Public Sector Pay

Debate between John Glen and Baroness Winterton of Doncaster

Thursday 13th July 2023 Commons Chamber

[John Glen]

The Government have an extensive programme led by the Secretary of State for Levelling Up, Housing and Communities. I am sure that he would be happy to set out the further work he is doing in advance of the autumn statement.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I thank the Chief Secretary for his statement.

Mortgage and Rental Costs

Debate between John Glen and Baroness Winterton of Doncaster

Tuesday 27th June 2023 Commons Chamber

[John Glen]

The interventions we have made provide significant scope for assistance. To find an accurate number would be very difficult, but we will continue to work with industry and with lenders to find maximum flexibility and interventions to support them at this difficult time. While we roll out those measures, tackling inflation remains the No. 1 priority of the Prime Minister and the Government. Inflation makes every person in this country poorer and it has to be tackled head-on.

Notwithstanding that, I am fully alive to the fact that some people remain in real distress. I assure hon. Members and their constituents that we will always stand ready to help where we can. That is why at the Budget we announced that the energy price guarantee would be extended for a further three months. That extension was funded in part by the energy profits levy that this Government introduced last year, recognising that profit levels in the sector had increased significantly due to those very high oil and gas prices, caused by global circumstances—including, of course, Russia’s invasion of Ukraine.

Alongside holding down energy bills, freezing fuel duty, increasing universal credit and raising the national living wage and pensions, we are giving up to £900 in cost of living payments to households on means-tested benefits. Taking those measures together, the Government are already supporting families with one of the largest support packages in Europe, worth £3,300 per household on average.

The Government’s approach makes targeted interventions to protect the most vulnerable, while maintaining a laser-like focus on tackling inflation. I believe that that stands in sharp contrast to some of the policies offered by opposition parties. The Liberal Democrats are calling for a £3 billion mortgage protection fund, which would simply pour fuel on the fire of inflation, making it harder to bring prices down. That would be such a damaging move that it is apparently even too extreme for those on the Labour Front Bench to contemplate.

However, I would say that the Labour party is not without its own flaws when it comes to offering unfunded inflationary policies. The media reports that the right hon. Member for Doncaster North (Edward Miliband) has had his wings clipped by the Leader of the Opposition for his excessive spending proposals, but in reality the shadow Chancellor is only slightly delaying Labour’s £28 billion spending spree to the second half of the next Parliament—an amended timetable, but the same reckless policy.

We said that we would halve inflation, not because it was an easy thing to do, but because it was the right thing to do. History and the best economic insights that we have today tell us that the best way to beat inflation is to stick to our plan, backing the Bank of England’s monetary policy decisions. We will stick to the plan, because it is the only way we can give relief to families and reprieve to businesses. As we have done before, we will face down these economic challenges while supporting the most vulnerable and setting us up for economic growth.

Since a Conservative Government came into power in 2010, the UK economy has grown more than those of major countries such as France, Italy, or Japan, and about the same as Europe’s largest economy, Germany, which is now in recession. We have halved unemployment, cut inequality and reduced the number of workless households by 1 million. We have protected pensioners, those on low incomes and those with disabilities. We will now overcome this inflationary period, and offer a helping hand to those who need it as we do so.

[Madam Deputy Speaker (Dame Rosie Winterton)]

Before I call the SNP spokesperson, I think I will have to give some firm guidance about time limits. My initial guidance would be six minutes, just so the first speaker on the Government side is aware.

Cost of Living

Debate between John Glen and Baroness Winterton of Doncaster

Tuesday 16th May 2023 Commons Chamber

[John Glen]

I have set out the number of interventions we have made to support individuals and the taxation levies on energy companies that we have set.

With inflation running high, I understand the temptation of some to accuse companies of profiteering, and the hon. Member for Paisley and Renfrewshire South (Mhairi Black) mentioned that in her opening speech. I would like to be clear with the House that the Government stand against that practice. At a time of high inflation, companies should not be seeking financial gain at the expense of their customers. Fortunately, we have not seen widespread evidence of this in the UK thus far. Corporations’ gross profits as a percentage of GDP were 21.4% in the third quarter of 2022, which is in line with an average of 22% over the last 20 years. The net rate of return for non-financial companies—a measure of company profitability—fell in the third quarter of 2022 and remains lower than 10 years previously. Instead, companies have been hit by a combination of rising labour, energy and raw material costs, and have reacted accordingly. As I have said, and it bears repeating, we do not expect them to profit excessively, but we cannot expect them unsustainably to absorb all cost increases, so the best course of action is the course we have charted thus far—to bear down on inflation.

