UK Debt Management Office: Business Plan
Harriett Baldwin Excerpts(8 years, 4 months ago)
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Harriett Baldwin
The United Kingdom Debt Management Office (DMO) has today published its business plan for the year 2016-17. Copies have been deposited in the Libraries of both Houses and are available on the DMO’s website: www.dmo.gov.uk.
[HCWS71]
Bank Branch Closures
Harriett Baldwin Excerpts(8 years, 4 months ago)
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The Economic Secretary to the Treasury (Harriett Baldwin)
It is a great pleasure to be able to respond on the Government’s behalf to this really excellent debate. I congratulate the hon. Members for City of Chester (Christian Matheson) and for Ceredigion (Mr Williams) and my hon. Friend the Member for Wells (James Heappey) on securing it, and thank them for giving me the opportunity to update the House on what is going on in this area. I also thank the Backbench Business Committee for scheduling such an interesting debate on a Thursday afternoon. I also thank the hon. Member for Hayes and Harlington (John McDonnell). It is a great honour for me to have the shadow Chancellor respond to the debate. He only lost one member of his team during it, so congratulations to him.
I need to start with a confession. I am a rural Member of Parliament. I spend four days a week up here in London. If I think about it, I actually cannot remember when I last went into a bank branch. I have been to the cashpoint, here and in my constituency, but I also ask myself when, these days, do I even use cash? The only place seems to be in the House of Commons Tea Room. I understand contactless is coming there soon, so where will we all be then?
Customer behaviour is clearly changing. The number of times that we all use a branch in any given year has dropped almost 30%. The most recent data that I have from the BBA show that branch transactions have fallen to 270 million branch customer contacts in 2016. If my maths is right, that is an average of four per year.
Kirsten Oswald
Does the Minister accept that some of the downturn in customer bank transactions is because bank branches have closed?
Harriett Baldwin
The hon. Lady is right to ask that question, but if customers were surging into branches and transacting valuable business, the banks would not be being as radical as they are.
Harriett Baldwin
A lot of Members will want to intervene. I have a lot of ground to cover and only seven minutes in which to cover it, so I will give way only very briefly.
Albert Owen
I am very grateful. I encourage the Minister to go to her local banks and talk to the staff. Their opinions have not really been voiced here today. They are the frontline of the banking industry and quite often we do not hear from them. It is because of reduced hours that she and I have limited time to go into our banks, but I do go in every Friday morning.
Harriett Baldwin
The hon. Gentleman is right to pay tribute to the wonderful staff up and down the land who staff our bank branches. The older members of our communities really value that interaction. It can be very important in protecting them against some of the online fraud, which, we have to acknowledge, targets older customers.
It is clear from the points raised today, and from the regular discussions I have with Members, that we are all in agreement that bank branches are an important part of the solution when it comes to access to finance for our local communities. It is one of my top priorities as Economic Secretary to ensure that financial services work for everyone and that they are on the side of people who want to work hard, do the right thing and get on in life. Having a good branch network is part of that. The role of banks in society is essential. I am glad that that has been acknowledged today.
In the interests of time, I want to just highlight some of the issues raised in the debate. First, in the past year we have made significant progress on access to banking services by improving access to the basic bank account. Many more banks now offer that. We have also reduced the practice of charging for failed payments, which was unacceptable. The industry has moved forward on that. I pay tribute to the hon. Member for Walthamstow (Stella Creasy). She has not participated in this debate, but she made such an impact in terms of bringing payday lending under the regulation of the FCA and the progress we are making on that. There has been much discussion about the access to banking protocol.
Chris Evans
Does the Minister know of my interest in real-time credit scoring? Has she had a chance to look at that?
Harriett Baldwin
The hon. Gentleman knows that that is worth a whole Adjournment debate in itself, so I will talk about the access to banking protocol instead.
The protocol means that when a bank decides to close a branch it must think carefully about the consequences of doing so, particularly when it is the last bank in town. We have heard today—this debate is timely—that Professor Russel Griggs has been appointed by the BBA to review how it has been working in its first year. All the points raised by Members will be excellent submissions to that review. I hope he will take the opportunity to meet hon. Members to hear at first-hand the feedback on the independent review of the protocol. I would like practical recommendations to come out of the review on how we can move forward. I think we all recognise there will be an ongoing review by banks on how they can best use their branches.
Mr Gareth Thomas
The Minister has a reputation for being one of the most reasonable of her colleagues on the Government Front Bench. Is she willing to receive a deputation from the people in the credit union and the responsible finance industry to see what else might be possible to help them to grow?
Harriett Baldwin
I am glad to confirm that all the occupants of the Government Front Bench are entirely reasonable and sane. I regularly meet members of the credit union industry. The hon. Gentleman’s point brings me on to credit unions specifically.
We think that credit unions are very much worth backing. As the hon. Gentleman will know, we have put a great deal of money into improving their technology. One of the challenges they have is scale: the smallness of some credit unions means that they need a communal IT platform. We have subsidised that to the tune of £38 million. I also want to highlight to the House that we have, in the past few days, launched a consultation—people may have missed it, with all the other news that has been coming out—on how the Help to Save product will work. I encourage credit unions to come forward with proposals on how they could be a part of this really important saving product.
Many Members have alluded to the important role that the post office network can play in solving this problem. As we know, this Government, like the last one, have committed to subsidising the network and making it viable. I dispute what the hon. Member for Ynys Môn (Albert Owen) said about the network having fallen from 11,900. The figure has stayed above 11,500—just over 11,600, I think—so there has been a small decline, but not the precipitous decline we saw when Labour was in government. Post offices are an important part of the solution. For example, the network’s opening hours have increased by nearly 200,000 as a result of the modernisation process.
Members have mentioned the importance of mobile phone signals, digital connectivity and our commitment on universal access. Those things are also an important part of the solution. Moreover, we currently have a record number of free-to-use ATMs in this country—about 45,000—and there is a commitment from the LINK network to continue expanding their number, particularly into harder-to-reach communities.
We have heard powerful and passionate contributions from the right hon. Member for Tottenham (Mr Lammy), my hon. Friend the Member for Brecon and Radnorshire (Chris Davies) and the hon. Members for Clwyd South (Susan Elan Jones) and for Harrow West (Mr Thomas), the last of whom talked about the affordable credit sector and the help we are giving to the mutuals sector. We have also talked about lending to small and medium-sized enterprises and the importance of the community finance network, which I know from my own constituency is very important. There are also now other platforms through which small businesses can access finance, such as peer-to-peer platforms and so on.
I do not have time to make all my points, but my door is open. We all aspire to ensure that as we go through this evolution we maintain good access to finance for everybody. Healthy competition is also important. The new starter banks—five have got a banking licence in this Parliament so far—are an important part of the solution, as too is the way firms are adapting branches to use technology to provide more services. I have run out of time—I want to hand over to the hon. Member for City of Chester to conclude—but this has been a very important and well-timed debate.
Finance Bill
Harriett Baldwin Excerpts(8 years, 4 months ago)
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The Economic Secretary to the Treasury (Harriett Baldwin)
Clause 129 increases the standard rate of insurance premium tax from 9.5% to 10% to raise revenue to invest in flood defence and flood resilience.
Insurance premium tax is due on general insurance premiums related to risks located in the UK regardless of where the insurer is based. It is charged as a percentage of the gross premium that an insurer charges, including any broker commissions and other directly related costs—so it is a charge on the insurer, not on the individual.
Insurance premium tax is due on general insurance, which accounts for approximately 20% of total insurance premiums. General insurance includes motor insurance, home insurance, employers’ liability insurance and medical insurance. Approximately 80% of insurance premiums are exempt from insurance premium tax. Exempt insurance includes long-term insurance such as life insurance and critical illness cover. Long-term insurance products are exempt from insurance premium tax to avoid creating a distortion between savings products and long-term insurance products, which can serve the same purpose for consumers. Reinsurance is also exempt to avoid double taxation.
Harriett Baldwin
I know the Opposition are having a hard time being an Opposition at the moment, but it can only be left to the imagination how hard they might find some of the difficult choices people have to make in government. We all agree that flood defence spending is an incredibly important part of what we need to do to help our communities. The hon. Member for Leeds East (Richard Burgon) is a Leeds MP, so I would have liked more of a welcome from him for the millions of pounds of additional funding this measure will give fund flood defences in his constituency. I, too, represent a very flood-prone area, with it containing the confluence of the Rivers Severn, Avon and Teme, and nobody in government argues for more money for flood defences more than I do. It is very important that we continue to find ways to make our country more resilient to what will occur on unpredictable occasions when we have the kind of weather that we had last winter.
The hon. Member for Aberdeen North (Kirsty Blackman) was right to point out the importance of flood defence spending. She was concerned about the fact that this Budget raises IPT by 0.5% and asked whether it was our policy to make any further changes to IPT. On that, I will have to give her the standard Treasury Minister answer, which she can probably guess: the Government keep all taxes under review. As others have pointed out, this 0.5% increase is considerably less than was feared at the time of the Budget announcements.
In terms of the availability of flood insurance for homeowners, the Flood Re initiative has been very helpful and beneficial in making sure that homeowners who perhaps in the past found it difficult to access affordable flood insurance are able to continue to access that. That has been very widely welcomed by those homeowners across the country, and I can certainly say in terms of my constituency experience that it is important that people shop around. If their existing insurer is causing difficulties in terms of price changes, it is worth getting in touch with the excellent British Insurance Brokers Association, who can be very helpful in terms of alternatives.
The hon. Member for Leeds East asked about hypothecation and about rate increases. We need to keep this in perspective. Although I welcome the Labour party’s sudden welcoming of lower taxes—something I hope all parties can subscribe to—we do need to raise tax revenues. The hon. Gentleman asked what this will actually cost. For average annual combined contents and buildings insurance, this would add just £1 to the annual bills, or 2p a week. For the average motor insurance premium, it will add just £2 a year or 4p a week. Just going from one petrol station to a slightly better value petrol station can save considerably more than that, which puts this measure into perspective.
