Financial Services and Markets Bill [HL]

Baroness Bennett of Manor Castle Excerpts

2nd reading
Monday 8th June 2026 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a great pleasure to follow the noble Baroness, Lady Northover, and to agree with her warning. I add the phrase “carbon bubble” as a further financial risk. I also must cross-reference her contribution to the words in the Minister’s opening speech about increasing the insurance business in London. This seems like a very bad idea indeed in view of the risks we face in the climate emergency and nature crisis. I note that, at this moment, we are facing the risk of an extreme El Niño, with impacts we should well understand.

But here we are again: I join a small but merry band of financial services Bill veterans—this is my third—and I welcome the Minister to our group and look forward to our deliberations. I say “look forward” genuinely, because this is the most positive start to such a debate that I have heard. There was a great deal in the speeches thus far that I agree with, and more determination than I have heard previously in your Lordships’ House to at least start to tackle what economist Ann Pettifor has termed the “global casino” of which the UK financial sector is a significant part. We did not hear those powerful words just from the noble Lord, Lord Sikka—always welcome as they are—and that makes a welcome change.

When I first took part in the debates on what became the Financial Services Act 2021, I was new enough to be shocked at the narrowness of the debate, with a Conservative Government reducing regulation and controls, while the Labour Front Bench just nodded along. Amendment after amendment in Committee and on Report came from those who wanted the Government to go further and faster in deregulating, in letting the financial sector rip, even though it was little more than a decade since we had seen the cost of that in 2007 and 2008.

Today, though, we have heard from the right reverend Prelate the Bishop of Manchester powerful words not just about the financial sector’s failure to meet the needs of many parts of our society but also about the damage the sector does to many of the vulnerable. I have not yet persuaded the House’s champion against child poverty, the noble Baroness, Lady Lister, to take part in one of these debates, but I hope one day she and others will, because finance is far too important—and damaging—to be left to the bankers.

Today, the noble Lord, Lord Sharkey, was speaking up for the interests of consumers of financial products, so often the victims of predatory practices not just by the fringes of the sector but by the highly profitable giant organisations at its heart. I associate myself and the Green Party with those remarks, while declaring my membership of the APPG on Investment Fraud and Fairer Financial Services.

We heard from the noble Baroness, Lady Hodge of Barking, well known for her championing of action against corruption, about the need to tackle the rampant corruption and fraud. However, I do not agree with the noble Baroness’s conclusion that we are talking about a few “rotten apples” rather than structurally embedded corruption, with roots going back centuries.

After all, the City of London, and with Crown dependencies—so disturbingly highlighted last week in an exhibition in Portcullis House that, unsurprisingly, attracted a great deal of negative attention—is, as the then deputy Foreign Secretary Andrew Mitchell said in 2024, a conduit for nearly 40% of the world’s dirty money. As the noble Lord, Lord Evans of Weardale, said in 2022, in a debate on corruption secured by my noble friend Lady Jones,

“we have clearly, as a matter of policy, turned a blind eye to the perpetrators of corruption overseas using London for business or leisure purposes”.—[Official Report, 13/10/22; col. GC 156.]

That of course is being helped by those enablers to which the noble Baroness, Lady Hodge, referred.

Looking back to 2020, if fellow noble Lords had expected me to take part at all in the debate, they probably would have predicted I would make comments resembling those powerfully made today by the noble Baronesses, Lady Hayman and Lady Northover, work on which Peers for the Planet has been so prominent, in pointing out there is no financial sector on a dead planet, and that the economy is a complete subset of the environment.

However, the House was in for a shock in 2020—perhaps not for the last time. When I spoke then about corruption and the City of London’s place at the heart of it, I got more than the odd gasp, and fervent head shaking and opposition. This was when, for the Government, the noble Lord, Lord Agnew of Oulton, said:

“The UK is internationally recognised as having some of the strongest controls worldwide for tackling money laundering and terrorist financing”.—[Official Report, 28/1/21; col. 1880.]


Well, on these subjects, we have come a long way, as indeed the noble Lord, Lord Agnew, has in his views. The debate has shifted far closer to where the Green Party has always been, saying, as the noble Lord, Lord Eatwell, said, in the relationship between society and the financial sector, the settlement is not working. The financial sector is not providing the appropriate support to the real economy and is extracting excessive profits from its traditional sectors and from parts of our society in which it should have no place, such as children’s social care, aged care, water companies and many other public services. Excessive pay is also being extracted, as the High Pay Centre has been so prominent in highlighting, and the sheer size and risk-taking threatens the security of us all. We have too much finance, so the Bill should not be seeking to grow more—as well as of course, too much corruption and fraud. There is another way, as the Global Justice Report by Thomas Piketty’s World Inequality Lab demonstrated this week.

There is also an issue not yet raised by others: the cost of the speculation in the prices we all pay for the basics of life, for food and for fuel, and the impact of the financial sector’s bulking up of lending on house prices. Food security, as the Green Party is trying to get the Government to understand, is a huge and present issue in the UK, and the financial sector is a significant part of the problem.

