Financial Services and Markets Bill [HL]

Baroness Bowles of Berkhamsted Excerpts

Committee stage
Wednesday 1st July 2026 Grand Committee

Moved by

[Baroness Bowles of Berkhamsted]

117: After Clause 22, insert the following new Clause—
“Section 166 reviews: threshold and proportionality requirements(1) Section 166 of the Financial Services and Markets Act 2000 (reports by skilled persons) is amended as follows.(2) After subsection (1) insert— “(1A) The regulator may not require a person to provide a report under this section unless it is satisfied that—(a) there is a material risk of serious detriment to regulatory outcomes, and(b) the use of a skilled person is a proportionate response, having regard to—(i) the scale and nature of the suspected issue,(ii) the expected burden on the firm, and(iii) whether the matter could reasonably be addressed through the regulator’s existing supervisory tools.”(3) After subsection (4) insert—“(4A) The regulator must publish, at least annually—(a) the number of reports commissioned under this section,(b) the sectors to which they relate, and(c) the aggregate cost to firms of such reports.”(4) In subsection (5), after “may” insert “, subject to subsections (1A) and (4A),”.”Member’s explanatory statement
This new Clause would introduce a statutory threshold for the use of section 166 skilled persons reviews, requiring the regulator to demonstrate a material risk of serious detriment and to consider proportionality, and would require annual publication of the number, sectoral distribution and aggregate cost of such reviews.

[Baroness Bowles of Berkhamsted (LD)]

My Lords, in moving this amendment, I shall speak also to Amendment 123 in my name. As I have said before in Committee, when we have been talking about proportionality, it is at least possible to look at rules and assess whether they appear proportionate and growth-friendly, but it is far harder to understand what is happening on the ground in supervision and enforcement because that activity is not public and is, therefore, less visible. This is particularly so with Section 166 notices.

I seem to have once again hit on the same subject as the noble Baroness, Lady Noakes. I promise noble Lords that there has been no conferring, as they say on “University Challenge”. There was a time when a Section 166 notice was very rare. It was regarded as a serious matter and something you did not want others to know about, lest it suggest that you were doing something really wrong, you were in real difficulty, or you were in trouble over something. Now, the reaction is much more along the lines of, “Oh, you too?”, and the sense in the industry is that what was once a rare and targeted tool is becoming a routine, general-purpose device—sometimes even a fishing expedition.

These investigations are not small matters. They can go on for a very long time. They are intrusive, expensive and disruptive to normal operations. They require the appointment of external consultants, often at significant cost, and involve a lot of staff time; they even require the hiring of additional staff to deal with keeping day-to-day activity going. In 2023-24, there were 83 Section 166 notices and in 2024-25 a further 47. The cost of them in 2024-25 was £44.7 million, which is not trivial. There is a legitimate concern that the threshold for initiating a Section 166 notice has drifted downwards, and that matters that should be dealt with through the ordinary supervisory channels are now being dealt with through Section 166. They should be dealt with routinely, using the regulator’s own knowledge and expertise wherever possible, but it seems that some of that is now being outsourced through this Section 166 route.

What is needed is a pinning back to serious matters, as well as greater transparency around how and why these notices are used. My amendment aims to restore Section 166 reviews to what they were always understood to be: a tool for investigating issues that pose a serious detriment to regulatory outcomes. It would also introduce a modest reporting requirement for an annual statement setting out the number of notices issued, a breakdown by sector, the reason there was a material risk of serious detriment and the aggregate financial cost to firms. This is not an attempt to remove Section 166 or constrain the regulator’s ability to act; it is simply an attempt to ensure that a powerful and intrusive tool is used proportionately, transparently and for the purposes for which it was originally intended. Too much use is harmful, and a reputation for routine use is itself a deterrent to locating businesses in the UK.

