Financial Services and Markets Bill [HL]

Debate between Baroness Bennett of Manor Castle and Baroness Neville-Rolfe

Report stage
Wednesday 9th September 2026 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise with great pleasure to follow all the speakers thus far in this group and to support all these amendments. I have not attached my name specifically to any of them—some of the most prominent are fully subscribed and I wanted to leave space for the breadth of that subscription, noting in particular Amendment 90, which has also been signed by the noble Baroness, Lady Coffey, who is not currently in her place.

I want to take a second to reflect on the point where we are at now with the Bill overall. What we have before us is essentially the same Bill that was introduced under a different Prime Minister and a different Chancellor. I remain astonished that the approach to competitiveness and deregulation that was directed by Rachel Reeves is now being continued, although after hearing the new Chancellor’s speech two days ago, I am somewhat less surprised.

I will particularly reflect on all the environmental measures here, and we still have before us essentially the same Bill as under the previous Government. I note that our current Prime Minister supported the fossil fuel treaty in June 2025, when he was Mayor of Manchester, and that, when running for the Labour leadership in 2015, he said:

“Labour under my leadership will never turn our back on … our duty to tackle climate change”.


All these amendments are therefore putting the Bill back on the track that it should be on—a track that the Government are apparently signed up to.

I will focus very briefly on Amendment 90 and the forest risk commodities. As with pretty well everyone who has already spoken, I think we remember the long wrestle to get not the strong thing we were looking for but at least the promise of Schedule 17 into the Environment Act 2021. There is a real problem here in terms of members of the public. They heard and saw that fight and saw the law put down by the Government, and they expect it to be delivered. Yet, five years later, we still do not have that provision.

After listening very carefully to the noble Baroness, Lady Young of Old Scone, I have a constructive suggestion. The timetable coming from Defra suggested that, within 12 to 18 months, we will finally see the delivery of what was promised in 2021. I am sure the Minister will say that he cannot accept Amendment 90. However, it would be very positive if, perhaps at Third Reading, the Government could table an amendment committing to these regulations in, say, 18 months’ time, which would be a minor adaptation to the amendment put down by the noble Baroness, Lady Sheehan, and others. The noble Baroness, Lady Young, has that promise and pledge in a letter; let us go a little further and put it in the Bill.

[Baroness Neville-Rolfe (Con)]

My Lords, we have a lot to cover today, so I will be brief.

We do not believe that imposing additional reporting duties, transition plan requirements and regulatory processes on financial services firms is the right way to address the concerns that have been addressed in these amendments this evening. One of the merits of the Bill is the way it cuts out needless and repetitive operational requirements on financial services firms and regulators and instead introduces a more effective approach based on five-year strategies. As we heard on Monday, stakeholders’ views will be sought in the course of establishing those strategies. Of course, climate change and environmental objectives already remain an important statutory regulatory principle, intended to contribute to the UK’s net-zero target under the Climate Change Act and to the environmental targets established under the Environment Act.

However, requiring banks, other financial institutions and the regulators themselves to fill in forms, tick boxes and produce more and more reports about climate change will not have a meaningful effect on global temperatures; it will simply add costs. We need a regulatory environment which supports growth, enterprise and investment. That means cutting down on the red tape and extra requirements that are putting our international competitiveness at risk. These amendments would add a further layer of process and obligation without a sufficiently clear demonstration that the burdens would advance the environmental objectives being pursued.

This is a time when we should be seeking to streamline regulations and be careful about new requirements, however well-intentioned, because of the need to get the economic growth that we lack. These amendments risk taking us a step backwards, so we cannot support them and will be voting against them if noble Lords press them to a vote.

Financial Services and Markets Bill [HL]

Debate between Baroness Bennett of Manor Castle and Baroness Neville-Rolfe

Report stage
Monday 7th September 2026 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, I speak to Amendment 97, which appears in this group in my name. I commend the noble Baroness, Lady Kramer, and the noble Lord, Lord Vaux, for providing us with powerful arguments, particularly for Amendment 17. I echo the noble Lord’s comments as, if the noble Baroness wishes to put this to the vote, the Green Party will certainly support it. We need to see the tech companies being made to pay for the huge profits they are collecting while continuing to allow illegality to operate in their spaces.