I cannot imagine that there is anything more exciting to watch on television at the moment than this debate, but if there is, it may explain why the Chamber is not particularly vigorously attended. However, with those points answered, and given that the link we have made—rather than the explicit hypothecation—means that these measures have been pretty widely welcomed by all commentators, without any further ado, given rival attractions on television, I would like to commend this clause to the House.
Question put and agreed to.
Clause 129 accordingly ordered to stand part of the Bill.
To report progress and ask leave to sit again.—(Margot James.)
The Deputy Speaker resumed the Chair.
Progress reported; Committee to sit again tomorrow.
Draft Building Societies (Floating Charges and Other Provisions) order 2016
Harriett Baldwin Excerpts(8 years, 4 months ago)
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The Economic Secretary to the Treasury (Harriett Baldwin)
I beg to move,
That the Committee has considered the draft Building Societies (Floating Charges and Other Provisions) Order 2016.
It is a pleasure to serve under your chairmanship, Ms Buck. We all want to see a healthy and competitive banking sector that delivers for consumers. For many years now, building societies have been strong competitors to the major banks, particularly in the mortgage market, and we want to see that kind of competition not only continue but grow further. In 2012, the Government launched a consultation to look at how we could level the playing field between banks and building societies. We wanted to maintain the distinctiveness of the building society sector but remove any unnecessary barriers that were getting in the way of their success. One key thing that building societies told us was that they found it difficult to compete because, unlike banks, they could only create fixed charges over their assets and not floating charges.
It may be helpful at this point if I explain briefly what floating charges are and how they are used. In short, they are securities over an undefined set of assets—for example, a building society’s mortgage book—that fluctuates in the course of business. That is in contrast with a fixed charge, which is over a fixed, defined asset such as a building or a specified set of loans. Floating charges allow financial institutions to borrow money and use their mortgage book as collateral, while still being able to exchange and dispose of any individual mortgages during normal trading activity. However, the Building Societies Act 1986 created a restriction that building societies could not use such charges. Banks therefore denied building societies access to certain transactions, because of the risk that a court could ultimately reclassify a fixed charge on a building society’s assets to a floating charge and make the security void.
Secured funding is an accepted and flexible funding tool that is far more commonplace and necessary now than when the restriction was introduced. That is why the Government made an order last year under the Financial Services (Banking Reform) Act 2013 that repealed the restriction and allowed building societies to create floating charges. Initial estimates indicate that the change will save the sector around £2 million a year by allowing building societies to enter into such transactions with banks.
The draft order will make further provisions in relation to the repeal of the floating charges restriction. It will amend the Building Societies Act to apply companies insolvency legislation if the building society were to go into receivership. Therefore, in the unlikely event that it becomes necessary to enforce the security, a floating charge holder can appoint a receiver to enforce the terms of a floating charge. The draft order is uncontroversial, and it will help to provide legal certainty and ensure the effectiveness of the repeal of the restriction made last year.
The draft order proposes a technical change that will allow us to continue our work to support building societies by allowing them to compete with banks on a level playing field. That will be not only good for the market by helping to boost competition, but help to create better products and services for the people who use them. I therefore commend the draft order to the Committee.
Harriett Baldwin
I congratulate the hon. Member for Salford and Eccles on the expertise with which she addressed the draft order. I do not know whether hers is a permanent or temporary substitution on the Opposition Front Bench, but she has acquitted herself with great excellence, and I am glad that her colleague from the Whips Office, the right hon. Member for Tynemouth, is here to observe her. I welcome her support for the measure and her enthusiasm for potential further deregulation in the building society sector.
The hon. Lady is absolutely right that we put competition in the banking sector right at the heart of what we are trying to do. I welcome the fact that eight new banking licences were awarded in the UK in the last Parliament and that five have been awarded so far in this Parliament. The Prudential Regulation Authority has set up a new bank unit, which might welcome—although this is unlikely—new building societies to the fold. Competition is something that we think is helpful and beneficial for consumers, and something that we back wholeheartedly. We, too, are looking forward to the final report from the CMA later this year and its recommendations.
One thing I will share with the hon. Lady is that, when bringing such measures to a Committee of the House, I try to bunch them together as much as possible, so it is perhaps unfortunate that we have such a short discussion today. She asked about deceased investors in building societies. She is right that representations have been made and are being considered by the Treasury on that matter. She is also right that further representations have been made about some of the reporting requirements. It is incumbent on us, as we have done in this instance, always to look for opportunities to simplify or clarify regulations on behalf of the sector.
In the interests of potentially beating the record for the length of consideration of such a technical change, I commend the draft order to the Committee and hope that it will be widely welcomed and accepted.
Question put and agreed to.
Oral Answers to Questions
Harriett Baldwin Excerpts(8 years, 5 months ago)
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Alan Brown (Kilmarnock and Loudoun) (SNP)
7. What steps he is taking to increase exports.
The Economic Secretary to the Treasury (Harriett Baldwin)
Over the last six years, UK Trade & Investment has more than doubled the number of businesses that it helps. It now aims to help a further 100,000 firms to export by 2020.
Alan Brown
I thank the Minister for her answer, but it did not make it clear what is actually being done to increase exports. The Chancellor promised that his growth strategy would be underpinned by a doubling of exports to £1 trillion by the end of the decade, but to date his targets have been missed, and the export figures are moving in the wrong direction. What will the Government do to turn that dire performance around?
Harriett Baldwin
My right hon. Friend the Chancellor mentioned earlier the important work that UKTI is doing in not only promoting the Exporting is GREAT brand around the world, but, now—across the whole Government—encouraging all our embassies around the world to focus their resources on increasing the potential opportunities for our world-class exporters.
Sir Henry Bellingham (North West Norfolk) (Con)
22. Is the Minister aware that more than 25% of small businesses in France and Germany export, whereas the figure in the United Kingdom is about 20%? Does she agree that not just UKTI, but chambers of trade and business organisations such as the Federation of Small Businesses, can play a role in encouraging more small firms, in particular, to export?
Harriett Baldwin
My hon. Friend is absolutely right that there is an important role to be played by not only our embassy network, but our chambers of commerce and the Federation of Small Businesses. I also welcome the fact that some of our larger banks have also set themselves targets for getting additional customers to start to export during the next five years.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Is the Minister aware that Huddersfield and Yorkshire are already a northern powerhouse in terms of manufacturing and the quality of partnership with universities? Is she aware that my universities in Yorkshire and the manufacturing sector are terrified that we will leave the European Union? It will bankrupt the universities and the manufacturing sector.
Harriett Baldwin
The hon. Gentleman is absolutely right to highlight the fact that the UK’s universities are unanimous in expressing the value that they put not only on higher education, but on the potential for those educated in universities to export in due course. He is absolutely right to highlight the fact that all other trade deals would be worse than the current zero-tariff trade deal that we have as a member of the EU.
Clive Lewis (Norwich South) (Lab)
8. What assessment he has made of which groups within the UK population will benefit from planned changes to (a) capital gains and (b) corporation tax.
Bob Blackman (Harrow East) (Con)
T6. I note that the Government will publish a report on the progress of payments to Equitable Life policyholders who are victims of the great scam, and I congratulate the Government on the progress that has been made to compensate those individuals. Will my right hon. Friend undertake to review the amount of money paid to victims of the scam so that we can fulfil the debt of honour that we owe them?
The Economic Secretary to the Treasury (Harriett Baldwin)
I can announce that although the Equitable Life payment scheme is now closed to new claims, payments being made under the scheme to with-profit annuitants are not only tax free but will continue for the life of the relevant annuity.
Steven Paterson (Stirling) (SNP)
T8. June’s OECD economic outlook revised down its prediction for UK GDP growth. This latest fall arises in the aftermath of the International Monetary Fund’s health check of the UK economy, which concluded that GDP growth was also paltry. When will the Chancellor listen to the experts and offer much-needed investment instead of ideologically driven austerity?
Harriett Baldwin
I hope that my hon. Friend has experienced only the ambulance chasers, not the whiplash. He is right to highlight the cost that this puts on motorists, which we estimate is about £90 a year for every motorist in the country. That is why we have already taken steps to reform this area. Last year in the autumn statement we announced further reforms, which will remove the right to cash compensation for minor whiplash injuries, while ensuring that genuine claimants are rehabilitated.
Greg Mulholland (Leeds North West) (LD)
Genuine tax avoidance must be tackled, but HMRC pursuing people who invested legally in schemes, not to avoid tax, and who are now being hit with accelerated payments, is an affront to natural justice, treating them as guilty until proved innocent. Will the Chancellor meet me and a group of people who are seriously detrimentally affected by this?
Harriett Baldwin
I welcome this question because our financial services sector is not only our highest-paid sector, but the one with the widest gender pay gap. That is why we launched the Women in Finance charter, and we are asking all financial services firms to implement the recommendations in the excellent review by Jayne-Anne Gadhia, the chief executive of Virgin Money, on the representation, or rather the under-representation, of senior women in financial services.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
The Government have made significant public spending cuts affecting disabled people, including nearly £30 billion of cuts in social security to 3.7 million disabled people. Given that disabled people are twice as likely as the general population to be living in poverty, how many more disabled people will be living in poverty by 2020?
Counter-terrorist Asset-freezing Regime
Harriett Baldwin Excerpts(8 years, 5 months ago)
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The Economic Secretary to the Treasury (Harriett Baldwin)
Under the Terrorist Asset-Freezing etc. Act 2010 (TAFA 2010), the Treasury is required to report to Parliament, quarterly, on its operation of the UK’s asset-freezing regime mandated by UN Security Council Resolution 1373.
