Public Works Loan Board Lending Limit

John Glen Excerpts

Wednesday 11th May 2022 Written Statements

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

The Public Works Loan Board (PWLB) is a HM Treasury lending facility to local government. The PWLB passes on central Government’s lower cost of borrowing to local authorities to support their delivery of housing, local infrastructure, service delivery and local regeneration. It also helps local authorities to manage their cash flow in a predictable and cost-effective way.

Today, I wish to announce an important step the Government are taking regarding the ongoing effective management of the PWLB.

I will shortly commence section 112 of the Finance Act 2020, amending the National Loans Act 1968 to increase the overall PWLB lending limit from its current level of £95 billion to £115 billion. This will allow the PWLB to make an additional £20 billion of advances to local authorities across England, Scotland, and Wales, continuing to fund essential local projects that will support the delivery of local infrastructure, housing, and service delivery.

The lending limit was previously raised from £85 billion to £95 billion in October 2019. Heightened local authority lending, as highlighted in reports produced by the Public Accounts Committee (PAC) and National Audit Office (NAO), has driven the need to implement this further increase. The ongoing increase in lending largely reflects local authorities’ continued investment in their capital programmes and the expansion of their delivery of services through capital expenditure. The PWLB provides critical support for local authorities through accessible, low-cost lending, and it is important that this access is maintained. I note the action taken by my right hon. Friend the Secretary of State for Levelling Up, Housing and Communities to address instances of excessive risk, which will safeguard the proper and proportionate borrowing and investment provided by the PWLB.

The PWLB remains the best source of accessible, low-cost borrowing for local government. By extending the overall lending limit, the Government are strengthening their commitment to supporting local government delivery of key local priorities.

[HCWS13]

Money Laundering and Terrorist Financing (High-Risk Countries) (Amendment) Regulations 2022

John Glen Excerpts

Monday 25th April 2022 General Committees

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

I beg to move,

That the Committee has considered the Money Laundering and Terrorist Financing (High-Risk Countries) (Amendment) Regulations 2022 (S.I. 2022, No. 393).

It is a pleasure to serve under your chairship this afternoon, Mr Hosie.

The Government recognise the threat that economic crime poses to the UK and our international partners, and are committed to combating money laundering and terrorist financing. Illicit finance causes significant social and economic costs through its links to serious and organised crime. It is a threat to our national security, and risks damaging our international reputation as a fair, open, rules-based economy. It also undermines the integrity and stability of our financial sector, and can reduce opportunities for legitimate business in the UK. That is why we are taking significant action to combat economic crime through the economic crime levy and the Economic Crime (Transparency and Enforcement) Act 2022, and by progressing the Government’s landmark economic crime plan. We are also working closely with the private sector and our international partners to improve the investigation of economic crime, strengthen international standards on corporate transparency, and crack down on illicit financial flows.

The money laundering regulations support our overall efforts. As the UK’s core legislative framework for tackling money laundering and terrorist financing, they set out various measures that businesses must take to protect the UK from illicit financial flows. Under the regulations, businesses are required to conduct enhanced checks on business relationships and transactions with high-risk third countries, which are countries identified as having strategic deficiencies in their anti-money laundering and counter-terrorism financing regimes that could pose a significant threat to the UK’s financial system.

This statutory instrument amends the money laundering regulations to update the UK’s list of high-risk third countries to mirror lists published by the Financial Action Task Force, the global standard-setter for anti-money laundering and counter-terrorism financing. The UK’s high-risk third countries list will now include the United Arab Emirates, and will no longer include Zimbabwe. In March 2022, the UAE was listed by the FATF, and Zimbabwe was removed, having completed its FATF action plan to address the key deficiencies in its anti-money laundering and terrorist financing regimes.

As the Financial Action Task Force carries out its periodic reviews and regularly updates its public lists of jurisdictions with strategic deficiencies, we also need to update our own. Updating our list shows that we are responsive to the latest economic crime threats, and ensures that the UK remains at the forefront of global standards on anti-money laundering and terrorist financing. This amendment will enable the money laundering regulations to continue to work as effectively as possible to protect the UK financial system. It is crucial for protecting UK businesses and the financial system from money launderers and terrorist financers. I therefore hope that colleagues will join me in supporting this legislation.

--- Later in debate ---

[John Glen]

I will endeavour to address the points made by the hon. Member for Hampstead and Kilburn, but I will turn first to the two points made by my right hon. Friend the Member for Scarborough and Whitby, the first of which was on the nature of the regulator’s engagement with small entities—he cited his own in North Yorkshire. The new chief executive of the Financial Conduct Authority, who was appointed in October 2020, is undertaking a transformation programme at the FCA that is designed to interrogate risks more effectively and to target compliance activity more proportionately. A lot of progress has been made, but clearly there is more to be done. I will be happy to take up any individual examples that my right hon. Friend raises formally.

