Financial Services and Markets Bill [HL]

Baroness Bowles of Berkhamsted Excerpts

2nd reading
Monday 8th June 2026 Lords Chamber

[Baroness Bowles of Berkhamsted (LD)]

My Lords, I declare my interests as a director of Valloop Impact Captive.

The Bill is a chunky addition to the impenetrable forest of financial services legislation, relocating key issues into the even larger forest of regulator rules. Who is it for? It cannot be only for business; it must also be for people, and that is how I will interrogate it. How are people affected when primary legislation is repealed and their rights are transferred to regulators? How will they feel when their MP says, “It’s out of the hands of Parliament, in fact it is often out of the hands of the Treasury and out of the hands of the courts”. That is what Clauses 1 and 17 do.

Fair for people means anchored in law, not left to discretion, not left to drift and not left to five-year strategies. Which? warns that the Bill removes vital protections without clarity on how or whether they will be replaced. Uncertainty for people is also uncertainty for business. While I understand well the pressures on firms and regulators to achieve more certainty over long-tail risks, that cannot justify Parliament removing statutory rights before we know what will replace them.

I share the aim for growth, investment and competitiveness, but growth cannot be built on taking advantage of people. Stripping primary legislation of fundamental protections—both rights and remedies—replacing them with yet-to-be-seen secondary legislation and removing Parliament from its past and future influence is not the route to stable, responsible growth. Three areas illustrate this: consumer credit; access to banking; and the removal of the “have regard” principles.

On consumer credit, the unfair relationship provisions, Section 75, unenforceability rules and protections for vulnerable borrowers are core statutory rights and remedies, not conveniences. The FCA’s conflicting provisions on motor finance, where it originally said there was no need to disclose commission arrangements unless asked, shows that the legislative line set by Parliament was not followed. The FCA did not get that right—will it get it right in future? Before the Consumer Credit Act is hollowed out, will the Government define in the Bill a core of statutory protections—the rights and the associated remedies that make those rights effective—that will remain in primary legislation?

Clause 3, on access to banking, raises a fundamental question about the balance between consultation, ministerial discretion and parliamentary scrutiny. The Government want to consult on access to banking services and then implement the outcome through regulations that amend primary legislation, including with FCA rules as they change over time. Parliament’s role becomes a take-it-or-leave-it vote on an unamendable instrument. Clause 3 could be more tightly framed—for example, linking it expressly to matters already consulted on or by avoiding automatic changes to the law when FCA rules are updated. Access to banking is vital. Members of the other place will not want to tell their constituents, “We have no influence”.

The consistent pattern is that this Government want to do without Parliament in future and eradicate its past. The next eradication of Parliament’s voice is the removal of the “have regard” principles that anchor regulators to law, proportionality and Parliament’s intent. In practice, regulators trivialised them. Then, in their consultation response, they said that these duties were burdensome. The Government did their bidding, removing them from operational decision-making and, fundamentally, the basis on which courts can test that delivery.

Administrative inconvenience is not a constitutional principle. If the issue is frequent or laboured reasoning, that can be solved without removing the duties. British Steel pensions showed why the “have regard” principles must stay. The FCA had full perimeter responsibility, yet the principles—vulnerability, transparency and proportionality—were treated as a box-ticking exercise. Parliament had to drag the issue into the open before the regulator acted. The answer is not to remove the principles on which we were able to drag but to insist that they are applied properly.

Dame Elizabeth Gloster’s report into LCF found the same pattern. The FCA failed to apply the statutory principles that Parliament had set, treated them as peripheral and did not understand the framework in which they were meant to operate. Its response was mechanistic “have regard” tables, which was defensive paperwork, not culture change. If anything, that shows why these duties must remain in law, be effective and not be removed at the regulator’s request.

Before anybody says that the consumer duty does it all, it does not. It does not replace statutory duties or bind the regulator in any way that Parliament can, and it certainly does not give courts the tools they need to test regulatory decisions. It is an FCA rule, changeable by the FCA, not a fair substitute for a statutory duty.

Proportionality, transparency and respect for the size and nature of firms must apply to regulators’ rule-making and operational decisions, not be pushed to high-level strategy with no legal bite. The same is very much true for addressing climate change.

This is not just the view of consumer groups. TheCityUK warns that Clauses 16 to 18 weaken Parliament’s ability to hold regulators to account. The London Market Group is equally clear that downgrading proportionality is a step backwards. When consumer groups, industry and parliamentarians all say the same thing, the Government should listen. I do not know how the Treasury has been suckered into suggesting that this is merely administrative, but I am not buying it. These are protections for people—the fiduciary bargain.

To conclude, this Bill has ambition but it removes safeguards, hands too much to regulators, disfranchises Parliament and leaves people without rights and without the remedies that make those rights enforceable and effective, grounded in law. That same uncertainty hurts responsible business, and I will submit amendments on which I hope we can work together.