The noble Lord, Lord Eatwell, said risk aversion has its uses—I can only agree. He questioned, however, the cost to the sector of regulation, but the cost to all of us in getting it wrong is of course enormous and possibly existential. We must not forget how close we got in October 2008 to total collapse.

It is customary at Second Reading to mention issues that one wishes to raise in Committee, and I have pointed to my areas of interest: making the financial sector work for the real economy; tackling corruption and fraud; protecting consumers; of course, nature and climate; and tackling the cost of speculation to us all. But I will raise one final issue, which I will be tackling within the Bill if I can find a way. It is an issue that politicians around the global North have been facing for a long time. I go back to US President Roosevelt in 1936:

“Business and financial monopoly, speculation, reckless banking ... had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob”.


We have, just down the road from us, the City of London and the City of London Corporation, which have a unique, archaic and dangerous place outside the rules that apply to the rest of society—rules about democracy and rules about transparency. This is a place where organised money rules. I mentioned the APPG on Investment Fraud and Fairer Financial Services, which I am working with now on a survey, asking for views on whether the corporation should be maintained as it is, reformed, or abolished, as a royal commission recommended in 1894.

We have come a long way in our understanding of the issues in the financial sector. We will have to see how far we can go, because we need to grasp, as I respectfully say to the Minister, that the City is not one of our greatest economic success stories but an entity that needs far tighter, stronger controls from the Government for the security of us all.

Financial Services and Markets Bill [HL]

Baroness Bennett of Manor Castle Excerpts

Committee stage
Monday 22nd June 2026 Grand Committee

[Lord Davies of Brixton (Lab)]

I shall speak to Amendment 23 in the name of my noble friend Lord Sikka. He very much regrets not being able to be here, but I hope that the Minister will still respond to the point that it raises.

The key issue is that there is a public service element in banking. It goes beyond commercialism; it is reasonable to ask that the review which is taking place should consider that issue, and specifically whether it requires an amendment to the Bill to effectively pre-empt the issue and say that villages, towns and districts need some form of banking services. I think there could well be broad agreement on that—the issue is that banks are competitive commercial organisations and so are not going to do it. They will do it only if there is some sort of collective scheme, funded by a levy, that provides good services for people where they live. I very much enjoyed the contribution of the right reverend Prelate, and indeed churches have closed down far less frequently than banks and post offices. I hope my noble friend will respond positively to that point on the public service element.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I speak for the first time in Committee on my third Financial Services and Markets Bill. I reflect on the curious circumstances in which we find ourselves and offer reassurances to those who do not like Clause 3 in particular. Surely under the new regime, which we expect to see in a month or so, we are unlikely to see the Bill in anything like its current form given that it aims overall to deliver the so-called Leeds reforms of Chancellor Reeves. Those intend to give the financial sector a boost of growth, at an inevitable cost to the real economy—a boost to London and the tax havens at a cost to the rest of the country—and to reduce the regulations which were brought in as protections for all our security after the last financial crash. However, there is still a point in all of us going through the Bill in detail as we are doing now, because we are also making bids for what a future Government will look like.

On that basis, I will speak in particular to Amendment 22, in the name of the noble Baroness, Lady Tyler, and Amendment 23, in the name of the noble Lord, Lord Sikka. We are expressing very important issues, as the right reverend Prelate put so well. He was speaking about religion but also about humanity and human need, which these amendments particularly address. Your Lordships do not need to listen to me with my radical voice; reading around this, I found an article in March from the Civil Service Pensioners Alliance. It quoted figures which state that about 53 bank branches close each month, and pointed out that this was forcing older people in particular into digital exclusion, stripping away their independence and leaving them highly vulnerable to scams. No one has yet brought that up, but speaking to local persons in a local branch can be an important prevention against scams, and there is also the premium on having to pay more for things because you are poor.

Picking up the point made by the noble Baroness, Lady Tyler, the pensioners alliance talks about circumstances of bereavement or the need for a power of attorney, which are circumstances that can happen to any of us. They will continue to happen, and technology cannot make them disappear. On that, I take issue with a couple of points made by the noble Baroness, Lady Noakes. The noble Baroness said that we can get rid of branches when cash users drop to an insignificant number. First, we should not be treating anyone in our society as insignificant, but more broadly, that assumes that we are heading—both as individuals and collectively—only in one direction. You may, at a certain age, be able to cope very well with digital banking and be perfectly comfortable with it, but that is not to say that later in life you might not want to use a different system. You might not be able to see the screen of your phone or manipulate its buttons, or you might not be able to hear on the telephone anymore. At that point, cash being available is an absolutely crucial thing.