I turn to my Amendment 123, which concerns the information powers under Section 165 of FSMA. It aims to set a framework around the information demands that regulators can make. It is not intended to intrude on anything reasonably necessary for investigatory, supervisory or other statutory functions, or for advancing the regulator’s objectives. However, as the House of Lords Financial Services Regulation Committee heard in evidence, firms are receiving many requests for information that do not appear necessary or are duplicative or made without co-ordination across teams. These requests impose real cost and disruption and are not always proportionate to the matter at hand. This amendment seeks to put some structure and co-ordination around what can reasonably be expected, ensuring that information requests are targeted, necessary and proportionate, and that firms are not repeatedly asked for the same material by different parts of the same regulator. I beg to move.

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[Baroness Noakes (Con)]

The Minister made great play of the importance of proportionality, on which I think there would be considerable agreement. The Bill removes the requirements to have regard to the regulatory principles, including, importantly, the proportionality paragraphs, for anything other than the five-year plan. It is therefore incumbent on the Government to look at all other areas of the Bill to ensure that proportionality, where it is needed, is correctly referenced in the Bill. By taking it away at the outset from the requirement to have regard in areas other than the five-year plan, the Government are leaving the Bill wide open to the non-proportional use of powers by the regulator. This area has not been fully developed by the Government in their thinking on this.

[Baroness Bowles of Berkhamsted (LD)]

My Lords, I thank all those who have spoken in this debate, in particular the noble Baroness, Lady Noakes, for her last intervention; I presume that the Minister had finished speaking. Perhaps we need 200 amendments on Report saying, “This has to be done proportionately”. That is literally where we are. Anybody who has been near a Section 166 review will know that an awful lot about it seems awfully unfair. For instance, the regulator may not have its own expertise, so it makes you pay to hire it in. Some of these things should be done under the regulators’ ordinary duties. This needs to be looked at and, as the noble Lord, Lord Altrincham, said, some kind of proper discipline must be put around it. That is what we are asking for.

I am glad to hear that there is a target of cutting the administrative burden by 25%. We will see how that goes, but I do not think that everything can be left as open as it is now, which is the much-repeated message that we have been delivering. For now, I beg leave to withdraw my amendment.

Amendment 117 withdrawn.

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Moved by

[Baroness Bowles of Berkhamsted]

121: After Clause 22, insert the following new Clause—
“Periodic independent review of financial regulatorsAfter section 1S of the Financial Services and Markets Act 2000 (reviews) insert—“1SA Periodic independent review of financial regulators(1) The Treasury must appoint a panel of at least three independent persons (“the Review Panel”) to conduct a periodic general review of the effectiveness of—(a) the Financial Conduct Authority,(b) the Prudential Regulation Authority, and (c) the Bank of England in respect of its functions under Parts 1 and 5 of the Banking Act 2009 and Part 2 of the Financial Services Act 2012.(2) A person may be appointed to the Review Panel only if—(a) the Treasury has proposed the appointment, and(b) the appointment has been approved by a resolution of the House of Commons and a resolution of the House of Lords.(3) A person is not eligible for appointment if, within the previous three years, they have held senior office in the Treasury, the FCA, the PRA, the Bank of England, the Payment Systems Regulator, the Financial Ombudsman Service, or in any firm or body materially affected by the review, unless the nature of the interest has been fully disclosed and the appointment has been expressly approved by both Houses.(4) A general review must take place at intervals of every two to three years and must include a review of—(a) internal operations and controls,(b) systems for responding to whistleblowers, parliamentary correspondence and reports, and public interest concerns,(c) regulatory perimeters and customer classifications,(d) the effectiveness of relevant legislation and rules and the regulatory burden,(e) whether statutory and public policy objectives have been met,(f) the operation and effectiveness of engagement practices before and during rule making,(g) the skills base of staff,(h) follow up from previous reviews,(i) access to redress and effective remedies,(j) the operation of the FCA/FOS relationship and systemic complaint escalation, (k) evidence handling, audit trails and responses to parliamentary, whistleblower and public interest concerns,(l) whether statutory rights and remedies transferred into regulator rules remain effective in practice,(m) redress shortfalls, repeat misconduct and deterrence,(n) any other matter the Review Panel considers relevant, and(o) any matter requested by a relevant Committee of the House of Commons or House of Lords.(5) The Review Panel must not determine the merits of any individual complaint, regulatory decision or enforcement case, but may consider individual cases, whether anonymised or otherwise, for the purpose of identifying systemic, procedural, evidential, perimeter, redress or accountability issues.(6) On completion of a review, the Review Panel must make a written report to the Treasury—(a) setting out the results of the review, and(b) making such recommendations as the Panel considers appropriate.(7) A copy of the report must be—(a) laid before Parliament within 30 days of receipt, and(b) published in such manner as the Treasury considers appropriate,subject only to necessary redactions for confidentiality, privilege or enforcement sensitivity.(8) The Treasury must publish a response to the report within 60 days of its publication. (9) The FCA, PRA and the Bank of England must each publish a response to the report within 60 days of its publication, including a statement of actions they will take as a result.(10) The Review Panel has a right of access (at any reasonable time) to all information which it may reasonably require for the purpose of performing its functions under this section.(11) The Review Panel is entitled to require from any person holding or accountable for such information any assistance or explanation which the Panel reasonably considers necessary for that purpose.(12) “Information” includes any document, record, data, correspondence, internal report, or other material held by the FCA, the PRA or the Bank of England.””

