Mortgage Prisoners

Debate between Martin Docherty-Hughes and Andrew Griffith

Wednesday 28th June 2023 Westminster Hall

[The Economic Secretary to the Treasury (Andrew Griffith)]

It is a pleasure to see you in the Chair, Mr Robertson. I congratulate the hon. Member for West Dunbartonshire (Martin Docherty-Hughes) on securing the debate. I thank all Members for their contributions, including my hon. Friends the Members for North Norfolk (Duncan Baker) and for Kettering (Mr Hollobone) and the hon. Member for Feltham and Heston (Seema Malhotra), whose chairwomanship of the all-party parliamentary group on mortgage prisoners does so much to increase the standing of Parliament.

Our primary role, as we represent our constituents, is to use our voice to ensure that nobody feels that they are being forgotten. Today’s debate is proof of that. There are no easy answers, but this is Parliament at its finest, as it uses its powers to compel Ministers to come and account for themselves. I am grateful for the work of Rachel Neale and others in the Public Gallery who are continuing with this campaign.

I am humble about the potential failings of Government and regulators. It is not my role to sit here and mouth platitudes. I am not going to say that everyone always gets it right, and I cannot offer false hope. There is a lesson for us all in what we saw with the Horizon scandal, involving postmasters: every human process is fallible. As Minister, I will continue to keep an open and inquiring mind on such issues.

[Martin Docherty-Hughes]

I will make the same points that I made to the shadow Minister. In the interests of openness, will the Minister consider at some point a moratorium on evictions and a cap on the standard variable rate? Will he pledge to support the creation of a cross-party vehicle to enable closed books to pivot back into the mainstream market?

[Andrew Griffith]

I was just starting, but I will try to address the points that Members have made in the debate, including those made by the hon. Gentleman.

The Government and I recognise the anxiety that people in general have about mortgages, and we will use the tools at our disposal to limit the rise in rates. I will leave the general points and address the specifics about what we are debating today. We spent a lot of parliamentary time yesterday debating the new mortgage charter, but this is clearly a different debate—about those who have been in this situation for a long time, such as the hon. Gentleman’s constituent Chris and the constituents in Feltham and Heston and North Norfolk.

--- Later in debate ---

[Andrew Griffith]

I thank the hon. Lady for her intervention. I have met her and campaigners previously, and I am happy to undertake to continue to do so. The best way to find solutions is by working together. I would caution that everything I have seen so far tells me that there is no one-size-fits-all solution. There are a very large number of categories. There is a temptation to aggregate to the largest possible number, but the FCA’s analysis slices it down into more detail and recognises that there are varied circumstances in terms of why people have reached the position they have. I would love to hear more from the hon. Member for West Dunbartonshire about his constituent Chris’s circumstances. He told us that the mortgage was taken out in 2003, which was well before the change in Northern Rock post-2008. By 2007, it had already moved into an interest-only mortgage.

I am a data-led Minister, and as we unpick the data we often find co-mingled in these issues, understandably, the human stories of people who are vulnerable, have fallen on hard times and have been affected by the personal tragedies that all of us as Members hear in our constituency surgeries every week. But those are, to some degree, disconnected from their particular choice of mortgage and are circumstances that affect the wider taxpayer population.

[Martin Docherty-Hughes]

I need to come back on that point. The only tragedy here is that my constituent and his wife will lose their home in 2029 if this Government and any future Government do not get their finger out.

[Andrew Griffith]

I hear the hon. Gentleman. As I say, one of the ways to explore solutions is, I would counsel, to look at the individual circumstances and see what remedies, if any, there are, based on particular cohorts.

