Digital Markets, Competition and Consumers Bill

Baroness Wheatcroft Excerpts

Committee stage
Wednesday 7th February 2024 Grand Committee

Moved by

[Baroness Wheatcroft]

212: After Clause 308, insert the following new Clause—
“Consumer information: vote reporting(1) The FCA must make rules requiring relevant FCA-regulated persons to—(a) give consumers information on request in a machine-readable form about the exercise by the persons or on their behalf of all voting rights attached to assets in which the consumers have an interest, including in respect of any specified description of scheme or investment vehicle, within 30 days of that request being received;(b) have regard to guidance in respect of the format of the information provided under subsection (1)(a).(2) The FCA may discharge the duty in subsection (1) in respect of—(a) beneficiaries of occupational pension schemes within the meaning of section 1 of the Pension Schemes Act 1993,(b) beneficiaries of the local government pension scheme,(c) clients of personal pension schemes within the meaning of an order under section 22 of Financial Services and Markets Act 2000, and(d) clients of stakeholder pension schemes within the meaning of such an order,by making rules requiring relevant FCA-regulated persons to give the information described in subsection (1)(a) to a relevant intermediary, or make it publicly available.(3) In this section—“relevant FCA-regulated persons” means—(a) persons managing investments within the meaning of an order under section 22 of FSMA 2000, including the activity described in paragraph 6 of Schedule 2 of that Act, and(b) persons effecting or carrying out a contract of insurance within the meaning of an order under section 22 of FSMA 2000;“relevant intermediary” means—(a) in respect of subsection (2)(a), the trustees of the scheme,(b) in respect of subsection (2)(b), an administering authority of the scheme in which the consumers have an interest, and(c) in respect of subsection (2)(c) and (2)(d), the managers of the scheme.”Member’s explanatory statement
This amendment would require the FCA to make rules requiring on-request standardised reporting on company voting by investment managers and life insurers, and to provide guidance to firms on the format of that reporting. The FCA could discharge that duty in respect of the members of pension schemes by passing the information to the trustees, administering authorities and managers of the schemes, or to publish it.

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[Baroness Wheatcroft (CB)]

My Lords, I declare my interests as listed in the register, and I apologise that I could not attend Second Reading. I will speak to the single Amendment 212. Among the Bill’s declared purposes is

“to make provision relating to the protection of consumer rights”.

This amendment is concerned with one specific but important consumer right: having visibility as to how one’s money is being used. I believe that every investor, big or small, should have easy access to see how their shares are being voted, and this amendment would be a big step in that direction.

I gratefully acknowledge the support of the noble Baronesses, Lady Sheehan and Lady Altmann, who believe in the principle at stake here. I thank the fintech firm, Tumelo, for its help in drafting the amendment. It has the support of the Association of Member Nominated Trustees, which represents board members of 700 pension schemes, accounting for more than £1 trillion of assets. That is quite some weight.

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[Lord Offord of Garvel (Con)]

I thank the noble Baroness, Lady Wheatcroft, for Amendment 212, which would require the Financial Conduct Authority to make rules requiring regulated persons to give consumers certain information regarding voting rights attached to assets in which the consumer has an interest. I also thank the noble Baroness, Lady Sheehan, the noble Lords, Lord Clement-Jones and Lord Leong, and my noble friend Lord Lucas for their contributions.

I appreciate the strength of feeling on this issue. I suggest that we speak to the Treasury and write to the noble Baroness on a number of her questions, in particular to draw on the comparisons with the US, with which we are so close on so many things, to understand what its experience is and where we are in comparison.

The Government recognise that transparency is crucial to effective stewardship and corporate governance by pension and other investment funds. We also acknowledge the argument that the existing voting disclosure framework is not working as well as it could. That is why, as the noble Baroness mentioned, the FCA set up the independently chaired vote reporting group in November 2022, following recommendations made by the task force on pension scheme voting implementation to develop a standardised and decision-useful framework for voting disclosure.

It is important to take a proportionate approach in implementing changes to vote reporting. Mandatory voting disclosure would be a significant departure from the FCA’s existing rules on voting disclosure. It is important that we have a globally competitive asset management sector. This means designing and implementing regulatory change in a way that considers regulatory costs as well as benefits. That is why the Government support the FCA’s approach to work closely with industry stakeholders and build consensus.

The group has made significant progress and recently consulted on its proposals for a comprehensive and standardised vote reporting framework. The Government believe that it continues to be more appropriate to wait for the group’s final output before requiring the FCA to produce further rules and regulation. I can assure the noble Baroness, Lady Wheatcroft, that, when reviewing the group’s final proposal, the Government will carefully consider whether its recommendations go far enough to address the existing issues around transparency for consumers that the noble Baroness so eloquently described, as well as what further action may be appropriate. We therefore hope that she will feel comfortable withdrawing her amendment.

[Baroness Wheatcroft (CB)]

I thank the Minister for what I think was an unusually conciliatory reply. I am quite cheered by what he said. I understand that we will wait to see what the FCA comes up with. I cannot say that I am overly optimistic about the FCA being effective with anything other than mandatory reporting—that will require the Government to act—but I look forward to seeing that action before too long. I beg leave to withdraw.

Amendment 212 withdrawn.