Financial Services and Markets Bill [HL]

Lord Mackinlay of Richborough Excerpts

Committee stage
Wednesday 24th June 2026 Grand Committee

[Lord Hope of Craighead (CB)]

My Lords, I should like to speak to Amendments 64B and 69AA in this group, which are in my name. They direct attention to matters arising from the provisions in Clause 14 that are of great concern to the Law Society and the Law Society of Scotland. I apologise to the Minister for their late arrival; they are based on draft amendments that were not sent to me until Monday of this week. I am grateful to the Table Office for its help in drafting them at short notice.

The background to these amendments is as follows. The Law Society and the Law Society of Scotland are both regulatory authorities. Their current regulatory roles include responsibility for supervising compliance by solicitors, in their respective jurisdictions, with the UK’s anti-money laundering and counterterrorism financing frameworks. They are, therefore, supervisory authorities of the kind referred to in the amendment to Section 49 of the Sanctions and Anti-Money Laundering Act 2018, as set out in Clause 14(2).

However, the regulation of anti-money laundering and counterterrorism financing is only part of the responsibilities that these two societies exercise as regulators. Solicitors play an important role in tackling economic crime. The societies’ roles as AML supervisory bodies are a key component of their functions as regulators of the solicitor profession. This is a task that both societies take very seriously. I am told that the Law Society of Scotland employs a team of dedicated specialists with detailed, up-to-date knowledge of the trends in economic crime and the risks that are associated with the provision of legal services; I have no reason to think that the way in which the Law Society of England and Wales handles its responsibilities is any different.

The effect of the amendments proposed in Clause 14 would be to transfer, through regulations that we have not yet seen, the front-line AML supervision of the solicitor profession to the Financial Conduct Authority, as the single professional services regulator. The Law Society believes that this will amount to a seismic shake-up as to how law firms and their AML/CTF obligations are regulated, which risks sending shockwaves through the sector. It also says that adapting to this change has the potential to divert attention, resources and time from supporting clients and developing solicitors’ businesses, with effects that it would be quite hard to cope with.

The Law Society of Scotland strongly opposes this change. Its point is that it will lead to the duplication of systems of regulation. On the one hand, the society will continue to have its role as the profession’s regulator; on the other hand, there will be the FCA. Solicitor firms, large and small, will have to deal with them both in future, increasing the time spent and the cost of being regulated. This will bear heavily, especially on small firms in the remoter areas of Scotland, which often operate on very narrow margins. The population is thinly spread in these areas, as are the firms that exist to provide essential legal services there to the people who need them. Much will of course depend on how the FCA approaches its task, but anything that might lead to the disappearance of these firms due to the consequences would be very much to be regretted. That is what lies behind the Law Society of Scotland’s objection.

The Law Society of England and Wales, for its part, is concerned that, without a clear statement of their position by the Treasury and the FCA, Parliament is being asked to legislate for powers to enable the detail of the reforms to be enacted that remain unclear and which the sector has not yet seen.

My Amendment 64B focuses on the points that are of particular concern. I shall mention in relation to each one, as briefly as I can, the questions for which answers are sought from the Minister. Proposed new subsection (1C)(a) asks that the regulations be “proportionate and risk-based”. The question is whether the FCA intends to import its banking model into the process for all solicitors’ firms, small as well as large, or instead to take a risk-based approach. Should not the supervision in regard to this profession be tailored to the risks posed by the different sectors within it? Firms vary from the very small, with perhaps just one partner in a remote part of Scotland, to the very large international firms found in the City of London. How will the Government ensure that the small high street firms up and down the country are not disproportionately burdened by the system that they propose to operate?

Proposed new subsection (1C)(b) seeks appropriate protections for legal professional privilege and client confidentiality. Can the Minister confirm that nothing will be done under Clause 14 that will weaken legal professional privilege, which has a vital role in securing access to justice? The Solicitors Regulation Authority of the Law Society of England and Wales at present keeps all LPP material confidential. It may be used only for investigation and enforcement proceedings against the solicitor or the firm that it regulates. It may not be used in relation to proceedings that may be taken against its clients. Will the FCA follow the Law Society’s practice? Will it also accommodate the duty of confidentiality that underpins much legal work? Further, will it respect the obligations of the solicitor or the firm to the court?