[Baroness Bowles of Berkhamsted (LD)]

My Lords, I am moving my Amendment 121, and I support the amendments in this group in the name of the noble Lord, Lord Bridges. My proposal is for an independent oversight mechanism for our financial services regulators. It builds on the ideas in Section 1S of FSMA 2000, under which the Treasury can require an independent review. This is usually triggered after a significant event: the most recent review, Gloster’s review published in December 2020, was triggered after the collapse of London Capital & Finance.

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[Lord Holmes of Richmond (Con)]

You might get a better response.

[Baroness Bowles of Berkhamsted (LD)]

Shortly after my proposal first surfaced, I was contacted by people involved in the Australian royal commission on financial services, because they had noted that I had reached the same conclusion as them: that it was too big a job for Parliament to do by itself, given everything else that national Parliaments have to do.

Australia introduced two-yearly reviews, and it is not the only country to have an independent review. A similar arrangement now exists in New Zealand, and in the US all regulators come under powerful scrutiny by the Government Accountability Office. One advantage of my proposal is that it follows a path we understand from Section 1S reviews, and it could be done quickly—maybe as an interim solution, for example, until an office such as that proposed by the noble Lord, Lord Bridges, could be formed. By having regular reviews, oversight of progress would also be possible. After her review, Dame Elizabeth Gloster told the Treasury Committee that we are left to “hope” that the regulator “implements” regulations. Hope is not a system.

Why did I propose this? It was the point at which the Government were looking at the post-Brexit future financial framework. As has already been rehearsed in this Committee, this Parliament does not have the structure and focus that was available in the EU Parliament. Having been chair of the ECON committee dealing with all the post-financial crisis legislation, I can safely say that I know what it takes and that it is not easy. That is another reason why I do not recommend a continuous process.

There will be more to it in the UK, because many issues arise from the execution of supervision post rule-making. Brexit created the first need, which we eventually tried to patch with a new committee. Your Lordships heard from members of that committee and in the report of the Industry and Regulators Committee, Who Regulates the Regulator?, that now the overwhelming conclusion is that significant independent review is needed.

Now we have a new, second need due to the changes in this Bill, which remove the “have regards” away from operational effectiveness and into a five-year strategy. How is that to be monitored? Is there any intention at all for follow-through? The changes make the already difficult acquisition of information even harder. Several things that the Minister has said in his replies ring alarm bells and show the absolute need for scrutiny. We need it because financial services regulation and supervision is too important to allow issues to creep up—all the more so in a higher-risk environment. LCF-type regulator risk needs even more guarding against.

