Financial Services Bill

Iain Duncan Smith Excerpts

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

[John Glen]

It is easy to point to headline differences in rates of fines, but it is quite different to intervene with a new piece of legislation that is fit for purpose. That is why I am absolutely clear that the call for evidence this year will gather that evidence—I am sure that my hon. Friend will be keen to submit his evidence to that—and, in due course, we will look at it and examine what the implications are. However, I am not suggesting from the Dispatch Box that everything is perfect with respect to regulation, and of course, there are regulatory failures from time to time and criminal activity. The question is what the most appropriate legislative response is.

I turn to new clause 14, which would add a requirement for the Government to report on the effect of clause 31 on tax revenues. This does not reflect the effect of the provision that we have included in the Bill. The Bill provision merely ensures the continuation of, and the ability to vary in future, the original powers assigned to Her Majesty’s Revenue and Customs with respect to registration of overseas trusts. It does not make any change to taxes.

Similarly, it is not necessary to introduce a report on the impact on money laundering of clause 31, as proposed by new clause 19. Existing legislation already requires the Treasury to carry out a review of its existing provisions within money-laundering regulations and publish a report setting out the conclusions of its review by June 2022. This wider review will provide a more meaningful evaluation than the one envisaged in the amendment.

Amendment 7 raises a very important issue. This amendment would require the FCA to “have regard” to the promotion of ethical investments with reference to findings of genocide by the High Court and the International Court of Justice when making rules for the investment firm prudential regime. While I am extremely sympathetic to the issue raised by Members on both sides of the House, including the hon. Member for Bethnal Green and Bow (Rushanara Ali) and my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith), this Bill is not the right place to address the issue. This amendment would require the FCA to make political choices about whether to associate itself and its rules with countries that are guilty of genocide or ethnic cleansing. These important decisions on UK foreign policy are for Government to take and not an independent financial services regulator.

I will now address a number of amendments that seek to bring new activities—

[Sir Iain Duncan Smith (Chingford and Woodford Green) (Con)]

Will the Minister give way?

[John Glen]

I am very happy to—I thought I might provoke an intervention from my right hon. Friend.

[Sir Iain Duncan Smith]

I am glad he gave me time to get this awful mask off.

I understand fully my hon. Friend’s arguments, and I will come to that in a second when I have an opportunity to catch Madam Deputy Speaker’s eye, but on the point he is making, I simply ask him this question: can he conceive that any UK Government would ever authorise trade arrangements on a special basis with any country guilty of genocide?

[John Glen]

My right hon. Friend has raised this matter in the context of his raising it in a number of other regards with respect to the Trade Bill, and it would obviously be appropriate for my ministerial colleagues in that Department to address it in that context. Today, it is my responsibility to deal with it in the context of financial services regulation, as I think I have done, but I do not want to deny the grave significance of the matter that he is raising, and indeed, my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) has raised it with me, too. Obviously, these are complex matters on which others will respond in due course.

I will now address a number of amendments that seek to bring new activities into FCA regulation. New clause 7 relates to “buy now, pay later” products and would require the Treasury to bring those products and other interest-free credit products into the scope of financial services regulation. Those products can play an important role by providing a lower-cost alternative for people making purchases, especially larger items. As an interest-free credit product, “buy now, pay later” is inherently lower-risk than other forms of borrowing, and can be a useful part of the toolkit for managing personal finances and tackling financial exclusion.

--- Later in debate ---

[Mr McFadden]

The hon. Gentleman makes a very strong point, and it is why we believe these are strong amendments. We should do this because it is right in itself, and it is an important signal to send about financial services in this post-Brexit world. We do not want to send a signal that we are going for relative weakness in anti-fraud and anti-money laundering laws. Instead, the signal should be that we insist on the strongest possible measures.

New clause 21 seeks to establish a duty of care. This is a long-running debate, and we tabled a similar amendment in Committee. The new clause is intended to make companies ask not just whether their products are legal but whether they are right and are in the consumer’s interest.

New clauses 25 and 26 seek to address the plight of mortgage prisoners. These are people who are stuck on very high standard variable rates and have no ability to switch. All I would ask is, if the Minister cannot accept these amendments, will he continue to work on this issue to try to help these people who are trapped, through no fault of their own, on very uncompetitive rates? He mentioned 3% or 4%, which is much higher than is available in a mortgage environment where the base rate is 0.1%. That can mean paying thousands of pounds more per year, depending on the size of the mortgage, so this is a real material difference for people.