Cryptocurrency Regulation

Debate between Martin Docherty-Hughes and Andrew Griffith

Tuesday 13th June 2023 Westminster Hall

[Andrew Griffith]

I pay tribute to my right hon. Friend for the points that he made about how important it is that we lean into this space. He used the excellent and apposite example of fintech—a flourishing industry, for which the UK is genuinely one of the leading centres in the world. I share his concern about the availability of bank accounts. As he understands—I am sure he would not wish it otherwise—that is a commercial decision for organisations, but to the extent that the regulatory framework, or indeed the regulatory culture, is a contributing factor, Parliament will bring cryptocurrency into the regulated domain and decide that it is a lawful activity that could reap many benefits for the United Kingdom. It would, of course, be a concern if those who take part in this lawful and well-regulated activity were unable to procure bank accounts, so I can undertake to keep a close eye on that. I do not plan to make an immediate intervention, but he and other colleagues have raised the issue, as has the APPG. I will undertake to keep a close eye on it, and I am open to hearing examples of where people cannot open bank accounts.

The hon. Member for Strangford (Jim Shannon) has left the room, but I can give him the assurances he seeks. As a proud Unionist, it is a delight to have such a diverse set of representatives from across all parts of the Union. It is wonderful to have contributions from all parts of the Union today, but financial services is a reserved matter, and the Treasury and Parliament will bring forward the right regulations. The regulators have hitherto been clear about some of the risks in this domain, and we seek to strike the appropriate balance between not regulating and introducing appropriate regulations while recognising the potential consumer harms and making sure that we have effective, clear, proportionate and timely regulation. Those seem to be entirely desirable attributes.

[Martin Docherty-Hughes]

I am afraid I am going to have to challenge the Minister on his point about regulation. We already have regulation, which he and I have talked about, especially in Committee on the Finance (No. 2) Bill. Pretending that we did not have levers for a technology that has, in its tech section, been around for 30 years is, quite frankly, pie in the sky. When will the Government implement the existing regulation around fraud to deal with some of the crypto bros we have all been talking about for years?

[Andrew Griffith]

Fraud sits separately as part of criminal law. Fraud is fraud, which is a long-standing offence. I am sure the hon. Member has studied in detail the Government’s most recent fraud strategy, which is excellent, and I would be happy to introduce him to the Government’s recently appointed fraud tsar, my hon. Friend the Member for South Cambridgeshire (Anthony Browne), who will redouble the Government’s focus on tackling fraud.

On regulation, the hon. Member for West Dunbartonshire (Martin Docherty-Hughes) will recall that we recently passed secondary legislation covering cryptoasset financial promotions, which has now been passed by both Houses of Parliament. The regulators are working on its implementation, which will happen later this year. Importantly, it will once again bring the domain within the realm of the regulators we seek. I should say that the Government have no plans for a crypto tsar, but I undertake to champion the sector, quite rightly, in my role as the Economic Secretary, because I am responsible for financial regulation in the UK.

Given the potentially vast benefits of cryptocurrency, it is right that the Government are leaning forward and taking proactive action to harness the opportunities. I recognise the balance struck in the all-party parliamentary group’s report. I also agree that the UK must show early leadership within this internationally competitive sector, which is why we are working flat out to give clarity and to implement the framework as quickly as possible. I welcome the offer of support from the hon. Member for East Kilbride, Strathaven and Lesmahagow—it is a dialogue that we should continue—and I welcome the work of the all-party parliamentary group. I have regularly engaged with the cryptoasset sector. Rather than set up a single taskforce, I am regularly having multiple engagements to try to move things forward.

Fellow parliamentarians have suggested that cryptoassets are akin to gambling. I refute that. That is not the Government’s position; the right bodies to regulate them are the financial regulators, with their deep expertise and understanding of the issues such as how to ensure that markets are fair and how to protect consumers. They have much greater resource. That is no reflection on anyone, it is simply an important fact.

Importantly, industry can see that the UK has clear and ambitious plans for cryptoassets. I was thrilled to welcome one of the world’s leading tech investors, Andreessen Horowitz, which has decided to open its very first international office—its first outside silicon valley—in the United Kingdom. I hope that it blazes a trail that many others follow, and that reaches into all parts of this wonderful United Kingdom because it is about much more than simply London and the south-east.

