Financial Conduct Authority: Accountability

Wendy Chamberlain Excerpts

Wednesday 1st May 2024 Westminster Hall

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

I beg to move,

That this House has considered the accountability of the Financial Conduct Authority.

It is a pleasure to serve with you in the Chair, Sir Philip. I welcome the Minister to his place. I know that he has an interest in these issues, and I hope that this debate will be a productive exercise for us all.

It may be worth explaining a little bit about how I came to be interested in the FCA. I probably speak more about fishing than financial services in this House, but the FCA came to my attention as a consequence of constituents who I have been helping. They were victims of a Ponzi scheme, and they lost hundreds of thousands of pounds as a consequence of fraud. The perpetrator was sentenced to 14 years, later reduced to 10 years, in the High Court of Justiciary.

On no fewer than three occasions, the FCA, or the Financial Services Authority as it was initially, failed to read the warning signs and take action. As a consequence, that was allowed to continue. Had it acted at the first available opportunity, there would have been only one victim of Alistair Greig, rather than hundreds.

As is often the case with these matters, a handful of people were determined to fight, but they were rebuffed at every turn. They were told, “No, this is nothing to do with us. It is not a matter of regulation; it is a question of the creation of a principal and of an agent,” and the rest of it. They took court action, which cost them £2 million, and they lost, but eventually the FCA was forced to put them into the financial services compensation scheme, which gave most of them compensation, albeit capped at £85,000. One of my constituents was out for £130,000, so he is £45,000 down and has suffered a further loss as a consequence of the fact that he was one of the brave souls who was party to the court action. The 95 people who were behind that court action are now left with a bill of almost £2 million.

Notwithstanding the fact that this is a consequence of the way that the FCA has gone about its business, it wishes to have no further part in any discussions with the people who were affected. I organised the screening of a documentary in the House a few weeks ago. Even the judge who heard their case turned up. I have never heard of this happening before, but the Financial Conduct Authority did not want to know. No one from the organisation was prepared to come to this House, sit in a room for an hour with the people whose lives had been most dramatically affected by their decisions, look them in the eye and explain what they had done.

[Wendy Chamberlain (North East Fife) (LD)]

My right hon. Friend is outlining a very concerning story. When many hon. Members think about the FCA, including me as an MP from the 2019 intake, it is in relation to its legislative authority for ensuring the changes on access to cash. Does he agree that ensuring that people get the right support so that communities have the access to cash that they deserve is a real concern?

--- Later in debate ---

[The Economic Secretary to the Treasury (Bim Afolami)]

It is a pleasure to be here. I thank the right hon. Member for Orkney and Shetland (Mr Carmichael) for raising this extremely important issue for debate. Neither he nor the House will be surprised to hear that the Government agree—and I very strongly agree—that accountability for the financial services regulators is of the utmost importance. Before I was in my current post, I set up, chaired and ran the Regulatory Reform Group, which brought together over a dozen Members of this House to think about how we reform the regulatory and accountability structures in this country. I have thought and been concerned about that issue for many years.

The right hon. Member for Orkney and Shetland and other Members will be aware that the FCA is operationally independent and must act to advance the objectives that Parliament has set for it. Independence of the regulators, however, must be balanced with clear accountability; appropriate democratic input, for which this debate is one forum; and transparent oversight. That is why the FCA is fully accountable to Parliament and the Treasury for how it discharges its functions.

To ensure that the regulators consider the financial services sector’s critical role in supporting the British economy, as the right hon. Gentleman pointed out, last summer we gave the regulators new secondary objectives to facilitate the international competitiveness of the UK economy and its growth for the medium to long term. By putting growth and competitiveness at the heart of our regulatory system, while retaining the primacy of protecting the safety and soundness for financial services firms and the wider system, we will ensure that the sector remains at the forefront of the global economy. It is vital that we hold the FCA to account for delivering on those objectives; I take that responsibility very seriously.

