Financial Services and Markets Bill

Debate between Bim Afolami and David Simmonds

Report stage
Wednesday 7th December 2022 Commons Chamber

[Bim Afolami]

With your indulgence, Madam Deputy Speaker, I would like to start, before getting into the meat of this, by paying tribute to a Labour councillor in Hitchin who recently and suddenly passed away in my constituency. Judi Billing had served as a district councillor since 1980 and was an excellent servant, and I wanted to make that point on the Floor of the House.

I rise in particular to support new clause 17. As we all know, this is really an enabling Bill and a lot of its meat will come in regulations that will be passed in the coming weeks and months. In the short time available to me, I think it is important to stand up for the regulators, because someone has to in this debate. I want to stand up for them not because I have agreed with every decision of the Prudential Regulation Authority, the Financial Conduct Authority, the Payment Systems Regulator or anyone else, but because a lot of the right criticisms that I and many other colleagues have had of the regulators arise more as a function of the system in which they operate than as a result of the decisions made by those individual regulators or institutions.

There is a key point about accountability, which many colleagues on both sides of the House have already raised: there needs to be strengthened accountability to this House. I have made the point many times before, but I urge those on the Treasury Bench, His Majesty’s Treasury and Parliament to look at this more deeply. Unless we can strengthen the accountability to this House and the other place of the regulators directly, we will continue to run up against criticisms that they are not taking colleagues’ considerations into account.

There is also a need for more effective accountability to the Government. What I mean by that is that the Government have clearly set out, in a series of actions, policy statements, speeches and strategies over the past few months, and in numerous reviews, what their intentions are. Those have been supported when it has come to votes on the Floor of this House, but sometimes there is a gap between the intention of the Government and what ends up coming through, even when regulations are passed to that end. It is important that the regulators and the Government work together to find a system whereby the Government can ensure that their strategic aims are being supported on an ongoing basis by the regulators. This is not just about saying what the policy is, passing regulations and allowing the regulators to get on with it. However well they try to do that, a lot will get missed, so we need to think about that.

We need to rethink the entirety of our regulatory structure, particularly as to how it governs financial services. We have very powerful regulators that have taken on a huge amount of power from the European Union, and they are doing their best. There are some overlaps between them and there are times when certain aims of one conflict with the aims of the other, even in relation to the competitiveness objective that has come up many times in the passage of this Bill. We end up with the situation where the regulators have to balance off competitiveness and other secondary objectives, and indeed the primary objectives. We have to work out how we are going to put together a framework that enables better accountability to this House, and better accountability to the political aims that have been passed by this House and to the aims of the Government, so that we get a regulatory system that drives a better, more competitive, safer financial services system.

To that end I have set up the Regulatory Reform Group, of which some Members of this House and others outside are a part. I intend to work with the Government on this issue, because unless we get it right, all the best intentions that all colleagues have in different areas will find it hard to be effected because of the structural difficulties that are inherent. So I would like to stick up for the regulators but say that they need to be able to operate in a more effective system.

[David Simmonds (Ruislip, Northwood and Pinner) (Con)]

I am delighted to be able to speak in support of the Government this evening, because this Bill is of great importance to my constituents, many of whom work in our financial sector, and also to the capital city, of which my constituency is a part.

Since I contributed to the earlier stages of the Bill, I have had the opportunity to hear from UK Finance, Zurich, Lloyds, the London Chamber of Commerce and Industry, the Property Institute and Just Group and many others, and they have reflected back to me the broad and strong support of the financial sector, which is the jewel in our industrial crown, for the measures that the Bill envisages. The key thing from the perspective of my constituents is that the Bill seeks to right-size regulation in the United Kingdom to reflect the fact that the risks and the challenges that the sector faces change over time. Just as we need to manage the risk from competitors, through the measures on competitiveness, we also need to ensure that we have a financial sector that enables all of our citizens to access the broadest possible range of financial services.

I have listened carefully to the points made about financial inclusion, for example, which are very important in the context of our financial sector. We need to ensure—and I think this Bill does—an appropriate balance between products that are pricing in a degree of risk, but that enable people to build their creditworthiness and their participation in the benefits that the financial sector can bring in their lives, with a recognition that there are risks to constituents, in particular from the development of new products, which the Bill seeks to address through better regulation in areas such as crypto investments.

Briefly, on new clause 27, although I have sympathy with the points that have been made by a number of Members, this strikes me as an example of where there is a significant risk of unintended consequences. As Ministers have heard, there is a need for due process for those who feel that they have been wronged by the decisions of a provider to be able to seek a remedy for that, but we do not want to get into the kind of situation that we have seen in the past, where an obligation to provide a universal service sees significant numbers of providers—useful providers—exiting the market because they are not prepared to accept the risks that come with that. My view is that the Government are finding about the right balance.

Let me turn now to the issues around the Financial Conduct Authority and the regulators. There will be a new chair of the FCA from 21 February next year. I wish to bring to the attention of the House and of Ministers that the strong view of my constituents and many in the sector is that we need to see a greater degree of rigour in the enforcement action that the FCA in particular is able to take. It is a matter not of new powers, but of making sure that they are operating effectively.

In respect of access to cash, I would like to thank Ministers. Certainly, in my constituency, we have seen really significant efforts by financial institutions to ensure that every high street has at least one free-to-use cashpoint, and, thus far, the feedback from business owners is very good.

In conclusion, I strongly support the Government’s position. I am not afraid to say if I think things are going wrong, but, in this case, it is clear to me that the Bill is beneficial to my constituents as business owners, as employees in the sector, and as consumers of the sector’s product, and it is beneficial to the taxpayers of the United Kingdom.