My right hon. Friend also raised the issue of PEPs—politically exposed persons—and the frustrations that occur when colleagues are prevented from accessing financial services products, as well as the consequences of not resolving that issue. There is a framework for light-touch, proportionate and appropriate interrogation of such risks, although sometimes those processes are not always executed properly. I have taken that up on two occasions over the last few years, and there has been an incremental step change each time, although the situation is not yet perfect. Again, I will be happy to take that up that issue.

The hon. Member for Hampstead and Kilburn raised three points—on the UAE, Zimbabwe and Russia—which I will take in turn. On the listing of the UAE, she recognises the history. At the March 2022 FATF plenary, the FATF concluded that the UAE should be added to the list of jurisdictions with significant weaknesses in its counter-illicit finance regimes, but recognised that the UAE had made significant progress. A lot of FATF assessments are not black and white, as many of the countries are on a journey, but in my experience the FATF is pretty rigorous in its assessments and pretty unashamed in intervening, regardless of any lobbying. I am clear that the process is rigorous and thorough.

The UAE expressed its high-level political commitment to making further reforms in a number of areas in order to exit the FATF list. The UK is working closely with the UAE to address those weaknesses in the UK-UAE partnership in order to tackle illicit finance. By aligning the UK’s approach to that of the FATF, the UK is in line with international standards. The identification of countries is underpinned by the FATF’s consistent technical methodology and robust assessment processes. On occasion, other countries’ representatives have challenged those processes, asking me, “Would the UK intervene?”; we do not. As a key, leading member of the FATF—one of its 39 countries—we stand by its methodology.

The hon. Member for Hampstead and Kilburn asked a number of questions about the history of the relationship with the UAE, and cited Spotlight on Corruption and other organisations, such as Transparency International. We look carefully at what they have to say. I cannot answer her questions about the specifics of the UAE-UK relationship historically, but I will write to her if I can find any more information.

The hon. Lady made a number of assertions about the FATF and where the UK is. I recognise the politics of the matter, and the movements that the Government have made in this Session and hope to make in future. I draw her attention to the mutual evaluation report of the UK’s system in December 2018, which cited the progress needed on the register of overseas beneficial ownership and Companies House reform. A large amount of money—£63 million—was allocated to work on Companies House reform at the last spending review, and the legislation is coming to make good on that. I do not accept all that the hon. Lady said, but I welcome the steps that have been taken in these difficult times, and that will continue to be taken to accelerate and to meet the conditions set out in that report. Overall, that FATF analysis of the UK was extremely complementary—one of the best reports it has ever done—and we should be proud of our progress.

On Zimbabwe, I acknowledge and am grateful for the hon. Lady’s assent to what I am proposing today. Clearly, there is an ongoing piece of work with every country. Countries move through the journey, from being a cause for concern to not a cause for concern; this measure is the consequence of that. She asked why Russia has not been added to the high-risk third countries list. The UK’s HRTC list mirrors those identified by the FATF in its public documents as having poor anti-money laundering and counter-terrorist financing controls. I certainly grasp the optics of where Russia is—that it is not on the list—but by aligning our approach FATF we remain in line with international standards. The identification of high-risk countries is underpinned by that consistent, objective methodology and robust assessment process.

It is important not to look at the UK’s list of high-risk jurisdictions in isolation. The money laundering regulations require enhanced scrutiny in a range of situations that present a high risk of money laundering, and Russia will be included in that. Regardless of listing, firms have to make nuanced risk assessments of business relationships and transactions. The UK’s national risk assessment on money laundering and terrorist financing publicly identified Russia as high risk. We will continue to work with our allies, including the FATF, the EU and the US on these matters, ensuring the continuation of a co-ordinated and targeted response to Russia’s invasion of Ukraine that protects the international financial system as a consequence.

I have addressed the three countries that the hon. Lady mentioned. It is the Government’s view that this amendment will ensure that UK legislation remains up to date and continues to protect the financial system from the threats posed by jurisdictions with inadequate money laundering and terrorist financing systems. The amendment enables the UK to remain in line with international standards on anti-money laundering and terrorist financing, allowing it to continue to play its full part in the fight against economic crime. I hope the Committee has found my observations somewhat illuminating, and supports the regulations.

Question put and agreed to.

Financial Services Update

John Glen Excerpts

Tuesday 29th March 2022 Written Statements

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

I can today inform the House of the disposal of approximately £1.2 billion worth of Government-owned NatWest Group plc—formerly Royal Bank of Scotland, RBS—shares, representing approximately 4.91% of the company, by way of a directed buyback transaction.

Approximately £1.2 billion worth of shares were sold to NatWest in a single bilateral transaction on 28 March 2022.

The Government remaining shareholding represents approximately 48.1% of voting rights in the company, meaning that for the first time since the financial crisis NatWest is no longer under majority public ownership.