This is a Government of action and delivery, as I have set out. We have pledged to tackle inflation, bring down debt and grow the economy, and we are doing just that. We said we would help the most vulnerable through these challenges, and we are, and we have refined and developed those interventions to suit the evolving circumstances. We are focused on strengthening our great Union, halving inflation by the end of the year, easing the pressure on households, and boosting the economy and protecting growth—proving our economy is more resilient than predicted—as well as boosting employment to well above pre-pandemic levels and ensuring more people have the security of a steady wage. As a united Government, we will continue to remain focused on what really matters to the British people.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the shadow Secretary of State.

Compensation (London Capital & Finance plc and Fraud Compensation Fund) Bill

Debate between John Glen and Baroness Winterton of Doncaster

2nd reading
Tuesday 8th June 2021 Commons Chamber

[John Glen]

I thank the hon. Gentleman, as ever, for his representations. He has been a determined campaigner for that sector during my tenure. I have regular conversations, at least every six weeks, with the chief executive of the FCA, and we discuss a whole range of matters. I would be very happy to discuss that matter with him when I next speak to him in the next few weeks.

As Members from across the House have recognised today, the measure concerning a loan to the board of the Pension Protection Fund, set out in clause 2, is vital to ensure that those defrauded of their pensions by scam pension liberation schemes are able to access the compensation that they deserve. The Bill will ensure that those whose pensions have been unjustly targeted by fraudsters receive their pensions. We must continue to provide a safety net for people across the UK, who deserve to have confidence that they will have a pension pot for their retirement. I note that a number of observations were made about the ongoing challenge of dealing with the evolving nature of financial services firms and the sophistication of scams. The Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Hexham, and I are working across Whitehall to bring an effective resolution to this matter.

I acknowledge that Members from across the House have supported the principles of the Bill, and I welcome the support that it has received. It will offer some relief to the enormous distress and hardship suffered by LCF bondholders and victims of fraudulent pension liberation schemes. It is an important Bill, and I want to move as quickly as possible from Royal Assent to enact it and deliver that compensation. I hope that right hon. and hon. Members will support it this evening.

Question put and agreed to.

Bill accordingly read a Second time.

Compensation (London Capital & Finance plc and Fraud Compensation Fund) Bill (Programme)

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

That the following provisions shall apply to the Compensation (London Capital & Finance plc and Fraud Compensation Fund) Bill:

Committal

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 17 June.

(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Proceedings on Consideration and Third Reading

(4) Proceedings on Consideration 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 Third Reading.

Other proceedings

(7) Any other proceedings on the Bill may be programmed.—(Alan Mak.)

Question agreed to.

Compensation (London Capital & Finance plc and Fraud Compensation Fund) Bill (money)

Queen’s recommendation signified.

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

That, for the purposes of any Act resulting from the Compensation (London Capital & Finance plc and Fraud Compensation Fund) Bill, it is expedient to authorise the payment out of money provided by Parliament of:

(a) expenditure incurred by the Treasury for, or in connection with, the payment of compensation to customers of London Capital & Finance plc; and

(b) loans by the Secretary of State to the Board of the Pension Protection Fund.—(Alan Mak.)

Question agreed to.

Compensation (London Capital & Finance plc and Fraud Compensation Fund) 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 Compensation (London Capital & Finance plc and Fraud Compensation Fund) Bill, it is expedient to authorise such levying of charges under section 189 of the Pensions Act 2004 and Article 171 of the Pensions (Northern Ireland) Order 2005 as may arise by virtue of that Act.—(Alan Mak.)

Question agreed to.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I will now suspend the House for two minutes to make the necessary arrangements for the next business.

Financial Services

Debate between John Glen and Baroness Winterton of Doncaster

Consideration of Lords amendments
Monday 26th April 2021 Commons Chamber

[John Glen]

I thank my hon. Friend for his reasonable question about the updating of the list. The Financial Action Task Force meets three times a year to determine the countries identified on its public lists. As such, the UK’s new autonomous high-risk third countries list could be updated up to three times a year to mirror the decisions made by FATF. We will look at that carefully. FATF monitors the UK—indeed, it did a mutual evaluation of the UK in December 2018 and gave us one of the highest ever rankings—and constantly updates countries who are high risk around the world.

I will make a few points in response to the right hon. Member for Wolverhampton South East. In recent years, the Government have taken a number of actions to combat economic crime, including creating a new National Economic Crime Centre to co-ordinate the law enforcement response to economic crime, and passing the Criminal Finances Act 2017, which introduced new powers, including unexplained wealth orders and account freezing orders, and established the Office for Professional Body Anti-Money Laundering Supervision to improve the oversight of anti-money laundering compliance in the legal and accountancy sectors. In 2019, the Government and the private sector jointly published a landmark economic crime plan that outlines a comprehensive national response to economic crime such as fraud and money laundering, as mentioned by the right hon. Gentleman. It provides a collective articulation of 52 actions being taken in both the public and private sectors in the next three years to ensure that UK cannot be abused for economic crime.

