Financial Services and Markets Bill [HL]

Baroness Hoey Excerpts

Report stage
Monday 7th September 2026 Lords Chamber

[Lord Vaux of Harrowden (CB)]

My Lords, as this is the first time I am speaking on Report, I should remind the House of my interests as a shareholder in Fidelity National Information Services Inc, which provides services to the financial sector, and as a non-practising member of the Institute of Chartered Accountants in England and Wales. I, too, welcome the noble Lord, Lord Pitt-Watson, to his new role, and I apologise to the noble Lord, Lord Stockwood, because, when we discussed this clause in Committee, I jokingly referred to the Minister not always being the Minister, for which I apologise.

I have Amendment 9 in this group, which would remove the egregious Henry VIII power from Clause 3. I have also added my name to Amendment 10, which would delete Clause 3 altogether. As I explained in Committee, as someone who lives in a very rural area, my nearest bank branch, now that the last branch in my nearest town has closed, is a 100-mile round trip—so access to banking is a subject with which I have a lot of personal sympathy. I look forward to seeing the Lloyd report once it has been published in October. Like the noble Baroness, Lady Kramer, I expect to support an awful lot that will be in it.

The problem with Clause 3 is that it gives the Government incredibly broad and unfettered powers in this respect, including an unlimited power to amend any Act of Parliament. Indeed, there is nothing in the clause that would prevent a Government reducing access to banking if they chose to do so. I do not think I can put it any better than our Delegated Powers and Regulatory Reform Committee in its report of 17 June, which brought these wide powers to the House’s attention. It concluded that

“the problem with clause 3 is that it confers a wide regulation-making power on Ministers before any key policy decisions have been made, before any problem has been clearly identified and assisted by a power to amend any Act of Parliament ever made. Such a power severely compromises effective parliamentary scrutiny. We consider that the power in clause 3 is inappropriately wide and should be removed from the Bill”.

This Government have form on pushing through legislation before they know what they want to do with it, and this example is particularly egregious. I asked the noble Lord, Lord Stockwood, in Committee when he was the Minister, which Acts of Parliament the Government had in mind to alter using this power. The response, I am sorry to say, was less than illuminating. He said that

“the Treasury expects to use the power if needed to amend relevant legislation, for example, financial services legislation”.—[Official Report, 22/6/26; col. GC 232.]

He went on to say:

“As the recommendations of the independent Access to Banking Services review are currently unknown, it is necessary for Clause 3 to be able to amend primary legislation to respond to any recommendations that are made”.—[Official Report, 22/6/26; col. GC 235.]


In other words, “We don’t know what we want to do, so we’re just going to make it as wide as possible”. My guess is that it is actually highly unlikely that any primary legislation will need to be changed as a result of this, but we shall see.

I think that makes the case against Clause 3. It is not satisfactory for the Government to give themselves the widest of powers, including the unlimited power to change any existing Act of Parliament, when they have no idea what they want to do with those powers.

The Government claim, in the Explanatory Memorandum and elsewhere, that they will narrow the powers once the Lloyd report has been received. But this is Report. We have not seen the report. It will take I do not know how many months for the Government to come up with recommendations based on the report. The Bill will probably already be law by then, so there will be no real opportunity to narrow the powers.

I am sure that the House will support moves to improve access to banking when in due course the Government actually have a plan, and, in the unlikely event that changes are required to existing law, a short, focused Bill can be created to do that, which, as all changes to the law should be, can be subject to the proper scrutiny processes of Parliament. This unfocused clause is too wide and any resulting changes to law would not be subject to proper scrutiny. That is not the right way to legislate. At the very least, the Henry VIII clause should be removed, as I suggest in Amendment 9, but the clause as a whole is too wide, and therefore I urge all noble Lords to support Amendment 10 from the noble Baroness, Lady Neville-Rolfe, to remove this unrestricted power.

[Baroness Hoey (Non-Afl)]

My Lords, I want to support Amendment 8, but no one seems to have spoken to it, so is it in order for me to say a few words on it? It is an important amendment because it contains really the only mention in the whole Bill of post offices. The amendment, in the name of the noble Baronesses, Lady Tyler and Lady Kramer, and the noble Lord, Lord Holmes of Richmond, talks about the Treasury considering

“the effectiveness of alternative frameworks, including the Post Office Banking Framework, in providing access to banking and cash services”.

That is an important aspect of all this.

Increasingly, we are seeing that people, particularly in rural areas or areas where there is high deprivation where people do not have access to online facilities and do not particularly want to go online because they do not trust banks enough to go online or they do not trust the internet, are using their post offices. The post offices could be doing so much more to widen access to cash and money.

I draw attention—although I am sure most noble Lords will have seen it—to the National Federation of SubPostmasters 18-page report on the access to banking services review, which shows statistically just how much more post offices are being used by people and how they could be used to provide even more services. When banks close in areas now, it is usually the post office that picks up a lot of that business.