Rationale

It is Government policy that where a Government asset no longer serves a public policy purpose the Government may choose to sell that asset, subject to being able to achieve value for money. This frees up public resource which can be deployed to achieve other public policy objectives.

The Government are committed to returning NatWest to full private ownership, given that the original policy objective for the intervention in NatWest—to preserve financial and economic stability at a time of crisis—has long been achieved. The Government only conducts sales of NatWest shares when it represents value for money to do so and market conditions allow. This sale represents a landmark for Government in exiting the assets acquired as a result of the 2007 to 2008 financial crisis, as it takes the Government’s shareholding below 50%.

Format and timing

The Government, supported by advice from UK Government Investments, concluded that selling shares to NatWest, in a single bilateral transaction, represented value for money.

Share buybacks are a common practice undertaken by companies looking to efficiently deploy their excess capital. On 6 February 2019, NatWest obtained shareholder authority to purchase shares held by Government at market price. This authority was renewed at subsequent NatWest annual general meetings in April 2019, April 2020 and April 2021.

This is the fifth large block sale of NatWest shares undertaken by the Government, following previous disposals in August 2015, June 2018, March 2021 and May 2021. This is the second sale of shares via an off-market share sale directly to the company.

The sale concluded on 28 March 2022, with NatWest purchasing a limited number of its Government owned shares. A total of approximately 550 million shares, approximately 4.91% of the bank, were sold at the 25 March 2022 closing price of 220.5p per share. The reduction in the Government’s shareholding is less than the percentage sold following the cancellation of shares by NatWest. Following this transaction the Government shareholding stands at approximately 48.1%.

Details of the sale are summarised below:

Midas Financial Solutions Collapse

John Glen Excerpts

Tuesday 22nd March 2022 Westminster Hall

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

It is a privilege to serve under your chairmanship, Mr Stringer, and I join others in congratulating the right hon. Member for Orkney and Shetland (Mr Carmichael) on securing today’s debate.

Before I get into the matter at hand, I want to acknowledge the role that my opposite number, the hon. Member for Hampstead and Kilburn (Tulip Siddiq), has played over the past six years in championing the case of her constituent, Nazanin Zaghari-Ratcliffe. We all have constituents in need, but the hon. Lady’s consistent advocacy has been very effective, and I want to pay tribute to her publicly.

In acknowledging that this is an extremely challenging case, which has caused great misery to many investors who were misled, I recognise, too, the broader context of a financial services sector that is a great success in this country. However, the debate and the points made in it have raised a number of issues that I want to respond to specifically. If hon. Members are patient, I will get into the mechanics of the authorised representative regime, how it is working and what lessons we learn from this.

Fraud is a crime that damages trust between individuals and across society—I would say it casts a shadow across the economy—and tackling it is a priority for the Government. Our efforts are focused on reducing vulnerabilities, catching the criminals responsible and supporting the victims of these despicable crimes. As the hon. Member for Strangford (Jim Shannon) said in his welcome remarks, those crimes cause considerable distress to individuals and have a catastrophic effect on families and communities.

We are working closely with industry regulators and consumer groups to consider additional legislative and non-legislative solutions. I will say more about that in a moment, but first I will set out the Government’s position on this specific case. As hon. Members no doubt appreciate, there are limits to what I can say, but Mr Alistair Greig perpetrated a large-scale fraud over several years, much of it accurately depicted by Members this morning. He lied to those who trusted him with their pensions and life savings, and caused enormous suffering.

Midas was founded by Mr Greig in 2006 and it carried on a financial advisory business based in Aberdeen. In 2007, it became an appointed representative of a firm called Sense Network Ltd, and the Treasury understands that much of its business was mortgage advice. Mr Greig used his senior position in the firm and its relationship with Sense to convince his clients that he was investing their hard-earned money in high street accounts with RBS.

I want to pick up the point made in passing by the right hon. Member for Orkney and Shetland on the culpability of RBS. In all these tragic cases, it is incumbent on all parties to examine their processes. I think the right hon. Gentleman mentioned that RBS had—

[Mr Carmichael]

A lack of curiosity.

[John Glen]

A lack of curiosity. I cannot know whether that is the case, but I say as a Minister that it is important that every business reflects on its responsibilities in cases of this sort.

Clearly, what Mr Greig said about where he was putting that money proved not to be the case. Instead, he was operating what we can all acknowledge was a Ponzi scheme. It went well beyond the scope of Midas’s appointed representative arrangement with Sense, the principal firm, and accepted deposits without proper authorisation. Instead of investing on behalf of clients who had trusted him with their savings, he transferred the money to his personal account and used it to fund the lavish lifestyle that has been spoken about this morning. His fraudulent activities were halted only when the Financial Conduct Authority intervened in 2014, following contact with a concerned investor. When the FCA became involved, the scheme included 279 members of the public, whose investments have not been repaid. They had paid £12.8 million and were owed a total of £13.6 million. Following the conclusion of a legal case involving some of the investors and Sense, the Financial Services Compensation Scheme declared Midas to be in default, following which the scheme was able to start accepting claims from investors and begin paying compensation to eligible claimants.

