Financial Services and Markets Bill [HL]

Baroness Morgan of Cotes Excerpts

2nd reading
Monday 8th June 2026 Lords Chamber

[Baroness Morgan of Cotes (Non-Afl)]

My Lords, it is a great pleasure to follow such a thoughtful speech from the noble Lord, Lord Carlile, who picked up on a couple of points that I was going to mention. First, I draw the House’s attention to my interests as a non-executive director at Santander UK, a non-executive director at the Financial Services Compensation Scheme, which oversees consumer redress, and as chair of the Advertising Standards Authority, which is a regulator. Because of those interests, I do not normally talk about financial services in this House, but because this is a more general debate at the start of the legislation, I want to assist, I hope, with a couple of factual points and pick up two areas of policy on which the Bill is currently silent—the noble Lord, Lord Carlile, has just picked up one of them. I do not intend to take part in further stages but, depending on the Minister’s answer to the final policy issue I will raise, I may return.

I will start with ring-fencing reform. We have already heard from a number of noble Lords about why reforms were introduced. To keep this on a factual basis, and to give examples of the unintended consequences mentioned by the noble Lord, Lord Kamall, I have two examples of why ring-fencing can be unhelpful to consumers and economic growth. The first example is a travel company offering package trips that wants to mitigate its exposure to increased fuel and foreign exchange costs. It wants to take options on forward fuel or FX costs, but those cannot be offered within the ring-fenced bank that it banks with. Those options can be obtained from another financial institution, but that obviously means extra costs and takes longer, and consumers will ultimately pay those costs.

The second example is a UK energy company looking for investment. The ring-fence rules, as currently drafted, mean that lending to the holding company is not permitted, so lending must go to a subsidiary on a strict reading of the rules. Is that really what was intended? Are we serious about bringing down the cost of doing business in the energy sector, a sector that has very real resonance for households, as well as a link to national energy security?

Moving on to reform of the Financial Ombudsman Service, we have heard in the speeches from two noble Lords the significant strength of feeling on these proposed reforms among consumer groups. I will just say two things here. First, predictability of law and regulation is an important principle of doing business in the United Kingdom and is something that businesses want to see. Secondly, in the speeches I have heard so far about reform of the Financial Ombudsman Service, I have not heard anything about the actions taken or the way that certain claims management companies’ business models are based on bringing cases to the ombudsman. The Financial Ombudsman Service performs an incredibly important role, and financial institutions should be held accountable when they get it wrong for customers, but we should not lose sight of claims management companies making money from customers who do not need to use their services when they are looking for financial redress.

I now turn to one area—the noble Lord, Lord Carlile, mentioned it—about which the ombudsman has received, and rightly upheld, many complaints: fraud. In November 2022, I had the privilege of overseeing the publication of a House of Lords inquiry report entitled Fighting Fraud: Breaking the Chain, in which we said:

“80% of reported frauds are cyber-enabled”.


According to the Crime Survey for England and Wales, in the year ending June 2025, there were an estimated 4.1 million fraud incidents, a 14% increase compared with the figures for 2024. Out of those 4.1 million incidents, around 3 million involved a loss, and in 2.2 million cases, victims said they were fully reimbursed.

The reason I mention fraud is because the Bill does not contain anything about it affecting the financial services sector. I hope that the Treasury is not leaving it to the Home Office to lead on this. Fraud is not a victimless crime. As we have already heard, the role of online platforms and marketplaces is very important, and romance fraud is hugely costly to victims, both financially and personally. We heard earlier about the changes to the senior managers and certification regime. While I understand them in the context of this Bill, frankly, I would extend the senior managers and certification regime to the bosses of the tech companies to make them accountable for what is happening on their platforms. Since 2022, the world has moved on, and there is now the issue of deepfakes in relation to fraud. Today, I heard about ChatGPT recommending fake websites, which are costing their victims huge amounts of money. I am sorry that the Bill is silent on such an important issue for financial services.

I move on to the final policy area that I hope the Minister might say something about: economic abuse. This is a devastating form of domestic abuse used by abusive partners or ex-partners to control a victim survivor’s money and economic resources. It includes the routine misuse of financial products and services, such as a bank account, a mortgage or credit. Some 4.2 million UK women experienced economic abuse in the past year alone, leaving them carrying debts coerced in their name and trapped with abusers in joint financial products long after separation, while their credit scores are tarnished by the abuse, leading to immediate and long-term financial exclusion. A staggering 750,000 UK women experience economic abuse through the joint mortgage they share with an abusive partner or ex-partner. Perpetrators will routinely use these ties to coerce and control survivors long after separation, leaving their victim survivors facing arrears, repossession, credit destruction and even homelessness.

Financial services firms’ contractual obligations to both parties, through the concept of joint and several liability, limit the steps those institutions can take to prevent these harms through joint mortgages. It is clear that urgent legislative reform is necessary to address this. I welcome the Government’s financial inclusion and violence against women and girls strategies. Both make significant commitments to tackle economic abuse and ensure consistent responses from financial services to support victim survivors.

How will the Government ensure that the Bill’s implementation effectively supports good outcomes for economic abuse victim survivors as vulnerable customers? Will the Minister’s department use this Bill to remove the legislative barriers that still prevent financial services institutions safeguarding victim survivors against the harms caused through joint mortgage abuse? I fully agree with the comment that the Minister made at the beginning of this debate that this whole Bill is a question of balance. I look forward to hearing in the forthcoming debates how that balance is resolved.