I hope that I have made it sufficiently clear that the Government want to be a leader in this space and on the opportunities for growth that it can bring to the UK economy. In my view and that of the Government’s view, the best way to do that is to continue to develop a comprehensive regulatory regime that will create a safe environment to encourage innovation while managing the risks. I look forward to continuing discussions with parliamentary colleagues on this important agenda.

Question put and agreed to.

Digital Pound

Debate between Martin Docherty-Hughes and Andrew Griffith

Tuesday 7th February 2023 Commons Chamber

[Andrew Griffith]

My hon. Friend makes two important points. The first is about the long-term nature of this Government, whose focus on delivery extends to the Prime Minister’s organisation of Departments to ensure that they deliver the outcomes that the British people expect.

My hon. Friend also highlights the importance of financial education. I can commit that, as part of the national dialogue on this important issue, we will give thought to how we ensure that we educate our citizens to prevent them from falling prey to the terrible financial scams that people are trying to perpetrate in the financial system today.

[Martin Docherty-Hughes (West Dunbartonshire) (SNP)]

I declare non-pecuniary interests as chair of the all-party parliamentary group on blockchain and as a vice-chair of the crypto and digital assets all-party parliamentary group. I am glad to see the co-chair, the right hon. Member for East Ham (Sir Stephen Timms), in the Chamber.

The Minister will know that I led the first debate in this House on cryptoasset regulation; I think he was the Minister who responded. Central bank digital currencies played a major part in my speech, so I welcome the opportunity for a consultation. For all the bad press that cryptoassets have—alas, justifiably—received, there exists an undeniable opportunity, as I am sure he will appreciate, for CBDCs to create an accessible, reliable store of value using the principles of distributed ledger technology. Will he elaborate on the aspects of financial inclusion he hopes to bring forward to ensure equal access to the CBDC for the most digitally excluded of our constituents, not just for the crypto bros?

[Andrew Griffith]

I thank the hon. Member for his contributions to the ongoing debate. I have said that there is an opportunity for us to design in financial inclusion; that is one of the advantages of consulting early and of building a consensus across the House on a subject as important as our nation’s currency. He is quite right that it needs to be accessible and reliable as a store of value; the opportunity for it to sit side by side with cash and with the existing bank and digital payments system should give us the ability to drive financial inclusion outcomes.

Financial Services and Markets Bill (Ninth sitting)

Debate between Martin Docherty-Hughes and Andrew Griffith

Committee stage
Thursday 3rd November 2022 Public Bill Committees

[Martin Docherty-Hughes]

The Minister talks about how he wants the impact of closures to be understood in the decision-making process. Understood by whom? The banks are telling us why they want to close their branches: they are saving money. The FCA is saying, “The banks are closing their branches to save money.” Our constituents know what it means to lose a bank branch. There is nothing new here. We understand why banks are closing their branches: they want to save cash. They do not want to continue a local service for our constituents, so what does the Minister mean by “understood”? Understood by whom—the banks, the FCA or our constituents?

[Andrew Griffith]

Ultimately, the banks are downstream of the widespread issue that is the change in consumer behaviour. We have heard both in evidence and in comments made in Committee that 86% of transactions are now digital. The use case of going to a bank branch has evolved rapidly in my lifetime and the lifetime of all Committee members. That is the ultimate macro issue that we are dealing with. Is that issue understood? I think it is.

Solutions could be brought to the table, in terms of both a greater toolkit for the FCA and greater prominence and scrutiny of the FCA as it uses the existing toolkit and the new powers in the Bill. There are also industry-led solutions, which having perhaps started slowly are increasing at greater pace. Proportionality is about giving those developing trends time to mature to see what models can be developed, while accepting the underlying need for action.

I therefore ask the hon. Member for Hampstead and Kilburn to withdraw the motion.

