Financial Services Bill

John Glen Excerpts

2nd reading & 2nd reading: House of Commons & Programme motion & Programme motion: House of Commons & Ways and Means resolution & Ways and Means resolution: House of Commons
Monday 9th November 2020 Commons Chamber

[The Economic Secretary to the Treasury (John Glen)]

Earlier today, we heard the Chancellor describe the UK’s financial services industry as fundamental to our economic strength. I wholeheartedly agree with that statement. This is an extraordinary industry: it drives growth and generates millions of jobs in every corner of our country, it has secured our reputation as a dynamic and world-leading financial centre, and it contributes vast sums to the public purse—money that has helped this Government to support millions of individuals and business through the pandemic. Now, however, as we leave the European Union and start our recovery from coronavirus, we commence a new chapter in the sector’s story.

We have set out a vision to create an industry that is even more open, more technologically advanced and greener than before; an industry that serves the people of this country and drives our economic recovery. That is underpinned by an unwavering commitment to high quality, agile and responsive regulation, and safe and stable markets. Through this Bill, I am laying the legislative foundations on which we will build to achieve those goals. I will speak briefly about the context in which the Government are bringing forward the Bill.

Until now, most of our recent financial services regulation was introduced through EU legislation. Having left the EU, we now have the opportunity to take back control of decisions governing the sector and, guided by what is right for the United Kingdom, to regulate differently and regulate better. That is why the Government are also undertaking a more fundamental review of our financial services regulatory framework, which will allow us to consider how the way in which we make our future rules might change to reflect the UK’s position outside the EU. The review will take time, however; the Government are consulting on it and there are changes that need to be made now. The Bill is therefore an important first step in taking control of our financial services legislation, which will support our position as a global hub for the sector in line with international standards.

In many parts, the Bill is consistent with the approach we took while this country was still part of the EU, but there are areas where it will better suit us to choose our own path, and this Bill marks the start of a process of evolution towards our goals. The Bill has three objectives: first, to enhance the UK’s world-leading prudential standards and protect financial stability; secondly, to promote openness between the UK and international markets; and thirdly, to maintain the effectiveness of the financial services regulatory framework, along with sound capital markets. I will speak about each of those objectives, starting with the first.



Clauses 1 and 2, along with schedule 2, require the Financial Conduct Authority to create a tailored prudential regime for investment firms—businesses that provide a range of services that allow investors to access financial markets. At present, investment firms are part of the same prudential regime as banks, even though their services are quite different and they do not pose the same risks to financial stability. The Bill will therefore require the UK’s independent regulator, the Financial Conduct Authority, to set more proportionate prudential requirements, which better reflect these firms’ risks. These measures will drive healthy competition across the sector, while allowing the UK investment industry to thrive outside the EU.

The UK’s regulators are globally respected, in large part as a result of the expertise of leaders such as Nikhil Rathil of the Financial Conduct Authority, Sam Woods at the Prudential Regulation Authority, and, of course, Andrew Bailey as Governor of the Bank of England. That is why it is appropriate to delegate responsibility to them for this complex and technical area of financial regulation. However, I can assure the House that the Bill also introduces an accountability framework to ensure greater scrutiny and transparency of the FCA’s decision making when implementing this regime.

This framework will sit alongside the prudential regime for banks and the largest investment firms, whose failure would impact the wider economy. They will remain subject to internationally agreed prudential standards. That is why clauses 3 to 7, along with schedule 3, will enhance the prudential regulatory regime in line with the latest global Basel banking standards endorsed by the G20. That will increase the UK’s resilience to economic shocks, while meeting our international commitments to protecting the global financial system. The Bill will enable the PRA to implement the standards in its rulebook. It, like the FCA, will be subject to an accountability framework. These measures illustrate this Government’s commitment to global financial stability.

[Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)]

Is there any chance, therefore, that, as part of this process, some of the commitments the UK has signed up to, such as those under Basel III, will be watered down?

[John Glen]

I am grateful to the hon. Gentleman for his intervention. The driving principle guiding the Government in bringing forward the Bill is to maintain the highest possible standards; indeed, our reputation globally relies on the maintenance of such standards. However, it will be in the role of our regulators, with their technical expertise, to determine how those standards are implemented.

Let me move on to the next part of the Bill.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

My hon. Friend mentioned the word “banks”, which obviously stimulated my interest as the co-chair of the all-parliamentary parliamentary group on fair business banking. He mentioned prudential risk around banks. Currently, the capital adequacy requirements for banks are all pretty much treated the same, which can deter competition from new entrants, such as regional mutual banks. Is he interested in looking at that issue in this legislation or in a future piece of legislation?

