Financial Services and Markets Bill [HL]

Baroness Altmann Excerpts

Committee stage
Monday 22nd June 2026 Grand Committee

[Baroness Bowles of Berkhamsted (LD)]

My Lords, I oppose Clause 1 and Schedule 1 standing part of the Bill. I shall speak also to my detailed amendments to the schedule, which appear as Amendments 4 to 17.

We all know how consumer agreements work, whether for credit or anything else. There is always an asymmetry of power between the provider and the consumer. Nowadays, it is often impossible to speak to a person rather than a bot. If you do get a person, it is a call centre with scripted questions and answers, often including a recital of terms and conditions faster than it is possible to understand. You cannot get to the next stage without saying, “Yes, I have understood and agreed”, when, in truth, you have not. You do not even see the terms and conditions until after you have clicked “Yes”, then you are given a time-limited right to withdraw. This back-to-front impatience to get boxes ticked first is now a feature of the modern consumer environment—one that I fear we have now replicated in the legislative procedures in the Bill, only here, once Parliament ticks the box, there is no cooling-off period and no right to withdraw.

The Bill repeals parts of the Consumer Credit Act. It gives the Government open-ended regulation-making powers before there has been any consultation and before we have seen the shape or operation of any FCA rules. I cannot support that. It goes too far, too fast and too unseen. That is not the way to make irrevocable changes. So I will not tick the box. I want to know what I am signing up to, just as the consumer must. I want to know that what are presented as rights are, in fact, rights.

Clause 1 repeals statutory rights before replacements exist. The Government take powers to make regulations before consultation. At the very least, that is a reason to take a great deal of notice of what is being said by Parliament. I also question whether this approach meets the Government’s own statutory duties under the Legislative and Regulatory Reform Act 2006, which requires regulation to be proportionate, accountable and transparent. Repealing rights before replacements exist does not seem to meet those tests. This is a fundamental change from the status quo, where rights are in statute and rules are made to assist in negotiating the statute.

Clause 1 reverses that. It removes statutory protections now and offers only a possibility of regulatory rules later. Rules are not rights. Rules can be changed by the rule-maker, whereas rights bind everyone, including the regulator. The Government’s approach is, therefore, constitutionally backwards. Parliament is being asked to repeal rights without knowing what will replace them. It is like signing a credit agreement without knowing the terms, and we are being asked to sign it on behalf of the public.

My solution would be to preserve a statutory floor, both now and in future, and not a temporary one that could be slowly eroded at the whim of the Government or a regulator. My amendments to Schedule 1 are intended to show how this can be done; I thank Which? for its assistance in preparing them. They aim to preserve important provisions in relation to notices of arrears and default sums, as well as the unenforceability sanctions attached to them in the Consumer Credit Act. These are the legal backstops—the protections that ensure that rights are real.

I shall explain what my amendments do and why they matter. First, they would preserve the requirement to serve notices of arrears and default sums and the statutory consequences of failing to do so. These provisions apply, for example, where a borrower has fallen behind on payments. A default notice must be served before a creditor can take certain drastic steps such as terminating the agreement, demanding early repayment or recovering goods and land. Default notices also play an important part in determining when debts become statute barred, because, once served, lenders have six years to take court action. Secondly, they would keep these protections in legislation but allow the FCA to modernise the form and content of the notices. That is the right balance. Technology changes, as does the way in which information is presented, but the underlying rights do not and should not.

The Government’s approach is to repeal the majority of the CCA provisions with the suggestion that they could be recast into FCA rules at some future point, subject to consultation. That means there will be no parliamentary scrutiny of what these protections might look like once they are repealed. My amendments would guarantee that the core protections remained mandatory legal requirements while allowing the FCA to update the way in which information is provided. That is what the legislation should have done from the start—modernise the form, not abolish the substance.

I turn to sanctions, which is where the Consumer Credit Act is at its strongest and where the Bill is at its weakest. The sanctions in the CCA were included in 1974 because Parliament recognised the significant imbalance of power between a consumer and a creditor. Parliament wanted proactive compliance with the law, not a system where an individual consumer must detect a breach, voice a complaint, and then pursue slow and time-consuming legal or ombudsman remedies, particularly when those consumers are likely to be vulnerable, stressed or in financial difficulty.

The sanctions ensure that a creditor cannot take steps against a debtor while the creditor is non-compliant with the law. They are automatic. They work because they require compliance up front, not after the harm has occurred, and they cannot be replicated in FCA rules. Without those sanctions, consumers may face new threats from being pursued for debts, particularly when debts are sold to unauthorised debt purchasers. The burden shifts on to the consumer to detect breaches and seek redress. Vulnerable consumers are disproportionately harmed, and the automatic reprieve that Parliament deliberately created is lost.