Financial Services and Markets Bill (Seventh sitting)

Debate between Martin Docherty-Hughes and Andrew Griffith

Committee stage
Tuesday 1st November 2022 Public Bill Committees

[Andrew Griffith]

In substance, the Payment Systems Regulator, in the same way as the FCA, the Bank and the PRA, will have the target as one of its principles. It will be for the PSR to decide how it reports against that. These are ultimately decisions for the regulators themselves to put into practice. To the extent that I have more information at this stage, I will write to the hon. Lady with any clarity I can provide.

Question put and agreed to.

Clause 46 accordingly ordered to stand part of the Bill.

Schedule 7 agreed to.

Clause 47

Cash access services

[Martin Docherty-Hughes (West Dunbartonshire) (SNP)]

I beg to move amendment 40, in clause 47, page 68, line 9, after “of” insert “free of charge”.

This amendment makes reference to the provision of free of charge cash access services in Schedule 8.

Financial Services and Markets Bill (Eighth sitting)

Debate between Martin Docherty-Hughes and Andrew Griffith

Committee stage
Tuesday 1st November 2022 Public Bill Committees

[Andrew Griffith]

I will be brief. We all join hands in taking any action that we can against fraudsters. It is a terrible crime, and one that is on the rise, and the Government will do everything in our power to take action.

I say to the hon. Member for Hampstead and Kilburn that I will take no lessons from the Opposition on fraud. The impediment to cracking down on this issue lies solely within EU law. It is this Government that have withdrawn from the European Union—a policy that her party now belatedly supports, but did not for many years. It is only by bringing forward this legislation and withdrawing from the European Union that we are able to put in place clause 62.

[Martin Docherty-Hughes (West Dunbartonshire) (SNP)]

rose—

[Andrew Griffith]

I will happily give way to my colleague, who I think, unlike the Opposition, still wants to be part of the European Union.

[Martin Docherty-Hughes]

Definitely. Is the Minister therefore saying that the European Union was promoting fraud within the financial framework of the United Kingdom of Great Britain and Northern Ireland? Is that what he just said?

[Andrew Griffith]

I wish the hon. Gentleman was attentive to what I was saying. That was not what I said; I did not use the word “promote” in any way. I said it was an impediment. Clause 62 addresses the fact that under retained EU law, it is not possible to take the action that we wish to take on push payment fraud. That is a fact, and that is why we came forward with the Bill. There are many other things the Government are doing outwith the Bill to tackle fraud, and I will happily sit down and talk with anybody—and meet with any party—who has practical suggestions to tackle fraud.

--- Later in debate ---

[Martin Docherty-Hughes]

I agree with the official Opposition on clause 63. I must say, we have talked about 1979, but I would mention 1977, when the Dalmuir Credit Union was opened, and I was number 501 with a membership card, around the age of six, on the church hall stage.

I am very aware of the good works that credit unions such as Dalmuir, Dumbarton and Vale of Leven do in my constituency, and, I am sure, across other Members’ constituencies, but I share the concerns expressed by the official Opposition about the existing infrastructure. I hope that the Minister can say something to alleviate concerns about that existing framework—not only for credit unions but for other local banks, which have been diminished over the past couple of years—and about how the legislation helps to grow this sector of mutual financial support in local communities. We know our banks and post offices are closing, but the credit unions, especially, can be a good cause on which we can all agree.

[Andrew Griffith]

I thank the hon. Members for West Dunbartonshire and for Hampstead and Kilburn for raising those points. I look forward to hearing the debates about the new clauses that have been tabled.

The Government are on the side of credit unions. We would like to see the mutual and co-operative movement flourish. We need more diversity, affordable options and access to credit. The Government introduced this clause with the absolute intention of helping to expand the range and create more economic opportunities for those bodies. If we have, in some way, fallen short of what could be achieved, I look forward to hearing more about that. I cannot comment on the specific point made by the hon. Member for Hampstead and Kilburn about sharing households and data, so perhaps she would allow me the courtesy of writing to her afterwards if I can find out anything about those points.