Finally, I will pick up a point from the noble Baroness, Lady Noakes, which the right reverend Prelate also discussed. It is not the case that customers have to pay for the provision of these services. I point out that the big four UK lenders made £14 billion total profit in the first quarter of this year, and their profits last year were £46 billion. The financial sector depends on government support to survive. That is a licence, and we can comment on the conditions under which that licence is held. If this legislation goes forward, surely we can add a provision on local banking services—having a person to speak to when you really need it. Whatever future legislation comes in, there clearly needs to be action in this area.

Financial Services and Markets Bill [HL]

Baroness Bennett of Manor Castle Excerpts

Committee stage
Wednesday 24th June 2026 Grand Committee

[Baroness Kramer (LD)]

My Lords, this is very much a probing amendment, but I thought that we ought to raise this issue; the Bill seemed an appropriate place to do so. Frankly, it is an issue on which we have hardly touched in Parliament.

Private credit markets are a phenomenon that has surged since the crash of 2008. Market-based finance accounts for around half of the UK and global financial sector assets, according to the Bank of England. Global private market assets were estimated at $18 trillion in 2025. As Sarah Breeden, a deputy Governor of the Bank of England, said in a speech made this year:

“They have not yet been tested, at that scale and complexity, by a broad based macroeconomic shock in a higher rate environment”.


At the same time, public debt is close to post-war highs, not just in the UK but globally, making it more difficult to respond to any financial shocks.

People sometimes see the private credit sector as distinct from other parts of finance. In the UK, the banking sector has lent to private credit funds at a scale to provide them with liquidity, with pretty much no transparency to evaluate the quality of funds. There is clearly co-investing and interconnections through derivatives. I cannot find good data to work out where the exposure lies, but there have been enough articles raising warning signs to convince me that there is something serious here that must be looked at.

UK pension funds have invested heavily in private assets. The Universities Superannuation Scheme has £7.8 billion in private credit exposure. Institutional providers such as TPT Investment Management have launched schemes specially for the use of UK pension schemes, and the Mansion House Accord encourages even more investment into these private markets. As I listened to the Pensions Minister during the passage of the then Pension Schemes Bill, I heard what sounded like claims that these private assets are high-return, low-risk assets and perfect for pensioners with very little savings. It is because of such a naive understanding of private credit, among other things, that that Bill was so important. That is why protecting the fiduciary duty of pension trustees dominated its passage; the noble Baroness, Lady Noakes, and my noble friend Lady Bowles were instrumental in making sure that that fiduciary duty remained primary.

The insurance companies are deep into this, too. According to the Bank of England, in evidence given to the Lords Financial Services Regulation Committee:

“The interconnections between private markets and the life insurance sector have grown considerably, with analysis by the IMF … showing that approximately 35% of assets held by US life insurers and approximately 23% of those held by UK life insurers were allocated to private credit”.


It is clear that if the private credit market goes wrong, it goes wrong for the whole financial sector. It is not an exaggerated fear: the sector has serious liquidity issues. Anyone who picks up a newspaper can see that firms such as Blackstone, Oaktree, Apollo and Morgan Stanley, to name but a few, are now limiting or refusing redemptions. We cannot ignore the canary in the coal mine.

The Lords FSR Committee published a report on this sector in January, entitled Private Markets: Unknown Unknowns. At the end of that process—I give some credit to the committee—the Bank of England announced that it would conduct a system-wide exploratory scenario that will involve the banks, insurers, private equity companies and pension fund investors, but on a voluntary basis. It will report in 2027. The committee is to be commended for focusing on the issues in this sector, but I do not think that this satisfies a reasonable standard of parliamentary scrutiny or reflects a parliamentary responsibility to the public to make sure that we avoid another major financial crash. Therefore, my amendment is designed simply to put pressure on the Bank of England in order to get proper answers. I am still disturbed that it thinks it will do so only on a voluntary basis. I hope that the Bill as a whole can be amended to restore proper democratic oversight, and then Parliament could engage with finding a solution. One of the reasons so few people in both Houses are aware of the concerns about the issue is that there is virtually no vehicle for a debate, for consideration and for action.

The second part of my Amendment 78 addresses a problem that I have never heard widely discussed. If the private credit market goes bad—and the banks, because they are entangled with that market, begin to divest loans—what happens to small businesses dependent on bank credit? We saw this behaviour in 2008. After the crash, banks continued to fund the big companies but found every way possible—many of them legal but I would consider unethical—to call in loans to small companies. In loan agreements that were being paid in full and on time, there would be a covenant somewhere in the documents that said that if loan-to-property values fell below a certain level, the loan could be called. I am pretty sure that the small business never really thought that that was a significant paragraph in its loan agreement, but it proved the trigger and we saw basically every major bank exercise it.

The FCA refused to act and has always held the line that the regulatory perimeter means that it cannot offer protection to small businesses and that, instead, caveat emptor applies. To me, this is untenable in the complex world of finance that we have today. I want the regulators to take a proper look at the whole issue of the regulatory perimeter, if we are to go into a cycle of financial shocks.