My amendments would ensure that those sanctions on arrears and default notices remained in legislation while allowing the FCA to modernise the way information was presented. That would preserve vital individual rights while recognising that flexibility is needed in a digital age. That is not an unusual approach. The CCA and the FCA’s existing consumer credit rules already operate in a complementary way.

The amendments I have tabled focus on arrears and default notices because that is where the greatest harm would arise if protections were removed, but they are only exemplary. They show the balanced approach that should have been taken across the whole reform of the Consumer Credit Act: move form and content to the FCA rules where appropriate but keep the substantive protections in legislation. I am looking for that complete reform.

There are other areas, such as the form and content of credit agreements, the duty to provide information under fixed-sum and running-account agreements, and the sanctions for improperly executed agreements, where the same balanced approach could and should be taken. I would be happy to meet to discuss those. The Government’s own consultation on CCA reform was meant to have two phases. Phase 1, on information requirements and sanctions, took place, but phase 2, on key consumer rights, was scrapped. That is not a sound basis for repealing rights now and promising rules later.

The CCA was ground-breaking for creating automatic protections, even if at times those protections have been bitten for trivialities. That is a reason for modification, not cancellation. Their purpose is still relevant: ensuring active compliance, preventing regulatory creep and protecting vulnerable consumers. They cannot be replaced with certainty in FCA rules. Their removal shifts the burden on to consumers. This is a regression in consumer protection at a time when modern communications already curtail the time for circumspection.

If the Government were bringing forward a coherent replacement for the Consumer Credit Act, it would look something like this: statutory principles of fairness, transparency, good faith and protection against unequal bargaining power. Those are not exotic ideas; they exist in other jurisdictions. Australia’s unconscionable conduct regime is one example. At the end of the day, businesses must think and exert conscience and play fair, but that is not what Clause 1 does. It removes rights without replacing them. Modernisation is possible but I will not tick the box on behalf of the public until I have seen the replacement and until I know that it preserves rights now and in the statute. I beg to move.

[Baroness Altmann (Non-Afl)]

My Lords, I must apologise: I was not in the country for Second Reading, so this is my first intervention on the Bill.

I support wholeheartedly the amendments in the name of the noble Baroness, Lady Bowles, and the rationale that she has just explained. I thank Which? for the work that it has been doing on the Bill and to try to help consumers.

I cannot support this leap in the dark for parliamentary scrutiny and I cannot support imposing this leap in the dark on consumers. At the end of the day, that is what the provisions in Schedule 1 are at risk of doing. I believe that the noble Baroness, Lady Bowles, with her amendments, and the amendments that we have seen from other noble Lords in the first group, are seeking to help the Government to achieve their aims more safely for consumers. I believe that what the Government are trying to do has the right motive; it is about whether the manner in which this is being done is safe for us to agree to—and I do not believe that it is.

If we think one step ahead, what protection will consumers have against the FCA making a significant error in its regulation? What protection will consumers have if the asymmetry of information and power that we know already exists in the financial services industry, especially for retail customers, continues along its current lines? I hope that the Government and the Committee will recognise that leaving consumer protection to the regulators is not a safe thing to do if you want to improve consumer protection—and, as I say, I believe that is what the Government would like to do.

The FCA has a peculiar regulatory style. For example, if it has discovered or suspected wrongdoing, it does not, as you might expect, do mystery shopping on behalf of consumers. It will ask firms generally to investigate how they behave and then to report to the FCA. That may work but it will not always work, and there is no fallback protection such as we have in the Consumer Credit Act if the consumer experience is not as it has been portrayed or as the FCA might have expected. There is a consumer panel as part of the FCA, but, in my experience with a number of financial scandals or problems that have arisen for consumers, the FCA consumer panel has little or no power. It is not listened to and does not form part of the FCA regulatory decision-making process that perhaps one would need to be confident that it represents in the case of passing on this protection to the FCA.

I hope that the Minister and the Government will listen carefully to the arguments that have been made so far in the first two groups and recognise the damage that could be done by pursuing the proposed actions.

--- Later in debate ---

[Lord Davies of Brixton (Lab)]

I just wanted to say that I have a lot to say on the Financial Ombudsman Service but I shall save it all for group 6.

[Baroness Altmann (Non-Afl)]

My Lords, first, I declare an interest, which perhaps I should have done at the beginning. I am a director of a pension company that is regulated by the FCA. I apologise for not having declared that earlier.

