Financial Services Bill

Bim Afolami Excerpts

Report stage & 3rd reading & 3rd reading: House of Commons & Report stage: House of Commons
Wednesday 13th January 2021 Commons Chamber

[Kenny MacAskill (East Lothian) (SNP) [V]]

Obviously there is much in the Bill that deserves support, although some of it has come about through our self-inflicted wounds from Brexit. However, the greatest comment I will make is on the opportunities of what should be added and on what is currently missing. I endorse the comments of my hon. Friend the Member for Glasgow Central (Alison Thewliss) and support points made by other Members, particularly those who spoke to amendments 4 and 30, which deal with economic and corporate crime.

We are in a difficult time at the present moment. People are suffering. They are making sacrifices. They welcome fixed penalties being given out to those who act rashly—sometimes stupidly, sometimes deliberately. Equally, they are aware that huge rip-offs are not being dealt with and remain unpunished, which causes a great deal of angst and upset, which needs to be addressed.

When I was Justice Secretary of Scotland, I recall that we set up a serious organised crime taskforce, with a model that has been replicated elsewhere and indeed has been extended to issues beyond serious organised crime. It had clear benefits, but there were also obstacles faced by law enforcement. It had the benefit of bringing together all the agencies, but they faced the same challenges. We had to recognise the extent of the challenge and bring in organisations that had previously been left out, from environmental protection through to local government. There were clear challenges in dealing with corporate crime. There is a lack of a legislative framework—there is insufficient legislation there—to allow Police Scotland, City of London police or police services elsewhere, or the Crown Office and Procurator Fiscal Service in Scotland, or indeed the Crown Prosecution Service south of the border, to carry out a diligent, good job. They lack the powers.

I am always minded of the Woody Guthrie song, “The Ballad of Pretty Boy Floyd”:

“As through this world I’ve wandered, I've seen lots of funny men.

Some will rob you with a six-gun, and some with a fountain pen.”

The tragedy in this country is that it is usually quite easy to deal with those who rob you with a six-gun. Dealing with those who rob you with a fountain pen has proven far harder, which is why significant changes are required, because it is just not good enough that corporate criminals go unpunished, which we know happens. Anyone who has seen “The Inside Job”, which includes Matt Damon, will know the fraud that went on in the financial crash. We have seen LIBOR and forex. We have seen Serco.

Meanwhile, fixed penalty notices are issued for rash and stupid actions, and rightly so, but where is the responsibility being taken by the shareholders and corporate leaders? They have to be held to account. These amendments would help to address that, making sure that we have greater fairness between the small guy and the big guy, bringing us into line with the United States of America, where the wolf of Wall Street is being prosecuted, while ensuring that we keep up corporate standards, which sadly in some instances have slipped quite shamefully. It is only right and appropriate that we make sure that fraud and money laundering are dealt with every bit as strenuously and firmly as bribery and tax evasion.

These are hard times. People are making sacrifices, and it is about time that those who are abusing their powers in the corporate boardroom were held to account. We need to have the legislative framework.

[Bim Afolami (Hitchin and Harpenden) (Con)]

I rise to support the Bill and to focus my brief remarks on the wholesale market, rather than the retail market, which most Members have addressed so far. In particular, Government amendments 22 and 23, which the Minister mentioned in his opening speech, clarify beyond any doubt that non-UK firms—all firms that do not have the UK as their principal place of business—are not within the scope of the rules on the parent undertaking. That is particularly relevant to me. I brought the subject up in my Second Reading speech and it is something on which I have corresponded with the Minister and his team. I am very glad that he and the Treasury have engaged on the Bill in this way. It is a telling example of how good Ministers behave, and the Minister has been exemplary in taking on board comments on the Bill from a range of Members. I commend him for that.

I have a couple of short comments on what others have said. On new clause 16, tabled by the SNP, in my speech on Second Reading I gave my view that there is a need for increased scrutiny by this House of the regulators, but the Minister is right to say that we need to consider that in its entirety in the consultation on the future of the regulatory framework. That is the right way to do it. It is very important to get it right, and I look forward to sending in my remarks if I have not already, and seeing the Government’s response to those points.

I shall finish by addressing certain amendments that were introduced in Committee or that have been mentioned today, on the European Union—new clause 12, new clause 20 and many others—whereby, effectively, Opposition Members have tried to impose requirements on the FCA or the PRA to assess the impact of the differences between the EU and UK regulatory frameworks. The conceptual problem with that is—as I think that all hon. Members, and indeed the Government, need to see—that over the next five to 10 years we are going to be in a very different regulatory world. We need to think of attracting companies and investment on a global basis, not with a purely European focus as was the case in the past.

The Minister has already mentioned our success in relation to FinTech. The Chancellor has mentioned his focus on making sure that the London stock exchange is more attractive and effective for others coming from abroad. The European Union’s drivers and incentives are not the same as ours in this country, so it would be wrong for us to necessarily seek to follow the rules blindly. It is not a race to the bottom; it is a race for us in this country to win the global competition for safe, beneficial, productive capital and business. That is what the Bill helps set us up for.

[Christine Jardine (Edinburgh West) (LD) [V]]

It is an honour to follow the hon. Member for Hitchin and Harpenden (Bim Afolami) in this Report stage debate and to speak on a Bill that is of so much importance at this juncture for our economy and the circumstances that we face. The sector that it deals with is so important, and it cannot be overstated. The financial services sector is vital to our recovery, not just because of the jobs it provides and the tax that it contributes to the Exchequer, but because of the number of people, families and communities in this country whose future wellbeing depends on a well-regulated and successful financial services sector.

The Liberal Democrats, my own party, have tabled two amendments—new clauses 22 and 23, both of which address the issue of debt repayment and recovery, but at this stage we shall not be pressing them to a Division, so I prefer not to discuss them. Instead I shall discuss the amendments that we will be supporting, specifically new clause 7, tabled by the hon. Member for Walthamstow (Stella Creasy), of which I am one of the signatories. As I alluded to, our support is recognition of the need to act now to create an environment that enables our economy and the people at the heart of it to recover as quickly and as financially painlessly as possible. The scale of the potential problem that awaits us as we emerge from the current crisis is frightening for businesses and for households. The most recent research from StepChange estimates that more than 3 million people are in arrears and priority debts, and potentially 6 million people—more than the population of Scotland—are behind on household bills. For those people, that creates stress, financial hardship and sleepless nights worrying about how to feed their children.

We should have no truck with any company or organisation that in any way exploits the difficulties that covid has created. That is why I put my name forward as a co-sponsor of new clause 7, which would bring the non-interest-bearing elements of buy now, pay later lending and similar services under the regulatory ambit of the FCA. We need to act now, before we have another scandal. Such companies facilitate overspending online and costs appear lower than they actually are. One in four shoppers used such companies in the run-up to Christmas. More people are being furloughed and made redundant, so even if something seems affordable now, it might not be in future, either for the country or for individuals.

In the past year, we have heard much about the crossroads at which our economy, and indeed the country, stands. Our financial services sector was worth £132 billion to the UK economy in 2018 and had more than 1 million jobs. It has suffered. It is worth 7% of our economy. In my city of Edinburgh, we have the second-largest financial services sector in the UK and the global financial centres index ranks it as 13th in the world. The scale of what we are facing cannot be underestimated, which is why the Bill should be amended as I suggest.