However, I will primarily speak to Amendment 97. I begin by acknowledging the work of Joshua Tjeransen, who is my King’s College London intern. He has identified this issue for me and done a great deal of work on this amendment. This amendment is about a different sort of fraud from that covered by the amendment from the noble Baroness, Lady Kramer; it is about ransomware. I am sure noble Lords have come across many cases of this; it is a great concern to businesspeople, individuals and institutions, particularly the NHS. It is where a computer system or database is locked and access is prevented. The ransomware takes it over, and companies are told, “Pay up or you will never get this back”.

It is worth thinking about the circumstances of this. Very often, payment is demanded in cryptocurrency. People are told, “If you don’t do this in the next hour, the figure will double and double again” and so on, through alerts appearing on someone’s computer screen. These are tremendously frightening, difficult, challenging circumstances to face.

The figures we have for this come from Report Fraud. In the year from April 2025, 323 UK organisations reported such an attack. More than half of them were small and medium-sized enterprises, and the average loss was £270,000, which for SMEs is a huge sum of money. I said “reported” because it is generally acknowledged by experts in the field that there is a real issue of stigma here. Companies and organisations do not want to admit that they have fallen victim to such a fraud, and it is generally agreed that those figures are the tip of the iceberg. The accepted advice from law enforcement is “Don’t pay”, but it is generally acknowledged, although it is very hard to put figures on it, that a lot of people are paying right now, and this must be very lucrative for some very nasty criminals.

I come to the amendment, which would insert a new clause that would place a duty on the Financial Conduct Authority to make rules within 12 months of Royal Assent prohibiting the firms it regulates from

“making, offering, authorising or facilitating a ransom payment”

and would prevent the insuring or indemnifying of anyone against such a ransom payment. Firms would have to notify the FCA within 72 hours of becoming aware of a ransom demand. The only exception provided is where the payment is needed to prevent an imminent risk to life or serious injury, and then only with the prior approval of the Secretary of State. It covers authorised persons and firms supervised by the FCA under the Payment Services Regulations and the Electronic Money Regulations.

I think it is worth going back over how we have got to the point where we still do not have any action. In January 2025, the Home Office consulted on three proposed measures on ransomware: a targeted ban on ransom payments by public sector bodies and operators of critical national infrastructure; a payment prevention regime under which other organisations would have to notify the Government before paying; and mandatory incident reporting. The response was reported on 22 July 2025 and recorded 72% support for a targeted ban. There was an announcement that all public sector bodies and CNI operators would be banned from paying, and there would be a notification requirement.

On 14 October 2025, answering a Question from the noble Lord, Lord Fox, on the Jaguar Land Rover attack, the noble Lord, Lord Leong, told the House:

“The Home Office is progressing a new package of measures to protect UK businesses, and we will update the House accordingly”.—[Official Report, 14/10/25; col. 169.]


In December 2025, the Security Minister said that the ban remained a priority and would progress—noble Lords know the dreaded phrase—when parliamentary time allowed. You might think that there would be coverage of this in the Cyber Security and Resilience (Network and Information Systems) Bill, but my understanding is that there is no coverage of such issues.

Why does this amendment work? Why can we do this through the Financial Services and Markets Bill? Nearly every payment will pass through a financial company. If there is any kind of scale to this at all, whoever the victim is, the money will go through a firm that the FCA supervises. A rule on these firms therefore reaches most payments made from the UK, not just payments by financial firms themselves. I think the amendment is elegant. It would not create a new offence or a general ban on businesses as the Public Bill Office said that that would be outside the scope of the Bill. Instead, it would place a duty on the FCA to create the rules within 12 months. This is a step forward in dealing with a critical issue that is affecting businesses and organisations right now and on which the Government have promised to act. It follows the Government’s own design.

I am not expecting the Minister to accept the amendment, and I am not going to put this to a vote because we have not had the time or capacity to work through the detail of exactly how this is written, but none the less I hope that we will hear from the Minister that there is going to be significant progress in this area very soon. I am really hoping not to hear the phrase “when parliamentary time allows” because the Government have done the consultation on this and have promised to act. We need to see protection in this fraud capital of the world—the UK—for firms. If ransoms cannot be paid, it will not be in the interests of criminals to put the effort in to try to get ransoms.

[Baroness Neville-Rolfe (Con)]

My Lords, we are concerned about the scale of fraud, and in particular by the continued growth of authorised push payment fraud and other forms of online economic crime. The Government and the banks have made progress, but the truth is that it is hard to keep up with the scammers, and the sums at stake are significant, as the noble Baroness, Lady Kramer, has explained. I therefore strongly welcome the proposal from the noble Lord, Lord Vaux, for an annual report.