Proposed new subsection (1D) seeks to avoid duplication. It is feared that the Treasury will introduce a broader system of regulation than the current regime, with the risk that this will duplicate the Solicitors Regulation Authority’s oversight, create unnecessary burdens and delay routine transactions. What practical mechanisms can be put in place to prevent solicitors from being subjected to overlapping requirements from both the FCA and the SRA?

Proposed new subsection (1E) calls for an impact assessment. How can the appropriateness of these powers be judged without seeing the underlying regime? Will the regulations be accompanied by assessments of their impact on those to be subjected to the system of supervision for which they provide? What estimate has been made of the compliance costs for these law firms? Will the powers be compatible with the way that legal services are regulated in Scotland, which has a different legal system from that in England and Wales?

My Amendment 69AA asks for a review of AML and CTF supervision within three years and a report that includes an assessment of each of the points to which I have drawn attention. I do not expect the Minister to answer my questions this evening. I have set them out because I hope that they may form the basis of some discussion, if the noble Lord is willing to meet me at some point before Report to go over these thoughts at greater leisure and in more detail.

[Lord Mackinlay of Richborough (Con)]

My Lords, I add some comments to what the noble and learned Lord, Lord Hope, has said and what he is trying to achieve. I put on record my interests in the register as a chartered accounts and chartered tax adviser—I am very well versed in the burdens, I suppose, of the AML regulations in smaller practice. These are burdens that we all suffer almost daily if attempting to move money between one very regulated institution in the UK to another very regulated institution in the UK. We have all suffered it: you transfer funds from one to another, yet the receiving institution asks the same questions all over again, including proofs of source of funds, as the original organisation, in the UK, asked when you put those funds into that institution.

Frankly, the AML regulations have got out of control. We could do it in this Bill, and I think it is time to streamline what has become a real blockage in the UK. I had a quite ridiculous situation recently in purchasing a property: they wanted proof of funds for a transaction that I conducted in 1992. I struggled to find it, because it had long gone through the shredder, as one might imagine.

Financial Services and Markets Bill [HL]

Lord Mackinlay of Richborough Excerpts

Committee stage
Monday 6th July 2026 Grand Committee

Moved by

[Lord Mackinlay of Richborough]

142B: After Clause 22, insert the following new Clause—
“Facilitation of inheritance tax payment before probate(1) The FCA must make rules to ensure that financial institutions facilitate the payment of inheritance tax by executors before probate is obtained through the Direct Payment Schemes for Inheritance Tax (IHT423) form.(2) For the purposes of this section, “financial institutions” include banks, building societies and investment account providers that—(a) are registered with the FCA;(b) are regulated by the FCA.”Member's explanatory statement
This amendment seeks to place the informal procedure of executors using the IHT423 scheme to pay inheritance tax before obtaining probate into legislation, and to require all financial institutions regulated by the FCA to facilitate that service. As things stand it is at the discretion of financial institutions to decide whether to facilitate the IHT423 scheme.

[Lord Mackinlay of Richborough (Con)]

My Lords, as noble Lords have noticed, this is a very skinny list of amendments; it is a group of one. I will put on record my registered interests: I am a chartered accountant and a chartered tax adviser, and, back in the day, I did the appropriate examinations that allowed me to be licensed for non-contentious probate work under the ICAEW. I suppose that it needs the ingenuity of a chartered tax adviser to get an amendment to the Financial Services and Markets Bill relating to inheritance tax.

Noble Lords may have noted the Economic Affairs Finance Bill Sub-Committee report of 28 January this year. It focused on the six-month rule for paying inheritance tax. It is not actually six months; it is six months after the end of the month of death. For instance, if somebody passed away in December 2025, the due date for inheritance tax would be the end of December plus six months: namely, the end of June 2026. The House of Lords Economic Affairs Finance Bill Sub-Committee was considering how, after next year, the system will deal with SIPP—self-invested personal pensions—coming within the scope of inheritance tax from 6 April next year.

