Draft Financial Services and Markets Act 2000 (Financial Promotion) (Amendment) Order 2023 Draft Financial Services and Markets Act 2000 (Commodity Derivatives and Emission Allowances) Order 2023

Debate between Andrew Griffith and Kit Malthouse

Tuesday 2nd May 2023 General Committees

[Andrew Griffith]

It is a pleasure to follow the hon. Member for Brent North. I will attempt briefly to address Members’ concerns.

The fact that there is an exemption process is something that came out of the consultation, to which we responded. It is the way in which we can encompass regulation around what is currently an unregulated sector. It still requires the relevant firms to act as if and to comply with the FCA requirements in this area. It is not a bug; it is a feature. I hope the hon. Member for Hampstead and Kilburn will accept that.

We did not talk too much about the specific regulations with which we expect the FCA to come forward. It is right that the purpose of this SI is to set out the overall structure, on the bones of which the FCA will put some flesh. Members will be interested to know, though, that the regulations will certainly encompass, for example, a 24-hour cooling-off period.

I will try to address the points of my right hon. Friend the Member for North West Hampshire separately—he gave an interesting tour around this space—but he is wrong to assert that the regulation for cryptoassets would be the same as that for stocks and shares or for bonds. Cryptoassets would form part of a high-risk group that required, for example, a 24-hour cooling-off period, which we do not apply to those other assets. They are therefore being regulated as high-risk assets.

The hon. Member for Hampstead and Kilburn mentioned stablecoins. The detailed regulations for them have yet to be seen. There are stablecoins backed by fiat currency, and the thrust of the regulations will ensure that people can have the highest level of trust that they are properly backed. As ever, I am happy to write to the hon. Lady.

I think that I wrote to the hon. Lady about the decision on NFTs—I certainly wrote to the Chair of the Treasury Committee, my hon. Friend the Member for West Worcestershire (Harriett Baldwin). We have clearly delineated that because NFTs are—as in their name—non-fungible and we do not wish investors and consumers to confuse them with instruments of investment. That is important because the counterfactual that Members should consider is not that consumers are not exposed to promotions of cryptoassets. One does not have to go far—we have only to venture down into London’s fine underground—to find currently unregulated promotions, which expose consumers to all the risks without any of the protections. The statutory instrument seeks to rectify that.

My right hon. Friend the Member for North West Hampshire gave quite a tour around the sector. He talked about money supply and cash fraud, on which he is obviously an expert. I would argue that by bringing cryptoasset promotions within the perimeter, we are not making the existing situation worse. Arguably, by imposing the FCA’s rigorous anti-money laundering measures and providing a greater incentive for more firms to come within them, we potentially add a clearly difficult task, on which I will not expand.

[Kit Malthouse]

I just want to take the Minister back to his point about NFTs. He said that they are not a form of investment, but I am afraid that they are. People are investing thousands of dollars in NFTs, and particular groups of NFTs, and effectively holding them as a collection as they would fine wine or art. They are certainly not a consumable. They are designed to hold value and to be disposed of at a future date, which is why NFT exchanges exist.

Secondly, does my hon. Friend accept that bringing NFTs into the investment fold grants them an air of legitimacy? We are saying, “This is a legitimate investment, notwithstanding the risk. We’ll give you some protections and the FCA will provide investment advice.” It makes such investment more legitimate than it otherwise would be.

[The Chair]

Order. Interventions must be brief.

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[Andrew Griffith]

I shall be brief. I am happy to be guided by the hon. Member for Hampstead and Kilburn; she should let me know if there is anyone she would particularly like to be consulted as the FCA brings forward rules. This is the third consultation in the process, so it will be fairly well sighted on the interested parties, but, as ever, one would encourage the widest range of participants. That is certainly the way that we seek to make and inform policy, and I know that the FCA will also seek to do so.