My noble friend Lord Howard of Rising is right to be concerned about the future protection of commercially sensitive information as part of a competitive UK sector. I am glad he has brought his amendment back, and I hope the Minister will be able to provide an assurance that this will be addressed.

The amendments in this group raise important questions about transparency, monitoring and the practical steps that firms can take to identify scams earlier, warn consumers, share information more effectively and pay compensation where that is appropriate. Indeed, there has been considerable progress since the APP reimbursement regime was introduced in 2024. I always remember my card being used in Korea to buy £2,500 worth of Louis Vuitton luggage. That would not happen today, as banking procedures and scrutiny are so much better.

However, the proposal from the noble Baroness, Lady Kramer, is a difficult one, as it is not clear what the technology companies could do to stop fraud systematically. They are not passing money on in the same way as the banks do. That may have been what the noble Lord, Lord Stockwood, was getting at in Committee when he responded to this amendment at that stage. New regulations of this kind could also have a chilling effect on the supply of online services in the UK, so more analysis is needed before the FCA introduces new rules. We believe this is an area where the Government and the regulators should be prepared to make progress, but we also understand the constraints.

It is also important that people learn to avoid scams with simple procedures such as face ID, and to take care over what they buy online. This should be an important part of education, and indeed Ofcom, working with the FCA and the tech companies, should be able to make more progress here. I very much look forward to the Minister’s response on this important area and how he thinks we can best address this problem.

Money Laundering and Terrorist Financing (Amendment) Regulations 2026

Debate between Baroness Bennett of Manor Castle and Baroness Neville-Rolfe

Monday 18th May 2026 Grand Committee

[Baroness Bennett of Manor Castle (GP)]

My Lords, I thank the Minister for his expansive introduction to this SI. I wish to express concern about two elements of it: the change in the transactions and the change in the rules on trusts.

This all comes at a moment when the OECD and the Financial Action Task Force are pushing every major jurisdiction in the direction of having more transparency, more openness and more recording. It weakens the UK’s stance when we ask other countries to tighten their own procedures. Both the OECD and the FATF have been pushing countries to make registers of beneficial ownership more complete and more accessible. The message that is being sent is, “We need to widen the net”.

Of course, historically, the UK has held itself up as a leader in this area, however hard it might have been to justify that claim. One of my questions for the Minister is: how does this measure align with the Government’s 2025 anti-corruption strategy, which is supposedly aimed at driving dirty money out of the UK and strengthening national security?

I note that, in December, the City of London Police was awarded an extra £15 million to expand its anti-corruption efforts. The Justice Secretary then said that the UK

“will no longer be a haven for dirty money and dictators’ laundered assets”

and promised action to tackle “professional enablers”— the lawyers, bankers and estate agents who we know have been at the heart of some very murky, shall we say, transactions. As the Justice Secretary said at the time, all too often, the trail of dirty money “leads back” to London; he also noted that that is

“exploited by those Kremlin-linked elites who enable Putin’s aggression”.

I come to my two specific points. The greatest area of concern that I can identify—the Minister alluded to this—is the jurisdictions under enhanced monitoring. The SI replaces high-risk third countries with FATF “call for action” countries in the enhanced due diligence trigger. Therefore, we are picking up only countries that are blacklisted now: North Korea, Iran and Myanmar. Previously, the regulations that applied to so-called grey list countries, which called for increased monitoring, included the UAE, South Africa, Turkey, Nigeria and the Philippines.

UK firms transacting with counterparts in those jurisdictions will no longer be automatically required to imply the enhanced due diligence. This seems to place a great deal of trust in UK companies that do not have a great record; I cross-reference back to what the Justice Secretary said in December about dirty money flowing into London. So, in effect, this SI represents a substantial retreat at exactly the moment when we are supposed to be cracking down on illicit finance.

My second area of detailed concern is the register provisions. New paragraph 23A of Schedule 3A to the 2017 regulations will create the first-ever general sized-based exemption from the trust register. If a trust holds no UK land, has under £2,000 in current assets, has never held more than £10,000 over its lifetime and earns under £5,000 a year, it never has to register.

This anti-abuse rule stops only a single settler, but does not allow for the situation where a wealthy family spreads a pot across a spouse, parents, adult children and who knows who else with each acting as a settler. Regulation 25(3) removes stamp duty reserve tax as a registration trigger, quietly pulling share-owning trusts that would otherwise have appeared on the register out of the scope of the register.