Although I am pleased that the scheme was uncovered and stopped by the FCA and that the FSCS has been able to compensate for a significant proportion of what was lost, I recognise that the scheme will have caused great pain to those involved, and I condemn unreservedly the actions of the man responsible. In seeking to understand the case, it is worth while for me to unpack the appointed representatives regime, which has been mentioned by the right hon. Member for Orkney and Shetland and others. It is the key policy area that is thrown into focus by this case.

As Members will know, under the UK’s regulatory approach to financial services, a firm must be authorised by either the FCA or the Prudential Regulation Authority in order to carry out a regulated activity. Authorised firms can also appoint other firms to act as appointed representatives for certain regulated activities, but it is worth noting that deposit taking, which Mr Greig was carrying out, is not an activity allowed under the regime, and I will say more about that in a while. In such relationships, the authorised principal firm must ensure that its appointed representatives are complying with all relevant regulatory requirements set out by the FCA. Mr Greig was a director of Midas Financial Solutions, which was a firm that was permitted to carry out the regulated activity of providing investment advice because it was an appointed representative of Sense Network, a financial advice firm that is authorised directly by the FCA.

The FCA’s investigation found that Mr Greig deliberately concealed his fraudulent operation from Sense Network, the firm that had regulatory responsibility for Midas. Unfortunately, all firms—whether directly authorised or appointed representatives—can be susceptible to individuals deliberately acting in a fraudulent manner, which is what happened. It was a shocking case of fraud. Greig was operating a scheme for which his firm was not authorised, and he hid the scheme from Sense Network.

[Mr Carmichael]

I have a question that I hope the Minister will answer in the next sentence or two. How would any individual investor know the extent of the authorisation and the relationship between the principal and the AR? This does not conform to any other aspect of the law of agency.

[John Glen]

I hope I am coming to that point. The right hon. Gentleman addresses the core point, which is about the comfort that the appointed representative regime provides to the consumer, and the Treasury and FCA are taking steps to ensure that use of the appointed representative regime is not open to abuse.

The relationship between a principal firm and the appointed representatives, including what regulated activities it covers, should be available to the public. That is now a regulatory requirement, and the FCA is taking steps to improve the information that is available to the public by clarifying what the appointed representative firm is authorised by the principal—in this case, Sense—to undertake and what it is therefore not authorised to undertake. That will give consumers clarity on what activities they can legitimately discuss with the appointed representative firm and ensure that they know there is regulatory oversight.

As we know, Sense was not found to be at fault in its role as a principal, as Mr Greig was acting outside the Sense-Midas agreement. The right hon. Member for Orkney and Shetland has spoken about the role of the principal, and the hon. Member for Hampstead and Kilburn asked what the Treasury is doing about this issue, following the Select Committee report last summer. We are undertaking a review of the appointed representative regime and examining how consumers are protected when dealing with an appointed representative and not directly with the authorised firm.

On 3 December, we published a call for evidence on the regime as a whole. At the same time, the FCA published a consultation paper on proposals that will strengthen the oversight that principals have over their appointed representatives, or ARs, and the information available to consumers on the FCA register when dealing with these firms. That call for evidence is essentially gathering information from interested parties and it closed a few weeks ago on 3 March. The Treasury and the FCA are working together to consider the responses, and to set out the next steps in due course and as urgently as we can.

I will also speak a little bit about the role of the FCA, which, as the House will be aware, is an independent regulator, and of the Financial Services Compensation Scheme. The FCA took steps to investigate Midas and Alistair Greig in relation to the activity of accepting deposits without the necessary authorisation and subsequently referred the matter to the police, who launched a successful criminal investigation. The FCA took civil action to stop the activity and obtain compensation for victims, securing agreements to repay over £1.3 million in October 2015. As a result of the proceedings, the FCA recovered approximately £380,000, which has been distributed to victims. Mr Greig was charged by Police Scotland and sentenced to 14 years in jail in April 2020 for fraud.

Although the FCA took action and the subsequent police action led to Mr Greig being prosecuted and sent to prison, I acknowledge the point made in the complaints commissioner’s report that the Financial Services Authority, which was the predecessor to the FCA, should have taken more action, more swiftly and more effectively. It is right, therefore, that the FCA, the successor organisation to the FSA, apologised for that.

Let me just say something about the Financial Services Compensation Scheme, which is the UK’s compensation scheme of last resort. It pays compensation to consumers when authorised financial firms fail and a relevant regulated activity has been undertaken. The FSCS carries out its compensation function within the rules set by the FCA and the PRA. The FSCS first became aware of claims against Midas in December 2019, when lawyers representing claimants approached the FSCS, and it declared the default in March 2020. By August 2020—so, just a few months later—it had processed 197 claims and paid out £9.6 million in compensation.