[John Glen]

My hon. Friend has unrivalled expertise and tenacity in bringing these matters before the House. He is right that there is a challenge to examine the relative regimes for different sized banks and institutions. That is something that regulators, subsequent to this Bill, will need to look at—indeed, they are keen to look at it—and I would welcome my hon. Friend’s further interventions in discussions in this place as we move forward on that legitimate question.

Eight years ago, the world was shocked by the LIBOR scandal. As the House will recall, traders at multiple banks attempted to manipulate that crucial benchmark, which contributes to interest rates for everything from complex derivatives to mortgages. Since then, significant improvements have been made to the benchmark’s administration. However, the Financial Stability Board, an international body that monitors and makes recommendations about the global financial system, has stated that continued use of LIBOR and other major interest rate benchmarks poses a serious source of systemic risk. That is because the decline in the inter-bank lending market has meant that such benchmarks depend increasingly on the judgments of panel banks rather than actual transactions. UK regulators have been encouraging firms to gradually shift away from LIBOR and are at the forefront of the global response to the transition, so to ensure that that transition was orderly, the FCA agreed with the LIBOR panel banks that they would continue to contribute to the benchmark for a temporary period. However, that temporary period will expire at the end of 2021, and after that point there is a risk that the benchmark will become unrepresentative of the market that it measures, potentially leading to disruption.

While we want firms to take the initiative in migrating from LIBOR, we recognise that there are some contracts that cannot be realistically amended to achieve that goal, so clauses 8 to 19, along with schedule 5, will give the FCA the powers that it needs to oversee the orderly wind-down of critical benchmarks, including LIBOR, and clause 20 will extend the transitional period for benchmarks with non-UK administrators from the end of 2022 until the end of 2025. This will avoid difficulties for our firms while the Government consider any changes required to our third country benchmarks regime to ensure that it is appropriate for the United Kingdom.

I will move on to the second objective of the Bill: to promote openness to overseas markets. I am delighted that clauses 22 and 23, along with schedules 6 to 8, establish a framework to provide long-term market access between the UK and Gibraltar for financial services firms. As many will know, Gibraltar boasts an array of thriving businesses in the sector, many of which are UK household names, including Admiral and Hastings, to name just two. The new Gibraltar authorisation regime in this Bill delivers on an earlier ministerial commitment and recognises our long-standing special relationship.

[Sir Robert Neill (Bromley and Chislehurst) (Con)]

I refer to my entry in the Register of Members’ Financial Interests. May I say, as chair of the all-party group on Gibraltar, how delighted I am to see this in the Bill? I know that that is echoed by Her Majesty’s Government of Gibraltar and the whole Gibraltar community. The Government have made good on a promise and it is very welcome. The Minister is right to set out that some 20% of UK insurance contracts are written by Gibraltar-based insurers. Will he undertake that, as well as this important piece of legislation, we will now build on it with his colleagues in other Departments to develop a full free market—a free-trade area effectively—between the UK and Gibraltar in services and goods?

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[John Glen]

My hon. Friend is absolutely right with that 20% statistic and to point to the extensive orientation of the Gibraltarian insurance industry towards the UK. Ninety per cent. of the business that it writes comes to the UK. He is right to say that this is foundational to a deepening relationship, and I will ensure that Gibraltarian firms can continue to access the UK market on the basis of aligned regulation and supervision. I look forward to listening to him, as we move forward, on further steps that he thinks would be appropriate.

The proposals will guarantee close co-operation between our regulators, and this measure highlights the spirit of openness that underpins our approach. The same can be said of clauses 24 to 26 and schedule 9, which make up the overseas funds regime. These measures will simplify the process under which overseas investment funds are marketed in the UK. Under the present system, the FCA has to assess the protection standards of every individual fund before allowing it to be offered to UK consumers. However, the Bill will allow the Treasury to give market access to entire categories of funds from other countries that have so-called equivalent regulatory standards to those in the UK. Funds in this group can then undergo a simpler application process, due to the confidence provided by their home regime, which will allow overseas investment funds to be marketed in the UK, maintaining the UK’s position as a global centre of asset management. There are currently over 9,000 funds that passport into the UK from the EU, and let me stress that the existing process will remain for funds that have not been declared equivalent.