For those who might be listening, stamp duty reserve tax is a 0.5% tax when you buy UK shares electronically, so if a trust buys £100,000 worth of UK shares, it pays £500 in SDRT. It is a tiny tax and a tiny tax liability, but at the moment that triggers the registration. There are express trusts that have to register because of what they are, but there are also a large number of trusts that have to register only because of this provision. Trusts that own UK-listed shares are exactly the kind of structure where transparency matters to cleaning up the dirty money and I think to the general public as well. They are how anonymous foreign money often holds stocks in UK companies. The current position means that any trust active in the UK equity market at any scale has been caught, regardless of where it is based or who set it up, so removing it punches a hole in the net specifically to oversee shareholding trusts. I would like to hear some more from the Minister on how the Government see this deregulation as being any kind of positive when we are trying to crack down on the flows of dirty money that the Government acknowledge are flooding into London.

[Baroness Neville-Rolfe (Con)]

My Lords, these regulations introduce a number of changes following the Government’s 2022 review and the 2024 consultation. I thank the Minister for his clear introduction and for emphasising the important principle of getting things right first time, which partly explains why these reforms have taken time to come in. Some of the changes appear to be sensible. Refining due diligence requirements so that enhanced due diligence applies to unusually complex transactions rather than all complex transactions seems a proportionate step. Likewise, reforming the trust registration service to close identified gaps, while creating an exemption for low-value, low-risk trusts, appears to strike a reasonable balance between maintaining safeguards and reducing unnecessary burdens. To that extent, His Majesty’s Opposition welcome the direction of travel.

However, these regulations also raise a wider and very important question about whether the current anti-money laundering regime is operating as effectively, proportionately and fairly as it should. It is right—indeed, it is essential—that we are robust in tackling money laundering, terrorist finance and financial crime, but it is also essential that the system does not impose excessive costs, drive firms into defensive behaviour or leave innocent customers and legitimate businesses without access to banking services.

The purpose of anti-money laundering regulation is, of course, to prevent crime, but there is growing evidence that the regime can also have a serious unintended consequence, and customers who have done nothing wrong are nevertheless finding themselves excluded from banking services because they are deemed too costly, too complex or too risky to serve. The IEA’s 2024 report, Debanked, argues that under the current regime certain categories of customer may present a higher initial risk profile, but that the cost of establishing whether they are, in fact, engaged in criminal activity can exceed the value of their business to the bank. The result is that some accounts are closed pre-emptively.

The same report also estimates that compliance with anti-money laundering regulations costs UK banks £34 billion a year. That is a very significant burden and one that is ultimately borne by consumers and businesses. That is a huge multiple of the £178 million of savings in compliance costs which I think the Minister mentioned. To put it into context, the sums spent on some of the enforcement agencies are also relatively small. Nearly £100 million is spent on the Serious Fraud Office and £195 million on the Insolvency Service. Police funding, because police are very important in money laundering, costs nearly £20 billion, but that includes the excellent efforts of the City of London Police in this area, which were mentioned by the noble Baroness, Lady Bennett.

What assessment have the Government made of the impact of the current AML regime on access to banking services? Are the considerable costs—the £34 billion I mentioned—imposed by this regime being matched by clear evidence of a proportionate reduction in financial crime, drawing on the resources I have described? Will the Government consider a broader review not merely of whether the system is functioning according to its own internal processes but whether it is delivering the right outcomes in the real world and whether the enforcement regime is fit for purpose? The Minister has mentioned the economic crime plan.

I turn to the issue of complexity. An anti-money laundering and sanctions regime must be clear if it is to be effective. I know this from my experience of trying to enforce the law in the business area. Professional advisers and regulated entities struggle to understand their obligations. If this happens, the result will naturally be worse enforcement. I was slightly concerned to hear that the Solicitors Regulation Authority has described the UK sanctions regime as “complex and challenging”. That should give us pause for thought. If professionals whose work depends on understanding and applying the law find the regime difficult to navigate, we should not be surprised when banks and firms respond by taking the safest possible course—even when that means withdrawing services from customers who may pose no real risk.

Can the Minister confirm whether organisations such as the SRA were consulted before these regulations were laid? Can he explain whether the regulations will materially reduce the complexity in the system? Do the Government intend to bring forward wider reforms to make the regime easier to understand, easier to apply and therefore more effective in achieving its core purpose and preventing financial crime?