[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a great pleasure to follow the noble Baroness, Lady Kramer, on what may be the most important amendment that we will discuss in Committee, and I hope we might discuss it on Report as well. As she said, there is a huge lack of discussion of this issue in Parliament, whereas if you go to the pages of the Financial Times, for example, you will see, pretty well every day, alarming reports and strong headlines expressing concern about the issue. I am aware that we are operating under heatwave conditions, as is the rest of the nation. As with our credit system, we have all been puffed up by a lot of hot air, much of which has indeed been financed by our financial system, so I will be quite brief, but I want to pick up a couple of points that the noble Baroness made.

The powerful argument about a voluntary engagement with the stress test is just laughable—with a sick kind of laugh. We know what voluntary regulation has done in so many different areas of our business sectors, and that is not the way to go forward. The noble Baroness also talked about pension funds, particularly about investing in private credit and the grave concerns that it raises. There is quite a bit of research that indicates that the people profiting from this are the managers and companies, and pension funds are getting the same or lower returns as they are from other investments.

The most useful way I thought I could add to this was to go through the Financial Times private credit headlines for this month alone. I will give a representative selection of them. The first is:

“Are insurers becoming dangerously addicted to private credit ratings?”


It is a question-mark headline, to which the answer is clearly given as “yes” in the article. Here are some of the others:

“Apollo’s flagship private credit fund hit by 17% redemption requests”,


“BlackRock private credit fund honours less than 40% of redemption requests”,


“Partners Group limits withdrawals at private equity fund for wealthy individuals”,


and

“Cliffwater’s flagship private credit fund redemption requests hit 17%”.


Rather than expound at length, I refer noble Lords to a single book: This Time Is Different: Eight Centuries of Financial Folly by Carmen Reinhart and Kenneth Rogoff.

There is no reason to think that what we are doing now will be different from where we have been before. Private credit is a new structure of a very familiar form, and we have seen what happens with these new financial-engineering structures. The noble Baroness is doing an important job here of at least starting a discussion on this. That discussion should be held at much greater length in the main Chamber, and its subject should worry us all.

Financial Services and Markets Bill [HL]

Baroness Bennett of Manor Castle Excerpts

Committee stage
Monday 29th June 2026 Grand Committee

[Baroness Northover (LD)]

My Lords, in moving Amendment 80 I shall also speak to Amendment 103. My name is also on Amendment 140, and I have no doubt that the noble Baroness, Lady Hayman, will expertly present that. I also support the other amendments in this group.

We experienced, of course, the most extraordinary heatwave last week, made so much more intense because our climate has already changed. It is now anticipated that we will never return to pre-industrial levels, yet, we have gone backwards on climate change and climate risk in this Bill. The Government may say that they have not, and that they want to ensure that the regulators are flexible in how they can tackle this challenge, but Clause 17 strips out all sorts of accountability arrangements in a number of areas. My noble friend Lady Bowles rightly argues that it simply should not stand part of the Bill.

The noble Baroness, Lady Noakes, said on day one in Committee that she concluded that in the Financial Services Act 2023, we failed to understand what the lack of EU oversight, as passed into UK law,

“meant for democratic oversight of what the regulators do with the powers that they acquire. We also failed to appreciate the scale of the task of holding the regulators to account.””.—[Official Report, 22/6/26; cols. GC 193-4.]

This has to be a major cause for concern to us across the broad range of powers we are passing to the regulators, especially as we do not even know what new rules will be drawn up for them. As my noble friend Lady Bowles said, again on the first day of Committee:

“Our system is not to delegate unconstrained power to regulators. Parliament sets the framework, regulators operate within it and, when necessary, the court interprets.””.—[Official Report, 22/6/26; col. GC 197.]


I know there will be a number of objections to what Clause 17 seeks to do, but in this group, we focus on the steps backwards that this represents in terms of climate risk, climate change and nature loss. I am extremely grateful to my noble friend Lady Kramer, who directed me towards the relevant page in an absolutely enormous tome which details the Financial Services and Markets Act 2000, with all the subsequent amendments, so that I could see exactly what Clause 17 does. If you simply read the Bill or the Explanatory Notes, you would never quite know what was being deleted. Knocking out the regulatory principles eliminates the explicit reference to the desirability of sustainable growth in the UK economy in the medium to long term, and the need to contribute to achieving compliance with the Climate Change Act 2008, on net-zero emissions, and with Section 5 of the Environment Act, on environmental targets.

I am sure the Minister will say that when the rules are drawn up, or when the regulators work out their strategies, they are bound to look at climate risk, for example. But as the earlier debates on this Bill have shown, we are removing protections that were in place and handing them to the regulator, when regulators are so often found lacking. That is why I put down Amendment 80, and I am very grateful to the right reverend Prelate the Bishop of Manchester and the noble Baroness, Lady Griffin, for their support on this amendment.