As I hope to show the Minister this afternoon, the system of getting inheritance tax paid is lumpy at best and mixed at worst. It is also very complicated for personal representatives and executors to deal with, at some of the worst times that people have to deal with the state and the system for getting affairs settled. They say that there are three dreadful events in life—death, divorce and moving—but I think most would appreciate that death is a particularly difficult time for all concerned.

I have been administering probates for a very long time, and it is an area where the state really interposes itself to stop the administration of an estate until HMRC is happy that it will get its wedge. It is the absolute blockage, and at a time when the state and the individual are in some conflict, because the state will not move to allow probate to be achieved and those assets to be released until the tax is payable. I do not think there is any other area of tax where an absolute blockage comes into play. There is completely no trust between the state and the individual when administering an estate.

I could say that all used to be well, but it was not really. There was a painful hangover from the November 2025 disaster Budget. It increased interest on all overdue taxes to 4% above base. That is a hefty rate above base whereas, if you have overpaid your taxes, you get credit interest at 1% below base. So the Government enjoy a 5% spread, and there is a huge imperative to get taxes paid when they are due. I hope that is the underlying reason why we currently have a penal rate of 7.75% on taxes that are due.

For many executors, getting the cash together to pay that tax within six months, plus possibly a few days, after death is a very difficult procedure, because probate can rarely be obtained within that timeframe. A scheme has been presented over time, and it has developed quite well, but it is discretionary and varies from institution to institution: it is the direct payment scheme allowed by the IHT423 form, which has been in place for many years. Executors ask banks and building societies to pay the tax in advance of the due date, and often in advance of putting the appropriate forms in to HMRC, so that probate can be obtained smoothly.

If anybody has been involved with a probate situation, they will know that one cannot get probate until the tax is paid. How do you get the money out to pay the tax? Well, you could do it with probate, so we end up in this Catch-22 situation, which the IHT423 system was designed to help break. On 1 October 2024, the IHT423 arrangement, which used to apply only to banks and building societies, was widened to include a greater range of investments with traditional investment houses.

I might not have come across this problem had I not been administering my father’s estate—I am his executor. In my professional years, I had never come across an institution that refused to pay the tax due on an IHT423 request. Now, sadly, I have come across one: M&G plc group, now a dual structure between M&G Investments and Prudential. As huge names in the marketplace, they must have a significant percentage of all investment management in the UK.

My father’s estate is due to pay inheritance tax—I take the “my” away from this as it would apply to any executor—and I had relied on the IHT423 procedure to liberate an appropriate amount of IHT from an M&G Prudential investment that he had held for 24 years. The answer came back, “No, we don’t do that”. I asked why not, since I have been doing probate for many years and have never had a refusal of an IHT423 request. They simply said, “No, we don’t that”. That gets to the heart of what my amendment is all about. It states that all FCA-registered institutions doing business in this country must be part of the IHT423 scheme—no discretion, no “We don’t that”—because this a period of great difficulty for executors up and down the country.

This makes no difference to me, because I am done, but I will explain what many executors have to do. They can either borrow money—which in itself is a tough ask but, given the 7.75% interest rate levied by the Government, perhaps it is cheaper than having any amount outstanding and due—or they can pay the IHT personally, as I had to do. So there is an estate asset, an institution that just says, “No, we don’t do that”, and an estate liability of IHT that has to be paid, or you have to pay 7.75%.

As we go towards Report, I hope that the Government and the Minister will be keen to think about this and say, “Yes, we want to be part of smoothing the administration of estates for people at a tough time in their lives”. I can but guess, and I certainly hope, that the reason for the 7.75% interest rate is to encourage people to pay, and that it is not meant itself to be a receipt for the benefit of the Government. If this is not accepted as an amendment on Report—I would very much like the Government to consider it and draft one—I will be left with the conclusion that the Government are rather more keen on earning money at 7.75% than on helping the administration of estates.