I will reflect on an issue that could arise because the Financial Ombudsman Service is in charge of complaints about pensions. We know that many people who are taking out pensions products may have problems that do not become apparent to them for six or 10 years or beyond. Perhaps we could consider an amendment that would carve out the extent to which the Financial Ombudsman Service deals with a pension complaint in relation to this element of the Bill.

[Baroness Kramer (LD)]

My Lords, I have only a few comments on this group. As I listened to the comments on Amendment 17A, particularly those of my noble friend Lady Bowles and the noble Baroness, Lady Altmann, I understood what reminded them of mortgage prisoners. In that case, people who held mortgages with banks that failed, and who were rescued by the Treasury, were then sold on to private holders who were not themselves lenders of mortgages. In effect, they lost the ability to refinance, and so they remained imprisoned in very high-rate mortgages at a time when everyone else was able to remortgage. We can see echoes of that in some of the limitations that would be introduced by these amendments. I am therefore always concerned about those time limitations, particularly in situations where assets can be sold on, as they often and increasingly are today.

Amendment 44, from the noble Baroness, Lady Neville-Rolfe, seeks to deal with the issue of consumer redress. If a consumer has been abused in some way and has a moral right to redress—a right in law—should that be lost simply because we have a regulator that fails to act promptly and within a reasonable time? I understand that it is tough for the industry, because it leaves it with uncertainty, but some of these products are life-changing for individual consumers and have life consequences. That is what made me think of mortgage prisoners; their lives were completely ruined by that process.

Where there are such consequences for the individual, it is very concerning to take away the right to redress because there was a delay in the functioning of the regulator. I understand that it means that the industry has to live with uncertainty, but my advice to it is to behave well to your customers. That really is the very best way not to get into these issues.

Financial Services and Markets Bill [HL]

Baroness Altmann Excerpts

Committee stage
Wednesday 8th July 2026 Grand Committee

[Baroness Lawlor (Con)]

I thank the noble Lord, but he was speaking about 2022, which was light years away for the financial sector. Things have moved on and have changed. We have different regimes in place now. As my noble friend Lady Noakes has explained, the banks are now resolvable. There are other schemes that will avoid the problems for the taxpayer. That should be borne in mind.

I had better finish quickly. That is my objection. It is about who decides for businesses. If you have a ring-fence, ultimately, no matter how much you relax it, the Government are never going to have the knowledge of the sector, and the detailed tactical and strategic ability, to be ahead of the game and make businesses grow. They will always play slightly safe, but maybe they are over-safe.

I will finish on why we need to repeal the ring-fence, not just why Clause 39 is not good enough. In a sense, we are seeing the inhibition of risk-taking and a structure that inhibits it. As other noble Lords have pointed out, we do not have parallels in other economies. I know that there is the Volcker rule in the US, but Switzerland has solved its “too big to fail” problem without a ring-fence and it has a very instructive banking sector. France and Germany have it individually but not the EU, which rejected it. Australia reviewed it again in 2019 and rejected it on the grounds that noble Lords have mentioned. It is well worth going back to the famous Skeoch review, which contends that, in the longer term, we will not need the ring-fence and we will have resolution schemes in place. For those reasons, I support my noble friend’s opposition to the clause standing part of the Bill and her Amendment 160A.

[Baroness Altmann (Non-Afl)]

My Lords, I support Amendments 159 and 174 in the names of the noble Baroness, Lady Neville-Rolfe, and the noble Lord, Lord Altrincham. I would be concerned about abolishing the ring-fence for similar reasons and concerns as those expressed by the noble Lord, Lord Vaux. However, I believe that a review of the workings of the alternative protections, such as the higher capital cushions and the bail-in regimes, would be appropriate. I also think that consultation would be advisable rather than simply removing these clauses. We are talking about taxpayer risk; that is basically what the ring-fencing is designed to mitigate. When it comes to consumer deposits, we have done an awful lot for retail savings to make sure that there is protection.

I apologise that I have been unable to participate fully in Committee, but I would like to put on record that there is another risk to the taxpayer in the form of retail pensions. In particular, I have concerns about the lack of any underpinning for the Financial Services Compensation Scheme around annuities, which are assumed to be 100% protected. There is a risk to the taxpayer, which I hope the Minister may consider or take back to the department to ensure that some of those issues are addressed through this Bill. Currently the implicit 100% guarantee can be met only by the taxpayer, and offshore operators of bulk annuities pose a serious risk to the retail pension sector.