[Sir Robert Neill]

I am grateful to the Minister for correcting me. Of course, my figure of 20% related purely to motor insurance policies; it is 90% for all Gibraltar-based insurance. Can he help me on the specific point of the overseas funds regime? It is widely welcomed in the sector that he will allow access for overseas funds that have not yet achieved equivalence, but can he help give some clarity on a matter that is of concern to some providers? What is the position if people have invested in the fund and for some reason equivalency is withdrawn? What would then happen in practical terms if, for example, additional money is invested in the fund after suspension? Can he help as far as that is concerned? It is important for many people.

[John Glen]

It would not be for me at this point to set out the deductions to be made on individual funds, but I would like to follow up with my hon. Friend formally on that matter, because a process is under way for that to be examined, and I am happy to engage with him further in due course.

I will move on to the importance of ensuring that the FCA has an appropriate degree of oversight over firms that could register under the regime. To my hon. Friend’s point, there is a tension between the objectives set in Parliament and the regulators’ judgment on the ground. We need to ensure not only that they are accountable, but that we have set the right prescription for the outcomes we wish to see.

[Richard Fuller (North East Bedfordshire) (Con)]

Will my hon. Friend spend a moment putting the Bill in context? Earlier today, we heard the Chancellor outline the bold initiatives on green finance and on making the UK a leader in transparency internationally and financial technology. As we leave the European Union, we are keen to accelerate away from a sclerotic, introspective set of financial markets. The Bill looks very worthy, but can he put it in the context of those broader ambitions for financial services? Is this the first of a series of Bills we will see, or is it clearing things up so that afterwards we are in a position where we can move forward to capture that opportunity?

[John Glen]

This is a portfolio Bill of 17 measures, some of which I have been wanting to introduce for some while. It is the first step on a journey, and there will, if the authorities allow me, be further financial services legislation that we will need to make following the consultation on the future regulatory framework. We need to be ambitious for financial services. We live in a dynamic world where financial services are evolving all the time, and we need to have regulators that are nimble in developing world-class regulation that allows us to continue to grow, and that is reflected in our appetite for FinTechs, stablecoins, digital currencies and the right regulatory framework for firms of different sizes, as my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) referred to earlier.

The third objective of the Bill is to maintain the effectiveness of the financial services regulatory framework and ensure sound capital markets. Clause 28 introduces a streamlined process for the FCA to remove an inactive firm’s authorisation and position on the public register. That will improve accuracy, while reducing opportunities for fraudsters.

Clause 29 makes small changes to the market abuse regulation, making the regime more effective, while reducing some of the administrative burden facing firms. I draw attention to clause 30, which raises the maximum sentence for two kinds of financial market abuse from seven to 10 years in prison, bringing the penalties for those offences in line with other forms of economic crime, such as fraud. Clause 31 will ensure we can enforce the rules that apply to trusts. The Government are also taking proportionate and effective action elsewhere to prevent the misuse of these trusts, collecting a range of ownership information on those that have a connection to the UK.

[Kevin Hollinrake]

My hon. Friend mentions economic crime, the prevention of fraud and the penalties for fraud, but one of the things the Government are committed to doing is bringing forward a corporate offence for the failure to prevent economic crime. It is not within this Bill. Is there any reason why not? What timescale might we see around that kind of legislation?

[John Glen]

As my hon. Friend mentioned to me a few days ago, he is aware that the Ministry of Justice is conducting a consultation on that matter, and that will drive the Government’s response overall, but it is a matter we take seriously. Following the Financial Action Task Force review at the end of 2018, we needed to move forward a number of measures to improve and tighten our regime. It is critical for the integrity of the United Kingdom’s financial services industry to have in place the appropriate sanctions and the important regulations on reporting standards across the whole of financial services.

Let me turn to clause 32, which will strengthen our breathing space scheme that supports people with problem debt. That has long been a priority of mine as City Minister, and I put on record my gratitude to my hon. Friend the Member for Rochester and Strood (Kelly Tolhurst), who introduced a private Member’s Bill on this issue, for all her efforts, and to Members across the House for the consensus on that legislation’s introduction. The Bill contains crucial amendments that are required to implement fully and effectively statutory debt repayment plans, which will help people facing problem debt to pay back what they owe within a manageable timeframe. The Bill’s measures will allow us to compel creditors to accept these new repayment terms, providing greater peace of mind to consumers, many of whom will be vulnerable.

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

I congratulate the Minister on the work I know he has done over many years on this subject. I understand that the Bill amends the Financial Guidance and Claims Act 2018 to ensure that the statutory debt repayment plan can include debts owed to the Government or Government Departments. Will he explain a bit further how that will work in practice? What will the ranking for claims be for creditors? Will it require a mediated process?