I welcome the Minister to his position, and I hope he will say whether the Government are serious about increasing the use of post offices, not just for some of the issues to do with banking. You can no longer pay your television licence—if you still want to pay it—in the post office. So many services have been taken away from the post office, but such services would make it much easier and more accessible for people, particularly in rural communities. People trust their local post office. They find that it is somewhere they can go and get the advice and reassurance that they cannot get in a local bank because they do not ever see a bank. I have already mentioned the lack of trust.

I ask the Minister to respond to this amendment and say whether he is willing to talk directly to the National Federation of SubPostmasters to discuss these issues further and how we can make our post offices more vibrant and involved with the local community by being able to offer them the services that they want.

[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to follow the noble Baroness. As this is the first time I have spoken on Report, I declare my technology interests as set out in the register, as adviser to the Crown Estate and Simmons and Simmons LLP and as non-executive director at Avalanche Foundation and Avalanche (BVI) Inc. I shall speak to Amendment 8, which I had pleasure in signing.

How many brands or businesses have we in the UK that have been on our high street for over half a millennium? That is what we have with the post office, which rode into our lives in 1511 and continues to have just shy of 12,000 branches up and down the country. Whatever happens with digital—and finance certainly is going to become, and already in many areas is, digital—we need, and must support, physical presence and human access to, and interaction with, finance, not least for those who find themselves at the sharpest end of financial exclusion. As I have already mentioned, financial inclusion often and perniciously goes hand in hand with digital exclusion, compounding both of those exclusionary forces.

The post office has a unique role. Of course, it has had well-known difficulties recently, but that does not diminish the potential role it can play as other financial services providers retreat, and have already retreated, from so many of our high streets. It can be the core of the community with inclusive, accessible finance at that core and rippling out all kinds of other financial, digital and small “s” social services. It has such positive potential. We have seen this with the hub model, and I would be interested in the Minister’s response as to whether the Government believe we have enough hubs, whether the plan for hubs is ambitious enough and whether we need to bring other players into this hub model to ensure that, wherever you are, whoever you are, in the country, in socioeconomics, you can have effective access to finance and through that meaningful, sustainable and often physical access to cash and financial services. I very much look forward to the Minister’s response to this amendment.

Financial Services and Markets Bill [HL]

Baroness Hoey Excerpts

Report stage
Monday 7th September 2026 Lords Chamber

Moved by

[Baroness Hoey]

16: After Clause 12, insert the following new Clause—
“Claims management services: Northern Ireland(1) The Treasury may by regulations made by statutory instrument make provision for claims management services provided in, from or into Northern Ireland to be regulated under the Financial Services and Markets Act 2000 on a basis equivalent to claims management services provided in, from or into Great Britain.(2) Regulations under this section may amend primary legislation, assimilated direct principal EU legislation or subordinate legislation, including—(a) the Financial Services and Markets Act 2000,(b) the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, and(c) Part 2 of the Financial Guidance and Claims Act 2018.(3) Regulations under this section may make consequential, supplementary, incidental, transitional, transitory or saving provision.(4) Before making regulations under this section, the Treasury must consult—(a) the Financial Conduct Authority,(b) the scheme operator of the ombudsman scheme under Part 16 of the Financial Services and Markets Act 2000,(c) the Department of Finance in Northern Ireland, and(d) such other persons as the Treasury considers appropriate.(5) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.(6) In this section, “claims management services” has the meaning given by section 419A of the Financial Services and Markets Act 2000.”

[Baroness Hoey (Non-Afl)]

My Lords, this amendment follows on from the amendment tabled in Committee by the noble Lord, Lord Hunt of Wirral. I am bringing the House’s attention to a growing and deeply concerning problem in Northern Ireland’s insurance market. The market is shrinking in insurer capacity, it is becoming less competitive, and it is leaving consumers and businesses facing higher premiums and fewer choices. It is an issue that the British Insurance Brokers’ Association has been highlighting for some time, and about which it has been getting in touch with noble Lords and Members in the other place.

The evidence suggests that the root cause is claims inflation driven by various factors that are within the power of government and regulators to address. Let me be clear to noble Lords, especially to the Minister: I am not calling for a new, immediate regulatory regime without proper consultation. Rather, the amendment would provide the Treasury with a targeted enabling power, subject to consultation and affirmative parliamentary approval, to extend FCA regulation of claims management companies to Northern Ireland. They are, of course, currently regulated in Great Britain by the FCA.

I will give a brief backdrop to the amendment, which paints a very stark picture. In home insurance, brokers in Northern Ireland now have access to just six markets, down from 11 in 2020. In motor insurance, the number of available providers has fallen from more than 15 to just eight over the same period. As competition has reduced, premiums in Northern Ireland have continued to rise, even as prices in Great Britain have begun to stabilise or fall. In motor insurance, Northern Ireland consumers are being affected by premiums increasing year on year, and they are already paying much higher premiums compared with the rest of the UK. Of course, as noble Lords will know, access to public transport in Northern Ireland’s extensive rural areas is very limited.