[Baroness Kramer (LD)]

My Lords, I thought the Committee might like to be reminded why such a radical step as ring-fencing was taken after the 2008 financial crisis. It was in part because, in a universal bank encompassing both retail and wholesale banking, failure in the investment bank could and did destroy the viability of the retail bank. It was also in part because, as the noble Lords, Lord Tunnicliffe and Lord Pitt-Watson, said, the investment bank, able to access retail deposits at zero interest and protected by deposit interest, could now take risks that it never would have been able to take if it had had to raise that funding in the financial markets. That was a major factor behind the extraordinary and careless risk-taking that led us into the 2008 crash.

There was also a further reason: cultural contamination that led to irresponsible lending and funding in the retail banks and the abuse of customers as, under pressure from directors, they sought to catch up with the performance of their investment bank equivalents. We all, as a community, paid a very high price for that. Even at the time when the ring-fence was introduced and the Parliamentary Commission on Banking Standards recommended it as the best way to provide protection for the future, all of us knew that there would at some time in the future be a dangerous complacency. I quote from evidence to the PCBS:

“The classic problem for human institutions and for the design of our regulatory structures and our policy is how do we design against [delusion] in 25 years’ time, when … we have another: ‘This time it’s different. This time we’re cleverer than the previous generation.’”


Another quote is that

“financial crises don’t often happen immediately one after another; there tends to be a lag while those people who learnt lessons move out of the industry”.

In opting for ring-fencing, the PCBS warned of future pressures to weaken the separation:

“Those pressures will include the siren voices of those who contend that structural separation as implemented represents a barrier to financial innovation and growth”.


That was prescient indeed.

The noble Baroness, Lady Neville-Rolfe, said in a previous day of Committee that I look too much to the past. I accept that memory is inconvenient, but the amendments today from her and her colleagues come from a party that, perhaps with the exception of Nigel Lawson, never accepted its responsibility for light-touch regulation, the culture of hubris and the casino mentality that was quite heralded and led to the crisis in 2008. I still hear little sympathy, frankly, from those Benches for the ordinary people who bore the consequences. I do not want to denigrate the banking community—there are many good people in it—but most of them walked away largely untouched and with the personal rewards for the activities that led to the crisis still in their pockets. Respecting the positives of the financial sector always has to sit with a recognition that so much money can be made from a bending or an adjustment of the rules that guardrails are a necessity.

As I listened to the proposals in this group, I realised that growth has become an excuse and resolution has become a cover for eliminating the ring-fence and, essentially, the precautionary principle. Resolution for systemic banks is not just untested but—I was thankful to the noble Lord, Lord Tunnicliffe, for quoting my Second Reading speech—it has a poisonous side-effect for others in the financial sector, notably the insurance and pension funds that in this case hold most of the bail-in bonds through MREL, and for their customers.

In 2023, the Swiss financial regulator FINMA—I was reminded of this when the noble Baroness, Lady Lawlor, talked about the Swiss being so secure—saved the equity holders of Credit Suisse, a collapsing bank, in order to rescue it, but wiped out the bondholders, an issue that is still in litigation and has cost the Swiss very dearly in their bond issuances. FINMA took its decision on the grounds that any other action would have undermined financial stability, it was so conscious of the contagion that comes when you activate a resolution procedure. While the Bank of England has said it would not hesitate to activate resolution procedures and wipe out both equity and bondholders, I find very few people in the industry who actually believe it on those kinds of statements. No one should look with equanimity at the idea that we allow a bank to fail and be rescued only through the extreme activities of resolution, rather than looking at the precautionary principle.

Yesterday, the ground shifted even more. The noble Lord, Lord Tunnicliffe, referred to the financial stability report of July 2026 from the Bank of England. I have not had time to read it thoroughly. I have done only a first read but, frankly, it is schizophrenic. The first half of the report, as others have raised, is chilling in its assessment of the increased risk—the noble Lord, Lord Vaux, raised some of these questions—of private credit, the Iran war and AI, and especially of these crises crystallising at the same time. But the second half of the report explains policy decisions to weaken the regulatory capital buffers for banks—the regulatory system that several people have spoken about here as the reason why it is possible to remove the ring-fence. That was weakened in yesterday’s publication. The reasoning appears to be that regulators overseas are weakening their buffers and, for international competitiveness reasons, we should too.

Last Sunday, the Sunday Times ran a piece in anticipation of this change, saying that the Bank is set to relax capital rules for lenders again. My reaction to the report is mirrored by the quote from Sir John Vickers in that article, in which he cautions against reducing capital requirements:

“At a time when risk has plainly gone up, it would not make sense to dial down insurance”.