Finally, I turn to redress. The consequences of debanking can be severe. A person or business whose account is closed may be left unable to receive payments, pay staff, meet obligations or even operate normally. Yet the process for challenging these decisions can be slow, opaque and deeply frustrating. In 2024, the APPG on Fair Business Banking published a report which found that thousands of customers were being debanked each month, often as a result of financial, regulatory and reputational pressures on banks. Shortly afterwards, the Treasury Committee published data showing that debanking-related complaints to the Financial Ombudsman Service had risen by 44% from 2023. These figures should concern us as they suggest a more systemic problem.

There are also particular groups that appear to be disproportionately affected: individuals with links to higher-risk jurisdictions, politically exposed persons such as ourselves, small businesses, charities and organisations with international connections—at a time when we are trying to encourage overseas investment. A further group the Government should examine closely is defence companies. A survey by ADS, the trade body representing 1,500 small defence companies, found that nearly three-quarters had struggled to access basic banking services, with respondents citing reputational concerns as a key factor behind that trend. I think I will return to this subject when we come to debate the financial services Bill.

These groups are not necessarily illegitimate customers yet, in practice, they seem to be treated, with the way in which the current regime operates, as though they are inherently suspect. Given the Government’s stated priorities of driving economic growth and increasing defence spending, this is surely an issue to which the Minister should be paying close attention. What consideration have the Government given to the impact of the AML regime on these groups? What steps are being taken to ensure that banks do not respond to regulatory pressure by simply excluding legitimate customers? Does the Minister accept that, if increasing numbers of affected customers are turning to the Financial Ombudsman Service, there is a strong case for looking at not just individual complaints but the structure of the regime itself? I asked that question at the beginning of my remarks.

Planning and Infrastructure Bill

Debate between Baroness Bennett of Manor Castle and Baroness Neville-Rolfe

Report stage
Wednesday 29th October 2025 Lords Chamber

[Baroness Neville-Rolfe (Con)]

Sorry, Lady Hayman. The noble Baroness is always an ally on the topic of small businesses, which is the subject of my Amendment 121G; I will concentrate on this rather than on gambling premises, which are also considered in this group. The noble Lord, Lord Foster of Bath, spoke with great eloquence, for which I thank him.

I tabled Amendment 121G following our discussion on Amendment 119. It is an attempt to persuade the Minister to think again. Although it was a late debate, there was considerable support in the House for my attempt in Amendment 119. I continue to prefer that formula and am planning to divide on it; however, this alternative formulation would ensure that the public bodies discharging duties under the Bill gave due consideration to the difficulties often faced by SME developers in engaging with the planning system. Such businesses, spread across the country, could make a much larger contribution to the Government’s house- building target of 1.5 million homes. The achievement of this target is going backwards—as we know from the leaked letter sent by the Home Builders Federation to the OBR—with productivity, which I care a lot about, also adversely affected.

Small entrepreneurs are the lifeblood of this country. If they are freed up, as we recommended in the cross-party report by the Built Environment Committee on demand for housing, they can make a huge difference. The difficulties that they face have meant that, in the past 30 years or so, the share of smaller operators in housing has officially declined from 39% to 10%; actually, I heard from a noble Lord last week that it has now declined to a new low of 9%.

The good news is that there seems to be a wide measure of agreement that we must reverse this trend. I believe that we must use the Bill to make things easier. My new amendment, to which it may be easier for the Government to agree, would introduce a duty to reduce the difficulties faced when engaging in the planning process, but it would do so in planning guidance. This would leave the Minister much more room for manoeuvre than my previous amendment did. It would ultimately be for MHCLG Ministers to decide how best to achieve the shift towards SMEs, and to translate that into guidance, but we must have in the Bill a reference to reducing barriers for SMEs if such businesses and their charitable counterparts are to start resuming their historical place in housing.

The changes in the site size thresholds working paper, which the Minister referenced, are generally welcome. However, we need something more concrete to deliver the crucial diversification of housing. For example, perhaps we could have an SME target for local authorities, Homes England and/or Natural England—or some other means; that can be decided on later—but a reference to the SME mission, which the Government purport to support, is needed because, in Whitehall and among these bodies, there is limited support for small businesses. I know this from my long career in dealing with all of them.