This Bill is part of a wider set of measures. On Friday, we discussed on the Floor of the House a Bill to help to prevent the demutualisation that has reduced the number of mutuals in recent years. I was pleased to give Government support to that Bill. There is an ongoing conversation with the Law Commission on the options to review the Co-operative and Community Benefit Societies Act 2014 and the Friendly Societies Act 1992. There is a very good case for looking at modernising the legislation in this sector.

Question put and agreed to.

Clause 63 accordingly ordered to stand part of the Bill.

Schedule 14 agreed to.

Clause 64

Reinsurance for acts of terrorism

Financial Services and Markets Bill (Third sitting)

Debate between Martin Docherty-Hughes and Andrew Griffith

Committee stage
Tuesday 25th October 2022 Public Bill Committees

[Andrew Griffith]

That is not the position in the Bill, which does not contain that date. Whether or not the Government’s intention at the time was different, nothing in the Bill says that that will happen. The Government will not diverge for divergence’s sake, because we understand the need for continuity to give financial services companies the confidence that they seek.

[Martin Docherty-Hughes (West Dunbartonshire) (SNP)]

It is good to see you in the Chair, Dame Maria. Does that also apply to financial organisations based in Northern Ireland, Minister?

[Andrew Griffith]

If I may, I will come back to that point later.

--- Later in debate ---

[Martin Docherty-Hughes]

I asked the Minister earlier about Northern Ireland, and SNP and Labour Members would be interested to hear what he means by “proportionality” when it comes to services, EU-derived legislation and what differences there will be between the UK and Northern Ireland. He never mentions Northern Ireland—he keeps talking about the United Kingdom.

[Andrew Griffith]

To the question asked by the hon. Lady, my understanding is that the terms will have the common law usage. It would be inappropriate for me to try to insert my own definition.

Question put and agreed to.

Clause 6 accordingly ordered to stand part of the Bill.

Clause 7 ordered to stand part of the Bill.

Financial Services and Markets Bill (Fourth sitting)

Debate between Martin Docherty-Hughes and Andrew Griffith

Committee stage
Tuesday 25th October 2022 Public Bill Committees

[Martin Docherty-Hughes (West Dunbartonshire) (SNP)]

What do the Government mean by “innovation” in a piece of legislation? I wonder why such a term is used, because it is so broad. What does the Minister actually mean?

[Andrew Griffith]

If the hon. Gentleman will let me continue, I can offer some clarification. It is vital that the Government have the flexibility to develop a world-leading regime for cryptoassets in an agile way. The innovation itself comes from emerging new technologies or new uses for those technologies. The role of the Government and the Treasury in this respect will be to create regulatory frameworks that enable their safe deployment, which I hope all Members of the House agree with. Together, amendment 22 and new clause 14 will ensure that that happens.

[Andrew Griffith]

I am cautious of time; this issue would be apt for a debate in itself rather than being discussed as part of the Bill’s technical clauses. Aspects of Bitcoin are already within the perimeter of the regulatory regime. As I said at the beginning of my remarks, that is an emerging area. The hon. Member for Wallasey is quite right that there are trade-offs, and we want to protect consumers while not shutting the regulatory regime off from an emerging set of technologies.

[Martin Docherty-Hughes]

rose—

[Andrew Griffith]

I give way again, but I do not want to turn this into a debate about the underlying societal challenges of an emerging technology; I want us to confine ourselves as much as possible to the Bill.

[Martin Docherty-Hughes]

I am grateful to the Minister. I disagree that crypto is emerging; it has been around for quite a long time. In terms of parity of regulation and consumers, there are also the producers. It seems that there would be a halo effect: for example, larger companies would control stablecoin, but small or medium-sized companies that could produce stablecoin might be excluded. Will the Minister assure us of the Government’s intention to create equity in the stablecoin market?