[John Glen]

I thank my hon. Friend for his question. As he says, the purpose of the measure is to provide, during the eight-week moratorium—longer for those with a mental health condition—a set of options, and it is key that the Bill will allow us to compel creditors to accept the new repayment terms. He is right to say that it will provide peace of mind to all consumers, with a compulsion under the provision to bring in debts owed across the public and private sector. He asked me to list the hierarchy of debts, which is probably beyond my capacity at this point, but I am happy to write to him to set out in more detail what the provision gives us room to do.

Clause 33 complements the Government’s pioneering Help to Save scheme, which supports people on low incomes to build up a nest egg. These changes will ensure that people can continue to save through a National Savings & Investments account after their participation in the scheme ends.

As I mentioned earlier, there will be some areas where this country will decide that it is right to diverge from EU regulation. Clause 34 is a good illustration of that, making amendments to the packaged retail and insurance-based investment products regulation, commonly known as PRIIPs. That EU legislation was laudable in its aims, although, one might argue, not quite as laudable in its outcomes and achievements. Concerns have been raised by Members across the House, and most tenaciously by my hon. Friend the Member for Basildon and Billericay (Mr Baron), that it is not working as intended and that there is a risk that consumers may be inadvertently misled by disclosures that firms must provide under the regulation. I am pleased finally to be able to address those concerns. The Bill will allow the FCA to clarify the scope of the regulation. It will tackle the issues around misleading performance scenarios and allow the Treasury to extend an exemption from the PRIIPs regime for undertakings in collective investments in transferable securities—UCITS—which are a type of investment fund.

These are some examples of how we intend to take advantage of a new ability to address issues in retained EU law. However, we have no intention of needlessly, ideologically or recklessly diverging from EU legislation. Instead, we will maintain existing regulations where they make sense for the financial services industry in this country. One instance of that approach is clause 35, which finalises reforms to the European market infrastructure regulation, which the UK supported as an EU member state, while clause 36 contains a change that should provide certainty to markets by ensuring the legal validity in the past and in the future of the financial collateral arrangements regulations.

Finally, clause 37 will make the role of the chief executive of the Financial Conduct Authority a fixed five-year term appointment that is renewable only once, in line with other high-profile roles in financial services regulation. That was recommended by the Treasury Committee not so long ago.

I recognise that Members might be concerned that some of the Government’s prior commitments are not included in the Bill. I assure the whole House that our focus on these issues has not wavered. One issue that came up in questions to the Chancellor earlier was access to cash. The Government are committed to ensuring that everyone who needs it has easy access to cash. I have heard representations on the issue from Members across the House in recent weeks, including my right hon. Friend the Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell), whom I met recently, and Members from across Scotland and the whole UK.

Earlier this month, we launched a call for evidence, seeking a wide range of views on the subject’s key considerations. Once we have reviewed the findings, we will bring forward legislation as soon as parliamentary time allows.

[Alison Thewliss (Glasgow Central) (SNP)]

I thank the Minister for making that point, because I was not going to make a great deal of it in my remarks. Does he appreciate the fears on the SNP Benches that by the time the Government get around to legislating on this, there will be no banks left?

[John Glen]

I understand the hon. Lady’s anxiety—it is one she has expressed to me a number of times over the past nearly three years.

We asked Natalie Ceeney to do a review last spring. Immediately the review was completed, we put together the JACS process—the joint authorities cash strategy—and brought together the Payment Systems Regulator, the FCA, the Bank of England and the Treasury. We are working closely with LINK and the banks to look at a new way of making cash available. The cashpoint network in this country is not fit for purpose and urgent work is going on behind the scenes to bring forward a cohesive solution.

The prospect of legislation remains, and the call for evidence a week or so ago is another step in moving this forward as rapidly as possible. This problem has been extended and made worse by our recent experience of covid. I assure the hon. Lady that I am committed to getting to the end of this in a positive way.

To conclude, the Bill marks an important moment in the history of the UK’s financial services sector. It is the next step of an ambitious programme of regulatory reform that will be guided by what is right for UK industry. In short, the Bill will support financial stability and high regulatory standards, promote openness between the UK and international markets, and maintain the effectiveness of this country’s financial regulatory framework. I commend it to the House.