Our concern here is to reinsert the desirability of sustainable growth in the economy of the UK in the medium and long term, something we managed to get into the 2023 Act. Of course we should be doing this. These are the industries of the future, and that is what we need to do if we are not to drive climate change further, but we have added climate risk. As I mentioned at Second Reading, we know that a lax attitude to regulation helped to bring about the financial crash of 2008 with all its economic, political and social consequences; so, it is all very well saying that of course the regulators will do this, but we know that that is not necessarily so. Climate change is a current and future risk to the financial sector over both the short and long term. Therefore, we should be strengthening, not weakening, the regulations here.

This comes across very clearly from the report of the Adaptation Committee of the Climate Change Committee. The priority risks in the UK are intensifying heat, growing flood risk and rising drought and wildfire risk. The risk to the insurance industry is obvious. There is a report in today’s Times on subsidence and the likely increase in its incidence. It points out that the summer of 2025 was

“Britain’s hottest on record and also its most expensive for homeowners: insurance companies paid out £307 million for subsidence claims over the year, the highest ever amount, according to the Association of British Insurers”’

Moreover, many insurers are now becoming so risk-averse that they no longer cover subsidence, so that leaves the poor home owners on the hook. The Adaptation Committee points out that flood-related insurance claims are rising and that home insurers have paid out more in claims than they received in premiums for the five years to 2024. It notes that this will put stress on the financial sector as banks face higher default rates on mortgages and business loans, and this will then affect the housing market, just as happened with subprime mortgages. As the report states:

“Actions by FIs are needed to ensure that physical climate risks don’t disrupt the financial system”.


Therefore, it becomes vital that we ask the regulators to assess for climate risk. This should be in the Bill as this issue, sadly, is not going to go away.

For this reason, in Amendment 103—I thank the noble Baroness, Lady Griffin, for her support— we propose that the regulators make annual reports to the Treasury on how they have upheld their climate risk and environmental principles. The reports must explain what action they have taken to ensure that climate risk is embedded in their operations, processes and decision-making, and what rules and guidance they have therefore promulgated. The way this is done takes as its template the proposals in Clause 20. Moreover, it should not be just a matter of “having regard” to these issues; it should be informing their day-to-day work, due to the negative impacts already being witnessed on price stability, financial stability, market functioning and growth.

As I have said, I also support the other amendments in the group—which will be fully explained by others—to ensure that UK-related financial institutions develop and implement credible transition plans, as well as those in the name of my noble friend Lady Sheehan. I beg to move.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise to speak to Amendments 83B and 86A, which appear in my name. It is a pleasure to follow the noble Baroness, Lady Northover, and to agree with a great deal of what she said. It is almost as if in the past week or so, the planet itself has been speaking to us and sending us a message that should direct the Committee’s deliberations on this Bill.

I will restrict myself to my two amendments, in the interests of time. I have been asked to table them by people who are gravely concerned about issues of corruption, dirty money, the “London laundromat” and associated security concerns. These are issues on which I do a considerable amount of work, and that is why I have this focus on this group.

These amendments are related. They seek to add both climate risk and the laundering of criminal gains causing environmental harms to the regulatory principles to which the FCA and PRA must have regard. I can pretty well hear the concerns about to be expressed some time soon about “have regard” amendments, but surely these are things that we have to think about. We have to make sure that we direct the regulators to think about climate and the laundering of criminal proceeds through the City and associated institutions.

I note that the Financial Action Task Force recognises environmental crimes as predicate offences for money laundering. The European Union has strengthened its criminal law framework through the environmental crime directive, requiring member states to publish a national strategy on combating environmental criminal offences by 2027.

Looking around the world, in 2018 the United States Treasury sanctioned the Zhao Wei transnational crime organisation and listed wildlife trafficking as one of the many illicit activities undertaken by the network. In Zambia, the economic and financial crimes division of the high court recently forfeited to the state a vast array of assets associated with a major illegal logging operation. Diplomatic momentum for a fourth protocol under the UN Convention Against Transnational Organized Crime to address crimes against the environment is also advancing, with the support of the UK.

As a global financial centre, the UK has a particular responsibility to ensure that it is not supporting financial and environmental crimes globally and it should play an important role in achieving a stronger global approach. Evidently, however, although environmental crimes are recognised as serious at present, without an explicit recognition of this in the regulatory principles, the FCA and the PRA will not be equipped or directed to respond with the necessary action.

It is important to stress that this is also very much a security issue. There is clear evidence that environmental crime is not only associated with financial and organised crime but with terrorist and armed groups as well. For instance, the proscribed terrorist group al-Shabaab has historically benefited from the illicit charcoal trade in Somalia, with state actors also being complicit. More generally, Interpol has found that the proceeds of environmental crime have become the largest source of income for non-state armed groups and terrorist organisations. Without sufficient regulatory framework, the UK could be contributing to these very dangerous, deadly, human rights-abusing forces around the world.