This is the 18th report under the Act and it covers the period from 1 January 2016 to 31 March 2016.1This report also covers the UK implementation of the UN ISIL (Daesh) and al-Qaida organisations asset-freezing regime (ISIL-AQ) and the operation of the EU asset-freezing regime in the UK under EU regulation (EC) 2580/2001 which implements UNSCR 1373 against external terrorist threats to the EU. Under the ISIL-AQ asset-freezing regime, the UN has responsibility for designations and the Treasury has responsibility for licensing and compliance with the regime in the UK under the al-Qaida (Asset-Freezing) Regulations 2011. Under EU Regulation 2580/2001, the EU has responsibility for designations and the Treasury has responsibility for licensing and compliance with the regime in the UK under part 1 of TAFA 2010.
Annexes A and B to this statement provide a breakdown, by name, of all those designated by the UK and the EU in pursuance of UN Security Council resolution 1373. The one individual subject to a designation, which has been notified on a restricted and confidential basis, under sections 3 and 10 of TAFA 2010 is denoted by “A”.
The table attached sets out the key asset-freezing activity in the UK during the quarter ending 31 March 2016.
Legal Proceedings
Moazzem Begg, who was previously designated under TAFA 2010, lodged an appeal on 3 November 2014, challenging the Treasury’s decision to revoke rather than quash his designation. These proceedings were ongoing during the reporting period.
One individual, C, designated under TAFA 2010, lodged an appeal against his designation on the 26 May 2015. These proceedings were ongoing during the reporting period.
Mohammed al Ghabra’s challenge of his listing under the EU ISIL (Daesh) and al-Qaida regulation was heard by the CJEU in February 2016. Judgment is to follow.
There were no criminal proceedings in respect of breaches of asset-freezes made under TAFA 2010, during the reporting period.
Annex A: Designated persons under TAFA 2010 by name2
Individuals
1. Hamed ABDOLLAHI
2. Imad Khalil AL-ALAMI
3. Abdelkarim Hussein AL-NASSER
4. Ibrahim Salih AL-YACOUB
5. Manssor ARBABSIAR
6. Usama HAMDAN
7. Nur Idiris HASSAN NUR
8. Nabeel HUSSAIN
9. Hasan IZZ-AL-DIN
10. Mohammed KHALED
11. Parviz KHAN
12. Musa Abu MARZOUK
13. Khalid MISHAAL
14. Khalid Shaikh MOHAMMED
15. Abdul Reza SHAHLAI
16. Ali Gholam SHAKURI
17. Qasem SOLEIMANI
18. A (restricted designation)
Entities
1. Basque Fatherland and Liberty (ETA)
2. Ejército de Liberación Nacional (ELN)
3. Fuerzas armadas revolucionarias de Colombia (FARC)
4. Hizballah Military Wing, including external security organisation
5. Popular Front for the Liberation of PALESTINE—General Command (PFLP- GC)
6. Popular Front for the Liberation of Palestine— (PFLP)
7. Sendero Luminoso (SL)
Annex B: Persons designated by the EU under Council Regulation (EC)2580/20013
Persons
1. Hamed ABDOLLAHI*
2. Abdelkarim Hussein AL-NASSER*
3. Ibrahim Salih AL YACOUB*
4. Manssor ARBABSIAR*
5. Mohammed BOUYERI
6. Hasan IZZ-AL-DIN*
7. Khalid Shaikh MOHAMMED*
8. Abdul Reza SHAHLAI*
9. Ali Gholam SHAKURI*
10. Qasem SOLEIMANI*
Groups and entities
1. Bu Nidal Organisation (ANO)
2. Al-Aqsa E.V.
3. Al-Aqsa Martyrs’ Brigade
4. Babbar Khalsa
5. Communist Party of the Philippines, including New People’s Army (NPA), Philippines
6. Devrimci Halk Kurtulu Partisi-Cephesi—DHKP/C (Revolutionary People’s Liberation Army/Front/Party)
7. Ejército de Liberación Nacional (National Liberation Army)*
8. Fuerzas armadas revolucionarias de Colombia (FARC)*
9. Gama’a al-Islamiyya (a.k.a. Al-Gama’a al-Islamiyya) (Islamic group—IG)
10. Hamas, including Hamas-Izz al-Din al-Qassem
11. Hizballah military wing, including external security organisation
12. Hizbul Mujahideen (HM)
13. Hofstadgroep
14. International Sikh Youth Federation (ISYF)
15. Islami Büyük Dogu Akincilar Cephesi (IBDA-C) (Great Islamic Eastern Warriors Front)
16. Khalistan Zindabad Force (KZF)
17. Kurdistan Workers Party (PKK) (a.k.a. KONGRA-GEL)
18. Liberation Tigers of Tamil Eelam (LTTE)
19. Palestinian Islamic Jihad (PIJ)
20. Popular Front For The Liberation of Palestine—General Command (PFLP-GC)*
21. Popular Front For The Liberation of Palestine— (PFLP)*
22. Sendero Luminoso (SL) (Shining Path)*
23. Teyrbazen Azadiya Kurdistan (TAK)
1 These figures are correct as at 30 September 2015
2 For full listing details please refer to: https://www.gov.uk/government/publications/current-list-of-designated-persons-terrorism-and-terrorist-financing
3 For full listing details please refer to: www.gov.uk
* EU listing rests on UK designation under TAFA 2010
[HCWS26]
Insurance Fraud Taskforce
Harriett Baldwin Excerpts(8 years, 5 months ago)
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The Economic Secretary to the Treasury (Harriett Baldwin)
The Insurance Fraud Taskforce was established as an independent body by HM Treasury and the Ministry of Justice in January 2015 in order,
“to investigate the causes of fraudulent behaviour and recommend solutions to reduce the level of insurance fraud in order to ultimately lower costs and protect the interests of honest consumers”.
The final report of the Insurance Fraud Taskforce published on 18 January 2016 made 26 recommendations to tackle fraudulent activity ranging from organised or premeditated crime to opportunistic fraud. It is available at https://www.gov.uk/government/publications/ insurance-fraud-taskforce-final-report.
The Minister of State for Civil Justice (Lord Faulks) and I are very grateful for the work of the taskforce members, and to all those who contributed to it. We are particularly grateful to David Hertzell for his efficient stewardship of the taskforce.
The report highlighted the particular problem of fraud in relation to low value personal injury claims and the Government have established a programme of reforms in this area, particularly in respect of whiplash claims. We are pleased that the report’s recommendations reflect and support that reform programme. The Government accept each of the recommendations addressed to it and we will set out in due course how we propose to implement them. However, there needs to be a concerted effort by all those involved in the insurance process to tackle this serious problem, which is estimated to cost policyholders up to £50 each per year, and the country more than £3 billion. We therefore expect organisations tasked with taking forward recommendations to do so with urgency. The Government will do what they can to assist and, in order to make sure that all of the recommendations are actively pursued, we will seek an update on progress later in the year.
[HCWS28]
Office of Financial Sanctions Implementations
Harriett Baldwin Excerpts(8 years, 5 months ago)
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The Economic Secretary to the Treasury (Harriett Baldwin)
At the summer Budget the Chancellor announced that HM Treasury will establish the Office of Financial Sanctions Implementation (OFSI) before the end of the financial year to support the UK’s foreign policy and national security goals and help maintain the integrity of and confidence in the UK financial services sector. The OFSI was established on 31 March 2016 within HM Treasury. Its principle aims are to:
increase awareness of and compliance with financial sanctions;
ensure that sanctions breaches are rapidly detected and effectively addressed; and
provide a professional service to the public and industry on financial sanctions issues.
The Treasury, through OFSI, will continue to be the UK’s competent authority for the implementation of financial sanctions, and Treasury ministers will continue to be responsible for licencing decisions and designations under UK sanctions legislation.
[HCWS723]
Financial Services Update
Harriett Baldwin Excerpts(8 years, 6 months ago)
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The Economic Secretary to the Treasury (Harriett Baldwin)
I can today confirm that I have laid a Treasury Minute informing the House of the sale of NRAM plc to Cerberus, and the replacement of NRAM plc on the Government’s balance sheet by a new company, NRAM (No.1) Limited (“StayCo”), which will continue to wind down the remaining legacy assets of the former Northern Rock.
The Treasury Minute concerns the transfer to StayCo of assets and liabilities of NRAM plc that were not included in the sale to Cerberus. The Government have also reissued, on a like-for-like basis, the guarantees for StayCo’s directors, replacing the previous arrangements for NRAM plc. StayCo is also taking on NRAM plc’s state aid commitments.
The Government have received the final £520 million from Cerberus as part of the conclusion of this sale. The Treasury’s contingent liabilities have also reduced by £1.6 billion as a result of the withdrawal of the Treasury’s undertaking to NRAM plc.
I will update the House of any further changes to NRAM (No.1) Limited as necessary.
[HCWS712]
Bank of England and Financial Services Bill [Lords]
Harriett Baldwin ExcerptsTuesday 19th April 2016
(8 years, 6 months ago)
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The Economic Secretary to the Treasury (Harriett Baldwin)
I beg to move, That the clause be read a Second time.
Madam Deputy Speaker (Mrs Eleanor Laing)
With this it will be convenient to discuss the following:
Amendment (a) to new clause 12, after paragraph 2A(1)(b) insert—
“(1A) If, before the term of office has begun, the Treasury Committee reports to the House that the appointment should not be confirmed, the Treasury shall not continue with the appointment unless the House of Commons resolves that the appointment should be confirmed.”
Amendment (b) to new clause 12, at end insert—
“In Schedule 1ZA to the Financial Services and Markets Act 2000, in paragraph 3(1), at the end insert “, except in the case of the chief executive of the FCA, who shall be appointed for a reappointable term of five years”.”
New clause 1—Chief Executive of the Financial Conduct Authority—
‘(1) Schedule 1ZA of the Financial Services and Markets Act 2000 is amended as follows.
(2) After paragraph 2(2) insert—
“(2A) The Treasury shall not appoint a chief executive without the consent of the Treasury Committee of the House of Commons.”