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[Alison Thewliss (Glasgow Central) (SNP)]

My colleague from the Treasury Committee, the hon. Member for West Worcestershire (Harriett Baldwin), mentioned earlier that some of the Benches in this place are a little empty this evening. I am sure that that is not because this is not a wonderfully exciting Bill—well, perhaps. But we have to look at the reality of the situation that we are in. We are here in London in lockdown and people are being advised not to travel. So I do not hold a grudge against any Member who has decided not to travel today, for their safety or the safety of their constituents and their families. It is important that we consider each other in this place as well as those out there in every street in the country as coronavirus continues to spread.

I thank the Minister for his briefing on Thursday evening. It was a very good distraction from all the events in the United States. I also thank all the organisations that have provided such helpful briefings in advance of the Bill. The financial services are a significant part of the economy in Scotland in terms of the number of businesses, the number of employees and their contribution to the wider Scottish economy, particularly in the growing area of FinTech, where we have much innovation coming out of our universities.

The Bill is, relatively speaking, a wee bit dull and a wee bit functional. Some bits have been taken out of the back of the drawer at the Treasury and presented in the Bill tonight.

[John Glen]

Harsh.

[Alison Thewliss]

The Minister says that is harsh, but he said himself that there are things here that he has wanted to do for quite a wee while and has not found the mechanism to do. It is a portfolio Bill, as he called it generously, of some things that hang together and some things that are a wee bit tacked on.

The regulations are important, and they affect us all in some way or another. The purpose of financial regulations is to protect us as citizens from the worst extremes of the financial inclinations of those who wish to grab the cash a wee bit quicker. We would all live with the consequences of deregulating to an extreme, so we need to be very careful of the regulations that we make.

The Bill’s objective is to enhance

“the UK’s world-leading prudential standards and promote financial stability”,

to promote openness

“between the UK and international markets”

and to maintain

“an effective financial services regulatory framework and sound capital markets”.

I am sure that that is all very laudable. It is what we had as a member state of the EU. Who could really object to any of those aims? We on the SNP Benches will not be opposing this Bill on Second Reading tonight, but we do hope to put together some constructive amendments for the Government to ignore in Committee. If they would like to surprise me and take them on I would be absolutely made up, but we shall see. I shall go ahead and hope rather than look at experience.

I hope that we can have some good discussions on the things that should be put into the Bill to give people greater protection, and where things should be that wee bit tighter. Despite what the Chancellor said earlier about unilateral equivalence, the reality is much more complex and many firms do not yet know what they are preparing for. Whether it is the worst or not quite the worst, it will still cost money, time and resource, at a time when covid affects us all, and it will still be significantly less advantageous than it was under EU membership or even single market membership.

I am nervous, as are many others, about Parliament’s role in the regulatory framework and where that ends up. CityUK has expressed concerns, as has Barclays, about taking back these powers to hand them straight over to the PRA and the FCA. This is hardly taking back control. I worry that with the safeguards that we have, we will not find out that something has gone terribly wrong until it is far too late, and far too far down the line. I worry that Parliament will find out about these things when it is too late, because that has been the experience of the banking crisis and other things. We need to be careful that we do not end up going down those same roads. A statutory limit on the term of the FCA chief executive is not quite taking back control in the same way. This is giving a whole lot of power to these institutions and cutting out Parliament.

I have some questions and I would be grateful if the Minister picked them up. For example, the Bill will allow Her Majesty’s Treasury to revoke the capital regulation in favour of PRA rules, so what happens to those who are already working to the CRR2 EU regulations and what do they now need to do? Will regulatory decisions and implementation be in line with broader public policy objectives and is there a safeguard within that, because Parliament should be satisfied that existing appeals mechanisms are sufficient and, as Barclays says, that they are commensurate with the increased level of autonomy and rule making for those regulators?

The ABI is also concerned about a number of areas. It talks about the need for the Gibraltar authorisation regime, saying:

“We welcome that Government will work with the FCA to ensure that, once the GAR comes into force, individuals and eligible small businesses using financial services sold in the UK by Gibraltar-based firms can refer disputes to the UK Financial Ombudsman Service”.

That protection ought to be there in black and white but it does not appear quite yet to be at that stage. People need to have that protection—that recourse—if something goes wrong.

It is of huge concern to us that the UK regulators have threatened to deviate from EU rules on share trading if Brussels does not deliver market access permissions to the City of London. The ABI has said that the equivalence process has occasionally been used as a political weapon to wield against third countries. It is concerned about where the overseas funds regime sits within this, particularly because it does not know what might happen should there be a negotiating advantage for one side or another when the cost is borne by companies and consumers.