The hon. Member for Glenrothes mentioned the Cayman Islands. As of the FATF plenary in February 2021, FATF collectively agreed to include the Cayman Islands in its list of jurisdictions under increased monitoring. As that is one of the FATF public lists that the UK autonomous list mirrors, the Cayman Islands will be included in the UK’s list of high-risk third countries. The outstanding issues that the Cayman Islands must address are outlined in FATF’s publicly available statement.

I hope that the House has found the debate informative and will join me in supporting this important step to ensure that we have an up-to-date framework to protect the financial system from money laundering and terrorist financing.

Question put and agreed to.

Business of the House (Today)

Ordered,

That, at this day’s sitting, the Speaker shall put the Question on the Motion in the name of Keir Starmer relating to the Health Protection (Coronavirus, International Travel) (England) (Amendment) (No.7) Regulations (SI, 2021, No. 150) not later than 90 minutes after the commencement of proceedings on the motion for this Order; the business on that Motion may be proceeded with at any hour, though opposed; and Standing Order No. 41A (Deferred divisions) shall not apply.—(David Duguid.)

[Madam Deputy Speaker (Dame Rosie Winterton)]

We will now have a two-minute suspension for cleaning.

Financial Services Bill

Debate between John Glen and Baroness Winterton of Doncaster

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

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

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Dame Rosie Winterton)]

With this it will be convenient to discuss the following:

Government new clause 28—Forfeiture of money: electronic money institutions and payment institutions.

New clause 1—Report into standards of conduct and ethics in the financial services industry—

“(1) The Treasury must prepare and publish a report into standards of conduct and ethics of businesses regulated or authorised by the Financial Conduct Authority.

(2) The report must include—

(a) an assessment of the prevalence of unlawful practices in the sector, including—

(i) tax evasion, and

(ii) money laundering;

(b) an assessment of the prevalence of other practices including—

(i) the charging of excessive fees,

(ii) the provision of inadequate advice to customers, and

(iii) tax avoidance;

(c) consideration of the case for the establishment of a public inquiry into standards of conduct and ethics within the UK financial services industry, under the Inquiries Act 2005; and

(d) an assessment of the present arrangements for the regulation of the financial services sector and the Government’s plans for further reform of the regulatory system.

(3) This report must be laid before Parliament within six months of this Act being passed.”

This new clause would require the Government to publish a report into the standards of conduct and ethics of businesses regulated or authorised by the Financial Conduct Authority, including consideration of the case for the establishment of a public inquiry.

New clause 2—Report into anticipated use of the Debt Respite Scheme—

“(1) The Treasury must prepare and publish a report into the anticipated use of the Debt Respite Scheme over the five years following the passing of this Act.

(2) The report must include an assessment of—

(a) the number of people likely to use the Breathing Space scheme

(b) the number of people likely to be offered a Statutory Debt Repayment Plan,

(c) the scale of personal and household debt within the UK economy and the impact of this on use of the Debt Respite Scheme,

(d) the effectiveness of current mechanisms to prevent people having recourse to the Debt Respite Scheme, and

(e) the potential for additional policies and mechanisms to complement the work of the Debt Respite Scheme.

(3) This report must be laid before Parliament within six months of this Act being passed.”

This new clause would require the Treasury to publish a report into the anticipated use of the Debt Respite Scheme, including the effectiveness of the current mechanisms to prevent people having recourse to the Debt Respite Scheme.

New clause 4—Facilitation of economic crime—

“(1) A relevant body commits an offence if it—

(a) facilitates an economic crime; or

(b) fails to take the necessary steps to prevent an economic crime from being committed by a person acting in the capacity of the relevant body.

(2) In subsection (1), a ‘relevant body’ is any person, including a body of persons corporate or unincorporated, authorised by or registered with the Financial Conduct Authority.

(3) In subsection (1), an ‘economic crime’ means—

(a) fraud, as defined in the Fraud Act 2006;

(b) false accounting, as defined in the Theft Act 1968; or

(c) an offence under the following sections of the Proceeds of Crime Act 2002—

(i) section 327 (concealing etc criminal property);

(ii) section 328 (arrangements etc concerning the acquisition, retention, use or control of criminal property); and

(iii) section 329 (acquisition, use and possession of criminal property).