(3) After paragraph 4(1) insert—
“(1A) But a chief executive appointed under paragraph 2(2)(b) is not to be removed from office without the consent of the Treasury Committee of the House of Commons.”
(4) After paragraph 27 insert—
“References to Treasury Committee
28 (1) Any reference in this Schedule to the Treasury Committee of the House of Commons—
(a) if the name of that Committee is changed, is to be treated as a reference to that Committee by its new name, and
(b) if the functions of that Committee (or substantially corresponding functions) become functions of a different Committee of the House of Commons, is to be treated as a reference to the Committee by which those functions are exercisable.
(2) Any question arising under sub-paragraph (1) is to be determined by the Speaker of the House of Commons.””
New clause 2—Composition of the Court of Directors of the Bank of England—
“In making nominations to the Court of Directors of the Bank of England, the Chancellor of the Exchequer must have regard to the importance of ensuring a balanced representation from the nations and regions of the United Kingdom.”
New clause 3—Change in title of the Bank of England—
“The Bank of England shall be known as the Bank of England, Scotland, Wales and Northern Ireland; and any reference in any enactment to the Bank of England shall be taken as a reference to the Bank of England, Scotland, Wales and Northern Ireland.”
New clause 5—Sterling Central Bank—
“The Bank of England is renamed the Sterling Central Bank.”
This new clause would change the name of the Bank of England to reflect its position as the UK central bank and the UK’s shared currency.
New clause 6—Membership of the Monetary Policy Committee of the Bank of England—
“(1) Section 13 of the Bank of England Act 1998 is amended as follows.
(2) At the end of subsection 2(c), add “of whom one each must be nominated by the Scottish Government, the Welsh Assembly Government and the Northern Ireland Executive.”
This new clause seeks to ensure representation of the four nations of the United Kingdom on the Monetary Policy Committee.
New clause 7—Objectives of the Monetary Policy Committee—
“After subsection 11(a) of the Bank of England Act 1998 there is inserted—
“(b) maximum employment, and.””
This new clause would expand the mandated objectives of the Monetary Policy Committee to include maximum employment.
New clause 8—Bank of England Accountability and Devolved Legislatures—
“Within three months of the passing of this Act, the Chancellor of the Exchequer shall lay a report before both Houses of Parliament on the merits of ensuring that the members of the policy committees of the Bank of England, including the Governor, appear before the respective economy committees of the devolved legislatures of the UK at least once a year.”
New clause 13—Freedom of Information—
“(1) Schedule 1, Part VI to the Freedom of Information Act 2000 is amended as follows.
(2) In the entry relating to the Bank of England, leave out all the words after “England.””
Amendment 6, in clause 9, page 7, line 19, at end insert—
‘(6A) The Comptroller may enquire into the Bank’s success in achieving its stated policy objectives but shall not enquire into the desirability of such objectives having been set.
(6B) The Comptroller shall submit reports arising from the exercise of his powers under subsection (6A) to the Treasury Committee of the House of Commons (or any successor committee exercising the same or equivalent functions).
(6C) The Comptroller shall lay before Parliament, and publish, each report arising under subsection (6B) promptly unless, in the opinion of the Treasury Committee, publication of a particular report would be likely materially adversely to affect the stability or functioning of the UK’s financial or banking system.”
Amendment 7, in clause 11, page 12, line 2, at beginning insert
“Subject to section 7ZA(6A) of the Bank of England Act 1998,”
Government amendment 3.
Harriett Baldwin
I would like to start by emphasising that the Treasury Committee is an esteemed Committee of this House and provides exceptional scrutiny of the Government and their regulators. Through its programme of pre-commencement hearings, it questions appointees to several posts before they start work. After appointees have started, they can expect to appear regularly before the Committee, and the public can expect the Committee to hold appointees firmly to account.
The Government welcome that scrutiny of appointees—it is a critical democratic function. That is why we have tabled new clause 12 to ensure in statute that the Committee always has the chance to scrutinise a new Financial Conduct Authority chief executive before they start work.
Mark Field (Cities of London and Westminster) (Con)
Will this be setting a bit of a trend? For which other important posts—there will be a number of other important posts at not just regulators but other City institutions—does my hon. Friend think it would be appropriate for the Treasury Committee to have a similar approval process?
Harriett Baldwin
I am speaking very narrowly to new clause 12. I am sure the Treasury Committee and other Committees will look at the issue again. I expect it to be part of the ongoing discussions between Parliament and the Executive. However, I am speaking to the very narrow characteristics of new clause 12.
Since we tabled our new clause, there have been further discussions with the Chair of the Treasury Committee over its role in the appointment of FCA chief executives. I am pleased to announce that we have found a means of reinforcing its scrutiny role that goes further than the context of this Bill. Indeed, today the Chancellor has written to the Chair of the Treasury Committee, agreeing that the Government will make appointments to the role of chief executive of the FCA in such a way as to ensure that the Committee is able to hold a hearing before the appointment is formalised.
Helen Goodman (Bishop Auckland) (Lab)
Is the letter in the Vote Office if it has already been penned?
Harriett Baldwin
The letter is in my binder and I would be happy to read it out, provided that the Chair of the Committee does not object. I will ensure that a copy is put in the House of Commons Library, if that has not already happened. I am sure that the Chair of the hon. Lady’s Committee will be more than happy to share it with her. Would she like me to read the letter out in full?
Harriett Baldwin
By popular demand, this is what the letter states:
“Dear Andrew,
During the passage of the Bank of England and Financial Services Bill, we have considered the role of the Treasury Select Committee (TSC) in scrutinising the appointment of the Chief Executive of the Financial Conduct Authority (FCA).
This scrutiny is important and welcome. I will therefore ensure that appointments to the Chief Executive of the FCA are made in such a way to ensure the TSC is able to hold a hearing, after the appointment is announced but before it is formalised. Should the TSC recommend”—
this is more exciting news—
“in its report that the appointment be put as a motion to the whole House, the government will make time for this motion and respect the decision of the House.
Additionally”—
it does not stop there—
“I will seek, in a future Bill, to make a change to the legislation governing appointments to the FCA CEO to make the appointee subject to a fixed, renewable 5-year term. This would not apply to Andrew Bailey, who I recently announced as the new head of the FCA, but would first apply to his successor.
I believe that these changes will reinforce the Treasury Committee’s important scrutiny role.”
John McDonnell (Hayes and Harlington) (Lab)
It would be helpful if the Economic Secretary could assure the House that that future Bill will be introduced sooner rather than later.
Harriett Baldwin
I am sure that the shadow Chancellor welcomes Government new clause 12 and the news that we will carefully consider the earliest possible opportunity for doing that, following today’s debate.
As the letter states, should the Treasury Committee follow the pre-commencement hearing with a report recommending that the appointment be put as a motion to the whole House, the Government will make time for that motion and, should it result in a vote, they will respect the decision of the House. We will also seek an opportunity to alter the legislation governing appointments to the FCA chief executive officer, to make the appointee subject to a fixed, renewable, five-year term. I can confirm that Andrew Bailey, the new CEO of the FCA, has been appointed to a five-year term that can be renewed, so the agreed process will first apply to his successor. The agreement is the right way to reinforce the crucial scrutiny role of the Treasury Committee.
Helen Goodman
I am grateful to the Economic Secretary, who is being extremely generous with her time. What she has said is extremely welcome and a significant step forward. Will she explain why the Chancellor thought it better not to insert it in the Bill, but to make the arrangement through an exchange of letters?
Harriett Baldwin
We tabled our new clause on Thursday and, as I have said, there have been further discussions with the Chair of the Treasury Committee. I am delighted to be able to announce the result of those discussions today.
I also want to take a moment to address the question of dismissals of the FCA chief executive. I can confirm that the Government do not have the power, except in very limited circumstances, to dismiss the chief executive of the FCA during his or her term of office. I refer the House to paragraph 4 of schedule 1ZA to the Financial Services and Markets Act 2000, which applies to the chair and the external members, as well as to the CEO, and states:
“The Treasury may remove an appointed member from office…on the grounds of incapacity or serious misconduct, or…on the grounds that in all the circumstances the member’s financial or other interests are such as to have a material effect on the extent of the functions as member that it would be proper for the person to discharge.”
The lawyers are clear that the only reasons the Treasury can dismiss an FCA chief executive are incapacity, serious misconduct and conflicts of interest. I hope that offers the House considerable reassurance.
Mark Field
It is worth saying a little about what happened in relation to Martin Wheatley. Although he was not technically dismissed, his term was not renewed. The situation was straightforward. In July 2015, it was announced that his term would not be renewed in March 2016. As a result, he left his office six months early. I accept that that may have been a mutual decision between the Treasury and Mr Wheatley, but it certainly gave the impression, at least, that, even if it was not a fully fledged dismissal, it was a non-renewal, and, ultimately, the exit from office came six months before the end of a fixed term.
Harriett Baldwin
My right hon. Friend has stated the facts about the term of office to which Martin Wheatley was appointed and the fact that the Government chose not to renew it. It is appropriate to pay what I hope is a cross-party tribute to the excellent work of the acting chief executive, Tracey McDermott, who stepped into the role at that time. She has carried out the role for almost a full year in an absolutely exemplary fashion.
Unless there any further questions on the new clause, I am going to move on to the amendments relating to devolution. I am inviting interventions, but there are none.
The next set of amendments, which stand in the names of the hon. Members for East Lothian (George Kerevan), for Carmarthen East and Dinefwr (Jonathan Edwards) and for Kirkcaldy and Cowdenbeath (Roger Mullin), force us to ask exactly who the Bank works for. The answer must be the entire United Kingdom. Indeed, that is emphasised in the Bank’s mission statement,
“to promote the good of the people of the United Kingdom by maintaining monetary and financial stability.”