I will come on to some of the remarks made by the right hon. Gentleman, in no particular order. What comes to my mind first is that he mentioned the FCA’s so-called naming and shaming proposals, which have been covered in the media and elsewhere. The Chancellor has been publicly clear that he thinks the FCA should rethink that approach, and I share his view completely. I am particularly interested in, and strongly support, the remark made by the right hon. Gentleman that it is most often the small players that see the sharp end of that approach. What that does to innovation, competition and actual money for individuals invested in those small players, be they customers or shareholders, is very significant. The right hon. Gentleman explained eloquently that the impact of being named and shamed very early could be significant. I want to put on record, following up on what the Chancellor has said publicly, that I believe the FCA should rethink that and rethink it quickly.

[Wendy Chamberlain]

That is my concern, given what I have heard today in relation to access to cash. One real concern of communities is that banks rush to leave town and leave one bank standing. When we think about banking hubs and communities, we are thinking about ensuring that the most vulnerable have access, so it is really important those bigger players are held to account. Does the Minister agree?

[Bim Afolami]

The hon. Lady makes an important and fair point. I agree with her that access to cash—which, as she knows, this Government legislated for—needs primacy in the way she has described. Banking hubs are a replacement when several banks have shut in a town or large village, and I believe that the assessment criteria relating to where they come in and the speed of the roll-out should be looked at again. To be fair, that is not down to the FCA. The expected timeframe for it to finish its consultation on access to cash is the third quarter of this year, and although the FCA is part of that process, it is worth saying that it is not the primary driver; the primary driver is the industry.

Let me come to a case that I know is close to heart of the right hon. Member for Orkney and Shetland: the failure of Midas Financial Solutions. Mr Alistair Greig perpetrated a large-scale fraud over a period of several years, lying to those who trusted him with their pensions and life savings. Those were people who had done the right thing in their lives—they had done everything right—and because of the fraud of that individual and his company, they lost out. The FCA intervened in 2014, following the receipt of intelligence related to the Midas scheme. The Financial Services Compensation Scheme was subsequently able to compensate eligible customers for a significant portion of what was lost, and Mr Greig was charged, found guilty of fraud and imprisoned.

It is imperative that the FCA continues to robustly enforce its rules and standards, not just against firms that are carrying out blatantly fraudulent activity as in the case of Midas, but to ensure that all the firms it supervises meet high standards and deliver high-quality outcomes. The FCA operates a risk-based approach, not a zero-failure regime. It is important Ministers say this: we are not in a world—nor should we aim to be in one—where it is impossible for anything to go wrong ever. What we have to do is say to the FCA, “Your job is to maintain a high standard and high quality in the market for all the firms you supervise.”

HMRC Self-Assessment Helpline

Wendy Chamberlain Excerpts

Wednesday 20th March 2024 Commons Chamber

[Nigel Huddleston]

Yes, I am sorry to hear about those circumstances for the hon. Lady’s constituent. As I said, I have to be careful given the need to keep at arm’s length in individual cases, but she also raises a broader policy point. A lot of training and work goes on. I repeat that some 60,000 people work for HMRC, many of whom are dedicated, hard-working and well-trained individuals, and they often do a thankless job, but she makes a valid point, and I will happy raise that issue. I spoke incorrectly a few moments ago, so may I take the opportunity to correct what I said, Mr Speaker? HMRC staff are required to work in the office 60% of the time, not 40% of the time.

[Wendy Chamberlain (North East Fife) (LD)]

The Government were forced to extend the state pensions top-ups through to April next year because of unacceptable delays on the Department for Work and Pensions/HMRC helpline for that issue. The Minister has mentioned that a review will take place; will that helpline be in its scope? It is a concern to many, many constituents.

[Nigel Huddleston]

As I say, I have ongoing engagement with HMRC. It is operationally independent, but I do have some oversight, and ministerial guidance is appropriate. I appreciate all the comments made by hon. Members today. These will be live conversations, and HMRC is listening to the conversations today. I will be happy to raise with it the points that she makes.

Oral Answers to Questions

Wendy Chamberlain Excerpts

Tuesday 19th March 2024 Commons Chamber

[The Chief Secretary to the Treasury (Laura Trott)]

I commend my hon. Friend and my hon. Friend the Member for Kensington (Felicity Buchan) on their great work on this project. There appears to be a compelling case, and I know that the programme team at the Department of Health and Social Care is looking closely at the proposal.