My right hon. Friend the Member for North West Hampshire will forgive me; he used the word “trading” repeatedly, so let me be very clear that this is not the regulation of those who are trading in commodities. By their very definition, they would not be able to take advantage of this measure. This is for the manufacturer of an engine who seeks to place their order for copper some months in advance—those who are using a commodities market, but not for the purpose of trading. With this measure, we are reverting to the situation prior to 2018, when a piece of European legislation came into a regulatory environment that was working perfectly well, in which no one had diagnosed any problem. There was a pragmatic way for businesses to operate and then the bar was raised. We now have the opportunity simply to revert to the situation prior to the introduction of that legislation.

[Kit Malthouse]

I understand the Minister’s point. I am aware of the fact that it is perfectly possible for a company that is trading in a commodity to have futures trading, which is what we are talking about here—commodity derivatives trading—as an ancillary function of its overall business. For example, the Man Group, of which I am sure the Minister is aware, started as a cocoa and sugar ordinary trader. It had a small derivatives department, which was actually algorithmic black box trading—commodity trading adviser trading—which grew and grew. In the early days of the Man Group, under the test, that would have been ancillary to their trading. Nevertheless, it would have been a reasonably big part of the market.

Silicon Valley Bank

Debate between Andrew Griffith and Kit Malthouse

Monday 13th March 2023 Commons Chamber

[Kit Malthouse (North West Hampshire) (Con)]

I draw attention to my entry in the Register of Members’ Financial Interests.

Bravo to the Minister and, in particular, the resolutions team at the Bank of England, who have been honing their skills for many years and finally got the chance to put them to use. Further to the question from my constituency neighbour, my hon. Friend the Member for Devizes (Danny Kruger), does the Minister understand the relief felt by many that the taxpayer, once again, has not been asked to step in and, in effect, nationalise private sector losses? Does he agree that for a capitalist economy to function, even in the most painful of circumstances, it has to be allowed to do what it does best—recycle distressed assets?

[Andrew Griffith]

My right hon. Friend is quite right to talk about risk and capital systems’ proficiency at recycling capital to productive uses. That is also an enormous focus of this Government and is why our No. 1 priority was to seek to make a private sector transfer of the bank if we could, to protect the taxpayer while also protecting customers and the solvency of the financial system. I am glad that we were able to achieve this outcome. We will continue to do so by having fit-for-purpose regulations in this space.

Financial Services and Markets Bill

Debate between Andrew Griffith and Kit Malthouse

Report stage
Wednesday 7th December 2022 Commons Chamber

[Andrew Griffith]

We talked about my right hon. Friend’s relative munificence of 53 free cash machines in his constituency—I think it was that at the last count. What he says is the case. The Bill gives the Government the ability at any point in time to give direction to the Financial Conduct Authority, the relevant regulator—this is the basis on which we regulate all our financial services in this country—through a policy statement that will set out the Government’s policy on such matters as cost and location. I am being clear that it is our expectation that the industry will deliver on this important issue for our constituents. If not, the Bill gives any future Government the ability to mandate that.

[Kit Malthouse (North West Hampshire) (Con)]

Notwithstanding the support that the Minister is giving to the notion of free cash, he will recognise that the Government cannot sit there like King Canute, and that between 2010 and 2020 the number of payments made in cash went from 50% to 17%. That has fallen yet further during the pandemic. There are significant advantages to cashless transactions, not least in the elimination of crime. Actually, it is a bit of a myth that there are sections of society that struggle, and we see that most apparently in the advent of cashless parking. There are hardly any councils left in the country now that use cash for their parking. They are all using apps on smartphones. When we introduced it when I was at Westminster City Council, we did not have a single complaint from an elderly person—quite the reverse. They often found it much easier than fumbling around for coins and notes to be able to park, as well as having the ability to extend the time using the phone. There are great advantages to the elimination of cash in society too.