To fulfil that mandate, the Bank of England goes to great lengths to ensure that it has a comprehensive understanding of the economic and financial situation across all corners of the United Kingdom. The Bank has a network of 12 agencies, which are located across Scotland, Wales, Northern Ireland and the regions of England. Each year, those agents undertake some 5,500 company visits and participate in panel discussions with approximately a further 3,500 businesses. In that context, imposing a requirement to have regard to regional representation on the court is unnecessary. A comprehensive framework for regional information-gathering already exists.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
Will the Economic Secretary inform me who the Welsh representative is, because I have absolutely no idea who represents Welsh interests at the Bank of England and I am Plaid Cymru’s Treasury spokesperson?
Harriett Baldwin
I will make sure that that person makes him or herself known to the hon. Gentleman with the greatest of speed. It is important to point out that the agents do not engage with us as politicians. The agent for the west midlands and Worcestershire is very engaged with my local businesses, but I as a politician have never had a meeting with them. That is how it should work.
George Kerevan (East Lothian) (SNP)
I realise that the Economic Secretary is trying to be helpful, but does she not recognise that there is a strategic difference between the process of information-gathering through the agents and that of policy-making through the bodies of the Bank itself? That is where we are asking for representation.
Harriett Baldwin
I will get to that point later in my remarks. As always, I seek to be helpful to the hon. Gentleman, so I hope that he will enjoy those remarks when I get to them.
We believe that it is unnecessary to impose the requirement in new clause 2 to have regard to regional representation on the court, which is effectively the board of directors of the Bank of England, because of the comprehensive framework for regional information gathering that already exists. In addition, if we found a candidate with the perfect profile to serve on the court, but we insisted on downgrading them because they lived in an over-represented part of the country, that would not be the best way to produce an effective court.
I have been clear that in setting both monetary and financial stability policy, the Bank must take into account economic conditions in, and the impact of policy decisions on, every part of the UK. Monetary and financial stability policy must be set on a UK-wide basis. None of the 65 million people whom this House represents would be well served if, for example, different capital requirements applied to banks in different parts of the UK. Of course, monetary policy must be consistent. It is completely impossible to set different interest rates in different regions, so monetary and financial stability are, rightly, reserved policy areas.
The men and women who make up the Bank’s policy committees must have their decisions scrutinised, but since policy must be set UK-wide, this Parliament must hold them to account. This Parliament holds power over reserved matters, which these issues rightly are, and the Members of this Parliament represent people from every part of the country on an equal basis. Likewise, Ministers, who are accountable to the House and who hold their positions with the support of a majority of the House of Commons, must be responsible for making the external appointments to the Monetary Policy Committee, each member of which is responsible for considering the impact of their policy decisions on all 65 million people in the UK.
We also return to the question of the Bank’s 300-year-old name. It is important to recognise the reputation associated with a name built up over such a long period. During that time, the Bank has come to be globally renowned as a strong, independent central bank. We should not underestimate the importance of that. International confidence in the Bank of England helps to support international confidence in our economy and currency.
I turn to the monetary framework. The Government amendment in this group is modest. The Bill reduces the minimum frequency of Monetary Policy Committee meetings from monthly to at least eight times in every calendar year, and our amendment adjusts the reporting requirements of the Monetary Policy Committee to match.
Tommy Sheppard (Edinburgh East) (SNP)
The Minister moved on very quickly from the matter of the name. I just want to clarify whether the Government have a view on changing the name of the Bank of England to reflect the fact that it is the Bank for all the nations of the United Kingdom. Notwithstanding the fact that in normal, everyday parlance it will, I am sure, still be referred to as the Bank of England, its long and proper title surely should reflect all the nations of the United Kingdom.
Harriett Baldwin
I respect and pay tribute to the fact that the Bank of England was founded by someone from Scotland, so the hon. Gentleman is absolutely right to draw attention to the fact that this is an historical anomaly. I would be the first to accept that the monetary policy of the Bank of England is set for the whole United Kingdom. That does not mean to say that we will accept the new clauses that would change the name of the Bank of England, because we think that its name has been well established over 300 years.
Mark Field
I think that the Treasury is right, in this instance, not to change the name. The Bank of England has a brand. I do not need to give a history lesson to the nationalist Members, but the Bank of England was founded in 1694, which was before the 1707 and 1800 Acts of Union that might—for two of the three other parts of the United Kingdom, at least—otherwise have had an impact on its initial name. Its brand is important, and I hope that those from the other parts of the United Kingdom will not feel as though their interests are being downgraded simply because they do not appear in the headline name, not least for the reasons that have been set out. It is important that we recognise that the Bank acts for the entirety of the United Kingdom, and that it therefore pays great attention to the voices of those in all parts of the United Kingdom, not just England.
Harriett Baldwin
Yes, and on that point I hope that the support of the hon. Member for Edinburgh East (Tommy Sheppard) for the united nature of our kingdom means that the Scottish National party has moved on from the discussions of last year in which it wanted to break up the United Kingdom. I hope that the party will accept the settled will of the Scottish people to continue to benefit from monetary policy that applies right across the country.
Jonathan Edwards
Further to the points made by the Minister and the right hon. Member for Cities of London and Westminster (Mark Field), the new clause tabled by my colleague the hon. Member for East Lothian (George Kerevan) will address the issue that they spoke about. As a keen cricketer, I know that the official title of the governing body is the England and Wales Cricket Board, but it is named “England” for all promotional purposes. Even if we accept the well-intentioned new clause tabled by my colleague from the Scottish National party, the Bank of England will still be known, in promotional terms, as the Bank of England.
Harriett Baldwin
The hon. Gentleman tries to tempt me down the path of comparisons with sports teams, but I decline to be tempted. The Government amendment is modest: the Bill reduces the frequency of MPC meetings from monthly to at least eight times in every calendar year, and the amendment will simply adjust the reporting requirements of the MPC to match.
New clause 6, tabled by the hon. Member for Carmarthen East and Dinefwr, suggests that we give the MPC a second primary objective of maximising employment. We conducted a comprehensive review of the monetary policy framework in 2013 and concluded that a flexible inflation targeting framework offered the best approach. Employment is already explicitly part of the MPC’s objectives. Its secondary objective is
“to support the economic policy of Her Majesty’s Government, including its objectives for growth and employment.”
The most recent MPC remit letter summarised the Government’s economic policy as being
“to achieve strong, sustainable and balanced growth that is more evenly shared across the country and between industries”.
George Kerevan
I thank the Minister for her forbearance in giving way again. She is taking refuge in the Bank of England’s existing mandate, a mandate that all Members, on both sides of the House, know has long since become redundant. The inflation target has been dead in the water for years and years, because inflation is nowhere near 2% and is not likely to be for a long time. Implicit in the new clause is the fact that we are questing about for other policy measures to replace the 2% inflation target. Will the Minister address the question of what future targets the Bank of England should have to address the needs of a deflationary era, rather than the inflationary era of the last 20 years?
Harriett Baldwin
The hon. Gentleman asks an important question. There are many opportunities in Parliament, in the scrutiny of the Bank of England by the Committee of which he is a member, to ask those important questions. The Government choose to use the mechanism of the letter process and the remit. The hon. Gentleman and I are both old enough to know how inflation has changed over the years—[Hon. Members: “Surely not!”] I know; surely we are not. We should all welcome the significant lowering of inflation expectations, and we should all remember how important it is that we continue to ask the Bank of England to keep inflation under control, so that we never return to the kinds of impoverishing inflationary policies that so harmed people—particularly the poorest and oldest in society—during the 1970s.
Price stability must have primacy, because we judge that having a single lever aimed primarily at a single objective is the best way to make sure that the inflation target is credible. That, in turn, anchors all-important inflation expectations and helps us to keep inflation under control. Our system has shown that it produces good labour market outcomes. Despite global uncertainty, we have record numbers of people in work, an unemployment rate that is at its lowest in a decade, and a claimant count that has not been lower for more than 40 years. Moreover, targeting low inflation ensures that hard-earned wages are not eroded by inflation.
Mark Field
I must confess that I entirely agree with what the Minister is saying about inflation. I, too, am old enough to remember what inflation was like, particularly in the 1970s. However, it seems to me that the Bank of England’s sole monetary policy lever is to say that we must keep the inflation rate down. Surely we must recognise that inflation has now been well below the 2% target for a long time. I accept that we should never believe that inflation, and all the distortions it makes in our economy, has been entirely vanquished, but should there be a different inflation target, or a different set of remits for the Bank of England, to recognise that it should pay attention to other aspects of the economy in its monetary policy?
Harriett Baldwin
My right hon. Friend, who is an extremely wise and knowledgeable person—I will not refer in any way to his age—highlights an important point. He also emphasises the behavioural characteristic of the recency effect. Inflation is well below the 2% target today, but only during the lifetime of the last Parliament it was above 5%. Even during the six years that I have been a Member, we have tested the parameters of the inflation target. I do not think there is any need for us to make any changes to that target this afternoon.
I will conclude by speaking briefly to amendments 6 and 7 and new clause 13. The first part of amendment 6 states:
“The Comptroller may enquire into the Bank’s success in achieving its stated policy objectives but shall not enquire into the desirability of such objectives having been set.”
The Bill, as drafted, will already have that exact effect.
The second part of amendment 6 directs how the Comptroller and Auditor General should submit his reports. Parliament has delegated to the Comptroller discretion over the content of National Audit Office reports and the timing of their publication, and it is important that this independent officer of Parliament is able to use his judgment on how Parliament and the public are best served. The National Audit Act 1983 provides that the Comptroller
“may report to the House of Commons the results of any examination”.
Once he has reported to the House, it is open to any Committee of this House to inquire into matters on which he has reported. There is an in-built incentive for prompt publication as it mitigates the risk of the report’s conclusions being overtaken by events.