There are further questions on what this means for existing investors if equivalence is withdrawn. What happens if someone has money in a particular fund and then it goes? What are the practicalities there? What do they need to do as an investor in those circumstances? We need urgent clarity for people so that they know where they stand on these issues. Perhaps the Minister cannot give us those answers yet. That is part of the wider problem that people do not know exactly what is going to happen and how they can prepare for it. There could be a risk that people will withdraw from these funds altogether rather than keeping their money there, which would have further knock-on effects.

We support the increased sentences for insider dealing and market abuse. It is quite right that those should be increased. However, as I have said many times in this House, enforcement is key—having the tools in the box to make sure that we can find these frauds, market abuses and insider dealings and then punish those responsible. That is crucial, because if people are felt to get away with these things, then having the rules is really not enough.

On people exploiting rules and general misbehaviour, I want to talk about money laundering. I was on the Committee that considered the Bill that became the Sanctions and Anti-Money Laundering Act 2018 and I worked on it in this House. Clause 31 amends schedule 2 of SAML to ensure that regulations can be made in respect of trustees with links to the UK. Without it, any powers that HMRC sought to exercise to access information on such trusts are at risk of being held invalid under legal challenge. The Government say that this technical change

“will reaffirm the UK’s global leadership in the use of public registers of beneficial ownership, as identified by the Financial Action Taskforce’s Mutual Evaluation of the UK in 2018. This will further support the public and private sectors to efficiently and effectively target their resources towards potential criminal activity using trusts, maintaining the resilience of the UK’s defences against economic crime.”

That does not stack up to me because there have been opportunities to deal with this.

I was on the Committee on the Registration of Overseas Entities Bill, which sought to look at trusts as well. We took lots of evidence on how trusts are an open door for people to move money around, yet the Government are not really acting to deal with that. The Registration of Overseas Entities Bill went through the whole pre-legislative scrutiny process and then just disappeared. The difficulty is that people are moving money around and buying properties, largely in the city of London, where they can launder that money. There are huge buildings sitting empty in the city because people are using that as a means of moving money about. There is a huge homelessness problem as well, so this is a really pernicious problem that the Government need to get their head around.

I do not understand why there is not more to deal with the issue of trusts, or with the issue, as I have mentioned ad nauseum, about Scottish limited partnerships and proper reform of Companies House. The Chancellor mentioned the consultation on that earlier. That consultation has been going on for ever, it feels like, and nothing has yet changed. The Government have this huge, big, wide, gaping loophole in Companies House that allows people to move money around. If they want to do something properly, I would suggest that they deal with that, and do a lot more to take action on trusts and other means of shunting money about. Not doing that makes this country a home for dirty money. Lots of research has been done on this issue by Transparency International and others. The evidence is there; the action, unfortunately, is not.

The debt respite scheme in clause 32 can be enhanced further. I know the Minister is committed to doing this and wants to act on it. I would be curious to find out a bit more about what he has learned from what Scotland has done so far and how the schemes will work together, because we have had the debt arrangement scheme in Scotland since 2004 and the statutory moratorium since 2011. There are always improvements that Scotland can make and the UK can make as well. I would be very interested to hear what more can be done to improve upon that.

I have been contacted, as many other Members might have been, by Macmillan’s duty of care campaign. What conversations has the Minister had with the Financial Conduct Authority on that campaign? Macmillan fears that many people—people with cancer who are struggling —are finding things incredibly difficult. Can he say with certainty that the guidance put out by the FCA is enough? Could more be done to protect people in the most vulnerable of circumstances?

Help to Save customers have enough on their plate at the moment without having to navigate myriad changes to their saving products. We firmly believe that the accounts should continue to earn interest until this crisis is over. Savers who do not withdraw the funds after maturity and whose balance remains in the account do not seem to be eligible for further bonuses and they are also not earning interest. It seems very unfair to expect low-income savers, who are potentially dealing with the risk of redundancy and are worried about the risk of covid, to change financial products at this time to avoid losing interest. Some of this is the UK Government’s fault for not having set an end date when the scheme was introduced. We argue that they should extend the active period of these accounts at least until the end of this pandemic, so that nobody loses that all-important interest.

What is the communications strategy from the UK Government to make sure that nobody loses out? Since the launch of the scheme, more than 222,000 people have opened Help to Save accounts, with some £85 million deposited, I understand. So this is not a small amount of money for people at the very lowest end of our economy and they need to have some certainty that the scheme will not be rolled up and that they will not lose out because of the changes the Government seek to make in this Bill.