Therefore, there is no regulation of claims management companies in Northern Ireland. This has led to many of them exercising poor practices, which in turn leads to inflated claims settlements and therefore higher premiums for consumers and businesses. As fewer insurers have a physical claims-handling presence in Northern Ireland, so the prevalence of CMCs has become more apparent. The number of CMCs has grown rapidly. We estimate that there are probably twice the number operating than a year ago, suggesting that it is a very lucrative enterprise. Adverts appear everywhere, pointing people to them if they have a car accident, et cetera. Of course, in GB, since the regulation came in, the number of CMCs operating has halved since 2019.

Another reason for the growth of CMCs is their attraction of higher personal injury awards in Northern Ireland, which makes it a lot more lucrative for them. The difference between Northern Ireland and England and Wales is striking. For whiplash, for example, in England and Wales a compensation of around £1,500 would be paid. In Northern Ireland, it could be up to £15,000 with psychological claims added on. Obviously, those higher awards feed directly into higher insurance premiums for consumers and businesses alike. In some cases, we see clear conflicts of interest. Vehicle hire, legal services and CMCs are brought together under the same commercial structure, creating clear conflicts of interest, with some CMCs operating various companies under different names but with the same overall ownership. Ultimately, these additional costs are paid by consumers through higher premiums.

As we all know, insurance is not a luxury; it is essential. It must be accessible and affordable for all. It is very unfair that we in Northern Ireland are paying a higher premium compared to those in Great Britain.

The consequences of no regulation at all of CMCs are becoming increasingly clear. Major insurers have already withdrawn from Northern Ireland and new entrants are refusing to come. Some insurers are refusing to insure young drivers at any cost, and some insurers are refusing to cover certain postcodes where there is a high prevalence of CMCs and perhaps more perceived evidence of collusion. One insurer has reportedly reduced its Northern Ireland motor business by 75% and customers of a major broker have seen their premiums rise by 45% between 2023 and 2026. All this, of course, could lead to market failure.

Northern Ireland consumers deserve access to affordable, fair and competitive insurances. To achieve that, we will need co-ordinated action from the Northern Ireland Executive, the Treasury, Westminster, regulators and industry alike. We have to work together to make this happen. Everyone agrees that there is a problem and now we have to fix it. The issue has become quite a political hot potato in Northern Ireland, because the Department of Justice, the Department of Finance, the Department for the Economy and the Department for Infrastructure have all been examining it.

The FCA is aware of the problem but powerless to protect consumers. The Treasury is aware of the problem. MPs and MLAs continue to hear from frustrated constituents, yet despite all this—and, I hope, an agreement between the Opposition Front Bench and the Liberal Democrat Front Bench—nothing has actually changed and there is no regulation. While responsibilities pass from one department, committee, regulator and jurisdiction to another, premiums remain higher, choice remains limited and opportunities are denied to people who can least afford it.

The solution does not require years of further review or consultation; it requires action. Primary legislation is needed and the Bill is the perfect vehicle to deliver it. The amendment is practical, proportionate and targeted. It seeks to address what may become a market failure and create the conditions for a more competitive, affordable and accessible insurance market in Northern Ireland.

This is not a party-political amendment; it simply seeks to ensure fairness in Northern Ireland for consumers and to stop the rip-off merchants operating in this field. I hope that the Government will engage constructively with the amendment and work with us before the Bill goes back to the other place so that we can get the regulation needed.

The Bill is all about regulation. This is in the one place in the United Kingdom where we do not have that regulation. We have the ability to make it happen and I hope that the Minister will have some positive things to say. I beg to move.

--- Later in debate ---

[Lord Pitt-Watson (Lab)]

My Lords, Amendment 16 would give the Treasury the power to extend regulation of claims management activity to Northern Ireland through secondary legislation. I am aware of the concerns relating to high insurance costs across the UK and would be supportive of action to tackle these where we can, but we should not rush to regulate without clear evidence.

The Government’s Motor Insurance Taskforce has examined the drivers of motor insurance costs, including claims-related costs and market practices. This work has not identified clear evidence that claims management companies are a primary driver of higher premiums in Northern Ireland. Moreover, any proposal in this area would also need careful engagement with the Department of Finance in Northern Ireland and proper consideration of the devolution implications. I therefore ask the noble Baroness to withdraw Amendment 16.

[Baroness Hoey (Non-Afl)]

My Lords, there I was thinking that we had a Minister who was going to be much more reassuring, but, in fact, that was a very negative response. All the things he said have already happened and could be happening in more detail if the Government were to move forward with this. It really is a missed opportunity for the Government and it is not going to go away; it will have to come back in a different form.

I had not realised until recently—probably like many people here tonight—how appalling this situation is. I do not know where the Minister got his facts and figures; perhaps from the Treasury, but certainly not from the people who know what is going on in Northern Ireland. There is obviously no point putting this to a vote tonight, but I hope that, following this, the Minister will meet a group of us who understand this a bit more and will make it clear to him that perhaps, sometimes, he might be given the wrong advice. I beg leave to withdraw my amendment.

Amendment 16 withdrawn.