The Minister has said that proportionality will now be tested only at the strategic level. Let us be clear: testing proportionality at only the strategic level is barely a nudge. Rule-level and supervisory-level proportionality is the real test, but that has been put out of reach of accountability, as there is nothing to measure against. Indeed, they are not even looking at it apart from every five years. From that, it is pretty clear that substantial follow-ups on the five-year strategy are necessary. The Minister says that annual reports and remit letters provide accountability. Some substantial upgrading and interrogation of those is needed. What actionable event flows from an annual report? It is judge, jury and public relations all in one place. Does the Minister genuinely believe that an example here and there constitutes accountability?

The Minister argues that principles remain central, yet they are being moved into a document that cannot be enforced by the courts and cannot be used to test a specific rule or supervisory action. They are applied every five years, when the future cannot really be seen. This is not lip service; it is just print service, and as my noble friend Lady Kramer has shown us from the current version of the five-year report, there is little substance. Will we get something detailed for every category and size of financial market business?

The Government’s rhetoric suggests that reducing the burden of accountability will unleash a more dynamic and agile regulator, but that does not demonstrate the stability that is a prerequisite for competitiveness. Stability is the best friend of a competitive financial sector. Whether you cite centuries of institutional experience or the second law of thermodynamics, left to their own devices, systems corrupt or tend to disorder. Someone has to be on their case. But the Government are making the regulators far more insulated from the procedures that keep them on their toes. Avoiding the burden of accountability today is like banking a much larger, more expensive crisis for tomorrow. Additional periodic or permanent oversight has become even more necessary. I beg to move.

[Lord Bridges of Headley (Con)]

My Lords, I will speak to Amendments 133 to 135 and 136 to 139 in my name, but not Amendment 135A, which is in the name of my noble friend Lady Lawlor. I thank my noble friends Lady Noakes and Lady Lawlor and the noble Baroness, Lady Bowles, for putting their names to my amendment. This little clutch of amendments is turning into déjà vu, because the noble Baroness, Lady Bowles, has just spoken about issues that she raised some years ago. My amendment is one that I raised in this very Room, sitting on the other side, exactly three years ago—so it is déjà vu all over again.

I start from a basic point, which picks up exactly where the noble Baroness left off. I believe that we here in Parliament need more powers and, critically, more independent analysis to hold financial regulators and supervisors to account. In fact, I just mention here that we need to do far more to hold the Bank of England to account, but that was declared out of scope. I had wanted to table an amendment calling for a regular, probably five- or six-yearly, review led by Parliament into the remit and performance of the Bank of England as an entity and as an institution. I believe that that is an enormous democratic deficit that we need to address. I was told that it was out of scope for this piece of legislation, but I very much intend to return to that at a future date. It is much to the Minister’s relief, I am sure, that we are not going to do that now.

We spent Monday debating clauses in the Bill that I see as weakening parliamentary accountability. My amendments and those of the noble Baroness will take us in the opposite direction, towards more accountability. A number of us, on all sides of the Committee, have been asking a very simple question: do we, in this House and in the other place, have sufficient means to hold our financial regulators and supervisors to account without compromising that operational independence? The answer keeps coming back, resoundingly: no, we do not.

It is not as though this is the first time we have said this. As the noble Baroness mentioned, in its excellent 2024 report, Who Watches the Watchdogs?, your Lordships’ Industry and Regulators Committee found that parliamentary scrutiny of regulators remains too fragmented, too reactive and—I stress this—too limited by the resources available to Parliament. It concluded that the balance between regulatory independence and democratic accountability needs to be strengthened. As I said, that report came after all the debates we had in this Room on the previous Financial Services and Markets Bill, now an Act. We warned then that the transfer of extensive rule-making powers from Parliament to the regulators had created an accountability gap. That is why I addressed this very same proposal then. My concerns about accountability have not diminished; if anything, they have grown in the years since I was standing over there, so I am trying again.