I wish to close by discussing a briefing I received from the Finance Innovation Lab, which makes three well made points about the Bill. First, it says that the Bill threatens to introduce a democratic accountability deficit in financial sector policymaking, and I made that point earlier. We cannot be in the situation where we take all these powers back from Brussels and hand them straight over to unaccountable, arm’s length organisations. They might come before the Treasury Committee once every six months or so, when we will ask them some questions, and that is the extent of the scrutiny they get from this House. We do the best job we can to ask them questions—I see some colleagues from the Committee on the Government Benches tonight—but that is not the same.

Secondly, the FIL also argues, as the right hon. Member for Wolverhampton South East (Mr McFadden) did, that the purposes of the Bill should be broadened to economic, social and environmental outcomes. The Chancellor talked a lot earlier about how important those environmental outcomes are, but they are missing from this Bill. I do not know whether that is because one part of the Treasury is not speaking to the other or how else that has come about, but if the Government are now saying today that these environmental aspects are incredibly important and they should be a key part of COP26, as the former Governor of the Bank of England has also argued, they need to be in the Bill. If they are that important, the Government need to put them in the Bill.

Lastly, the FIL suggests that the Bill should help the UK to be a leader in financial regulation that sets high standards. There should be no backsliding on the standards we have built up as part of being in the EU. It is an area in which we had huge and significant influence as a member state in making a lot of these rules. Now if we want to have equivalence and have access, we are going to have to abide by some rules made by other people, rather than being able to make the rules ourselves. I believe firmly that we should not have less power as Members of this House than MEPs have to scrutinise all of those things that come before them, and we should have a bit more than we have in statutory instruments Committees; we cannot vote on those and we cannot amend them either. So we need to have a whole lot more by way of scrutiny of financial services in the future. In those Committees, I have argued regularly to the Minister that we need a plan and a framework, and we need to see the whole spectrum of what this Government propose for financial services. It needs to involve everybody—the people in the sector and Members from across parties in this House—so that we can build something resilient that we can all have trust and faith in. That trust and faith in financial services is what we all need. We need to be able to trust the institutions and that our money will be well managed and we will be protected in the event that anything goes wrong.

This is all about building something new, but there is really not a huge amount that is new in the Bill. The Government need to do a whole lot more on financial services, which have been neglected as part of the Brexit negotiations, put to one side and not prioritised, despite being an absolutely massive sector of the economy in Scotland and the rest of the UK. I hope very much that we will be able to make amendments to the Bill to improve it and that the Government will listen to those amendments and take them forward in good faith.

--- Later in debate ---

[John Glen]

With the leave of the House, I too would like to speak a second time.  I thank hon. and right hon. Members for their contributions and I welcome the broad support that I believe exists across the House on the Bill. Clearly, I will not be able to address all the points that have been made, but I have taken extensive notes and I shall write to colleagues where I feel I can say something meaningful at this point. But I look forward to further comments to address some of these points in Committee.

The right hon. Member for Wolverhampton South East (Mr McFadden) is right to say that the UK is a key player in the global effort to ensure that globally active banks are subject to strong regulation. I have huge respect for him and his experience in Government. I think he set out very clearly and plainly the fundamental challenges with which we are grappling in this industry. The track record we have in the United Kingdom should give him and other Members comfort that this Government have no intention of watering down regulations that have been agreed on the international stage. High-quality, agile and responsive regulation is absolutely key to the continuing success of the UK financial services sector and to addressing the potential challenges raised by my hon. Friend the Member for North East Bedfordshire (Richard Fuller) in his characteristically powerful speech.

On the matter of equivalence, I would like to address the wide-ranging questions from across the House. Equivalence assessments are an autonomous technical process. We have been clear from the beginning that the politicisation of equivalence is in no one’s interests. We are committed to an outcome-based approach. That means acknowledging how different approaches to regulation can achieve the same regulatory objectives.

A number of Members, including the right hon. Member for Wolverhampton South East, raised green finance. While he acknowledges that it is not directly related to the Bill—he wonders why—I hope the measures announced today show that the Government take their commitments in the green finance space very seriously. I look forward to engaging with him on the substantive points about how regulatory oversight works with the announcements made today.

I welcome the comments from the hon. Members for Glasgow Central (Alison Thewliss) and for Aberdeen South (Stephen Flynn) regarding overseas trust. The Government are taking proportionate and effective action to prevent the misuse of trust, through clause 31. The Government also intend to implement a register, the first of its kind, of beneficial owners of overseas entities that own or buy land in the UK.

[Alison Thewliss]

Will the Minister give way?