(4) In subsection (1), ‘facilitates an economic crime’ means—

(a) is knowingly concerned in or takes steps with a view to any of the offences in subsection (3); or

(b) aids, abets, counsels or procures the commission of an offence in subsection (3).

(5) In proceedings for an offence under subsection (1), it is a defence for the relevant body to show that—

(a) it had in place such prevention procedures as it was reasonable in all circumstances for it to have in place;

(b) it was not reasonable in the circumstances to expect it to have any prevention procedures in place.

(6) A relevant body guilty of an offence under this section shall be liable—

(a) on conviction on indictment, to a fine;

(b) on summary conviction in England and Wales, to a fine;

(c) on summary conviction in Scotland or Northern Ireland, to a fine not exceeding the statutory maximum.

(7) If the offence is proved to have been committed with the consent or connivance of—

(a) a director, manager, secretary or other similar officer of the relevant body, or

(b) a person who was purporting to act in any such capacity,

this person (as well as the relevant body) is guilty of the offence and liable to be proceeded against and punished accordingly.”

This new clause would make it an offence for a relevant body authorised or registered by the Financial Conduct Authority to facilitate, or fail to prevent, specified economic crimes.

New clause 6—Money laundering: electronic money institutions—

‘(1) The Proceeds of Crime Act 2002 is amended as follows.

(2) In section 303Z1 (Application for account freezing order)—

(a) In subsection (1) after “bank” insert “, electronic money institution”

(b) In subsection (6) after “Building Societies Act 1986;” insert—

“‘electronic money institution’ has the same meaning as in the Electronic Money Regulations 2011.”

(3) In section 303Z2 (Restrictions on making of application under section 303Z1), in subsection (3) after “bank” insert “, electronic money institution.”

(4) In section 303Z6 (Restriction on proceedings and remedies), in subsection (1) after “bank” insert “, electronic money institution.”

(5) In section 303Z8 (“The minimum amount”), in subsection (4) after “bank” insert “, electronic money institution.”

(6) In section 303Z9 (“Account forfeiture notice”), in subsection (6)(b) after “bank” insert “, electronic money institution.”

(7) In section 303Z11 (“Lapse of account forfeiture notice”)—

(a) in subsection (6) after “bank” insert “, electronic money institution”

(b) in subsection (7) after “If the bank” insert “, electronic money institution”

(c) in subsection (7) after “on the bank” insert “, electronic money institution.”

(8) In section 303Z14 (“Forfeiture order”), in subsection (7)(a) after “bank” insert “, electronic money institution.”

(9) In section 327 (Concealing etc), after subsection (2C) insert—

“(2D) An electronic money institution that does an act mentioned in paragraph (c) or (d) of subsection (1) does not commit an offence under that subsection if the value of the criminal property concerned is less than the threshold amount determined under section 339A for the act.”

(10) In section 328 (Arrangements), after subsection (5) insert—

“(6) An electronic money institution that does an act mentioned in subsection (1) does not commit an offence under that subsection if the arrangement facilitates the acquisition, retention, use or control of criminal property of a value that is less than the threshold amount determined under section 339A for the act.”

(11) In section 329 (Acquisition, use and possession), after subsection (2C) insert—

“(2D) An electronic money institution that does an act mentioned in subsection (1) does not commit an offence under that subsection if the value of the criminal property concerned is less than the threshold amount determined under section 339A for the act.”

(12) In section 339A (Threshold amounts)—

(a) in subsection (1) leave out “327(2C), 328(5) and 329(2C)” and insert “327(2C), 327(2D), 328(5), 328(6), 329(2C) and 329(2D)”

(b) in subsection (2) after “deposit-taking body” insert “or electronic money institution”

(c) in subsection (3) after “deposit-taking body” insert “or electronic money institution”

(d) in subsection (3)(a) after “deposit-taking body’s” insert “or electronic money institution’s”

(e) in subsection (3)(b) after “deposit-taking body” insert “or electronic money institution”

(f) in subsection (4) after “deposit-taking body” insert “or electronic money institution”

(g) in subsection (8) after “deposit-taking body” insert “or electronic money institution.

(13) In section 340 (Interpretation), after subsection (14) insert—

“(14A) “Electronic money institution” has the same meaning as in the Electronic Money Regulations 2011.”’

This new clause would update definitions in the Proceeds of Crime Act 2002 to reflect the growth of financial technology companies in the UK by equalising the treatment of electronic money institutions with banks in regard to money laundering regulations.

New clause 7—Regulation of buy-now-pay-later firms—

“Within three months of this Act being passed, the Treasury must by statutory regulations make provision for the protection of consumers from unaffordable debt by requiring the FCA to regulate—

(a) buy-now-pay-later credit services, and

(b) other lending services that have non-interest-bearing elements.”