[Andrew Griffith]

It is certainly not the Government’s intention to create anything other than opportunities for different participants to emerge and bring forward products in the sector. Those could include stablecoins, which are asset-backed cryptoassets. Over time, they could include central bank-issued currencies. The Government have indicated a desire to explore that, but have not yet confirmed that the Bank of England or the Treasury intend to issue.

Of course, we must ensure that products already out there being advertised to our consumers are appropriately regulated within the regulatory perimeter. We are not preferring or advantaging one or other part of that, but without the amendment and new clause we would not be able to bring forward the appropriate regulations, which the regulators will consult on with industry in due course. I hope that clarifies the Government’s thinking. Outwith the Committee, it will be appropriate in due course for the Government to update their set of policy objectives for this space. The subject that we are discussing today is somewhat narrower; it is just the remit of the Bill.

Amendment 22 clarifies that cryptoassets are within scope of the designated activities regime introduced by clause 8. We talked earlier about the designated activities regime—the DAR. By bringing cryptoassets within its perimeter for the first time, some of the societal outcomes and concerns that hon. Members have raised can be addressed. If we do not bring them within the perimeter, those concerns cannot be addressed.

New clause 14 clarifies that cryptoassets could be brought within the scope of the existing provisions of the Financial Services and Markets Act 2000 relating to the regulated activities order. The substance is that cryptoassets will be treated like other forms of financial asset: not preferred, but brought within the scope of regulation for the first time. That is the aim of the new clause. It will ensure that the Treasury is equipped to respond to developments in the crypto sector more quickly and deliver regulation in an agile, risk-based way that is consistent with our approach to the broader financial services sector.

The Treasury will consult on its approach with industry and stakeholders ahead of using the powers, to ensure that the framework reflects the unique features, benefits and risks posed by crypto activities. I think that is the assurance that hon. Members seek: that the Government will consult before seeking to use the powers. Any secondary legislation made to bring new cryptoasset activities into the regulatory perimeter would be subject to the affirmative procedure, so each House will have an opportunity to debate the legislation. That gives Parliament the appropriate oversight.

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

We welcome Government amendment 22 and Government new clause 14, which we recognise would extend financial protection to cryptoassets. It is a welcome and important move that will help to prevent high-risk cryptoassets from being falsely advertised to the public.

Does the Minister believe that the definition of cryptoassets is broad enough to capture financial promotions of as yet non-existent cryptoassets? I also wanted to ask him how the broad-ranging definition of “crypto” used in clause 8 takes account of the fact that the Bill only brings stablecoins into payment regulation.

[Martin Docherty-Hughes]

I draw the Minister and his Department’s attention to the work of Dr Robert Herian, who is one of the primary academics on regulation. I am mindful that he says it is the technology that underpins stablecoin and other related cryptoassets that we seek to regulate through the legislation. I welcome that—it is a step forward—but he has also said that the technology

“may offer an opportunity to recalibrate the powerplay between those who would engage in aggressive tax strategies and planning, and those charged with regulating them”.

Can the Minister advise Members whether he believes that this approach to stablecoin and future innovative technologies, which are already there, will enable a recalibration, so that finance is not utilised in some type of tax dodge? Could he reinforce that point? Every time we hear a discussion about stablecoin and cryptoassets, there is a certain element of finance that I do not think anyone here would really support.

[Andrew Griffith]

On the question posed by the hon. Member for Hampstead and Kilburn, I do believe that the definition is broad enough. If there are specific concerns or use cases that the hon. Member feels are not encompassed, I am happy to take that back offline or to write to her with advice. The intention is clearly to allow sufficient flexibility to broaden the perimeter.

I am not fully familiar with the works that the hon. Member for West Dunbartonshire talks about, but I am happy to become more familiar with them over time. It is clearly not part of the Government’s intention to legitimise what would not otherwise be legitimate or to create the opportunity for issuers to evade responsibility to society. That is not the Government’s aim and objective.

Amendment 22 agreed to.