That is a story that is probably being played out in tens or fifties, if not hundreds of thousands of households around the country as I speak. The fact that one of the giants of investment, M&G Prudential, with probably well over 10% of administered funds in this country, simply says no, is not good enough. We must therefore put this on a statutory basis, and this Bill seems to be an appropriate place to do so. I beg to move.

[Lord Davies of Brixton (Lab)]

The noble Lord makes a compelling case, but can he say what is meant by “facilitate” in the amendment?

[Lord Mackinlay of Richborough (Con)]

Facilitating means merely that any financial institution registered with the FCA in this country would have to use the IHT423 procedure—it could not say no. At the moment, we have a framework that is purely discretionary. In my professional life every single institution has always said yes, but obviously there are some out there which are saying no. So I want to put the facilitation not as a facilitation of choice but a facilitation of “must” on the request of an executor. There is no risk here. The risk is that either the funds remain in an investment account or they are in the account of HMRC, which, the last time I looked—despite my being a chartered tax adviser—is a safe place for people’s funds to be.

--- Later in debate ---

[Lord Stockwood (Lab)]

My Lords, Amendment 142B would require the FCA to ensure that financial institutions that are registered or regulated by the FCA facilitate the payment of inheritance tax by executors before probate is obtained through the direct payment scheme.

I appreciate that the purpose of this amendment is to make it easier for estates to pay inheritance tax. I am sorry to hear of the issues that the noble Lord, Lord Mackinlay, has had with the current system and I am very happy to take that up with HMRC to explore why M&G Prudential is not a member of the current scheme.

I can assure your Lordships from the research for this question that HMRC internal analysis suggests that most taxpaying estates are already able to fund at least a first instalment of inheritance tax before applying for probate. The direct payment scheme allows executors to ask banks, building societies or investment account providers to pay some or all of the inheritance tax due from the deceased person’s accounts. The scheme works well in its current voluntary form and provides an important mechanism to help executors pay any tax that is due.

We need to be very careful here. Releasing funds from a deceased person’s estate before probate is granted carries risk for financial institutions. Those institutions need to ensure that those payments can be made lawfully. The current system enables financial institutions to assess whether it is appropriate to make payments directly to HMRC on a case-by-case basis, ensuring that institutions make payment only if satisfied that the personal representative is indeed acting on behalf of the deceased’s estate and that they are releasing those funds correctly. FCA rules cannot put this issue aside as it is a matter of the wider law. Financial institutions would need to ensure that making these payments is appropriate whatever the FCA rules say. This would leave financial institutions on an uncertain legal footing.

I understand the spirit of this amendment but I do not agree that it is the right solution, and the existing voluntary scheme is working well on the whole. But I will definitely pass on the point the noble Lord raised about HMRC and will come back to him on that. I therefore ask the noble Lord to withdraw the amendment.

[Lord Mackinlay of Richborough (Con)]

I listened carefully to what the Minister had to say; I thought he was on a good track for a while but he finished rather poorly.

I am grateful for the very sensible words from my noble friend Lady Neville-Rolfe, who understood the situation completely and absolutely, and for the comments of the noble Baroness, Lady Kramer. If people actually listen to what happens in this Committee—I am sure the audience is fairly skinny—I will give a word of advice to them that is exactly on the tack of the comments of the noble Baroness, Lady Kramer. It is not a problem of a multitude of nationalities that might exist. I recommend to anybody who is getting a little older to make their affairs that little bit simpler, so that, once they depart, they are easier to unwind.

I will give your Lordships a very easy example—this is aimed at the point made by the noble Baroness, Lady Kramer. If one holds shares that are denominated in, say, Jersey—it is not uncommon, and there are listed shares on our stock exchange that are headquartered in an overseas territory, which is quite typically Jersey—one would then need to go through the whole probate procedure just for those Jersey-registered assets. There would be cost and aggravation, and my advice is to sell them.