In order to aid investors claiming compensation, the FSCS, using data collected by the FCA, was able to pay compensation to 175 investors without those investors actually needing to make a claim. It also ran a media campaign targeting the Aberdeen area to ensure that all investors were aware that they could claim compensation from the FSCS, recognising the sensitivity with respect to named constituents that the right hon. Member for Orkney and Shetland mentioned.

On that note, I will take this opportunity to say that the FSCS is still accepting claims against Midas, so I encourage anyone who thinks that they may be eligible to get in touch with the FSCS. Some Midas investors brought a claim against Sense as Midas’s principal, which is the point the right hon. Member made, and I understand that some of those investors are disappointed that the compensation they received from the FSCS did not cover their legal costs.

As set out in the FCA’s rules, the FSCS covers losses suffered by a customer caused by the firm in connection with its regulated activities. It does not, however, extend to covering legal costs in pursuing a regulated firm, especially where the firm is not even a party to those legal proceedings.

[Mr Carmichael]

I am grateful to the Minister for giving way; I see that he is on the last sheet of his speech and I think that we are coming to the very heart of the matter here.

Access to the FSCS was only an option because of the action taken by the 95 against Sense. Quite apart from that, the FCA has a power to pay ex gratia payments. It has not done so, even though it has apologised for the shortcomings in the actions of the FSA. This point was considered by the Commissioner, who declined to order an ex gratia payment, drawing a parallel with damages and saying it would

“clearly undermine Parliament’s intention to provide the regulator with some protection”.

What is more important to the Government here? Is it providing the regulator with protection or the consumers with protection?

[John Glen]

The Government work closely with the FCA. As I have said, we are taking very seriously the implications of this case and the relationship between the principal and the appointed representative, as well as the apparent lack of clarity over what consumers know to be covered by that delegated authority of the principal to the appointed representative. The right hon. Gentleman is referring to the relationship between two entities: the FSA and the FCA. The FCA acknowledges the FSA’s prior failings to do the job as it should have. The right hon. Gentleman is asking me to comment on the eligibility of the victims to access the FCA compensation scheme, which is clearly something that is governed by its protocols. I hope we can learn from this very sad case that, going forward, we will bring more clarity to the appointed representative regime and more clarity to consumers. Of course, consumer care is important.

However, we also have to recognise that the FCA is responsible for around 51,000 authorised firms. Of course, the role of some of those authorised firms in acting as sponsors for appointed representatives needs examination: as I have set out, the Treasury and the FCA are undertaking that. It would be pretty impossible for every appointed representative to undergo the same sort of supervision as an authorised firm—that would expand the scale of the FCA’s responsibilities. We have to make sure that authorised firms’ responsibilities to their appointed representatives are more effective.

I think that I have expressed with clarity that this has been an extremely challenging case for everyone involved. I acknowledge unequivocally that Mr Greig’s fraudulent scheme will have caused great misery to the investors he misled, and it is absolutely right that he was brought to justice. I am pleased that so many of those who made losses have been compensated by the FSCS, and I hope they can now put it behind them.

The Government are not complacent about this. I have gone into some detail about the lessons that we need to learn. We will work alongside other financial authorities to counter fraud and ensure that cases such as these are prevented wherever possible and that, where they do occur, they are dealt with appropriately.

It will always be the case that the Government will need to work with regulators to create an environment that protects consumers while allowing firms to operate. What we have to do—and, since the new chief executive came in about 17 months ago, work has been going on urgently at the FCA to do this—is to undertake a transformation programme to allow the FCA to examine risks across the authorised firms and act more effectively than its predecessor organisation, the FSA, did in this particular case. I hope that is helpful to the House this morning.

Independent Panel on Ring-fencing and Proprietary Trading: Final Report

John Glen Excerpts

Tuesday 15th March 2022 Written Statements

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

Today I have laid before Parliament the final report on behalf of the Independent Panel on Ringfencing and Proprietary Trading. In 2020, the Treasury appointed an independent panel¹—first to review the operation of the legislation related to ring-fencing; and secondly to review banks’ proprietary trading activities, following a statutory report from the Prudential Regulation Authority published in September 2020². Given the inherent links between the structure of the banking sector and proprietary trading activities, the Treasury appointed a single panel to conduct both reviews.

The ring-fencing regime was introduced in the aftermath of the 2008 financial crisis, following recommendations from the Independent Commission on Banking in 2011, to strengthen the resilience of the UK banking sector. The regime, which came into force in January 2019, separates core retail banking services from investment banking activities, with the aim of protecting depositors from riskier activity conducted outside of the ringfence or in the wider financial system.

Following Brexit, the Government have the opportunity to develop an approach to financial regulation that better suits our markets, while maintaining high standards, fostering competition, and boosting international competitiveness.

The Treasury welcomes the panel’s comprehensive set of recommendations. The Treasury will establish a taskforce with the Bank of England with immediate effect to assess the panel’s recommendations and options for taking them forward and will publish a Government response later this year.