[Wendy Chamberlain (North East Fife) (LD)]

T2. The Fife whisky festival took place in Cupar earlier this month, and was a great success. The industry welcomes the freeze in alcohol duty, but notes that it is only for six months. When will the Government provide the longer term consistency that the industry needs?

[The Exchequer Secretary to the Treasury (Gareth Davies)]

Our support for the Scotch Whisky Association is long-standing, and it was a pleasure to meet its representatives recently. We have frozen or cut duty for Scottish whisky in fiscal events going back many years. We are representing the Scotch Whisky Association in trade agreements, and that support will endure long into the future.

Autumn Statement

Wendy Chamberlain Excerpts

Wednesday 22nd November 2023 Commons Chamber

[Jeremy Hunt]

I thank my hon. Friend for his role in the transformation of the east midlands, through his other responsibilities in the councils there. Levelling up will work only if we harness the enterprise and ideas of local civic leaders, and he is a fantastic example of that.

[Wendy Chamberlain (North East Fife) (LD)]

Today is Equal Pay Day, which means, because of the gender pay gap, it is the day on which women, based on their average earnings, stop being paid compared with men, who continue to be paid to the end of the year. More concerning is the pension gap, which is 35% and means female pensioners stop being paid on 26 August. That is often because older women have chosen, and sacrificed their earning potential, to care for loved ones. When will the Government consider reforming carer’s allowance, which is currently an active disincentive to carers going into work? When we will start addressing this cliff edge, rather than making it shorter and sharper?

[Jeremy Hunt]

I am always happy to engage with any hon. Members if they have concerns about the way the benefits system operates in terms of disincentivising people who would like to work but cannot do so. Caring responsibilities are an area that she has raised and I am happy to engage with her on that outside this House.

Oral Answers to Questions

Wendy Chamberlain Excerpts

Tuesday 14th November 2023 Commons Chamber

[Nigel Huddleston]

The hon. Gentleman is well aware that there are real dangers that what he is proposing would make the UK a less attractive destination—that is a very important issue. The City pays for a huge amount of our NHS, for example, and non-dom taxpayers were liable to pay £8.5 billion in UK income tax in 2021-22 and invested more than £7 billion in the UK.

[Wendy Chamberlain (North East Fife) (LD)]

7. If he will have discussions with the Secretary of State for Work and Pensions on the potential merits of uprating benefits in line with inflation.

[The Chief Secretary to the Treasury (Laura Trott)]

The Government are committed to supporting households with the cost of living, delivering over £94 billion of support, including uprating benefits by 10.1% this year. As I have said, the Secretary of State for Work and Pensions is undertaking his review, and I cannot pre-empt that.

[Wendy Chamberlain]

Figures from the Trussell Trust show that food bank usage is at its highest ever level, and over the summer months a record 41,878 parcels of food were provided to 21,000 children in Scotland alone. Meanwhile, child poverty costs the Government £39 billion per year in poor health and educational outcomes. In order to tackle child poverty properly, will the Government commit to keeping benefits in line with inflation and lifting the two-child cap?

[Laura Trott]

We understand that things are really tough at the moment, which is why we have put in place £900 of cost of living support this year, but we also all need to work on bearing down on inflation. We are seeing it start to come down, but we know it is still too high, and we hope we will reach the Prime Minister’s pledge of halving inflation, because that is the biggest help we can give to households this year.

Non-domestic Energy Support

Wendy Chamberlain Excerpts

Monday 9th January 2023 Commons Chamber

[James Cartlidge]

I was absolutely clear in my statement that the precise reason that we are continuing the universal support is for those very companies, charities or other public sector organisations that fixed while prices were higher and have since reduced. We have precisely those companies in mind, but it is also for those companies that may currently be on a lower tariff that is about to finish, who had a long-term fix from some years ago when energy was much cheaper. The point is that it is another 12 months of security. It is right that it is not as generous as it was, but when speaking to stakeholders there was no expectation that a Government would continue a level of support costing £18 billion for six months. That is a very expensive intervention. This remains a significant intervention and will remain generous for charities, businesses and public sector institutions.