I do not really have a criticism of HMRC, and I am sorry if my speech came across with any criticism. There are two systems. There are relevant assets, which are typically property that cannot be easily realisable into cash to pay IHT. The system has accepted that for many years, and one can pay the tax due on those types of not easily realisable assets such as property or land over 10 instalments over 10 years ahead. But the 7.75% interest applies, so most executors—I am particularly thinking about the beneficiary—would like to clear the inheritance tax as quickly as they possibly can, because 7.75% is not a good deal in terms of an interest payment. That has been flexed for the BPR/APR assets that come in next year, of £2.5 million each, where the 10-year instalment plan will be interest-free. But the point is that the 7.75% interest rate makes it essential that people try to pay.

I do not accept the Minister’s observation that there is risk for the financial institution. In my experience over many years, I have found that 99% of institutions are happy to take that very small degree of risk, because the money will be residing in HMRC’s bank account, which is a safe place for money to reside. The risk is not just small but extremely small. If things have gone wrong, you just ask for it back, or somebody will, from HMRC. Given the speed of operation of HMRC, it might take quite some time to get the money back, but at least it is somewhere safe. So I do not accept the risk, because it is somewhere where there is no risk. It is unfortunate that this has fallen in a family issue, but M&G Prudential is the only institution that I have ever come across that simply says no.

Can the Minister go back to his officials and consider it further? I would be very pleased to meet him or his officials for blue-sky thinking about this. We have Report ahead of us. I am happy to withdraw my amendment.

Amendment 142B withdrawn.

Financial Services and Markets Bill [HL]

Lord Mackinlay of Richborough Excerpts

Report stage
Monday 7th September 2026 Lords Chamber

[Baroness Lawlor (Con)]

My Lords, I support my noble friend Lady Neville-Rolfe’s amendment, which would leave out Clause 3. I very much agree with the noble, Lord Vaux, and other noble Lords who have spoken.

I support these amendments on constitutional grounds, because of the importance of the separation of powers and the role of Parliament in checking executive power, as my noble friend Lord Massey mentioned. How can we hold the Government to account if we have no knowledge of the powers proposed? Clause 3 allows the Treasury the power to make any regulations it considers appropriate. We have no knowledge of what they are. Clause 3 also gives the Treasury power to delegate powers to the FCA. It allows the FCA to “make rules”,

“amend an Act of Parliament”

or

“make different provision for different purposes”.

There are many concerns about the regulators. I will mention two. First, the regulators do not supervise or explore predictably in accordance with their own rules. You will find different interpretations given to their rules in their rulings. We must ensure that their decisions are consistent between firms which operate businesses of similar sizes. Secondly, formal decisions by the regulators do not necessarily include sufficient explanation to serve as precedents to allow the application of the relevant rules.

I am very pleased to welcome the Minister to the Front Bench and to say how much we miss the noble Lord, Lord Stockwood, but I wish the Minister well. It is on constitutional grounds that I ask him to think very carefully about these amendments.

[Lord Mackinlay of Richborough (Con)]

My Lords, I will say a couple of words on Amendment 10 in the name of my noble friend Lady Neville-Rolfe, which I fully support. The phrase:

“The Treasury may by regulations make such provision as they consider appropriate in connection with providing access to banking services”,


is not just wide; it is ocean-wide. It is far too wide, and it is without parliamentary consent or any investigation as to what our democratic processes consider to be the right level of banking services and access to banking across this country.

I will also say a few words on Amendment 8. I am very pleased that the noble Baroness, Lady Hoey, spoke about the Post Office. When I was a constituency MP, I faced—as anyone who lives in any part of this country faced—the closure of banking services, which always caused concern, particularly to older residents. I purposely kept my father, now deceased, away from digital banking because of the risk of scams and of those dodgy emails coming in. He was of perfectly sound mind and very capable, but he perhaps was not as scam aware as younger people are, so I wanted him a long way away from digital banking services—and why should he not stay away from digital banking services?