This report is published at: https://www.gov.uk/government/publications/independent-panel-on-ring-fencing-and-proprietary-trading-final-report and copies are available in the Vote Office.

¹ Terms of reference for the Panel’s appointment:

https://www.gov.uk/government/publications/members-of-the-ring-fencing-and-proprietary-trading-independent-review-panel-announced-and-terms-of-reference-for-the-review-published/independent-reviews-of-ring-fencing-and-proprietary-trading-terms-of-reference

² https://www.bankofengland.co.uk/prudential-regulation/publication/2020/proprietary-trading-review

[HCWS683]

Oral Answers to Questions

John Glen Excerpts

Tuesday 15th March 2022 Commons Chamber

[Mr Ben Bradshaw (Exeter) (Lab)]

12. What steps he is taking to tackle illicit finance.

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

We continue to review and reform our regulatory and enforcement approach to ensure that, as illicit finance evolves, our responses do too. We have announced an unprecedented package of sanctions, including against prominent Russian oligarchs. Last night, we brought forward the Economic Crime (Transparency and Enforcement) Act 2022 to crack down further, and we will continue to do further work on the economic crime Bill in the next session. We have also brought a new kleptocracy cell into the National Crime Agency to tackle those explicit threats.

[Mr Bradshaw]

But it took a group of anarchists to seize Deripaska’s London mansion yesterday, so when will the Minister do what Europe and America have already done and seize rather than just freeze Putin’s cronies’ assets? When will he close the loopholes that still allow them to escape sanction by putting their assets in their family members’ names or using shell companies based in British overseas territories?

[John Glen]

The Government have worked closely with the US and the EU on a whole range of interventions. We have sanctioned 500 individuals and entities, including 386 members of the Russian state Duma. We have also worked with the US on the expulsion of banks from the SWIFT banking system, cut off 3 million Russian companies from capital markets and seen $250 billion wiped of Russian stocks. We will continue to work closely with our allies to ensure that our response continues to be comprehensive.

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

The Government have once again delayed the long-overdue reforms to Companies House that could have deterred illicit finance, prevented covid fraud and provided vital information to the authorities. I will ask the Minister an important question, and I want him to update the House accurately. How many Russian-linked individuals and businesses have been wrongly given Treasury-backed covid-related business support?

[John Glen]

We worked to give widespread support to lots of individuals across the economy. I cannot give the hon. Lady the exact chapter and verse on individuals who have been supported, but we will continue to work on Companies House reform, which will be the most significant reform of the companies register in 170 years, and later this year we will publish a second economic crime plan and fraud action plan to address the threats that we continue to see.

[Marsha De Cordova (Battersea) (Lab)]

T1. If he will make a statement on his departmental responsibilities.

--- Later in debate ---

[Mrs Emma Lewell-Buck (South Shields) (Lab)]

When the Government set up the coronavirus business interruption loan scheme, they recklessly failed to agree any guidance on early repayments. As a result, businesses are now being charged extortionate fees and are facing bankruptcy. Why is the Chancellor putting the profits of unscrupulous lenders above the recovery of our small businesses?

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

He is not doing that. The schemes were set up in various ways, depending on the size of businesses, and it will be for the individuals who borrowed money to engage with the lenders to refinance those loans on a case-by-case basis.

[Felicity Buchan (Kensington) (Con)]

T9.   People in my constituency who live in mansion blocks where heating is paid for centrally do not currently benefit from the energy price cap. That is clearly an anomaly. Will my hon. Friend meet me to discuss ways in which we might ameliorate the situation?

--- Later in debate ---

[Chris Bryant (Rhondda) (Lab)]

We really must start seizing assets and not just freezing them. That is the only way in which we can make sure that the money goes towards the reconstruction of Ukraine. Would it not also be a good idea for us not just to look at the really famous people like Abramovich, but to look at the people who own £750,000 properties in the UK and who may be the cousins, brothers, sisters, parents or some other proxy of Russian oligarchs in the UK? Must we not also do far more to tackle the personal finance of President Putin, much of which, I am told, is in the UK?

[John Glen]

As ever, the hon. Gentleman has made a powerful point about a very important matter. Work with our allies is ongoing to establish how we can deepen our response in a co-ordinated way in order to make a real impact on illicit finance.

[Sir David Evennett (Bexleyheath and Crayford) (Con)]

T10.   I regularly visit businesses throughout my constituency, and have been fortunate enough to meet some very talented apprentices who are eager to develop their skills and build careers. Does my hon. Friend agree that apprenticeships will play a key role in closing the skills gap by helping young people to gain employment in more highly skilled roles, and can he say what action the Government are taking to encourage more employers to take on more apprentices?