As noble Lords know, I am passionate about reducing barriers for SMEs. Referring to this in the Bill is, I believe, the way to inject more competition, diversity and enterprise into the sector. SME building in small developments is good for community cohesion, local employment and, above all, growth. It is extraordinary that there is nothing in the Bill to promote it. I hope that the Minister will be willing to agree to amend the guidance accordingly, either in a formal undertaking to the House—going beyond the consultations that are going on—or through a government amendment. She would gain many plaudits, and I encourage her to think again.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I shall speak solely to Amendment 117 in the name of the noble Lord, Lord Foster of Bath, to which I have attached my name. The noble Lord has already introduced it eloquently and powerfully, but I want to add a bit of context and a little more information to what he said.

The context is that, at the Treasury Select Committee yesterday—it was, of course, talking about taxing gambling rather than licensing it; none the less, this is a relevant comment—the head of the Betting and Gaming Council was asked about the social ills of gambling. She said that there is no social ill and that the industry is doing

“everything that it possibly can in order to mitigate any harms that may be caused by our products”.

I would suggest that that testimony is either not honest or is astonishingly, unbelievably ignorant. What the industry is doing is everything possible to make money. We have an extreme inequality of arms. You have the industry, and then you have local authorities—particularly those in deprived areas, as the noble Lord, Lord Foster, said—that cannot do anything to stop the social ill and the damage that they can see being done.

Financial Services and Markets Act 2023 (Mutual Recognition Agreement) (Switzerland) Regulations 2025

Debate between Baroness Bennett of Manor Castle and Baroness Neville-Rolfe

Tuesday 21st October 2025 Grand Committee

[Baroness Bennett of Manor Castle (GP)]

My Lords, I thank the Minister for introducing this statutory instrument, which, as he said, implements the UK’s commitment to the agreement between the UK and the Swiss Confederation on mutual recognition in financial services.

I note that the explanation of the SI says that it will, as the Minister said, allow the Financial Conduct Authority and the Prudential Regulation Authority to essentially oversee and ensure that nothing is going wrong and have oversight of Swiss operations here. That is perhaps not as reassuring as one might hope. I note a report in the Times yesterday that the Financial Conduct Authority had privately shared concerns about the 79th Group with the City of London Police eight months before the group collapsed, owing thousands of people more than £200 million. It is, to quote the Times,

“suspected of being one of the largest Ponzi schemes in British history”.

I note for the record that the company denies any wrongdoing. None the less, the Financial Conduct Authority appears to have had concerns but did not share those with consumers, who are clearly now very much paying the price.

It is worth reflecting that it is a little bit surprising that, as the Minister said, this reflects an agreement that was struck in December 2023 by the previous Government. They said that this was a

“ground-breaking pact on financial services cooperation”

and that it would enable

“frictionless, cross-border provision of financial services between the UK and Switzerland”.

It is interesting that a Government who have been elected on a promise of change now appear to be delivering exactly the agenda with the same kind of terminology as that of the previous Government who they replaced.

It is important to put on the record and focus on the reality of Swiss banking, which is deeply corrupt and non-transparent. If we take, for example, the Tax Justice Network’s financial secrecy index, Switzerland ranks second, and that is not a good result—it is second worst. The UK ranks at number 20, which is relatively good comparatively. Yet we now appear to be seamlessly linking up these two systems, linking our system into a more secret system, with considerable risks. Switzerland also ranks fifth on the Tax Justice Network’s corporate tax haven index, so it is complicit in multinational companies’ tax abuse in particular. The Tax Justice Network estimates the cost to other countries of the Swiss operations to be $21 billion a year.

Perhaps this is a specific question to the Minister. As regards the worldwide rise of automatic exchange of information notes in the past decade or so, in which Governments are supposed to exchange relevant financial information with their peers to help them enforce criminal and tax laws, Switzerland has carved out exceptions to these so-called AEOI notes. So, Article 47 of the Federal Act on Banks and Article 127 of the direct federal tax Act, which still provide for secrecy, have not changed. That is going to be accessing our system and under Swiss law we will not be able to see what is happening. There has been talk of using trusts to replace some of the secrecy instead, but of course trusts are one of the issues that are a major problem.

I note in particular the work of Maria-Gabriella Sarmiento—I do not know whether the Minister has seen this, but I certainly encourage him to look at it—who completed a PhD at the University of Zaragoza about the estimated losses of between $20 and $40 billion for corruption practices, of which Switzerland is a significant destination for that money. Over 20 years,

“assets from at least 33 jurisdictions have been traced to Swiss banks … primarily proceeds of grand corruption, money laundering and other crimes”,

with their estimated values ranging between $112 billion and $514 billion.