Amendment 7 would disapply restrictions in the Financial Services and Markets Act 2000 on the disclosure of specially protected information in relation to reports by the Comptroller and Auditor General. Information is specially protected under these rules if it is held by the Bank for the purposes of monetary policy, for financial operations supporting financial institutions in maintaining financial stability, or for private banking purposes. Similarly, new clause 13, in the name of the hon. Member for Bishop Auckland (Helen Goodman), would remove three corresponding exclusions in the Freedom of Information Act 2000. I hope I can persuade the House that each of the three categories of protected information is entirely sensible.
The first category applies to the Bank’s monetary policy functions. How we communicate monetary policy is extremely important. It moves markets in substantial ways and every detail of the published minutes is scrutinised for predictions of future changes. Managing disclosure while making sure information is presented in a timely way is vital. That is why the original legislation creating the Monetary Policy Committee in 1998 set out the full range of disclosure requirements, including publication of the minutes and of a quarterly inflation report. Since then, the Bank has implemented the recommendations of Governor Warsh’s review of MPC transparency. Through the Bill, we are supporting full implementation of the recommendations of that review.
The second exclusion applies to
“financial operations intended to support financial institutions for the purposes of maintaining stability”.
Hon. Members will understand that if the Bank has to extend emergency liquidity assistance, very careful communication is a critical element of preserving stability. Any covert assistance will be reported privately to the Chairs of the Treasury and Public Accounts Committees, while broader liquidity schemes for institutions, such as the special liquidity scheme and the discount window facility, may be announced to the markets.
Finally, the Bank’s very limited private banking services are excluded from FOI requests. We often forget that the Bank of England also provides private banking to customers. As I am sure hon. Members will agree, it would be entirely inappropriate to subject ordinary bank customer information to disclosure.
Richard Burgon (Leeds East) (Lab)
I rise to speak to amendments 6 and 7 in my name and that of my hon. Friends, but I first want to turn to new clause 1 and Government new clause 12 on the appointment of the FCA chief executive.
I came to the House ready to speak in support of new clause 1, which seeks to give the Treasury Committee a formal role in the appointment of the chief executive of the FCA. In my view, new clause 1 is better placed to guarantee the competence and independence of the regulator than the new clause in the name of the Chancellor, which in our original reading of it did too little to change the status quo. New clause 12 was tabled in response to the new clause tabled by the Chair of the Treasury Committee, the right hon. Member for Chichester (Mr Tyrie). We had a similar debate in Committee on an amendment about the appointment process for the chief executive of the Prudential Regulation Authority.
Since 2008, Select Committees have routinely held pre-appointment hearings for a number of public appointments, and some candidates have not been approved. The coalition Government developed the scrutiny agenda when the Chancellor agreed in 2010 to the Treasury Committee having a power of veto over appointments to the Office for Budget Responsibility. The Public Accounts Committee has a veto over the appointment of the Comptroller and Auditor General. Appointments to the Monetary Policy Committee and the Financial Policy Committee of the Bank of England are made by the Chancellor of the Exchequer, and are then subject to a confirmation hearing by the Treasury Committee. The Treasury Committee has powers over the chair and board members of the Office for Budget Responsibility, an arrangement that the Chancellor told the Treasury Committee he would put in place
“because I want there to be absolutely no doubt that this is an independent body”.
The Minister will be aware that, when it examined the proposals for the future FCA in 2013, the Treasury Committee made a number of recommendations on the accountability of the new body to Parliament, including that the legislation should provide that the chief executive of the FCA be subject to pre-appointment scrutiny by the Treasury Committee. I recall that the Treasury Committee was disappointed by the Government response, particularly in view of the deficiencies in the accountability mechanisms for the Financial Services Authority.
As we have heard, the view of the Treasury Committee was set out in the Treasury Committee Chair’s letter to the Chancellor of the Exchequer on 26 January, following the appointment of the current PRA chief executive, Andrew Bailey, to be the next leader of the FCA. In that letter, the right hon. Gentleman set out his Committee’s view that it should have a veto over the appointment and dismissal of the chief executives of both the FCA and the PRA. Indeed, the letter said that the FCA’s chair, John Griffith-Jones, told the Committee, when he met its members on 20 January, that there was merit in that proposal.
In Committee, I flagged up this matter and said it would be helpful to know whether the Chancellor had shared his thinking on such calls to extend pre-appointment hearings and the power of veto to those two positions. Now we have had his reply. It was in the Minister’s ring binder. As she said, it was “exciting” to hear the contents of it, and we got a fantastic insight into the fireside exchanges within the Government. Labour Members believe that the Treasury Committee should have greater authority over the future of financial regulation in this country.
On Government new clause 12, it is unclear what would happen in the period between the appointment of the chief executive and him or her appearing before the Committee. Would they be left in limbo, or would they in fact be settling into their new post? Would we be disappointed—in practice, would it simply be business as usual, with the Treasury Committee not given the power that we all believe it deserves? We do not believe that simply requiring any new chief of the FCA to appear before the Committee within three months of appointment delivers anything particularly new. It is reasonable to expect that any new postholder would appear before the Committee within that timeframe in any event, whether or not that appearance was codified.
Harriett Baldwin
In responding to the debate, I will perhaps leave aside the comments of the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell), as I do not recall him participating in the debates on Second Reading, in Committee or earlier today, and his speech did not reflect the full view of other parties in this House that the Bill is a very good Bill, in the words of the Chair of the Treasury Committee.
I want to respond to some of the points raised in the debate and, in particular, to put on record how pleased I am that everyone welcomes Government new clause 12, which is supplemented by the text of the letter from the Chancellor to the Chair of the Treasury Committee that was sent earlier today and that I read out in my opening remarks. This has been an important opportunity to put on record how our amendment recognises the important scrutiny role of the Treasury Committee.
I would also put on record the important role of this House in scrutinising the Executive. This is another opportunity for us to emphasise the importance—the necessity, even—of preserving the independence of the FCA chief executive’s operational role, apart from Government. Our amendment reaffirms that commitment to continued independence of the FCA. It is vital consumers and firms know that regulatory decisions are being taken in an objective and impartial way. The FCA is an operationally independent regulator and must carry out its functions in line with the framework of objectives and duties established in statute and the independence of that chief executive is protected by statute, with clear provisions requiring the terms of appointment to be such that the appointee is not subject to direction by the Treasury or any other person.
Throughout their appointment, the FCA chief executive is scrutinised on an ongoing basis to ensure their continued independence. It was notable that in the course of the debate nobody could point out anything as regards the allegations made in the press about operational interference. I look forward to seeing the Treasury Committee’s report, because I know that it has carried out a thorough investigation into the matter.
Our new clause ensures that the Treasury Committee will always have time to scrutinise an appointee before they get their feet under the desk. I have also put it on the record that the legislation is very clear that once they are appointed the Government absolutely cannot dismiss an FCA CEO except in the limited circumstances set out in statute. I will not read out paragraph 4 of schedule 1ZA to the Financial Services and Markets Act 2000 again, but I referred to it in my opening remarks and reiterate that it applies not only to the CEO but to the chair and the external members.
We heard from my right hon. Friend the Member for Chichester (Mr Tyrie) about his reaction and his decision to withdraw his new clause 1. He asked whether he could expect legislation in the next Session outlining the five-year term. As he knows, he has our commitment to find an early opportunity to put that into legislation. He is aware of the strictures that exist in relation to writing round and getting Cabinet agreement, but he has that commitment now from the Dispatch Box. He asked whether the legislation is permanent—a good question. It is possible that legislation becomes permanent, but it is also possible for a future Government, a future House of Commons and a future Treasury Committee to change legislation.
Mr Tyrie
I am grateful to the Minister for what she says. The clarification that I seek relates not to legislation, which stands or falls like any legislation, but to the arrangement. Is it intended that the arrangement between the Treasury Committee and the Chancellor, put in place in the exchange of letters today, will be permanent?
Harriett Baldwin
The Chancellor has many powers, but not necessarily the power to ensure permanence, which is a very long time. I can assure my right hon. Friend that it is the Chancellor’s intention that that remain the case for the length of time that he is able to exert power and influence over the matter. I hope that answers the question in the spirit in which it is asked.
The hon. Member for Leeds East (Richard Burgon) asked me to confirm that the NAO can look at the Bank’s success in meeting its objectives, but not necessarily at the desirability of those objectives. I have already said that that is exactly what the Bill achieves. The arrangements set out in the Bill have been agreed by both the Comptroller and Auditor General and the Governor, and the terms of reference have been made available to the House. The CAG is content that the scope of his powers is appropriate and the Bank is content that they do not go too far.
The hon. Gentleman asked whether the Bank should have practitioner representation. The Prudential Regulation Authority has a practitioner panel, which ensures that the interests of those who must put the PRA’s rules into practice are communicated to the PRA. That panel includes representatives of banks, insurers, building societies and credit unions, among whom the hon. Gentleman’s new favourite publication, City A.M., is widely read. Consumers also have an input through the FCA consumer panel, which has a statutory right to make representations to the PRA.
Speaking to her amendment, the hon. Member for Bishop Auckland (Helen Goodman) asked about the Bank of England and the extent to which it is subject to the Freedom of Information Act 2000. It is thanks to this Bill that the Bank is subject to the FOI Act. There are three specific limited exclusions from the Act as it applies to the Bank and, as I explained earlier, those are entirely sensible. The Bank of England is not alone in having particular elements of its work carved out from the Act. Other organisations to which specific exclusions apply include the Verderers of the New Forest, S4C in Wales, the Competition Commission and the BBC.
On the hon. Lady’s question about the Governor’s analysis supporting selling RBS shares at prices substantially above the price at which the shares are trading today, the Governor has explained that his analysis is based on commercially confidential information obtained as part of the PRA’s supervisory responsibilities. In the Freedom of Information Act there is, rightly, a standard exemption for commercial interests.