MiFID and Prospectus Regime Reform

John Glen Excerpts

Thursday 3rd March 2022 Written Statements

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

In 2021, the Government published two consultations on reforms to our capital markets regime: the wholesale markets review—which reviews the markets in financial instrument directive (MiFID) regime—and the prospectus regime review. These consultations form part of the Chancellor’s broader vision to improve the competitiveness of the UK’s financial services sector and take advantage of our new freedoms in financial services following our withdrawal from the EU. On 1 March, I announced the next steps we intend to take to reform UK capital markets.

Wholesale markets review/MiFID reform

Deep and liquid wholesale capital markets are at the heart of the UK’s prosperity as an international financial centre. With the development of the EU’s single market, much of our regulatory approach was set in Brussels. Now that we have left the EU, we can use our newfound freedoms to reform these rules to ensure they work for UK markets. I do not intend to make changes for the sake of it, but in many areas of our capital markets regime, it is clear we can improve standards and make regulation more proportionate, cutting costs for firms while improving market integrity. In 2021, we consulted on a number of changes to the MiFID framework, which underpins our regulatory regime for wholesale markets.

The consultation closed in September 2021 and HM Treasury received 78 responses. Respondents from across the financial services sector strongly welcomed the objectives of the review and proposals for reform. In the light of this, I have announced the Government’s intention to bring forward legislative changes when parliamentary time allows, to take forward the most important measures that received the strongest support. These include amendments to five key areas of the regulatory framework:

Trading venues and systematic internalisers (Sis): we will remove unnecessary restrictions on where and how trading can happen, to allow firms to get the best price for investors.

Equity markets: we will legislate to simplify how and when firms need to make trading information public before they trade, to reduce costs and burdens for firms.

Fixed income and derivatives markets: we will reform the transparency regime to reduce costs and increase effectiveness, and the derivatives trading obligation to ease burdens for firms when managing risk and prevent market fragmentation.

Commodity derivatives: we will streamline the position limits regime to make it more effective, proportionate and less burdensome to comply with.

Market data: we will bring forward legislation to enable a consolidated tape which would collate and disseminate real time trading data, to reduce data costs and improve quality.

Where changes can be made to the parts of the regime that are already set out in regulatory rules and guidance, the FCA has committed to progress these in line with its normal processes. Where legislative changes are needed but in future would better sit in regulator rules and are not urgent, the Government will wait until the outcomes of the future regulatory framework (FRF) review have been implemented to bring them forward. The Government believe that this step-by-step approach will ensure that the most burdensome and unnecessary regulatory requirements are removed as soon as possible.

The consultation response document is available at www.gov.uk/government/consultations/uk-wholesale-markets-review-a-consultation.

Prospectus regime review

In November 2020, the Chancellor asked Lord Hill of Oareford CBE to lead an independent review of the UK listing regime. Lord Hill made a series of recommendations to help attract the most innovative and successful companies to UK markets and help them access the finance they need to grow. Of particular importance was his recommendation to undertake a fundamental review of the UK’s prospectus regime, which is based on the EU prospectus regulation, now part of retained EU law. This is the regulation which underpins the documents firms must publish when they seek admission to a stock market or raise fresh capital.

Having received widespread support for our proposals from across the sector, I have announced that we will take full advantage of our new regulatory freedoms by repealing the prospectus regulation and replacing it with a regime better tailored to the UK’s position as a global financial centre, when parliamentary time allows.

Our reforms will achieve the following objectives:

The changes will facilitate wider participation in the ownership of public companies, and remove the disincentives that currently exist for the issuance of securities to wide groups of investors—including retail investors.

The changes will simplify the regulation of prospectuses and remove unnecessary duplications, without lowering regulatory standards.

The changes will improve the quality of information investors receive under the prospectus regime, giving them more confidence to make their investment decisions.

The changes will ensure that the regulation of prospectuses is more agile and dynamic, meaning that, in future, the regulation of prospectuses will be better able to respond to innovation and change.

Both of these reforms are core parts of the Government’s commitment to make the most of our new freedoms in financial services. By doing so, we will enhance the functioning and competitiveness of the UK’s capital markets, and ensure they are continuing to help create jobs, support businesses, and power growth across all regions and nations of the UK.

The consultation response document is available at www.gov.uk/government/consultations/uk-prospectus-regime-a-consultation.

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Prudential Regulation of Credit Institutions and Investment Firms

John Glen Excerpts

Tuesday 1st March 2022 Written Statements

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

Following the global financial crisis, the international Basel Committee on Banking Supervision (BCBS) agreed standards for prudential regulation to improve the resilience of the banking sector. Prudential regulation ensures that banks, building societies, and investment firms control risk and hold sufficient capital to better absorb economic shocks.

The UK has played an active role in negotiating and agreeing these standards— commonly known as the “Basel 3” standards—and has always been committed to their implementation. The Financial Services Act 2021 (the “FS Act”) was introduced to enable the PRA—as experts—to implement these standards.