Noble Lords will be grateful to hear that I will not go line by line through what each of these amendments would do. I simply say that Amendment 133 would establish an office for financial regulatory accountability, OFRA, as an independent body to support Parliament in scrutinising the work of financial regulators. It is crucial to stress that I do not see this as second-guessing regulatory judgments or interfering with regulatory operational independence. Rather, as set out in Amendment 135, which is pretty key in this clutch of amendments, it would provide Parliament and the outside world with impartial analysis of regulation, the actions of regulators in the round and, crucially, their performance at meeting their objectives, as set by Parliament.

Why do we need this? For a very simple reason—my noble friend Lady Noakes will pay testament to this. The volume and technical complexity of financial regulations are now making this absolutely necessary. If Parliament is to fully and effectively scrutinise the hundreds of pages of regulation that our regulators keep churning out, we need to do more. My concern—I would be grateful if the Minster could put my mind at rest—is that the Government seem to be suggesting that we do not need to have a case-by-case analysis of regulations. That is wrong: it is absolutely critical to have that analysis. We cannot rely on a five-yearly strategic report, or overall impressions and analysis, from regulators. We need to be able to analyse regulation point by point.

If the Minister responds by saying, “Don’t worry. The regulators will reflect their objectives in their actions and decisions, so we have nothing to worry about here”, I will say, “Let’s prove it”. Let us have the independent analysis to make sure that it is indeed the case that our regulators are reflecting the objectives that Parliament has set them in what they do. Greater scrutiny and, with it, greater accountability, will surely strengthen trust, which is critical.

The Minister might go on to argue that my proposal is not needed for two other reasons, the first being the cost-benefit analysis panels that my noble friend Lady Neville-Rolfe and others talked about when discussing previous amendments. I completely accept that they perform a very important function, but I see their role as being very different. Their role is to improve the quality of individual cost-benefit analyses prepared by the regulators. They are advisory bodies to the regulators themselves. They are not designed to provide Parliament and others with an independent assessment of the overall effectiveness and proportionality of regulation, bit by bit. This amendment would therefore complement rather than replace those panels: the cost-benefit analysis panels improve regulatory decision-making from within; OFRA would strengthen parliamentary accountability from without.

The second reason the Minister might use to oppose my proposal is that the FCA introduced its rule review framework in 2024, with the stated aim of undertaking increasingly rigorous post-implementation analysis of what it does. I stand to be corrected, but my delving into this suggests that the results so far of this new framework are modest. As far as I can see, since its introduction, only one full impact evaluation has been published, and one other has appeared in the past five years—I think that is overall, pre the framework being introduced. I would like to know whether that is the case and how effective the rule review framework has been.

Either way, that underlines the point that Parliament needs access to independent analysis, especially as the Government want to give regulators more discretion. This seems to be the entire drift of the Bill: more discretion for the regulators. If that is the case, surely the quid pro quo for more discretion must be having more mechanisms for accountability. If we are being asked to entrust the regulators with more, we need greater ability to have independent scrutiny of what they are doing.

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I thank noble Lords for this thoughtful debate; it is obvious that it will continue to develop over the coming weeks. I ask the noble Baroness, Lady Bowles, to withdraw her amendment.

[Baroness Bowles of Berkhamsted (LD)]

My Lords, I sometimes think that a useful thing to do with the Minister would be to sit down with him with the rulebook and go through some scrutiny. Perhaps he might then begin to see the scale of the task.

As I have said, when I chaired the ECON in the European Parliament, the committee there had nearly 100 full and substitute members. All of them were capable of doing work in specialist clusters, doing legislation and scrutinising everything. It was basically a full-time job—they did it all day, every day—and it did not even have anything to do with what was happening in supervision.

This task is not within the capacity of a national Parliament. The Minister was out of the Room when I explained that Australia had a royal commission, as part of its post-financial crisis review, to look at what went wrong with regulation. As royal commissions do, it took a long time. When it finally reported, it came to the consultation that an oversight body was needed; similar has been done in New Zealand and the United States, where they have powerful oversight over all of their regulators.