The Bank, I suspect encouraged by the Treasury, is weakening the resolution system. The noble Baroness, Lady Neville-Rolfe, and her party propose in addition to remove the precautionary protection of ring-fencing. All this is at a time of increased risk to financial stability. I came away from going through these amendments, frankly, in a mood of despair. We have to start once again to recognise the reality of risk.

Financial Services and Markets Bill [HL]

Baroness Altmann Excerpts

Report stage
Monday 7th September 2026 Lords Chamber

[The Lord Bishop of Manchester]

My Lords, I support Amendment 2 in the name of the noble Baroness, Lady Bowles of Berkhamsted, to which I have added my name. As we have already heard, this amendment would ensure that, when provisions of the Consumer Credit Act are repealed or replaced by FCA rules, the overall level of consumer protection would not be diminished. The Consumer Credit Act has long provided established routes of redress to consumers; it has done so for decades. It provides a core of fundamental protections enshrined in primary legislation and developed through parliamentary scrutiny, and probably is fairly well known.

As financial services continue to evolve, the ways in which consumers are protected must be capable of adapting to change. Were we to open up the CCA to repeal by the Treasury and the FCA without putting significant statutory protections in place, it would risk reducing standards of consumer protection for all people. Indeed, in its own review of the Consumer Credit Act, the FCA stated that many of its provisions

“could not be replaced by FCA rules”

under its current powers

“without adversely affecting … consumer protection”.

I have spoken many times before about the importance of equal financial opportunity for underserved communities, especially those who have less financial literacy or who face language barriers. The Joseph Rowntree Foundation tells us that a record number of people in this country are currently living in “very deep poverty”. Without equal access to financial services, they are deprived of the tools that might help them to stay afloat. For many families, credit is a lifeline in the face of the cost of living crisis. It is what enables them to make ends meet, but accessibility must be accompanied by adequate protection.

Data from the last year shows that 25% of cases seen by the Financial Ombudsman involved vulnerable consumers. It is these groups who are least able to advocate for themselves when things go wrong or to navigate complex complaints processes on their own. To increase access to financial services of vulnerable groups while simultaneously hollowing out the protections from which they disproportionately benefit introduces greater risk for those who already stand to lose the most.

The protections of the Consumer Credit Act are to be opened up to repeal. We must be certain that consumers will enjoy protections that are at least as strong as those from which they benefited before. This amendment is essential to preserving the fundamental rights which enable vulnerable groups to participate fully in economic life and provide consumers with the confidence they need that they will be protected when things go wrong—as from time to time they do.

[Baroness Altmann (Non-Afl)]

My Lords, I support the amendments in this group, and I feel that this Bill has an opportunity to improve—or at least not diminish—the protections that are offered to consumers of financial services. We have long known that from a consumer perspective, the asymmetry of information and the asymmetry of understanding leaves ordinary consumers open to being taken advantage of by financial services companies. The law is supposed to protect them and currently we have legal protections in place—albeit they are out of date and need updating, as we have already discussed. However, I certainly hope that the Minister—who I warmly welcome to his place—would understand that the aims of these amendments are to ensure that the financial consumer is protected both at the retail level and against practices that have arisen in the past and will arise in the future.

I particularly feel that the amendments about non-diminution when it comes to consumer credit and student loans, in the name of the noble Baroness, Lady Bowles, are extremely important to the ordinary person in the street. I commend the noble Lord, Lord Sharkey, and the noble Baroness, Lady Bowles, on continuing the attempts to ensure that mortgage prisoners are treated much more fairly. We have another opportunity now to remove this stain on our financial services landscape, and I really hope that the Government will be able to agree and accept that capping, at the very least, the costs and interest rates that mortgage prisoners have had to pay—at such great cost and pain—will be a possibility within this Bill.

[Baroness Kramer (LD)]

My Lords, I will be extremely brief because my Bench has just spoken very clearly on this issue. I share with the Conservative Front Bench concerns about accountability with a further removal of powers directly into the hands of the regulator, and had they pressed their Amendment 1, we would have supported it.

Very briefly, I will address the other amendments. I am still in a state of genuine concern that the Government will not accept an amendment that would confirm that the changes they are proposing to the Consumer Credit Act, which will be absorbed now into the role of the FCA, will not involve a diminution of consumer credit protection; this is the non-diminution of rights that the noble Baroness, Lady Bowles, described. Of course, the FCA could keep those rights in place, but there is nothing that compels it to do so. I find it extraordinary that we cannot be given this reassurance.