So much of what is happening in the world is criminal. Between 2013 and 2019, about 69% of tropical forest agro-conversion was conducted in violation of national laws and regulations. This, of course, is also associated with human rights abuses. Perhaps this is sometimes less considered, but Interpol says that illegal mining generates up to $48 billion annually, frequently breaching environmental regulations and contributing again to deforestation, pollution, biodiversity loss and harm to local communities.

I have already mentioned illegal wildlife products. Interpol found that the black market for those is worth up to $20 billion annually, and up to 100 rangers are killed by poachers each year while protecting wildlife and habitats. It might seem a very long way from the City of London to the ranger desperately trying to protect the wildlife population in a national park in Africa, but those two things are linked. We bear responsibility here. I urge the Government to consider these amendments in order to put this back into the directions for the FCA and the PRA.

[Baroness Hayman (CB)]

My Lords, it is a pleasure to follow the noble Baroness, Lady Bennett, and to say that I broadly support the action that she is suggesting in Amendment 83B. Organised environmental crime, including illegal deforestation and wildlife crime, is increasingly acknowledged as a major source of illicit finance and money laundering. It is therefore important that the FCA and the PRA have the ability properly to take account of these risks within their existing anti-money laundering framework. I hope that we will get a positive response from the Government on that.

This group of amendments deals with the gaping hole, frankly, in the Bill on nature and climate considerations. I was going to speak more broadly about the importance of taking these into account—I may still do so in our stand part debate on Clause 17—but the noble Baroness, Lay Northover, did the Committee a great service in setting out very clearly, in her opening speech, the issues that we need to address with some urgency.

--- Later in debate ---

[Lord Bridges of Headley (Con)]

My Lords, I agree with all the amendments to which my noble friend Lady Noakes just spoke, but Amendment 99 merits attention. I will speak to it very briefly, as I get a sense that everyone is wanting to get out of this lovely Room to eat something.

This amendment asks an interesting question; perhaps the Minister can answer it when he winds up. I am interested in what is more important. Is it the alignment with global international standards, or is it the competitiveness and growth objective? When one is thinking about these international standards, do we think that it is more important to align with those standards than it is to improve the competitiveness and growth of the financial services sector? I ask this as a genuine question. I can see an argument for saying that alignment with international standards adds to competitiveness and growth, but, if we believe that those international standards undermine growth, what is more important?

I ask that because—once again, I draw your Lordships’ attention to my entry in the register—every day, I am seeing, as my noble friend Lady Noakes alluded to, the fragmenting of international standards. Noble Lords may take very different views on that, but it is undeniably the case that the overall approach of the large financial sectors to adhering to those standards, if they ever really existed, is now under enormous pressure. Therefore, if we want to retain the competitiveness of the City and its contribution to the growth of this country, we need to be very mindful of that. If we want to continue to attract high levels of global capital here, we cannot, to my mind, just blindly say, “We must align with international standards”, without being fully cognisant of the consequences.

The amendment moved by my noble friend asks a very big question, which I look forward to hearing the Minister address.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise briefly to speak against all of these amendments, but the noble Lord, Lord Bridges, has asked an interesting question here: are we making this legislation for the City or for the country? My question to the Minister, therefore, is: does aligning with international standards mean that we can actually set higher standards? That is certainly what I would like us to do in terms of money laundering and the other issues that I raised earlier, but I think that the assumption in this amendment is that we might set lower standards.

One of the things that aligning with international standards would do is improve our international standing in this uncertain geopolitical age. Undercutting standards would be severely damaging to our international standing in the world. That is a much broader question than just the City.

I will cover all these amendments collectively. It is no secret that throughout all the previous financial services Bills I have worked on, I have opposed competitiveness and growth objectives. I am sure the noble Lord, Lord Vaux, will be delighted to know that it was his earlier contribution to the clause stand part debate that helped me to see clearly that what we are doing here is singling out the growth and competitiveness objectives from everything else. One of the ways in which noble Lords tried to deal with that in earlier groups was by adding crucial issues such as climate. The other way of approaching the problem, which I may well be tempted to do on Report, is by proposing that Clause 20 does not stand part.

It is important to raise the issue again now, given that just this week the Bank for International Settlements has spoken about the financial risk associated with big tech’s AI spending spree—in its terminology—which could lead to a prolonged investment bust that could have significant impacts on financial markets and the global economy. It produced the figure that the five biggest hyperscalers expect to invest more than $1 trillion from 2025 to the end of 2026. We are in a position of risk, so I believe we should look at growth and competitiveness again.

Amendments 102 and 104 seek to extend further than the Government have gone on the growth and competitiveness agendas. That is an extraordinarily bad and extremely risky idea. I am happy to carry forward that idea and keep saying it on Report.

[Lord Wilson of Sedgefield (Lab)]

My Lords, we have come to the end of the time available for Grand Committee today. Although it is unusual, I beg to move that the debate on this amendment be adjourned. We will return to this debate on the next day in Committee. Only those noble Lords present at the start of this group can speak when the group resumes. I have asked the clerk to circulate a list of those present in the usual channels.