[Wendy Chamberlain (North East Fife) (LD)]

Since the autumn statement, I have raised the case of an agricultural food manufacturer in my constituency in relation to energy support four times. Despite positive noises in the Chamber and its offer to engage in the review, to date we have heard nothing back. I have two questions for the Minister. First, will the review be published on gov.uk so that we know exactly who has been consulted? Secondly, he mentioned the different centiles, but what if a business disagrees with the Government’s assessment? Who does it appeal to? Who is the ultimate arbiter?

[James Cartlidge]

If the hon. Lady has a business that wrote in to the Department to contribute to the review and did not receive a response, I would be grateful if she forwarded me a copy of that correspondence so that I can look into it.

Oral Answers to Questions

Wendy Chamberlain Excerpts

Tuesday 20th December 2022 Commons Chamber

[Wendy Chamberlain (North East Fife) (LD)]

2. What assessment he has made of the implications for his policies of trends in the level of energy producer profits in the last 12 months.

[The Exchequer Secretary to the Treasury (James Cartlidge)]

The structure of the electricity market means that the price of electricity is tied to the wholesale gas price. Russia’s invasion of Ukraine triggered an unprecedented increase in gas prices, driving energy prices to eight times their historic levels. As a result, many energy generators’ profits are well above pre-crisis levels. As announced at the autumn statement, the Government are introducing a temporary 45% tax on extraordinary returns made by some UK electricity generators from 1 January.

[Mr Speaker]

I call Wendy Chamberlain, whose birthday it is today. Happy birthday.

[Wendy Chamberlain]

Thank you, Mr Speaker.

Shell announced worldwide profits of £8.2 billion and £9 billion for the three-month period between July and September and the three months to June. BP announced more than double its profits for the same period. They have increased their dividend payments and spent billions buying back their own shares from the market. Shell says that it does not expect to pay any windfall tax at all this year and BP said that it would pay £678 million. Does the Minister agree that, if the Government had implemented a proper windfall tax that captured these things, we could be supporting offshore customers such as my own in North East Fife?

[James Cartlidge]

Obviously, the hon. Lady knows that we do not comment on the commercial decisions of individual companies. What I can confirm is that the specific levy to which she refers—the energy profits levy—will contribute £40 billion to the Exchequer. We must remember that that £40 billion will play a key part in enabling us to afford the support that we are giving to constituents throughout the United Kingdom this winter and next year, which will total, for businesses and households, more than £100 billion, and the Office for Budget Responsibility has already found that that will help to reduce inflation overall.

Alcohol Duty

Wendy Chamberlain Excerpts

Monday 19th December 2022 Commons Chamber

[James Cartlidge]

I am grateful to my right hon. Friend for his kind words. My first ever Parliamentary Private Secretary job was as a PPS to him, as a brilliant Health Minister. He mentioned simplicity: he is absolutely right that that is a key part of the reform package. In terms of the wine easement, as we call it, the 18 months is there precisely to enable the sector to adapt to the changes that are coming. He was also right to emphasise the on and off-trade differences. There is a key point on those differences. It is again about public health. The evidence shows that, while all drinking should be done responsibly, where people are socialising and going to the pub, they are less likely to encounter the more severe end of problem drinking; that is more likely to happen in private. That is one of the reasons why we have the differential.

[Wendy Chamberlain (North East Fife) (LD)]

The Scotch Whisky Association said on behalf of producers that it was furious about the Government’s decision to increase rates of duty in the autumn statement. The freeze is therefore welcome, but distilling is an energy-intensive business. The Minister said that the energy bills report will come in the new year, but the Chancellor assured me at the Dispatch Box during the autumn statement that it would come before Christmas. I would be grateful if he could explain the delay.

[James Cartlidge]

The hon. Lady makes an important point. We are aware of the importance of energy costs. I was absolutely clear just now that we will report in the new year. It has taken slightly longer than expected. These are complex matters. It is complex enough to put in place household support. Non-domestic support is particularly complicated because of the huge range of businesses involved. However, let us be clear what is happening: six months of support since October, worth £18.1 billion for businesses, including pubs, distillers and breweries, with their energy bills. That is huge. Of course, I know that people want to know what happens next and in the new year we will come forward with the results of our review.