[Andrew Griffith]

My right hon. Friend is right and illustrates well the Government’s desire to achieve the right balance in this debate, rather than operate at either extremity. He will know from his former role the significant move in relation to Oyster and the ability to be cashless.

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[Andrew Griffith]

I agree with the hon. Lady’s point that it becomes a pressing issue. The justification, having successfully transacted in cash since the first Roman emperor decided to dispense pieces of metallurgic value with his head on them, is precisely that we see the transition and we want to get it right, in the interests of the vulnerable. The Bill also contains powers to regulate the wholesale distribution of cash—those people who trunk cash up and down cash centres across the United Kingdom.

[Kit Malthouse]

Will the Minister give way?

[Andrew Griffith]

We have spent a long time on cash, so I will take one final intervention on this. Then I will make progress, simply to allow other Members the chance to make the points that they are here to make.

[Kit Malthouse]

I am grateful to the Minister. He may not be old enough, but some of us will remember the moment the cheque started to go out of usage. There were lots of claims of damage to certain sections of society, and that lots of people would be outraged when the cheque disappeared. Now people operate without chequebooks on a daily basis, and no retailers, as far as I am aware, accept cheques. On the idea that we should mandate that cash be accepted, we cannot stand in the way of the fact that consumers are voting not to use cash. The market is telling us that cash is running out of use, and let us scotch the myth that there is such a thing as a free ATM. The network at the moment costs about £5 billion to operate. That is paid for by every user of the bank, whether they use the ATM or not.

[Andrew Griffith]

My right hon. Friend makes his points very well. As he said earlier, there are significant benefits in relation to fraud, traceability and the environment from dematerialising, but it is not the position of the Government to advocate for it.

Police National Computer

Debate between Andrew Griffith and Kit Malthouse

Monday 18th January 2021 Commons Chamber

[Andrew Griffith (Arundel and South Downs) (Con) [V]]

This incident is not without precedent—the Minister will recall that in 2007, 25 million child benefit records were lost. Can he confirm that everything possible will be done to remedy this and to learn whatever lessons need to be learned?

[Kit Malthouse]

My hon. Friend is right that, over the years, there have been a number of issues around governmental handling of data. It is a large and complex issue, and we are dealing with huge amounts of data that are very difficult to handle. He can be assured, and I hope the rest of the House will be, that we are working flat out to get on top of this problem and to rectify it. The first stage of our plan has gone well. The second stage is under way, and I expect to report better progress to the House in due course.

Oral Answers to Questions

Debate between Andrew Griffith and Kit Malthouse

Monday 28th September 2020 Commons Chamber

[Andrew Griffith (Arundel and South Downs) (Con)]

What steps her Department is taking to reduce the level of crime committed in rural areas.

[The Minister for Crime and Policing (Kit Malthouse)]

We are determined to drive down crime in rural and urban areas, which is why we are recruiting an extra 20,000 police officers and, by the way, investing £85 million in the Crown Prosecution Service to ensure that the criminal justice system can deal with the results.

[Andrew Griffith]

Will the Minister join me in thanking the Sussex rural crime team, which I long campaigned for and which was set up by police commissioner Katy Bourne in June this year? It is now doing excellent work, protecting our rural communities, farmers and isolated towns and villages in Arundel and South Downs.

[Kit Malthouse]

I am aware that my hon. Friend has made a huge impact in his constituency since he was elected recently and that this is a result of something that he has campaigned on for some time. I applaud Katy Bourne—who is one of our leading police and crime commissioners and is always innovating—on the establishment of this unit, and I hope that it will make a big difference.

I am reminded with rural crime of that interesting philosophical question: if a tree falls in a forest and no one is there to hear it, does it make a sound? If a crime happens and no one reports it, do the police see it? I urge my hon. Friend to encourage his constituents, particularly in rural areas—we have had a number of questions on rural crime today—to report every single crime, because modern policing is driven by data, and if a crime is not reported, as far as the police are concerned, it probably never happened.