The hon. Member for East Lothian (George Kerevan) said that there was a lot to be commended in the Bill. He asked about the range of expertise and perspectives on the court. He raised an interesting philosophical question, which is that in the past the court has been a much larger organisation, with 19 members—unwieldy, in the Treasury Committee’s view—but that it should represent the views of the entire UK. All members of the court should consider the whole UK, rather than acting as a representative of a particular part. He seems to have forgotten our exchange in Committee, when we talked about the trade union representation of the court and I assured him that we have said nothing during the passage of the Bill that would change the post-war reality.
Jonathan Edwards
The Minister will have heard today the heartfelt concerns of representatives from Wales, Scotland and Northern Ireland about the accountability of the central bank to the devolved Parliaments and Governments. Will she at least commit to a Treasury report on that, or will she request the Bank of England to produce a report on how it aims to improve its financial accountability and its relationship with the devolved Parliaments and Governments?
Harriett Baldwin
I think that there are a range of different ways in which that can happen, particularly now that the Treasury Committee in this House has a member from Scotland, and of course we all welcome the fact that the very coins in our pockets are minted in the great country of Wales.
The hon. Member for Carmarthen East and Dinefwr identified the Federal Reserve as an example of a central bank that adopts a dual mandate. US policy makers have judged that that is right for them. We believe that the primacy of price stability is important for anchoring inflation expectations, and we are joined in that belief by other central banks, including those in Canada and New Zealand and the European Central Bank.
I am pleased to have had this opportunity to respond to a range of issues raised in this part of the debate. I commend the Government’s new clause to the House and hope that it will agree to include it in the Bill.
Question put and agreed to.
New clause 12 accordingly read a Second time, and added to the Bill.
New Clause 2
Composition of the Court of Directors of the Bank of England
“In making nominations to the Court of Directors of the Bank of England, the Chancellor of the Exchequer must have regard to the importance of ensuring a balanced representation from the nations and regions of the United Kingdom.”— (George Kerevan.)
Brought up, and read the First time.
Question put, That the clause be read a Second time.
Harriett Baldwin
Let me start with new clause 9, tabled by my hon. Friend the Member for Broxbourne (Mr Walker) and others, which addresses the important issue of politically exposed persons. My colleague is an expert not only in oratory but in parliamentary procedure and I commend him for his use of both in this example. The Chancellor and I are very concerned about this issue, as my hon. Friend knows, and we are grateful to my hon. Friend for his assiduous work in collating examples that he has heard from colleagues and from the banking sector.
It is absolutely right that the “know your customer” requirements should be tailored to the risk posed, and I reassure the House that we are very much on the side of colleagues in this regard. I therefore welcome the amendment and the strong message it sends to banks as they implement these rules. The new clause also addresses guidance, and I fully agree that guidance will help the banks to take an effective, proportionate and commensurate approach to politically exposed persons. The Government intend to implement new money laundering regulations by June next year at the latest and this amendment will come into force at that time. We will consult on the new regulations this year.
As well as accepting the new clause, I want to take the opportunity to update the House on other action that we have taken to resolve these issues on behalf of Members since my hon. Friend had his Adjournment debate on 20 January. On 1 March we had a meeting with the banks that I organised with the Minister for Security from the Home Office, and on 23 March the Chancellor wrote to the banks to explain our views. We will continue to work with the banks, with the FCA and with others to ensure that a sensible and proportionate approach prevails.
I have also written not once but twice in a “Dear colleague” letter to all Members and Peers giving colleagues the name of a senior designated person to contact at each major bank should they or a family member encounter any problems. To conclude on this new clause, I thank my hon. Friend for bringing the issue to the House so that I can give this reassurance about the attention that the Government are paying to this challenge.
New clause 10, on debt management plans, was tabled by my hon. Friend the Member for South West Devon (Mr Streeter), and I thank him for his collaborative approach in tabling the amendment and the ongoing commitment shown by him and his all-party group to supporting all households in problem debt. The Government share his concerns about the potential for detriment to occur to consumers participating in some debt management plans and I recognise the importance of protecting this vulnerable group of consumers. The Government’s focus has been on comprehensively reforming the regulation of the sector to ensure that financial services firms are on the side of people who work hard, do the right thing and get on in life. Responsibility for regulating debt management firms, like that for all other consumer credit firms, transferred from the OFT to the FCA on 1 April 2014. The FCA has made addressing the risk posed to consumers by non-compliant debt management firms the highest priority, alongside payday lending.
Indeed, debt management firms were in the first group of firms to require full authorisation, and the FCA is thoroughly scrutinising firms’ business models and practices. Firms that do not meet the FCA’s threshold conditions will not be able to continue to offer debt management plans. Removing non-compliant debt management firms from the market will fundamentally reduce the risk of harm to consumers and will ensure that consumers have access to sustainable repayment plans as a result of providers acting in the best interest of consumers.
The hon. Member for Makerfield (Yvonne Fovargue) raised the question of the handover of clients with debt management plans whose firms have not been authorised by the FCA. That is an issue to which the FCA is playing close attention, to try to ensure that data protection issues are taken into account and to accommodate the disheartening position of someone with one of those plans whose firm fails to be authorised, for whom a better alternative must be found.
On the issue raised by the amendment—how debt management plans are funded—charities such as StepChange and Christians Against Poverty already successfully negotiate voluntary funding agreements with creditors through the fair share model. Introducing changes to this funding arrangement, such as mandatory contributions, may have unintended consequences, disrupting a successful funding arrangement for charities. Consequently, setting the level of this share is not supported by the not-for-profit sector. Similarly, not-for-profit providers are concerned that formalising fair share contributions may change charities’ relationship with creditors and compromise their independence. The perception of charities by their clients as impartial advocates is essential to encouraging households in problem debt to come forward for support.
With the FCA’s authorisation process ongoing, and the anticipated changes in the market that that will bring, now is not the right time to introduce changes to the way debt management plans are funded. Any consideration of changes to funding arrangements should take place when the shape of the debt management market is known. The best setting for looking at the full landscape of debt advice funding will be in the context of the public financial guidance review, which includes a commitment for the Government to monitor the impact on the FCA authorisation process. If necessary, the funding arrangements for debt advice will be reviewed, and the Government may consider broadening the funding base to include other sectors, to ensure that consumers continue to get the help they need. I trust that this assures my hon. Friend the Member for South West Devon that the Government continue to consider it a priority to help those facing problem debt, and that he will not press his amendment to the vote.
I shall deal now with amendments 1, 2, 8, 9, and 10, which would apply the reverse burden of proof to senior managers in the banking sector or in all authorised financial services firms. We reject both sets of amendments, above all because the senior managers and certification regime with a statutory duty of responsibility will be an extremely effective tool for holding senior managers to account.
The duty of responsibility will extend to all senior managers. The discredited approved persons regime will be replaced. Firms must identify exactly what their senior managers are responsible for. Senior managers will not be able to wriggle off the hook because they did not know what was being done in the areas for which they are responsible. The reverse burden of proof is not needed to deliver what we want to deliver—a culture change.
Lord Turnbull, who was a Cross-Bench member of the Parliamentary Commission on Banking Standards, said:
“In future, senior managers will have to take responsibility for what goes on in the teams for which they are responsible and for the actions of the people whom they have appointed and thereby given accreditation.”
He went on to say:
“I still fail to see why the reverse burden of proof is the only way to get people to understand that. . . I believe that the proposal now in the Bill—
that is, the duty of responsibility—
is superior.”—[Official Report, House of Lords, 15 December 2015; Vol. 767, c. 2026-28.]
In written evidence to the Public Bill Committee, the Building Societies Association stated:
“The lack of individual accountability to date is mainly the result of a failure to allocate responsibilities in firms’ corporate governance frameworks. Because this deficiency will be fully addressed by the new strengthening accountability in banking rules (through responsibility maps, individual statements of responsibility, handover arrangements), the reversed burden of proof is unfair and is redundant”—
not my words, but those of the Building Societies Association.
Today’s debate is about what happens when things go wrong and a firm breaks a regulatory requirement. Under the reverse burden of proof, the senior manager responsible for the area of the firm where the breach occurred would have to prove that they had taken reasonable steps to prevent it. The Bill will impose a statutory duty of responsibility on senior managers. Senior managers would still be required to take reasonable steps to prevent breaches of regulations in the areas of the firm’s business for which they are responsible. However, when such a breach occurs, it will fall to the regulators to show that the responsible senior manager had failed to take such steps. This duty will be extended with the senior managers and certification regime to senior managers in all authorised financial services firms, ensuring that they are held to the same high standards as those in banks.
Harriett Baldwin
Okay, the hon. Gentleman wants to hear more. In the July 2015 Budget we confirmed an extra £800 million investment to fund additional work to tackle evasion and non-compliance. HMRC’s specialist offshore unit is currently investigating more than 1,100 cases of offshore evasion around the world, with more than 90 individuals subject to current criminal investigation. Even before last week, HMRC had already received a great deal of information on offshore companies, including in Panama, and including Mossack Fonseca. This information comes from a wide range of sources and is currently the subject of intense investigation.
We are going further by providing new funding of up to £10 million for an operationally independent cross-agency taskforce. It will include analysts, compliance specialists and investigators from across HMRC, the National Crime Agency, the Serious Fraud Office and the Financial Conduct Authority. It will have full operational independence and will report to my right hon. Friends the Chancellor and the Home Secretary.
Of course the FCA has a role to play. Its 2016-17 business plan states that the fight against financial crime and money laundering is one of its priorities. Its rules require firms to have effective systems and controls to prevent the risk that they might be used to further financial crimes. That is why the FCA has written to financial firms asking them to declare their links to Mossack Fonseca. If it finds any evidence that firms have been breaking the rules, it already has strong powers to take action. However, it is HMRC that is ultimately responsible for investigating and prosecuting offences associated with tax evasion.
Finally, with regard to trusts, we believe that we have secured a sensible way forward by ensuring that trusts that generate a tax consequence in the UK will be required to report their beneficial ownership information to HMRC. By focusing on such trusts, we are focusing on those where there is a higher risk of money laundering or tax evasion, which arise when trusts migrate or generate income or gains, and minimising burdens on the vast majority of perfectly ordinary and legitimate trusts.