Financial Services and Markets Bill [HL]

Baroness Bennett of Manor Castle Excerpts

Committee stage
Wednesday 8th July 2026 Grand Committee

Moved by

[Baroness Bennett of Manor Castle]

172C: After Clause 47, insert the following new Clause—
“Review of the City of London Corporation(1) The Secretary of State must, within 12 months of the day on which this Act is passed, appoint an independent person or panel to undertake a review of the functions of the City of London Corporation in relation to regulation of financial services and markets.(2) The review must consider—(a) the arrangements relating to engagement between the City of London Corporation and the FCA and PRA, and(b) the extent to which the City of London Corporation contributes to the regulation of financial services and markets.(3) The reviewer must publish a report setting out their findings and recommendations no later than 18 months after appointment.(4) The Secretary of State must lay the report before Parliament and, within six months of receiving it, publish a response setting out what steps the Government intends to take in response to the recommendations.”

--- Later in debate ---

[Baroness Bennett of Manor Castle (GP)]

My Lords, this amendment would provide for a review of the City of London Corporation with regard to the regulation of financial services and markets. At Second Reading, I referenced my intention to address this issue—here it is.

In the interests of transparency, I note that my interest in the City of London Corporation extends beyond that. Noble Lords who read the Politico email newsletter may have noted that it has reported that I am working with the All-Party Parliamentary Group on Investment Fraud and Fairer Financial Services on a survey of people’s views of the City of London Corporation, including whether it should be retained as it is, reformed or abolished. That extends beyond the regulation of financial services and markets as covered by the Bill.

I also note that the survey’s existence has led to me being contacted by a significant number of both city residents who are unhappy with the way in which the corporation fulfils its local government-type functions and organisations that receive funding from it and are concerned about the way in which things are done. Those organisations are most keen that what I say does not identify them in any way, for fear of reprisals—I suggest that that is disturbing and telling in itself—but significant elements of the corporation’s operation not being covered by the freedom of information legislation makes it difficult to uncover exactly what is going on.

The survey and my expression of my personal views on the subject have sometimes been confused, as in a letter sent on 1 July by the corporation’s policy chairman, town clerk and chief executive to members of the APPG, including me. The letter seemed to be unable to distinguish between the questions in the survey and comments that I have personally made about the corporation. As the letter from the corporation notes, my views on its existence are well known. Indeed, when I was elected as leader of the Green Party of England and Wales in 2012, the city diary in the Evening Standard noted my calls for its abolition; that was the only record of the election result in that newspaper.

However, the letter of 1 July from the corporation contains powerful arguments for my amendment, which calls for an independent person or panel to be appointed by the Secretary of State to undertake a review of the functions of the City of London Corporation in relation to regulation of financial services and markets. The letter refers to the corporation’s place

“in the delivery of strategic, financial and professional services initiatives”.

It says:

“Mayors have helped to catalyse major initiatives such as the Mansion House Compact and Accord”.


As one industry commentator has noted, in seeking to channel pension fund capital into growth assets,

“private equity, infrastructure, private credit and venture capital are now firmly on the radar”

of pension funds. These are all sectors where we know that benefits are more likely to flow into the financial sector than to investors.

The corporation’s letter also points to its role in the Office for Investment: Financial Services, which describes itself on its website as providing

“international fintech firms with a single front door for regulatory assistance and wider business support”.

I direct noble Lords who want to explore the issues around this so-called foreign direct investment further to an excellent book by Angus Hanton, Vassal State: How America Runs Britain. It quotes a late Member of your Lordships’ House, Lord Myners, who said in 2021:

“Britain is open for business in the same way that a car boot sale is open for business”.


It is now even more open for business, with the Financial Times recently reporting that the value of acquisition by foreign buyers is now up to £128 billion this year—more than triple the level in the same period in 2025, and that was before the apparently pending sale of easyJet to yet another US private equity firm. That the last rotten borough in the country—finally otherwise removed by the Reform Act 1867, with non-residential votes removed from other council areas in 1969—operating under rules that would be unacceptable anywhere else in public life and that shield it from scrutiny, skewing democratic representation in favour of business, overwhelmingly financial businesses, can exercise privileged influence over our laws and their administration over regulation is surely something that should be examined, particularly over financial laws that, as we discovered in 2007-08, are so essential to our security.

That is all that this amendment asks for: to conduct an independent review of the corporation’s impact on financial regulations and markets. Surely, if the corporation is so confident about the claimed positive impacts that it likes to trumpet, it and the Government could have no objection to a review. Given the problem we have with trust in our politics and financial system, more transparency and consideration would surely be a good thing. I note a recent Public First survey that found that 40% of people think that financial markets have too much influence over decisions made by elected Governments. I also note—the Minister might like to consider this—that the same survey found that 52% agreed that the UK should prioritise financial stability and consumer protections, even if this limits investment and economic growth. When asked about the potential changes to the UK’s post-2008 bank ring-fencing regime, 64% agreed that financial stability should be the priority.