Energy (oil and gas) profits levy

Wendy Chamberlain Excerpts

Tuesday 22nd November 2022 Commons Chamber

[Wendy Chamberlain (North East Fife) (LD)]

Thank you, Madam Deputy Speaker, and apologies; you are stuck with me. This is our third Government and our fourth Chancellor this year, and we do not get our Advent calendars until next week. The right hon. Member for North Somerset (Dr Fox), who is no longer in his place, said that Opposition Members failed to recognise the issues and potentially gave Putin a foot in the door by criticising what the Government announced last week. I am an Opposition MP. It is my job to oppose the Government where I do not agree with them—that is a fundamental part of my job. I do not think anybody can say that Members across the House have not been unanimous in our support for Ukraine. These global events have been developing over the last three years, so why is there such a difference between this autumn statement and the plan for growth eight weeks ago?

The right hon. Member for Epsom and Ewell (Chris Grayling) and the hon. Members for Bolsover (Mark Fletcher) and for Newcastle-under-Lyme (Aaron Bell) talked about mistakes being made, and that is the fundamental point. This is about trust, and the Government have damaged not only the trust of the public—the hon. Member for Newbury (Laura Farris) said that the Conservatives were trusted more than any other party; she is clearly looking at different polling from me—but the trust of the markets, because we saw a direct impact on people’s mortgages and the repayments of Government debt as a result of the plan for growth eight weeks ago.

I would like to touch on a few parts of the statement that my constituents are particularly interested in. The first is the support for off-grid households, which several Members have mentioned. A number of my constituents in North East Fife are off-grid. They had the miserly support of £100. That has now been increased to £200, but it barely touches the sides. We know that off-grid households are facing an average increase of over £1,000 in heating costs, as the cost of oil has almost doubled in the past two months, and some of my small communities who work collectively as a group with brokers to buy oil in bulk are really seeing the impact.

Practically, it is still not clear how the Government are planning to make that payment to households. The relevant gov.uk webpage, which has not been updated since last week’s statement, tells off-grid households that they will receive the payment either through their electricity bill, which many of those households will not have, or via a fund that is yet to be designed.

When we think about the poverty premium for those living in rural communities, from the increased cost of transport to having to go to shops where people pay a premium, as opposed to being able to access some of the bigger discounting shops, we realise that is a real hardship for families who are struggling to make ends meet. I hope that the Minister will be able to set out what form the fund will take, how it will reach my constituents who need it, and when it will become operational. I also hope for more detail on how we can ensure that residents in park homes and with other energy provision, such as district heating schemes, will receive support and how we can ensure that that support is being passed on by anybody involved in those schemes.

I am sure that the Minister will be aware that during last week’s statement I raised the support that businesses receive for energy, and I wrote to the Chancellor yesterday. Businesses in my constituency are very concerned about the current economic outlook. The purpose of my letter was to say that they are keen to engage directly with the ongoing review of the energy relief scheme. They want to demonstrate the vitalness of their operations and what they are already doing to reduce their energy costs, because they are struggling to see how they can reduce their costs. Given that it was said last week that we expect the review to set a high bar for support, some of them are beginning to look at their future operating plans.

From the Chancellor’s response to me last week, I believe that the review will be done before Christmas, but it is vital for businesses to have that certainty. At this point, we simply do not know which businesses in our communities will have support from April, how much it will be and what form it will take. That will be make or break for some.

Meanwhile, the Government have imposed stealth taxes that will take money out of the pockets of businesses. The decision to freeze the registration threshold for VAT means that businesses will have to charge their customers more or potentially reduce their already small profit margins. I am proud of the number of small businesses that operate across North East Fife, from Leven to Newport and from St Andrews to Cupar. Despite the current outlook, the diversity is increasing, which is great and those entrepreneurs are to be celebrated, but I am concerned that hurting the high street hurts commerce, growth, customers and communities.

