Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2020

Baroness Northover Excerpts

Thursday 18th June 2020 Lords Chamber

[Baroness Northover (LD) [V]]

My Lords, I thank the Minister for her introduction, and her team for the clarity of their Explanatory Notes. Can the Minister confirm that the Gibraltarian authorities are happy with these provisions? In relation to the United Kingdom, we need to stay aligned during the transition period, but it also seems clear and welcome that we intend to stay aligned after that. Can the Minister confirm this?

The EU has amended its regime to include new categories of low-carbon benchmarks and extended rules on transparency in relation to environmental, social and governance factors. I note that

“As far as possible, HM Treasury’s approach ensures that the same laws and rules would continue to apply at the end of the Transition Period, to provide continuity and certainty to firms and their customers.”


That is excellent. Also, as new EU legislation becomes applicable during the transition period, the Treasury will introduce further SIs to ensure that this continues to operate effectively in the UK

“at the end of the Transition Period.”

The emphasis here is mine.

Despite this apparent commitment, however, the duty to co-operate with supervisors has been substituted with a power to co-operate after the transition period—why the difference? At the end of transition, the UK will be outside the EU’s single market for financial services, including the passport regime. This is hugely to be regretted, as the noble Lord, Lord Hain, has just said. There is the possibility of equivalence. How do we make sure that we secure this, and secure it long-term? My noble friend Lady Kramer, in the previous SI discussion, expressed her enormous concern about this. I did not feel that the Minister grasped the overarching point she made.

Given the potential impact of this, how optimistic is the Minister about securing equivalence in the long term? To what extent do the Government consider diverging from the EU in financial services, and what would be the effect on equivalence? Significant resources will need to be put into our close monitoring of any changes governing the EU financial services market, ensuring that we follow suit. Of course, this does indeed make us a rule-taker rather than a rule-maker. Can the Minister spell out how the Government intend to do this? I look forward to her reply.