Draft Financial Services (Miscellaneous) (Amendment) (EU Exit) (No. 2) Regulations 2019

Alison Thewliss Excerpts

Wednesday 22nd May 2019 General Committees

[Alison Thewliss (Glasgow Central) (SNP)]

It is a pleasure to see you in the Chair, Mr Robertson, and a pleasure to be speaking third—I have been able to catch my breath, having come up from Westminster Hall. I share the concerns that the hon. Member for Oxford East has iterated. We on this side of the House have been almost pleading with the Government, asking, “Are you sure you are getting this right?” It gives us absolutely no pleasure today to find out that the Government have not been getting it right. They have made errors and omissions that have come to light only months and months down the line. As the right hon. Member for North Durham just mentioned, if we had been in a no-deal Brexit scenario right now, we would be finding these errors out while these things were already in operation.

I ask the Minister what assessment is being made of all the other statutory instruments that we have scrutinised in this room over the past year. How do we know further errors have not been made? What checking are the Government doing to make sure further errors will not emerge, and who is the Minister relying on to make sure that those errors are being picked up? Is it up to individual firms to find those errors and report them to the Government somehow, and if so, what does that mechanism look like? Can we advise financial services firms, consumers, or anybody else to email the Minister and let him know if they find an error?

This situation gives Members on this side of the House no confidence that things are working properly. Any notion of the withdrawal Bill coming back to the House is laughable if the Government cannot table SIs without coming back with technical amendments months later. It is a dog’s Brexit, quite frankly, and we cannot have much confidence in it. Not only that: it cannot give much confidence to those people outside the House who work in the financial sector, both here in the UK and, more widely, in Europe and the rest of the world. If we cannot get these things right now, where will that leave us as we go forward, perhaps in a no-deal scenario under a different Government? I am sure that the hon. Member for Salisbury is a great Minister, and he may keep his role in a different Government; who knows. However, as the right hon. Member for Delyn rightly pointed out, he cannot give any assurances to the House about what the future may look like.

If later in the year we end up with a hard Brexiteer Prime Minister at the helm, we have no assurance that we will not be driven over the cliff into circumstances in which we have to rely on statutory instruments passed without the greatest amount of scrutiny possible. We may end up in a scenario in which we are relying on that deficient legislative framework to make sure that our financial sector is able to operate.

[Andrew Bridgen (North West Leicestershire) (Con)]

The hon. Lady is doing a very good job of explaining the complexities of unravelling a 46-year-old union. What does she think would be the complexities of unravelling a 300-year-old Union?

[Alison Thewliss]

It certainly would not start from here. The Brexiteers have started with no plan, nothing written down, no objectives, and no sense of where they want to arrive at, without even agreement among themselves about what they want to achieve. I will take no lectures from the hon. Gentleman on how we do negotiations, because this is a complete and utter shambles. I suppose it is no accident that we can look at the figures from EY, which says that since the 2016 referendum financial services firms have voted with their wallets and moved $1 trillion of assets from the UK to the rest of the EU—to their benefit, and certainly not to ours.

The financial services industry in Scotland is looking at the situation with a sense of disbelief and horror. Representatives come and ask me what is going to happen, and I cannot tell them. The Minister cannot tell them. The Prime Minister will no doubt be out of the door in a couple of days’ time, and she cannot tell them. What kind of confidence can the industry have that there will be a stable financial regime going forward, if we cannot even get these SIs correct? The other day, the Minister could not even tell my hon. Friend the Member for Glasgow North (Patrick Grady) whether the UK would break even at any point in this process. We will lose out as a result of Brexit, and she could not say when the UK economy will start to improve after all this disruption.

A number of the changes to the SIs—described in paragraphs 7.10 to 7.13 of the explanatory memorandum —are designed to improved consumer protection and increase consumer awareness where firms are in transitional regimes. That is quite a worrying omission. Had this not been brought to light, people who might rely on those types of consumer protection would not have had them under this SI, and perhaps under others. We simply do not know. We have raised concerns that industry has brought to us, when we have been able to do so.

This SI has gone through in a very haphazard manner, which is certainly concerning. The issues and concerns have been well iterated by the Opposition, but I want to ask the Minister about the procedure and process to ensure that all the other SIs that we have wheeched through the House in no time at all are as rigorous as they should be. It is deeply unfortunate that he has had to come back and do this today. I feel very sorry for his having to do it, and for the civil servants who have had to go through the process as well, but there must be a better process than this. The corrective process should be better than this. I would say that we are heading for chaos, but we are already in chaos. It gives Scotland no confidence that this UK Government are the strong and stable environment that we were always promised they were. I seek assurances from the Minister on what is being done to address these issues.

--- Later in debate ---

[John Glen]

I am grateful for the points that Members have raised, which I will be happy to go through. The additional measures and corrections in the instrument will help to ensure that the UK’s financial services regulatory regime continues to be prepared for withdrawal from the EU in any scenario, but I recognise the context of the multiple debates we have had and the concerns expressed by multiple Members on the process that has got us to this point and how it needs further elucidation, which I will try to do now. I start by saying that we have used the provisions in the legislation and that the changes did not impact materially on any meaning of thousands of pages of legislation. We always intended and expected that this mechanism would be required in the context of that volume of SIs.

I will now try to give some more detail. In a no-deal scenario, for which any responsible Government must be prepared, EU law and regulators will not have jurisdiction in the UK, so any relevant functions will be taken on by UK authorities and UK law will apply. The hon. Member for Oxford East made reference to Andrew Bailey’s recent comments on deregulation. It is important to contextualise that the European Union (Withdrawal) Act 2018 does not give the Government power to make policy changes beyond those needed to address deficiencies arising as a result of exit.

The hon. Lady tempts me to enter into a wider discussion of the future of regulation.

All I will say on that is that I do not believe that enduring competitive advantage can be or will be achieved in any jurisdiction by deregulation. It means for the UK at the moment that, as far as possible, the same rules that apply pre-exit will apply immediately post-exit. However, it is necessary to make changes to reflect the new third-country relationship between the UK and the EU, and to transfer functions currently carried out by the EU bodies to the appropriate UK body, in the context of this provision of a no-deal scenario.

Our onshore regime will be safe and workable until we have the opportunity to consider long-term reforms to our regulatory framework. The hon. Members for Glasgow Central and for Oxford East make a fair point about the clarity of that long-term arrangement. It obviously needs urgent work by the Government to establish that.

[Alison Thewliss]

The Minister says that it will need “urgent work”. When will that “urgent work” be done?