I hope that the Minister will therefore clarify what consultation or engagement there will be with businesses on energy, particularly those in critical industries such as food production and social care, and that the Minister will reassure them that a base level of support will remain in place to prevent businesses failing. I urge the Minister to rethink imposing VAT on smaller businesses that need help, not harm, over the coming difficult years; businesses that do not exist cannot grow.

My constituents really care about our place in the world. We have a world-leading university in the University of St Andrews, which was previously involved in international development funding and project delivery. There is no doubt, however, that the 0.7% official development assistance target cut has had an impact on that. Indeed, it was confirmed to me yesterday that those projects are no longer running.

The Chancellor spoke about this being an autumn statement with compassion, but I am concerned that 34.5 million HIV/AIDS, TB and malaria transmissions may become more likely as a result of those cuts. Where is the compassion in taking support away from women and girls around the world who are disproportionately affected by those diseases? We rightly focus on the conflict in Ukraine, but I hope to join students at St Andrews this Sunday as part of the rallies marking the march for freedom for Afghan women and girls. An ask of that campaign is to maintain the development budget for Afghanistan, particularly for women and girls. That is the least we can do.

The Foreign Secretary’s written statement today confirms that the 0.7% test that the Government set is not being met and will not be reinstated, but I welcome the pause on ODA spending being lifted, which is a positive step. If part of the reason we are here is difficult global issues, it is even more important that our place in the world is clear.

I am pleased that the Government made up their mind and did the right thing by uprating benefits and the state pension, which is a huge relief to many. It was clear in the recent Opposition day debate that there was support for the triple lock on both sides of the House. I reiterate what I said then: for all generations, the security of a sustainable state pension is very important. Despite that, pensioners have not yet caught up, given that the triple lock was dropped last year.

On benefits, we know how far behind people on benefits are, because we know that the removal of the £20 uplift for universal credit and the failure ever to uprate legacy benefits have had a devastating impact.

Finally, I hope that Members across the House are aware that I have a private Member’s Bill on carer’s leave. I am working closely with Carers UK on that, and I just want to bring to the Minister’s attention a letter sent last week by Carers UK, along with organisations supporting carers and people with disabilities from around the country. They ask for a top-up payment to be made to unpaid carers who are entitled to carer’s allowance without receiving universal credit. They ask that the Government raise the earnings limit for carer’s allowance to £199.50 per week, to allow people to work more—we have all talked about people who are economically inactive, and surely we want to put in place measures that will help people to work more. They also ask for a review to be carried out of all relevant benefits, to ensure that unpaid carers do not fall into poverty as a result of their role. Indeed, we will all know of many cases where that is already the case.

I have made this plea before. Almost all of us will either give or receive unpaid care at some point in our lives. That experience is unique to each person, but it is also universal. The simple step of allowing carers to work more would not even be adding to the Government’s budget, so I really do hope that the Treasury will consider those reforms.

Autumn Statement

Wendy Chamberlain Excerpts

Thursday 17th November 2022 Commons Chamber

[Jeremy Hunt]

I always listen to my hon. Friend on matters such as supply-side reforms and, indeed, long-term competitiveness. I want to reassure him that, while it is a long-term aspiration to become the world’s next silicon valley, we want to put those foundations in place next year. That is why, in those five growth sectors, I said that we will review and decide on changes to all the EU regulations that affect our growth industries in the next calendar year to make sure that we put those foundations in place fast.

[Wendy Chamberlain (North East Fife) (LD)]

The Federation of Small Businesses says that business confidence is at its lowest rate since the pandemic, and in the Chancellor’s oral statement today there was no mention of energy support for business. All the written statement says is that businesses can expect significantly lower support. I have businesses, including care homes, in North East Fife that are facing closure as a result. In the terms of reference, also published by the Government today, for the review, it says there is a very high bar. The Chancellor must have a fair idea of what that means. Can he share it with us and businesses?

[Jeremy Hunt]

We absolutely want to think about care homes and small businesses in the hon. Lady’s constituency, and in mine, and we are spending roughly £18 billion on the support we are giving this winter. We are doing a lot as a Government, but we want people to have certainty and to know what the support will be next April. We need businesses to help themselves as much as we help them, which is why they need to play their part in important energy efficiency measures. Our intention is to announce that business support before Christmas.