--- Later in debate ---

[Andrew Griffith]

I will do my very best to respond to that question. It is a point of detail. Today we are putting frameworks in place to try to legislate for as many outcomes as possible. By definition, that means that there is not a definitive list, but I will write to the hon. Lady and share the letter with the Committee.

To that point, given the breadth and variety of activities that may be designated under the DAR, a tailored supervision and enforcement framework will be needed for each one. We all recognise that we might want to regulate insurance in a different way from investment banking.

Proposed new section 71Q of FSMA therefore gives the Treasury the power to confer appropriate powers on the FCA for the purpose of supervising and enforcing regulations and rules relating to designated activities. Some activities that the Treasury may designate already have criminal offences attached to them under FSMA—for example, part 6 of FSMA contains two offences related to the offering of securities. Proposed new section 71Q will allow HM Treasury to maintain an existing criminal offence of offering securities and to modify it, including by adjusting the scope of the offence to reflect the scope of the new designated activity. I imagine from comments made that that would get broad support.

The Government will be able to apply and modify only criminal offences that already exist in FSMA. The provisions will not enable the Treasury to create a wholly new criminal offence relating to this activity. Schedule 3 sets out proposed new schedule 6B to FSMA. The schedule is inserted by clause 8 and lists examples of the types of activity that the Treasury may designate using the power introduced by clause 8. That may be the source of my response to the hon. Member for Kingston upon Hull West and Hessle. At this stage, schedule 3 is indicative only. The Government intend that a number of market activities currently regulated under retained EU law will be designated for inclusion in DAR. It is anticipated that a wider range of activities will be designated in future to ensure that the regime supports an agile and proportionate approach in the UK.

[Martin Docherty-Hughes]

Will the Minister help with a quick clarification on proposed new section 71Q? It refers to “conferring powers of entry”. Would that be on His Majesty’s Revenue and Customs? It has UK-wide powers of entry. Does that refer solely and wholly to HMRC, or does it refer to others who might require entry under the legislation?

[Andrew Griffith]

I will write to the hon. Gentleman to confirm that. It is important that our model of financial services regulation be responsive to emerging opportunities and challenges, and that includes those that can be regulated in future but are as yet unknown. Hon. Members can understand the thrust of what we are trying to do through clause 8 and schedule 3.

Financial Services and Markets Bill (Second sitting)

Debate between Martin Docherty-Hughes and Andrew Griffith

Committee stage
Wednesday 19th October 2022 Public Bill Committees

[Andrew Griffith]

Q Do you think this is a good example of an area where it is important that the Government have an intervention power? We have seen some patterns of behaviour emerge very rapidly and cause significant public policy concern.

Mike Haley: Yes, I think we have seen in the past that regulators have not moved quick enough when there has been widespread harm. We might look at payment protection insurance, for example, where consumers brought plenty of reports into MPs’ and Government in-trays, and yet the regulator was rather slow in intervening in a market—a market that had been abused. I think that an intervention power could be very powerful.

[Martin Docherty-Hughes]

Q In terms of clauses 21 and 22 on digital settlement assets, how effective do you think the Bill will be in ensuring that we reduce fraud with digital settlement assets that use blockchain? I am not having a go at the technology, because that is a completely different discussion. How effectively will an open or closed blockchain, and the differences between the two, be regulated by this Bill?

Mike Haley: I think one of the problems of all legislation is how quickly it keeps up with changes in technology, and it being broad around principles. As I mentioned, with the authorisation of anyone who becomes a regulated entity dealing with digital settlement assets, it is important to have clear criteria for the onboarding—know your customer—and to know who the accounts are opened by. I find that already we are looking at money laundering through coin swap services, for which you do not need an account and may not be under this regulation. There are cross-chain bridges, where someone can move from one blockchain to another. I am not an expert on whether clauses 21 and 22 cover some of those services that have been created, which were probably not in the thinking when the Bill was starting to be drafted.