The reality is, of course, that the UK and Switzerland are quite similar: they have expansive banking sectors, sophisticated wealth management services and market high-value assets. They are prime destinations for the corrupt to stash their money. To take one practical example from Transparency International, Carlos de São Vicente, a former CEO of a partially state-owned insurance company in Angola, embezzled more than $1.2 billion through Bermuda-registered companies; he then transferred substantial sums to Switzerland. That is one case where someone has been found out, but it is a sample of what a great many people we know are doing without being found out and without me being able to name the details.

I note also that, in 2023, Swiss regulators inspected their institutions and found that 50% had largely unsatisfactory anti-money laundering systems. I do not know whether the Minister can tell me whether there have been significant improvements in that area of money laundering since then.

It is very sad that this important statutory instrument is getting so little attention and focus and that it is happening in this Room, because it is crucial. We have to situate this in the context of the grave concerns—it is not just me who is expressing them—about the state of financial stability in our current system, for all kinds of reasons that I will not go into here. This is about linking up two systems that have great problems with corruption and a lack of transparency—two of the biggest systems in the world—and I cite a former Conservative Minister saying that 40% of the world’s dirty money goes through the City of London and the British Crown dependencies. I do not have a comparable figure for Switzerland, but I have no doubt that it is significant. We are linking up these two sets of money flows, which has to be a concern.

[Baroness Neville-Rolfe (Con)]

My Lords, this statutory instrument gives legal effect to the mutual recognition agreement between the UK and Switzerland known as the Bern financial services agreement. As the Minister has so clearly outlined, the agreement enables the UK and Swiss financial firms to provide services to each other’s markets, particularly in wholesale sectors, such as investment services, insurance and banking, without needing to establish a local presence or duplicate regulatory approvals.

The UK’s position as a global financial centre depends on maintaining strong transparent relationships with trusted international partners. We therefore welcome this agreement with Switzerland, developed on our watch. Mutual recognition, when accompanied by effective supervision and regulatory co-operation, can deliver meaningful benefits to both markets. Under this agreement, Swiss firms will be able to operate in the UK under the supervision of Swiss regulators, with the FCA and PRA granted powers to step in if issues arise—as the Minister explained. The same applies to UK firms offering services in Switzerland.

With that in mind, I would be grateful if the Minister could address the following points. First, I would like to probe the Swiss end. Has Switzerland yet put in place what is needed there to allow UK firms to benefit from mutual recognition? If not, when will this be done? What are the nature and scale of benefits to the UK financial institutions? That seems an important point.

Secondly, turning to our end, how confident are the Government that UK regulators have the necessary tools to monitor Swiss firms’ activities and act swiftly if concerns emerge? What protections are in place for UK clients—not only high net-worth individuals but small firms—should something go wrong?

Thirdly, on timing, why has it taken nearly two years from signing the agreement in December 2023 to putting this framework in place? Has there been a problem with the regulators not being ready or is the Treasury not working at pace?

I was grateful for the reply of the noble Lord, Lord Livermore, to my Question on 16 September, reporting that, by July this year, 51% of assimilated EU law—most of it in financial services—had been repealed, amended or replaced. This was a much lower figure than I had hoped for, given the importance of financial services to growth. I am not sure whether the Swiss regulations—the one set that we are debating and the negative set that is not being debated—will be included in the count in that definition, but the point about pace generally is important. The Official Opposition have been supportive of the transformation process, and there is no excuse for delay.

No doubt the Minister will respond on some of the reservations of the noble Baroness, Lady Bennett, and perhaps explain how things have improved in Switzerland over time. But I note that there will be information sharing as part of the deal, which is important. However, how will Parliament be kept informed of the operation of this agreement, particularly in the event of regulatory diversion or dispute, or a bad case of the kind that was asked about?

In conclusion, we support efforts to deepen co-operation with trusted international partners in financial services, but it is vital that it is done without compromising consumer protection or financial stability, and that it delivers the trading benefits that we all hope to see. I look forward to the Minister’s response, ideally today but otherwise in writing.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Debate between Baroness Bennett of Manor Castle and Baroness Neville-Rolfe

Committee stage
Tuesday 21st January 2025 Grand Committee

[Baroness Neville-Rolfe (Con)]

My Lords, on growth, and indeed on the hospitality industry, it is particularly good to have the practical experience of the noble Lord, Lord Londesborough. I agree with him that it would be helpful to understand today’s employment decline a little better in the Committee.