The FS Act also introduced the framework for the investment firms prudential regime (IFPR), a bespoke prudential regime for investment firms that do not pose a systemic risk to the financial system, to be implemented by the Financial Conduct Authority (FCA).

This instrument is part of a package of instruments which supports the implementation of the IFPR and Basel 3 standards.

The purpose of this instrument is to:

make changes, including consequential amendments, to primary, secondary, and retained EU law following the introduction of the IFPR and implementation of the Basel 3 standards on 1 January 2022.

make transitional provision for certain securitisations following the implementation of the IFPR. These provisions support requirements which aim to align the interests of the sell-side parties in a securitisation (e.g. lenders) and the buy-side parties (e.g. investors), by ensuring the sell-side parties retain some risk in the product.

make amendments to the Banking Act 2009 to ensure that short-term liabilities owed to investment firms with permission to underwrite or deal on own account will continue to be exempt from bail-in.

address legal deficiencies arising from the withdrawal of the United Kingdom from the European Union.

This instrument will primarily be made under the powers in the Financial Services Act 2021. It also uses powers in the Banking Act 2009 and the European Union (Withdrawal) Act 2018.

As required under the “enhanced scrutiny procedure” set out in schedule 8 of the European Union (Withdrawal) Act 2018, the draft instrument and explanatory memorandum will be published online for a period of at least 28 days before the instrument is formally laid in Parliament. To read the full draft statutory instrument and explanatory memorandum, please visit:

https://www.gov.uk/government/publications/the-financial-services-act-2021-prudential-regulation-of-credit-institutions-and-investment-firms-consequential-amendments-and-miscellaneous-provis

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Treasury Update

John Glen Excerpts

Monday 21st February 2022 Written Statements

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

Collective money purchase pension schemes, which are also known as collective defined contribution pension schemes, are a new style of pension scheme. Contributions into the scheme are pooled and invested with a view to delivering an aspired level or benefit at a fixed cost, and without guarantees. The framework for these schemes was set out in the Pension Schemes Act 2021 and the tax regime was set out in the Finance Act 2021.

The Government’s policy intention has always been that payments made from a collective money purchase pension scheme in wind-up should be treated as authorised payments. Following the publication of the draft Occupational Pension Schemes (Collective Money Purchase Schemes) Regulations 2022, the Government are aware of two instances where there is some uncertainty about how benefits from such a scheme would be treated in tax terms, should it ultimately become necessary to wind it up.

The first is about whether a member of such a scheme which is winding up can designate their funds into drawdown before transferring to another scheme. The Government can confirm that the policy intent here remains that this would be an authorised payment.

The second is whether such a scheme, in winding up, could pay a member a periodic income as an authorised payment. Here, too, the Government confirm that the policy intent continues to be that this would be available as an authorised payment.

This statement reconfirms that the original policy has not changed following the publication of the regulations and sets out the Government’s commitment to ensuring that this policy intent is delivered, including by pursuing further legislative change where necessary. Tax guidance and any necessary draft clauses for tax legislation will be published in due course as part of the usual tax policy-making process.

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Financial Services and Markets Act 2000 (Exemption) (Amendment) Order 2022

John Glen Excerpts

Monday 7th February 2022 Written Statements

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

Today I have laid the Financial Services and Markets Act 2000 (Exemption) (Amendment) Order 2022 (SI 2022/100) before Parliament. This will permit Norges Bank, the Norwegian Central Bank, to continue to benefit from access to the UK market without requiring authorisation under the Financial Services and Markets Act 2000 (FSMA) in respect of specific activities under the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001. These activities are: dealing in investments as principal, dealing in investments as agent, managing investments, arranging, safeguarding, and administering investments, and advising on investments.



Furthermore, so far as relevant to any such activity, this order also exempts Norges Bank from being required to obtain authorisation in respect of regulated activities of the kind specified in article 64 (agreeing to carry on specified kinds of activity) of the regulated activities order, pursuant to article 5(2) of the exemption order.

Prior to the UK’s departure from the European Union, Norges Bank, as an EEA central bank, benefited from an exemption from the requirements to be authorised under the provisions of FSMA. Norges Bank operates Norges Bank Investment Management, which manages investments on behalf of the Government Pension Fund Global. Under the EEA central bank exemption, it was permitted to undertake regulated activities in the UK without authorisation. A temporary transition power allowed a directive to be issued through which relevant EEA firms may continue activities that they were previously undertaking. As enabled by the TTP, Norges Bank has benefited from this exemption, which will expire at the end of March 2022.

HM Treasury has, in consultation with the Bank of England/Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA), considered Norges Bank’s suitability for an exemption as provided under section 38 FSMA, and has determined that Norges Bank is suitable for listing as an exempt person in respect of specified activities outlined above. This will allow Norges Bank to maintain its current UK position by carrying out the same activities that they are currently undertaking, with regulatory certainty and without a need for authorisation.

The legislation laid today is intended to come into force on 31 March 2022.

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