We were always told by the banks that were closing, “Fear not: we have a Post Office network for all that your constituents and customers need to do in terms of access to cash, banking cheques and that more standard stuff”. I do not know about other noble Lords, but I use digital banking—of course I do. However, when faced with cheques, which are a little bit rarer these days than they used to be, I struggle—for obvious reasons—to hold the camera and go up a bit, left a bit, right a bit, down a bit, get told, “It’s not all in the picture yet”, and press the button. I am sure we all share that frustration. Let me leave your Lordships with this about the Post Office: it is not the panacea of everything. Over the last few months, Lloyds Bank has stopped the use of Post Office services to its customers. I do not know why. This is a two-way street: at the banks’ discretion, they can have a relationship with the Post Office or not. For reasons known only to itself, Lloyds has decided not to use the services of the Post Office. For those reasons, I sympathise massively with the noble Lord, Lord Vaux, who now has to make a 100-mile round trip to a bank. No doubt there is a post office nearer than that, but if you are a Lloyds customer, hard luck: 100 miles.

This is not about the quantity and texture of tomato sauce in a can of beans, which might lead to officials and statutory instruments; these are fundamentals of life that everybody faces on a daily basis. To allow the extent of this power is a power too far. We see far too much Henry VIII in all legislation, not just from this Government but from the Government I was with over the years. There has been a temptation for this creep to happen, and it must not enter the Bill.

[Baroness Neville-Rolfe (Con)]

My Lords, I thank the noble Baroness, Lady Hoey, and my noble friends Lord Holmes and Lord Mackinlay, for reminding us of the value of post offices and the importance of banking hubs, especially in this ever-expanding digital world. There are serious issues here across the country.

I will speak to my Amendment 10, which would do a very simple thing: remove Clause 3 from the Bill. My argument for it is equally simple: Clause 3 contains no detail about what the Government intend to do. Instead, as the noble Baroness, Lady Kramer, explained, it grants Ministers extraordinarily broad powers, including the power to amend primary legislation on access to banking.

Once the Richard Lloyd review has concluded, the Government may legislate for whatever they subsequently decide is necessary. That could include anything on banking services, with huge implications for consumers, banks, other financial services and the high street. As the noble Lord, Lord Vaux, said, the Government will have the power to amend any Act of Parliament. That is a huge power grab by the Treasury and a very significant delegation of power to ask Parliament to approve in advance. We do not know what problems these powers will ultimately be used to address, what regulations the Government envisage making, or which Acts of Parliament they wish to amend. Yet Parliament is nevertheless now being asked to hand over the power to do all these things.

We should be very cautious about giving any Government powers of this breadth on the basis that they will decide later, in good faith, how they wish to use them. Parliament should not be asked to give Ministers carte blanche, particularly where the powers include the ability to amend primary legislation with minimal parliamentary scrutiny. That would set a terrible precedent.

The right course is straightforward: Clause 3 should come out. Once the Government have completed the review of access to banking and know what they wish to do, they can return to Parliament with legislation setting out the policy, the powers required to deliver it and the appropriate safeguards.

I am very grateful to the noble Baronesses, Lady Kramer and Lady Altmann, the noble Lord, Lord Vaux, and my noble friends Lord Massey, Lord Mackinlay and Lady Lawlor for supporting this amendment. The Minister has a problem: we have a lot of concern across this House, not only among those engaged on the Bill. The amendment reflects the concerns of the Secondary Legislation Scrutiny Committee, with its very expert membership. The committee has also advised that Clause 3 be removed; I say to the Minister that that is usually a killer argument. For these reasons, I do not believe that Clause 3 can remain in the Bill. When Amendment 10 is called, I intend to test the opinion of the House.

--- Later in debate ---

[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to speak in this group and, indeed, to follow the noble Baroness, Lady Kramer. There is a thread which unites all the amendments in this group: they all make sense, they are all clear and the Government should accept them.