According to the ONS, there are 8.4 million people working part-time in the UK, which is approximately one-quarter of the workforce. They work in large and small firms and include many young people, students and carers, as well as disproportionate numbers in hospitality, tourism and retail. I know from my days at Tesco how important part-time workers are to big employers as well as small employers, and, in particular, to 24/7 businesses—retail is a 24/7 business. That includes a lot of employment of elderly people. Also, as was said, part-time workers are not only the lowly paid—I had several part-time directors working for me—and good employers offer proper training to their part-time teams. It is an extremely important part of the economy.

While the rise in the national insurance rate to 15% will no doubt hit part-time workers, it is the huge reduction of the threshold to £5,000 from £9,100 that will have the most detrimental consequences for those who work part-time. It is yet another blow to the sector, alongside the increase in the minimum wage that comes into force in April.

As a result, a company that employs a part-time worker over the age of 21 who works just eight hours a week on the minimum wage—I think the noble Baroness, Lady Kramer, said it was down from 14 hours a week —will be hit with this jobs tax for the first time, and the hospitality sector will be disproportionately affected. I think Kate Nicholls used the word “eye-watering”. The industry has warned that the measures announced in the Bill will cost it £1 billion overall. My noble friend Lord Ahmad quoted that figure as well. He is right about the adverse consequences of this and the need for consultation on such changes. How can you adjust your business model and be ready if you do not know what is coming?

It is really difficult for these companies. For the first time, they will have to pay tax on the wages of thousands of part-time hospitality workers. UKHospitality has estimated that a company employing a part-time worker doing 15 hours a week will see a 73% increase in its national insurance bill. It goes without saying that business will have to make tough decisions, as employing part-time workers is soon to become much more expensive. The trouble is that part-time work provides a flexible form of employment for so many—I have mentioned students and carers, but parents are also affected. It can be very useful in juggling what families do. These are people who rely on the flexibility of part-time contracts and might not otherwise be able to work at all.

Can the Minister tell the Committee what assessment the Government have made of the effect of the changes enabled by the Bill on part-time workers? Perhaps he could also comment on the levels of employment within the hospitality sector and how he sees that panning out. How do the Government intend to support industries that will be most impacted by these changes to national insurance contributions? How can he give them hope and how can we be sure that they continue to play their part in growth? It is difficult and we need to try to find some comfort.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I apologise for speaking after the Tory Front Bench, but I thought the noble Lord, Lord Londesborough, was continuing after the voting break.

I will speak briefly in favour of Amendments 58 and 59. In doing that, perhaps I should declare an interest. I was on the board of the Fawcett Society in 2010 when it brought a judicial review against the emergency Budget of that year for its failure to honour its legal duty under the Equality Act to do with gender impact assessment. In that case, although Fawcett lost the overall case on legal grounds, it was said that the gender impact assessment requirements applied to the Budget and should have been carried out on a couple of aspects of that Budget.

With that in mind, I draw attention to the final page of the policy paper of 13 November, which I think we are regarding as an impact assessment. Under the heading “Equalities Impacts”, in this five-page document that my sub-editor’s eye tells me is in 16-point, it states:

“Secondary Class 1 NICs are levied on employers rather than individuals. There are therefore no direct equalities impacts”.


I would like to question the Minister on how it can be claimed that there are no equalities impacts. Some figures have already been raised, but I point out that 74% of part-time workers are female, 57% of involuntary part-time workers are female, 6 million women are working part time and 10 million women are working full time. According to the Resolution Foundation’s analysis of ONS data, 63% of UK workers under the £9,100 threshold are female. We are seeing national insurance charges increasing the cost of employment by nearly £700 a year for someone working 15 hours a week on the minimum wage. An additional 600,000 women workers are being brought within scope of national insurance. As others have said, on the minimum wage you need to work fewer than eight hours a week to stay below the new threshold.

Analysis of this has suggested that women workers are particularly affected by this change. Some of them may want to raise their hours, so this might turn out positive. Some of them may have caring responsibilities that mean that they cannot lift their hours and may then have to leave employment because they are being offered more or nothing. It is also worth pointing out that the Women’s Budget Group has highlighted how the overall impacts of the national insurance changes are likely significantly to increase childcare costs. That is of immediate relevance to working women with direct childcare responsibilities, but, as the Women’s Budget Group pointed out, there are also issues around grandparents, very likely grandmothers, who may find themselves being pushed, and feeling obligated, to leave employment so that they can take up childcare responsibilities. I do not think that that equalities impact can be justified and would appreciate the Minister’s comments.