Questioning the City’s place is not, after all, new. The Royal Commission on the Amalgamation of the City and County of London recommended its abolition in 1894. It was Labour Party policy to abolish today’s City of London Corporation until Tony Blair took over the party, and he instead chose to give even greater weighting to the business votes against those of residents.

Defenders of the City of London Corporation tend to reach for the language of heritage, as does the letter of 1 July: the corporation is ancient. It is part of the fabric of London’s history. Reform would be complicated. These are not effective arguments against examination. Age alone does not confer legitimacy—just look at the UK constitution. The corporation’s structures were not designed for a modern democracy. They pre-date it and have been carefully preserved by those who benefit from them.

The corporation is not the financial sector, but it is its lobbyist, its defender and a power base enjoyed by no other part of our society. Its existence cannot be separated from the fact that the financial industry is in a privileged position in our society. Giant financial corporations do not need any further boost to their power; they have more than enough already. No other major financial centre has anything resembling the City of London Corporation—not New York, Tokyo, Frankfurt or Singapore. Surely we should be examining the impact of this singular entity on the state of the UK. I beg to move.

[Baroness Bi (Lab)]

My Lords, I remind the Committee of my interest as the chair of Norton Rose Fulbright. Although my firm was located in the City of London for more than 200 years, from its founding in 1794, we are no longer within the jurisdiction of the corporation, having ventured south of the river a few years ago. My current office at More London gives me what is probably the best view of the Tower of London, which, notwithstanding the imminent arrival of the Bayeux tapestry, has been a daily reminder that not even the conqueror had the poor sense to interfere with the freedoms of the City, which worked extremely well, and we should be careful before we consider doing so. I oppose this amendment, which contemplates a two and a half year process after Royal Assent, with the attendant costs and distraction for the Treasury that such a review would entail. We should therefore ask what the review is actually meant to uncover.

--- Later in debate ---

Taken together, I do not see the need for action, as the corporation does not have a unique or privileged position in the development of financial services regulation, at which the Bill is particularly targeted. As such, I ask the noble Baroness to withdraw her amendment.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I thank the Minister for his response and everyone who has taken part in this interesting and informative debate. We have engaged with some interesting and broad issues. I particularly commend the noble Lord, Lord Pitt-Watson, who gave us some interesting suggestions and proposals that I am certainly going to go away and think about. I do not think that continuing with the history is necessarily the right thing to do, but that does not mean we cannot learn from history. The idea of the City of London having responsibility for its tradespeople has an interesting comparison, which makes me wonder: had we held the City responsible for the financial crash of 2007-08, and if the City had paid some of the large expenses that were instead, by austerity, put on the shoulders of the poor, the disabled and the young around the country, how different things might have been.

I note that the noble Lord also said that the City should be responsible for seeing that these services should deliver benefit to the world. That is an interesting proposal that I will take away. In responding to what the Minister and the noble Baroness, Lady Dacres, said, questioning what influence the City has over the FCA and the PRA, I will refer to the contribution from the noble Baroness, Lady Bi—

[Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)]

The noble Baroness was not here at the start of this sitting, which started earlier this afternoon, almost five hours ago. I point out that, as far as the Companion is concerned, when noble Lords are withdrawing amendments, they must be short and not rehash the whole argument or make responses to all the points made during the debate. If the noble Baroness would move towards withdrawing the amendment, that would be good.

[Baroness Bennett of Manor Castle (GP)]

I thank the noble Lord, the Whip. I am not rehashing; I am engaging with the contributions.

[Lord Wilson of Sedgefield (Lab)]

No. Paragraph 8.82 of the Companion says that when withdrawing amendments, noble Lords should be short in doing so and should not engage, because they will have done that during the debate.

[Baroness Bennett of Manor Castle (GP)]

I was speaking for about a minute and a half before the noble Lord interrupted me. I think three minutes might count as short, and I have two short points to make. The first, as I was saying before I was interrupted, is that the noble Baroness, Lady Bi, said that the City—

[Lord True (Con)]

My Lords, I apologise to the noble Baroness, but I support what was said from the Government Front Bench. This matter was discussed again in our Procedure Committee this morning: arguments that have been put are understood by a committee or by the House, and there is often merit in moving on relatively quickly, so, from the Opposition Front Bench, I support what was said.

[Baroness Bennett of Manor Castle (GP)]

I note the noble Lord’s contribution. As I said, I would have finished by now had I not been interrupted multiple times. The simple point I want to make is that the noble Baroness, Lady Bi, said that the City engages constructively with regulators. She also said that it uses its convening power to promote the sector. I would argue that, put together, those two things make the case for this amendment.

However, I was going to be brief; I would otherwise have finished a minute ago. We have had an interesting discussion. I will think about where this might go on Report but, in the meantime, I beg leave to withdraw the amendment.

Amendment 172C withdrawn.