However, I am more exercised than anything else about the position of mortgage prisoners. The people who have been impacted, and many are now elderly, have dealt with a shocking situation over the past years. We could now give them relief for the remaining years in which they will be tangled with paying extraordinary levels of interest on mortgages that were taken out in good faith, for which they properly qualified and which were, at the time, market-standard mortgages. It has happened because, in essence, an arm of government has made mistakes when it has sold on those loans to vulture funds. It is shocking that we have not corrected this. The amendment before us today is new thinking. It is incredibly effective at making sure that, going forward, this incredible injustice is ended, and I hope very much that, even in these last few minutes, the Government will think again and provide support.

--- Later in debate ---

[Lord Massey of Hampstead (Con)]

My Lords, I rise briefly to support Amendment 10 from the noble Baroness, Lady Neville-Rolfe, to add a few of my own concerns on Clause 3 and to support the remarks made earlier on this matter by the noble Lord, Lord Vaux, and the noble Baroness, Lady Kramer.

Protecting customer access to essential banking services is, of course, a goal we all share. However, the granting of such wide-ranging executive powers, basically conferring almost unlimited powers on the Treasury for this matter, seems unnecessary, even allowing for the understandable desire to act quickly. The Treasury’s own review of in-person banking access does not report until October, as has been mentioned, and we are being asked to legislate before we know the nature of the problem we are solving or the policy decisions that might follow. Would they be proportionate? Would they be effective? We really have no way of knowing this at this stage and do not even have the benefit of seeing the report.

The Treasury’s memorandum to the DPRRC seeks to narrow these powers when the review concludes, so the Government are implicitly aware, I assume, that the delegated powers are too broad. But the answer is not to grant excessively wide powers now and then tidy up later; surely it would be better to wait or bring back a properly balanced set of powers when the evidence exists. I offer my support to Amendment 10, which would delete Clause 3 altogether.

[Baroness Altmann (Non-Afl)]

My Lords, I also support the amendments in this group. I believe that the description of these extremely wide powers should, in itself, alert the House to the dangers that Clause 3 of the Bill could pose. I believe that it is important for the Government to understand, for example, what has been revealed in the latest report, just a few days ago, from Age UK about digital exclusion among the older age groups in this country. It is all very well for policymakers—and Members of this House, indeed—to believe that everyone can manage to bank online and that there is no need to go into a physical branch. But when it comes to the older generations, that is simply not the case. Certainly in terms of the population aged over 65, the research suggests that only 15% of pensioners, or of the over-65s, are fully digitally included and able to use all services digitally—it is 20% of men and 10% of women—and that 1.4 million over-65s are fully digitally excluded. The more we see bank closures and the less access to banking these people have, the more excluded from society they become.

I hope the Government will recognise that we need to make sure that there is an opportunity for Parliament and for the legislation to ensure that these older people are not forgotten or left behind and that the access to banking that they may rely on is not removed, perhaps inadvertently, from legislation where it could have been avoided. For example, if we agreed some of the amendments in this group, they would ensure that either Clause 3 altogether or the most egregious parts of it are removed, as the noble Lord, Lord Vaux, said. As the noble Baroness, Lady Kramer, said, we should make sure that the Lloyd review, which is meant to deal directly with this, is part of the legislation.

--- Later in debate ---

Therefore, I hope the Minister will be able to give me some assurance that this is an area that will need to be looked at because of the expansion of inheritance tax into pensions next year, when executors are going to struggle even more to extract funds to pay the tax at the right time to avoid those rather horrendous rates of 7.75% IHT. I am sorry to say that, given the state of the economy and the bond market and that it is 4% above base, it could go that little bit higher. In the media today, there is an expectation that interest rates will go up by two quarter points within the next six months. So you could have executors facing an 8.25% interest rate, which is not just high; it is truly damaging. I will leave the Minister with a bit to think about, and I look forward to his response.

[Baroness Altmann (Non-Afl)]

My Lords, I fully echo the comments that the noble Lord, Lord Mackinlay, just made, having had personal experience, sadly, of just what he described. Amendment 70 would provide at least some relief to those executors who cannot access funds and who see the interest racking up while probate delays or other delays beyond their control are occurring to the estate.

I urge the Minister also to take back to his department that if inheritance tax is indeed levied on unused pension funds from next April, there is not even the allowance in the new system for a 10-year delay, as there is with property, so it will not just be interest that racks up; there will be penalties and so on. There is a real problem in that regard and, indeed, there is a real issue with the costs involved in probate for the executors who cannot have the money released because some institutions have decided that even though the money is going to be paid directly to HMRC to satisfy inheritance tax, it will still not release the money—and, of course, it will still be charging fees on the funds that it retains. So I hope that the Minister will take seriously the ideas in Amendment 70.