Although I appreciate the spirit with which the new clause has been tabled, I do not believe that it would be appropriate to change the role of the FCA or the PRA, so I urge the hon. Member for Leeds East not to press the new clause.
Question put and agreed to.
New clause 9 accordingly read a Second time, and added to the Bill.
New Clause 14
Combating abusive tax avoidance arrangements
“(1) Section 3B of the Financial Services and Markets Act 2000 (Regulatory principles to be applied by both regulators) is amended as follows.
(2) At the end of subsection (1) insert—
(i) combating abusive tax avoidance arrangements.
(a) in observing principle (i), the regulators must undertake, in consultation with the Treasury, an annual review for presentation to the Treasury into abusive tax avoidance, including measures to ascertain and record beneficial ownership of trusts using facilities provided by banks with UK holding companies or entities regulated by the Bank of England or the FCA, control of shareholders and ownership of shares, and investment arrangements in an overseas territory outside the UK involving UK financial institutions.
(b) in this section “beneficial ownership of trusts” includes ownership of any equitable interest in a trust including being an object of a discretionary trust, power of appointment or similar arrangement as well as any vested interest under a trust;
(c) “control of shareholders and ownership of shares in companies using facilities provided by banks with UK holding companies or entities regulated by the Bank of England or the FCA” shall include control by any person with control over a voteholder in a company as defined in Part VI Official Listing s.89F of the FSMA (2000) as applied mutatis mutandis to this context, whether directly or indirectly, and whether alone or in concert with some other person.””—(Richard Burgon.)
Brought up, and read the First time.
Question put, That the clause be read a Second time.
Richard Burgon
I had not thought of that point.
The lack of any Welsh-themed banknotes is an error that the amendments are designed to put right. I would appreciate the Government agreeing to the proposal and investigating the possible costs and timeframes for such a change. Labour Members wholeheartedly and enthusiastically support these amendments.
Harriett Baldwin
Anyone would think that a Welsh general election was going on this afternoon, would they not? I am glad that we have had time to debate this issue this afternoon. I can remember the shock in Worcestershire when Elgar, whose birthplace is in my West Worcestershire constituency, was taken off the £20 note. It was certainly a very live political issue.
I know that we all have an emotional attachment to our banknotes, and I therefore sympathise with the desire of the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) to make the case that he has made so ably this afternoon, along with other Members, for banknotes to have some Welsh characteristics. We shall not be able to agree to the amendment today, for reasons that I shall explain, but I hope that what I shall say about our new banknotes will give some cheer to our Welsh colleagues.
Hywel Williams
Does the Minister agree with my earlier point that there is a commercial advantage to be gained from issuing one’s own notes? Why can that advantage not be extended to bank operations in Wales?
Harriett Baldwin
That is the very point that I was about to make. The amendment seeks to confer the right to issue commercial banknotes in Wales—a clear commercial advantage—on just one bank, Lloyds Banking Group. That appears to be based on a link to a right to issuance that was broken more than 100 years ago. Today, the Government—the taxpayer—owns just under 10% of Lloyds Banking Group. Part of Lloyds Banking Group already has a commercial banknotes issuance operation, which may be why the hon. Member for Carmarthen East and Dinefwr chose to focus on a single bank in his amendment. That is due to the acquisition of the Bank of Scotland operation, which is authorised to issue banknotes in Scotland. However, extending the privilege and the commercial advantage of issuing banknotes in Wales to just one bank would raise competition and commercial issues for others.
I liked the wide range of suggestions about who should be represented on Welsh banknotes, and, as I said earlier, the coins in our pockets are minted in Wales. I appreciate that the motive behind the amendment—the symbolic issue about which the hon. Gentleman feels so strongly—is to create a symbol, rather than to deal with a pressing economic or practical need for different banknotes.
The Bank of England has already announced that future banknotes, starting with the polymer £5 note which will be issued in September 2016, will include symbols representing all four home nations. For Wales, the imagery will be taken from the Royal Coat of Arms and the Royal Badge of Wales. The Bank recently announced that the design for the £5 note would be revealed on 2 June 2016.
I am very glad that we have had a chance to discuss the merits of the amendment. The hon. Gentleman will understand why I cannot support it. However, I welcome the opportunity to convey the message that an important symbol of Wales will appear on our new banknotes.
Question put, That the amendment be made.
Harriett Baldwin
I beg to move, That the Bill be now read the Third time.
It has been a pleasure to take this legislation through this House. There has been a good level of interest from Members from all parts of the House, and a wealth of suggestions and recommendations have been made, which is a testament to how important the issues in this Bill are. Indeed, some of the suggestions have made their way into the Bill.
The Bill will: make the Bank of England more transparent and accountable to Parliament and the public; further strengthen standards in the financial services sector; and strengthen protections for consumers, especially when accessing the new pensions freedoms. Building on the fundamental reforms to the regulatory architecture introduced by the Financial Services Act 2012, the Bill delivers a set of important evolutionary changes to the Bank. It ends the subsidiary status of the Prudential Regulation Authority and creates a new Prudential Regulation Committee, on the same footing as the Monetary Policy Committee and Financial Policy Committee. It makes the oversight functions the responsibility of the whole court, ensuring that every member of the court, executive and non-executive, can be held to account for the use of these functions. It also enhances the accountability of the Bank to Parliament by making the whole Bank subject, for the first time, to National Audit Office oversight. If I may, Mr Deputy Speaker, let me correct something I said in error earlier, when I confused NAO with FOI—freedom of information. Of course, FOI has applied to the Bank of England for some time; this Bill brings in the NAO oversight.
The Bill also implements the remaining recommendation of the Warsh review, updating requirements for the timing of MPC publications and meetings. As my right hon. Friend the Member for Chichester (Mr Tyrie) said on Second Reading, this Bill
“brings the Bank of England more up to date as an institution, and in doing so it should greatly improve the scope for making it accountable to Parliament and the public”.—[Official Report, 1 February 2016; Vol. 605, c. 667.]
During the passage of this Bill we have rightly devoted considerable time to the question of the appropriate role for Parliament. The Treasury Committee plays a crucial role in providing effective scrutiny of the FCA’s chief executive, and the agreement that we have announced today reinforces that.
The second aspect of the Bill is that it strengthens conduct in the financial sector by extending the senior managers and certification regime to all firms covered by the discredited authorised persons regime that we inherited. We all agree on the vital importance of high standards of conduct in the UK financial services industry. This Government have already taken the initiative in this area; we took a key step by bringing in the regime for the banking sector in March this year. The expansion of this new regime to all authorised persons will enhance personal responsibility for senior managers across the industry and raise standards of conduct more broadly.
Thirdly, the Bill introduces support for consumers accessing the new pension freedoms. To support consumers who, from April 2017, will be able to sell their annuity income stream in the secondary market for annuities, the Bill will extend the scope of the Pension Wise guidance service to cover these consumers, and introduce a requirement that, in effect, ensures that consumers with a high-value annuity receive appropriate financial advice before making the decision to sell their annuity income stream. These measures will help make consumers better informed and less vulnerable to mis-selling and scams.
In order to ensure fairness for people seeking to access their pensions early, the Bill will also give the FCA a new duty to cap early exit charges that act as a deterrent. This will provide real protection to consumers in contract-based pension schemes who are looking to make use of the freedoms.
The Bill also supports the Government’s consumer protection objectives by giving the Treasury a new power to provide financial assistance to illegal money-lending teams tasked with tackling loan sharks. Today, we have also added the amendment tabled by my hon. Friend the Member for Broxbourne (Mr Walker).
In closing, I thank all right hon. and hon. Members who have contributed to the debates, both by speaking and by tabling amendments. In particular, I thank all the members of the Public Bill Committee for their efforts and for the time spent going through the Bill clause by clause. The hon. Members for Leeds East (Richard Burgon) and for Wolverhampton South West (Rob Marris) provided challenging discussion throughout the passage of the Bill. The hon. Members for East Lothian (George Kerevan) and for Kirkcaldy and Cowdenbeath (Roger Mullin) gave close scrutiny to the Bill. My right hon. Friend the Member for Chichester made valuable contributions that have been most helpful and insightful, particularly on Treasury Committee matters.
I also thank the Treasury Whips, my hon. Friends the Members for Truro and Falmouth (Sarah Newton) and for Central Devon (Mel Stride), who have provided me with much support both during and outside Bill debates. The Chairs of the Public Bill Committee, my hon. Friend the Member for Altrincham and Sale West (Mr Brady) and the hon. Member for Sedgefield (Phil Wilson), and you, Mr Deputy Speaker, have handled our scrutiny well.
I thank my Parliamentary Private Secretaries, who took on the important and thankless task of sitting behind me during our sittings and ensuring that I got the right briefing, for supporting me generally throughout this process.
Lord Bridges and Lord Ashton have done a fantastic job in taking the Bill through the other place, and I trust that they will continue to do so when the Lords consider our amendments.
Finally, I give thanks to the organisations that have assisted us in developing the Bill—the Bank of England, the National Audit Office and the Financial Conduct Authority. I must also give sincere thanks to Treasury officials, lawyers and parliamentary counsel, who spent many hours in the box, drafting amendments and briefings for these debates.
We have had useful and wide-ranging debates, and our discussions with Members in all parts of the House were constructive, even when we did not agree and had to settle matters with a vote. We have shown an understanding of each other’s position and improved the legislation as a result. The Bill will now go back to the other place, where their lordships will consider the useful changes that we have made to the Bill. I hope that they will welcome the legislation in its current form.
In conclusion, this Bill makes changes to strengthen the governance and accountability of the Bank of England. It will contribute to the Government’s commitment to strengthen standards across the financial services industry and ensure that consumers are well protected. I commend its Third Reading to the House.