[John Glen]

I would be very happy to give way, as always.

[Alison Thewliss]

We both know that the Registration of Overseas Entities Bill was a Department for Business, Energy and Industrial Strategy Bill. Does the Minister have any further gen on what happened to it and when it might come back to this House?

[John Glen]

I think I have demonstrated that I have quite a lot to deal with in the Treasury, but I would be very happy to correspond with the hon. Lady further on the status of that Bill. I know she takes a very close interest in those matters.

On the hon. Lady’s words on the duty of care, the Government believe that the FCA, the UK’s independent conduct regulator, is best placed to evaluate the merits of a duty of care. She will know that last year the FCA published a feedback statement on its discussion paper on duty of care and announced that it will undertake further work to examine how best to address potential deficiencies in consumer protection, in particular by reference to its principles for businesses. The Government will continue to engage with the FCA, as I have done during my time in office, on a very regular basis.

The first objective of the Bill is to enhance the UK’s world-leading prudential standards and promote financial stability. On that theme, my hon. Friend the Member for Hitchin and Harpenden (Bim Afolami) asked a number of characteristically insightful questions that I expect to cover in detail in Committee. But I will also look to respond to his letter urgently.

Let me address the constructive points made by all Members on the important issue of the democratic oversight of the regulation of the financial services sector. Our independent expert regulators are a key strength of the UK’s existing framework. The right hon. Member for Wolverhampton South East and my hon. Friend the Member for Wimbledon (Stephen Hammond) should be reassured that it is these expert regulators who will be setting the firm-level requirements. We therefore think that they should continue to play a central role in developing and maintaining regulatory standards, in line with their statutory objectives. However, as my hon. Friend the Member for Wimbledon pointed out, that must be balanced with appropriate strategic policy input from Government and parliamentary scrutiny.

This Bill delivers for the specific purposes of implementing the remaining Basel standards and introducing a new prudential framework for investment firms. It introduces an enhanced accountability framework, specifying regulatory principles that the regulators must have regard to, as well as additional consultation and reporting requirements for the regulators when implementing the changes in the Bill. That sits alongside their existing statutory objectives. In addition, I recently issued a consultation on broader reforms to the regulatory framework as a whole: the future regulatory framework review. As I noted in my earlier remarks, this Government are committed to promoting openness to overseas markets. That is the Bill’s second objective.

My hon. Friend the Member for West Worcestershire (Harriett Baldwin), who is one of my predecessors, spoke to our ambitions for building our relationship with the USA in the area of financial services. I value her comments. It is important that we continue to maintain a truly global outlook, and we have well developed regulator-to-regulator relationships. I thank my hon. Friend the Member for Bromley and Chislehurst (Sir Robert Neill) for his intervention concerning the Gibraltar authorisation regime. A number of Members mentioned the overseas funds regime, for which I am grateful, and I hope that the complexity of this technical measure can be fully discussed in Committee.

As our third objective, it is essential that we maintain the effectiveness of the financial services regulatory framework and sound capital markets. I have outlined the measures in the Bill that will help to achieve both those things. Finally, I listened with particular interest to the typically well-informed speech from my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake). He covered a lot of important issues, some of which I may have heard before, and I look forward to discussing them further, as I always do; we do discuss these matters further, and we do make progress on some of them.

This Bill is a critical first step in taking control of our financial services legislation. As I said, it has three objectives: to enhance the UK’s world-leading prudential standards and promote financial stability, to promote openness to overseas markets, and to maintain the effectiveness of the financial services regulatory framework and sound capital markets. I am confident that the Bill will succeed in achieving all three, and I commend it to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Financial Services Bill (Programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Financial Services Bill:

Committal

1. The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

2. Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 3 December 2020.

3. The Public Bill Committee shall have leave to sit twice on the first day on which it meets. Proceedings on Consideration and up to and including Third Reading

4. Proceedings on Consideration and any proceedings in legislative grand committee shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which proceedings on Consideration are commenced.

5. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.

6. Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and up to and including Third Reading.

Other proceedings

7. Any other proceedings on the Bill may be programmed.—(David T. C. Davies.)

Financial Services Bill (Ways and Means)

Motion made, and Question put forthwith (Standing Order No. 52(1)(a))

That, for the purposes of any Act resulting from the Financial Services Bill, it is expedient to authorise provision enabling sums payable in respect of a debt in accordance with a repayment plan under the Financial Guidance and Claims Act 2018 to be payable towards costs of operating repayment plans of the debt respite scheme operated under that Act.—(David T. C. Davies.)