I strongly support Amendment 60, and I would have added my name to it had I been more on the ball. It was so nobly spoken to by the noble Baroness, Lady Kramer. She spoke of the child trust fund issue, where parents and carers of children—who cannot make the decision for themselves—who are managing the money for those children, and have done so since the child’s birth in some cases, are being told that they must go through an enormously lengthy legal process just to be able to take a bit of money out of the money that the Government gave for those children, which was safeguarded until age 18. When they reached that age, they were unable to access the funds.

Child trust funds started in 2005 so this problem of people being unable to get money from the child trust fund has been going on since 2023. Indeed, there was a consultation in 2022, which recommended that a small payment scheme at least should be introduced, but in the meantime, nothing has happened. As the noble Baroness, Lady Kramer, said, the costs of going to court and obtaining an order to be able to take money out of a trust fund could use up most—or, even, in some cases, all—of the money in the fund. There is an issue that needs to be addressed. Amendment 60 would be a way of helping these families, and I hope that the Minister will take this back to the department and come back with some positive news on this issue.

[The Lord Bishop of Manchester]

My Lords, I have sympathy with all the amendments in the group, but I will focus my comments on Amendment 11 in the name of the noble Baroness, Lady Kramer, to which I added my name. As we have heard, this would require the FCA to establish a framework assessing banks’ and building societies’ provision of affordable credit.

Credit is a lifeline for families facing debt and financial hardship. According to a recent report, 60% of the clients of Christians Against Poverty—CAP—an organisation that is very active in my diocese, find that they have to borrow money to pay for household essentials and bills. They are not borrowing for luxuries: when credit is unavailable, they are left to delay essential spending and go without meeting their most basic needs. Sometimes, spending a little now will save you spending a lot more down the line.

I am extremely grateful for the remarks made by the noble Lord, Lord Holmes of Richmond. Credit inaccessibility has real consequences for those who are struggling the most. According to CAP, 47% of UK adults who currently have debt that they are struggling to manage have been unable to access their preferred credit option in the past two years.

This kind of financial exclusion means that we are locking vulnerable families into a cycle of poverty. We are depriving them of the tools they need to climb their way out. Unable to look beyond the pressing need to put dinner on the table, it is those with the most desperate need who are forced to sacrifice the most to get by. Left with limited choices, they are the ones most likely to enter riskier credit deals and to pay the greatest poverty premium. I have worked as a vicar in parishes where loans were enforced by men with baseball bats.

Since Committee, we have had the report of the Commons Treasury Committee on the Government’s financial inclusion strategy. The report highlights the need for

“proportionate firm-level financial inclusion metrics. These should focus on the largest providers and on markets where exclusion causes the greatest consumer harm”.

That specifically includes “affordable credit”. The report proposes that metrics

“should be designed to identify whether progress is being delivered consistently across firms and sectors”.

The committee also concluded:

“Voluntary action and pilots … cannot be the main driver of a national financial inclusion strategy unless there are clear routes to scale and clear consequences if voluntary action fails”.


What is proposed in this amendment clearly has much wider parliamentary backing than simply from the noble Baroness, Lady Kramer, and me. Indeed, several major lenders indicated to the Treasury Committee that they would be entirely happy to provide financial inclusion data as part of a statutory system.

This Bill, and this amendment to it, provide a sensible and practical solution to implement what the Treasury Committee advocated. Importantly, it will place responsibility for access to affordable credit on the lender, and introduce a clear framework by which banks and building societies can be assessed on how effectively they are meeting the financial needs of underserved communities. The new requirement for this framework to be kept constantly under review will ensure that those requirements remain open to scrutiny and adaptable to ever changing patterns of financial exclusion—patterns that could become more dynamic and entrenched as society rapidly changes. This amendment is an important step towards ensuring that our financial services meet the needs and uphold the dignity of real people, rather than expecting individuals to adapt to systems that too often exclude them from full participation in economic and community life. The only people who will not like it are the dodgy lenders who harass people in my diocese. I pray that we all support this amendment.

Financial Services and Markets Bill [HL]

Baroness Altmann Excerpts

Report stage
Wednesday 9th September 2026 Lords Chamber

[Baroness Bowles of Berkhamsted (LD)]

My Lords, I will speak briefly to Amendment 87, and I support the amendment in the name of the noble Baroness, Lady Altmann, on superfunds. These are two issues that need attention. My amendment is about one thing: tax certainty for insurance-linked securities. It would not weaken anti-avoidance rules and does not seek any advantage that Parliament never intended; it simply asks for clarity in a regime that Parliament created to attract ILS business to the UK.

