial Services and Markets Bill [HL]

Lord Stockwood Excerpts

Report stage
Wednesday 9th September 2026 Lords Chamber

[Lord Stockwood (Lab)]

My Lords, it is a privilege to make my first contribution as a Back-Bench Member of this House in a slightly more relaxed environment than the last time I spoke on Clause 17 in the Moses Room. Indeed, I am told that some of the colour has started to return to my face, which is entirely due to the Recess rather than having to face-off against the rather formidable experience across the House.

Having spent a considerable amount of time before the summer defending Clause 17, I want to say a few words about this group, in particular Amendment 37. I argued then, and continue to believe, that the basic architecture of Clause 17 is right. We need regulators capable of exercising expert judgment, and we should be cautious about responding to every legitimate concern by adding another statutory duty or layer of prescription. However, I also heard clearly the arguments made across Committee that greater regulatory discretion must be accompanied by proportionality and meaningful parliamentary accountability. That is why I welcome the direction of these amendments. They reflect the concerns that were raised repeatedly before the summer, while preserving the regulators’ ability to exercise judgment. Amendment 37 is particularly important because there is a practical problem underneath the question of accountability. Parliament is scrutinising institutions such as the FCA, PRA and Bank of England with enormous analytical, policy and research resources. By comparison, even the Financial Services Regulation Committee operates with a very small team across an extraordinarily broad agenda. That imbalance matters, and we heard that.

Better accountability cannot simply mean regulators producing more information. Parliament must be able to interrogate that information, track what regulators have previously said and promised, and challenge them when the evidence does not match the rhetoric. I have written to the noble Baroness, Lady Noakes, offering some practical help, including exploring whether new analytical tools and AI, using publicly available information, could help to narrow that resource gap and do some of the analytical heavy lifting for the committee. To be clear, technology will not replace the judgment of those members or the expertise of committee staff, but it can potentially make that judgment better informed.

There is also a broader lesson in this group. One thing I learned during those six sittings in Committee is that scrutiny works best when government is prepared to listen. There may have been moments when I appeared rather attached to the drafting in front of me, which may be putting it mildly, but the purpose of this House is not simply to test the Minister’s powers of endurance, although sometimes it felt like that. It is to improve legislation. The group demonstrates that process working well. The Government have listened without abandoning the principles of the Bill and the House has helped strengthen the framework around proportionality and accountability. I particularly welcome Amendment 37 and support the approach represented by this group.

[Lord Vaux of Harrowden (CB)]

My Lords, while they do not go quite as far as I would have preferred, I welcome the Government’s amendments that will bring the essential regulatory principle of proportionality back into the discharge of the regulators’ general functions. I think it is a reasonable compromise to have met.

I have added my name to Amendment 62, tabled by the noble Baroness, Lady Neville-Rolfe, which emphasises the particular importance of proportionality to small and medium-sized enterprises, on which the regulatory burden can have a much greater impact than on large companies with dedicated compliance departments. I raised this on Monday in relation to the concern that the transfer of AML supervision to the FCA might disproportionately impact smaller firms.

I very much hope that the Minister can say something that will give us comfort that the regulators will take size, as well as other factors, into consideration when deciding what is proportionate regulation and supervision.