It is unreasonable to suggest that a committee that sits once a week for three hours could in any way touch this issue. Our committees are really good at doing specific inquiries into problem areas, but they cannot see things across the piece. That is what I described as our first need, when we left the EU. It has perhaps taken some people who do not have my experience a while to gain an understanding of how much it would take, but it happened pretty soon afterwards because, a year later, when the noble Lord, Lord Bridges, came forward with his proposals, the Industry and Regulators Committee had already realised that we needed more.

Then there is, as I said, a second need, following on from the Bill, which has distanced us further away because we do not even have the things we are supposed to measure. We do not have the information. Clause 16 creates the strategy—

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

Can the noble Baroness take a seat, please?

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[Lord Wilson of Sedgefield (Lab)]

The noble Baroness is absolutely right that this is a self-regulating House, but the other side of the coin is self-discipline.

[Baroness Bowles of Berkhamsted (LD)]

I am sorry, but I am replying to the Minister, and I have to say some things again because he was out of the Room. I am trying to explain that the Bill introduces a second need, because we will no longer have access to the information. It is going into a strategy and there is no link to operational duties, no reporting or guidance, and the annual report is only about competitiveness and growth. We are short of the basic information on which we are supposed to do this scrutiny: it is not coming to us; it is being rubbed out by the Bill. It is no good saying that a committee of this House—able, competent and hard-working though the committees are—can do it when you have taken the basic information away. That is the point. There is the fundamental size need, and then the removal of the information need. We need this independent body for the first need and, my goodness, we will jolly well need it if the Act ends up being anything like the Bill is now.

I think we will all want to return to this on Report, but for now, I will withdraw my amendment, even though the Minister seems to think that he has the equivalent of a perpetual motion machine and that something will happen with no input.

Amendment 121 withdrawn.

Moved by

[Baroness Bowles of Berkhamsted]

122: After Clause 22, insert the following new Clause—
“Reducing regulator duplicationIn section 3R of the Financial Services and Markets Act 2000 (arrangements for provision of services), after subsection (3), insert—“(3A) In exercising functions in relation to—(a) a PRA-authorised person within the meaning of section 2B, or(b) a person performing a senior management function in relation to such person,the FCA may rely on analysis, findings, information, or judgments of the PRA, so far as it is reasonable to do so.(3B) In exercising functions in relation to a person falling within subsection (3A), the PRA may rely on analysis, findings, information, or judgments of the FCA, so far as it is reasonable to do so.(3C) Subsections (3A) and (3B) apply in particular in relation to— (a) rule-making,(b) supervisory activity,(c) investigatory functions, and(d) enforcement decisions.(3D) Where a regulator relies on the other regulator under this section, it must have regard to—(a) the need to ensure that its statutory objectives are advanced, and(b) the desirability of avoiding unnecessary duplication of work or inconsistent outcomes.(3E) Nothing in this section prevents either regulator from undertaking its own analysis or reaching its own conclusions where it considers it appropriate to do so.(3F) For the purposes of this section “a senior management function” has the same meaning as Section 59ZA.””

[Baroness Bowles of Berkhamsted (LD)]

My Lords, the Committee will be pleased to know that this will be very short. I will speak briefly to my Amendment 122, which is quite simple. It is intended to encourage the sharing of analysis, findings, information and judgments between the FCA and the PRA, particularly in relation to senior appointments, regulatory and supervisory activity and enforcement. The amendment would not make this binding in any way; it would apply only in so far as it is reasonable to do so and the regulators want to do so. The objective is to remove duplication and give encouragement to the regulators to rely on one another’s work where that is sensible.

I have not looked recently at their memorandum of understanding; they probably have enabled themselves to do some of this, but I am not sure that that enablement has extended to actually doing it. This meshes with some of the other amendments we have had around not duplicating things. If a person has already been approved as fit and proper by one regulator, why would they not be approved by another regulator to do the same thing?