The problem is commercial. Rival jurisdictions give clear outcomes, but the UK does not. HMRC’s guidance leaves too much ambiguity and advisers reach conflicting conclusions on identical transactions, so, in a market where speed and predictability drive choice of domicile, capital goes elsewhere. The consequence is stark: London is the world’s largest commercial reinsurance centre, yet we have only 2% of global ILS activity. The catastrophe bond market is over $60 billion and the wider ILS market exceeds $140 billion. We could have a big chunk of that, but we are letting this substantial business, and indeed the tax revenue that would come from it, pass London by.

The new PRA reforms in the Bill are welcome, and London Bridge 2 has brought in new capital, but even that structure repeatedly runs into HMRC uncertainty. If the Government want the market then the guidance has to be clearer. It is only the Government who can fix this if they want the business in the UK. I beg to move.

[Baroness Altmann (Non-Afl)]

My Lords, I support Amendment 87 in the name of the noble Baroness, Lady Bowles. I will speak to my Amendment 92, and I am grateful to her for adding her name to it. Amendment 92 would insert a provision in the Bill to allow life insurers to set up defined benefit pension superfunds outside of their solvency UK ring-fences, enabling them to participate in the superfund market and potentially even help the UK build its own version of Canada’s much-vaunted Maple Eight. UK insurers—with suitable ring-fencing, as set out in the amendment, to ensure separation from their insurance business—are ideally placed to run large pools of pension investments, with existing in-house expertise in areas such as investment, actuarial and legal. At present, insurance buyout is seen as the gold standard for defined benefit pension scheme endgame strategies.

Superfunds could provide a means to add billions of pounds-worth of productive capital into the UK economy and allow pension members to enjoy better benefits, rather than superfunds remaining niche players, if the current system is not changed. Insurers could bring large amounts of capital pooled into the pension scheme area and collect pension assets so that scheme members would have better upside opportunities and robust alternatives to the finality of annuity buyouts, which are generally considered 100% safe but could well not be. Buyout pushes assets into low-return, unproductive opportunities and denies members greater returns and better pensions, which could come from superfunds.

In particular, there are concerns about systemic risk with annuity buyouts. I wondered whether the Minister might agree to meet me and other interested parties to discuss the risks involved in the Government’s current perception that annuity buyout is the gold standard, 100% safe endgame strategy. I hope that he will recognise that the Financial Services Compensation Scheme may not be as secure as expected.

[Lord Pitt-Watson (Lab)]

My Lords, I thank the noble Baronesses, Lady Bowles and Lady Altmann, for their amendments. I will take each in turn, starting with Amendment 87.

As was noted by my predecessor, the Government recognise the role which the bespoke tax regime for transformer vehicles plays in ensuring that the UK is competitive. We also recognise, as does this amendment, the importance of robust anti-avoidance measures and clear guidance in ensuring that the regime functions effectively, provides certainty to business and safeguards the integrity of the tax system.

It is right that we preserve HMRC’s ability to effectively pursue instances where vehicles are established for the purposes of avoiding tax, and it is important that we preserve that ability and avoid creating risks for the Exchequer. However, I recognise the strength of feeling in industry over this issue. I therefore offer the Baroness a meeting with HMRC and Treasury officials to discuss it in more depth. I remain of the view that this legislation is not the appropriate place to make provision for the tax regime governing transformer vehicles—the Risk Transformation (Tax) Regulations 2017 being the specific legislation designed to govern this.

On Amendment 92, the Government recognise the important role that defined benefit pension scheme consolidation can play in improving outcomes for pension scheme members and providing additional options for schemes. The amendment seeks to place in legislation an explicit permission for PRA-authorised insurers to establish, own or operate DB superfunds and would introduce statutory requirements governing the separation of superfund and insurance activities. However, insurers are already able to establish and operate superfunds under the existing regulatory framework. The amendment therefore does not create a new route into the market. Rather, its primary effect is to place requirements relating to ring-fencing, capital treatment and the separation of activities into primary legislation. The Government’s view is that matters relating to prudential regulation, capital treatment and the supervision of regulated firms are more appropriately addressed by the relevant regulators rather than through detailed provisions in primary legislation. For those reasons, while I appreciate the intention behind the amendment, the Government do not consider it necessary.

I therefore ask the noble Baronesses to withdraw or not move their respective amendments.

[Baroness Altmann (Non-Afl)]

Would the noble Lord be willing to meet to go through some of these issues?

[Lord Pitt-Watson (Lab)]

If I would be the relevant person to talk to on this matter, I would be happy to meet. If not, perhaps I can direct the noble Baroness to appropriate officials.