We have a global financial sector in this country that, if properly regulated and paying its way, is a huge asset to the people of this country. We want it to be innovative and successful, but we also want to ensure the public are properly protected against risks if things go wrong. That is the spirit in which we tabled these amendments, and it is the spirit in which we have approached the Bill throughout. I hope the Minister will consider that when it comes to the votes in a couple of hours’ time.

[Sir Iain Duncan Smith (Chingford and Woodford Green) (Con)]

I rise to support amendment 7, in the name of the hon. Member for Bethnal Green and Bow (Rushanara Ali), myself and 41 other Members. The Minister knows well, because we have had this discussion before—just in case it was to be private, I want to make it public, not because I do not trust him, but I just think it is helpful for him to know that—that the amendment seeks to bind or hold those involved in financial trade and investment to a definition of who they should not trade with and why. To that extent, it introduces the concept of a genocide definition. This measure is also in the Trade Bill, which is coming back to the House, and I make no apology for supporting the hon. Member for Bethnal Green and Bow in this. She will speak later, but as I understand it, she may not move the amendment. However, that is not the point. The point is that it is time to air this argument.

For too long, we have allowed ourselves to walk away from the issue of genocide without ever managing to hold any country guilty of this. Successive Governments have found it impossible to act because these issues are apparently referred to the International Criminal Court. The Government say to me, “It’s a matter for the international courts,” but they know full well that any reference to the ICC has to come from the Security Council, and it will never come from the Security Council because at least two of the nations there will always block it, particularly if it is to do with them or their allies. That is a distinct weakness, and I refer, of course, to the Chinese Communist party and Russia.

Let me give a couple of examples. We have discussed many times—the Foreign Secretary made a statement on it this week—the fact that many companies invest in, take trade from and take goods from areas of the world that are using slave labour. We know that this is happening in many places. For example, what is happening to the Rohingya is, in my view, likely to be defined as genocide. We can also look at what is happening to the Uyghurs in China. It is becoming more and more apparent every day that between 1 million and 3 million Uyghurs have been moved into labour camps. They are used as slave labour. They face forced sterilisation. There has been an 85% drop in their birth rate in that area. They have been moved out of their original area of work, and they are no longer allowed to speak their own language.

That is just one aspect, but a very brutal one, of what the amendment tries to deal with. After the Rwandan genocide in 1994, nothing happened. After the Bangladesh genocide in 1970, nothing ever happened. After the Cambodian genocide, nothing ever really happened. We still do not know what will happen, if it ever does, about Daesh’s genocide against Christians, Yazidis and so on, and companies will never be held to account for what they were involved in.

I realise that time is short, so I will conclude. Neither this amendment nor the one to the Trade Bill ties the Government’s hands. It does not give courts the right to proceed with investigations without reference. It does not give them the power to make criminal punishment, and it does not strike down trade deals or force criminal prosecutions. It would raise to the attention of the Government and the world that, at last, a domestic court here in the UK—the High Court or maybe the Court of Session—will be able to rule that, by all probability, genocide has taken place, and any financial institution, company or organisation involved with that area where genocide has taken place or with that country would no longer be allowed to do so. The Government would have to make that decision; that is the point.

I understand that, this week, the Board of Deputies is coming out in support of the amendment to not only this Bill but, importantly, the Trade Bill. I also understand that the US Senate, having seen what we have put forward, now plans to do the same. We have a chance here for leadership in the world. I thought we left the European Union to empower our courts and to give leadership. Again and again, I have been told by Ministers, “Not this, not now, not here.” The simple question I ask is, “Exactly when, what and how?” because that is never answered.

I finish by reading this:

“First they came for the socialists, and I did not speak out—

Because I was not a socialist.

Then they came for the trade unionists, and I did not speak out—

Because I was not a trade unionist.

Then they came for the Jews, and I did not speak out—

Because I was not a Jew.

Then they came for me—and there was no one left to speak for me.”

We need to speak out for all these oppressed peoples, whether it is in finance or in trade, and take the moral high ground.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I emphasise that before too long I will have to take the time limit down to four minutes, and I know that the SNP spokesperson is aware of this. I call Alison Thewliss.