Before I talk about the amendments in my name and the ones I have signed, I echo the points made by the noble Baroness, Lady Kramer, around child trust funds and follow her in acknowledging the great work that the noble Lords, Lord Blunkett and Lord Young of Cookham, in particular have done for years on this issue. The words of the noble Lord, Lord Blunkett, are particularly pertinent to this point. He was the Minister in charge at the time, in a Labour Government, and he has said things on numerous occasions in this House along the lines that this was never the intention. If this was never intended government policy from a Labour Government, then we now have a Labour Government. Would this not be the ideal opportunity to stop this being government policy and to make the changes set out in this amendment—and, if not to make the changes along the lines of these words, for the department to come up with some words of its own to make this change?

A review is not the solution. We know the issues; they have been well set out over years. We have the opportunity, with this Bill, to resolve the issue and to make such a difference, not just to the 80,000 or so individuals who have those trust funds but to the hundreds of thousands of family members, friends and communities who are adversely affected by this current position for want of government action, which could make this change and, through that, make such a difference.

I turn to my amendments on financial inclusion and the role of the various regulators. The regulators have a lot of obligations put upon them. I suggest just this: how can we have, in the United Kingdom, a financial services regulator which does not have clear responsibility for financial inclusion and a clear obligation to report on what it has done to advance it, specifying in detail all those affected? Financial inclusion—and, indeed, the adverse, financial exclusion—is not just a matter of the same people having the same effects and suffering the same exclusion. It is specific to older people, to disabled people, to those in certain socioeconomic groups and to those in certain geographies. Specific solutions and a strategy which incorporates all that and puts it into an operational road map are required if we are to get behind solving financial inclusion.

We have a Financial Stability Board, but I argue that you cannot have financial stability if you do not have effective, sustainable financial inclusion. It may not be measured, because the adverse impacts are often in other government departments and other parts of the state. But be in no doubt: when you gross up all the costs, implications and consequences of financial exclusion, that is financial instability, not just for individuals but for communities and for our country.

The financial regulators, among others, should take a leading role to get after this pernicious problem of financial exclusion, which has dogged our society for decades, blighted lives, impacted individuals and had an impact, when all put together, on what the Government constantly—and rightly—go on about in terms of growth. Well, if they want growth then financially including individuals right across this country would be a fine place to start.

[Lord Mackinlay of Richborough (Con)]

My Lords, I have only put forward one amendment to this entire Bill, Amendment 70. I spoke at great length in Committee and highlighted then, as I will highlight now, that I am a chartered accountant and chartered tax adviser, and have conducted probate work over many years.

Let us just lay out a little the framework of where we got to in the provision of IHT423, because it will not be familiar to everyone in this House, I am sure. The IHT423 arrangement was first rolled out in 2003 and applied only to banks and building societies, or cash-based liquid accounts. It allowed for the breaking of the Catch-22 situation which executors find themselves in when they administer an estate. An estate is often in two parts, one of which is called the free estate, which is your cash and liquid investments. The IHT on that has to be paid six months after the end of the month of death. The other part of the estate is property and often unquoted securities, where there is a non-liquid market; an instalment basis can apply over 10 years. Given that the new rate of IHT interest chargeable on unpaid tax, following Rachel Reeves’s first Budget, is now 4% above base, so currently 7.75%, then no matter whether it is free estate, payable immediately, or part of the estate that can be paid over 10 years, given the 7.75% interest rate, which is truly penal, most executors would like to pay the tax as soon as they possibly can, and certainly by the due date of six months after the date of death.

In the old days, the IHT423 procedure, which is a means by which a financial institution can release funds before probate, was working, because very few estates were hit by IHT. But because of fiscal drag—I will admit as much as anybody else that a lot of it occurred over our Government—the levels of free amounts for IHT have remained unchanged since 2009, which has meant that more and more estates are dragged into the IHT pot. So the IHT423 arrangement, of getting funds out of an estate before probate can be obtained—as I say, a Catch-22 of chasing one’s tail of having to pay the tax before probate can be obtained—was widened to any types of investment. That was negotiated by HMRC in 2024, so fairly recently, in recognition of the huge number of estates that now face IHT.