However, I would not expect this to be done blindly or without review. It goes to what I said: everything should be tried to avoid unnecessary duplication, because duplications are leading to delays. This could help to shorten approval times under the SMCR for tried and tested individuals and to align rules or processes where the underlying purpose is the same. It is a modest, practical amendment aimed at reducing friction and delay in areas where both regulators are already engaged. I look forward to hearing from the noble Baroness, Lady Neville-Rolfe, and the noble Lord, Lord Altrincham, on Amendment 166, which tilts in the same direction, to some extent. I beg to move.

[Baroness Neville-Rolfe (Con)]

My Lords, I am grateful to the noble Baroness, Lady Bowles, for bringing forward Amendment 122. I will speak to Amendment 166 in my name and that of my noble friend Lord Altrincham. I know that we are all very excited by the result in the football but, as the Minister knows, this is an area of great concern to me, so I will make the case.

In our discussions with firms, we have repeatedly heard that regulation has accumulated over many years in a way that is often overlapping and unnecessarily complex. Firms are required to repeat similar information to different bodies, in slightly different formats, at different times and through different systems. They are expected to absorb new rules and expectations while older requirements remain in place. The result is a regulatory environment that becomes heavier and more expensive over time. This affects not just large institutions but smaller firms, new entrants and challengers, which do not have the same compliance teams, legal budgets or administrative capacity as the largest incumbents.

Amendment 122 raises an important point in this regard. Where both the FCA and the PRA are dealing with the same firm, it is sensible that they should be able to rely on one another’s analysis, findings, information and judgments where it is reasonable to do so. Our Amendment 166 follows the same principle but would apply it more broadly. It would require the Treasury, the FCA and the PRA, when exercising powers under the Bill, to have regard to minimising the overall regulatory burden on regulated persons. That burden is not only the direct cost of complying with a new rule; it includes administrative burdens, reporting requirements, the costs of delay and the disproportionate impact that regulation can have on smaller firms and new entrants. If the Treasury, the FCA or the PRA considered that an increase in burden were necessary, our amendment would require them to publish reasons and an assessment of the expected effects on growth, competition, innovation and market entry.

Regulation should be judged by its practical economic effects. Does it make it harder for firms to grow? Does it reduce competition? Does it deter new entrants? Does it slow innovation? Does it make the UK a less attractive place to do business? Those questions matter because financial services are an internationally competitive sector, as we keep emphasising. If we allow our regulatory environment to become too complex, too expensive and too slow, firms and capital will go elsewhere.

The Bill is presented as part of a wider effort to make our regulatory framework more competitive and more supportive of growth, which we support. Amendment 166 would help make that ambition real. It would require the Government and regulators to keep the burden of regulation in view and to justify increases where they consider them necessary. This sort of provision does not exist in this regulatory area, although we have had amendments of this kind in other areas, in my experience. I hope that the Minister will engage constructively with the amendments in this group.

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[Baroness Neville-Rolfe (Con)]

I think that, in my amendment, I was trying to talk about when powers are exercised under the Act. Obviously, I appreciate the work that is being done to get the thicket out of the existing regulator. However, we are trying to introduce a system that, when regulations are being made—there will be many as a result of the Bill, because we are extending financial regulation into lots of new areas—that will be done in a way that really looks at the burdens. I am not sure that the cost-benefit panels and their work, which we discussed earlier, quite do that, so I ask the Minister to look at this constructively.

[Baroness Bowles of Berkhamsted (LD)]

My Lords, I thank the Minister for his reply, and everybody else who has spoken in the debate—I do not need to go over any of it again. It was interesting that the Minister elaborated on some of the co-operation that already goes on. I think that it could be interesting for the Committee to ask the regulators to further explain to us how they do that. We hear from industry that if feels there is duplication going on, so maybe we can try to join up that loop. For now, I beg leave to withdraw the amendment.

Amendment 122 withdrawn.