This new clause would bring the non-interest-bearing elements of buy-now-pay-later lending and similar services under the regulatory ambit of the FCA.

New clause 8—European Union regulatory equivalence for UK-based financial services businesses—

“(1) Within three months of this Act being passed, the Treasury must prepare and publish a report on progress towards regulatory equivalence recognition for UK-based financial services firms operating within the European Union.

(2) This report should include—

(a) the status of negotiations towards the recognition of regulatory equivalence for UK financial services firms operating within the European Union;

(b) a statement on areas in where equivalence recognition has been granted to UK based businesses on the same basis as which the UK has granted equivalence recognition to EU based businesses; and

(c) a statement on where such equivalence recognition has not been granted.”

This new clause would require a report to be published on progress towards, or completion of, the equivalence recognition for UK firms which the Government hopes to see following the Chancellor’s statement on EU-based firms operating in the UK.

New clause 9—Debt Respite Scheme: review—

“(1) The Chancellor of the Exchequer must review the impact on debt in parts of the United Kingdom and regions of England of the changes made by section 32 of this Act and lay a report of that review before the House of Commons within six months of the date on which this Act receives Royal Assent.

(2) A review under this section must consider the effects of the changes on debt held by—

(a) households,

(b) individuals with protected characteristic as defined by the Equality Act 2010,

(c) small companies as defined by the Companies Act 2006.

(3) In this section—

‘parts of the United Kingdom’ means—

(a) England,

(b) Scotland,

(c) Wales, and

(d) Northern Ireland; and

‘regions of England’ has the same meaning as that used by the Office for National Statistics.”

This new clause would require a review of the impact on debt of the changes made to the Financial Guidance and Claims Act 2018 in section 32.

New clause 10—Legal protections for retail clients against the mis-selling of financial services—

‘(1) Regulation 3 (Private Person) of the Financial Services and Markets Act 2000 (Rights of Action) Regulations 2001 is amended as follows.

(2) In paragraph 1(a), after “individual”, insert “, partnership or body corporate that is or would be classified as a retail client”.

(3) In paragraph 1(b), leave out “who is not an individual” and insert “not within the definition of paragraph 1(a)”.

(4) For the purposes of this regulation, a “retail client” means a client who is not a professional client within the meaning set out in Annex II of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU.’

This new clause seeks to give retail clients greater legal protections against the mis-selling of financial services products.

New clause 11—Legal protections for small businesses against the mis-selling of financial services—

‘(1) Regulation 3 (Private Person) of the Financial Services and Markets Act 2000 (Rights of Action) Regulations 2001 is amended as follows.

(2) In sub-paragraph 1(a), leave out “individual” and insert “relevant person”.

(3) In sub-paragraph 1(b), leave out “individual” and insert “relevant person”.

(4) After paragraph 1, insert—

“(1A) For the purposes of this regulation, a ‘relevant person’ means—

(a) any individual;

(b) any body corporate which meets the qualifying conditions for a small company under sections 382 and 383 Companies Act 2006 in the financial year in which the cause of action arises;

(c) any partnership which would, if it were a body corporate, meet the qualifying conditions for a small company under section 382 Companies Act 2006 in the financial year in which the cause of action arises.”’

This new clause seeks to give small businesses greater legal protections against the mis-selling of financial services products.

New clause 12—Pre-commencement impact assessment of leaving the EU Customs Union—

“(1) No Minister of the Crown or public authority may appoint a day for the commencement of any provision of this Act until a Minister of the Crown has laid before the House of Commons an impact assessment of—

(a) disapplying EU rules; and

(b) applying rules different from those of the EU

as a consequence of any provision of this Act.

(2) A review under this section must consider the effects of the changes on—

(a) business investment,

(b) employment,

(c) productivity,

(d) inflation,

(e) financial stability, and

(f) financial liquidity.

(3) A review under this section must consider the effects in the current and each of the subsequent ten financial years.

(4) The review must also estimate whether these effects are likely to have been different in the following scenarios—

(a) if the UK had left the EU withdrawal transition period without a negotiated comprehensive free trade agreement, or

(b) if the UK had left the EU withdrawal transition period with a negotiated agreement, and remained in the single market and customs union.

(5) The review must also estimate the effects on the changes if the UK signs a free trade agreement with the United States.

(6) In this section—

‘parts of the United Kingdom’ means—

(a) England,

(b) Scotland,

(c) Wales, and

(d) Northern Ireland; and

‘regions of England’ has the same meaning as that used by the Office for National Statistics.”

This new clause would require the Government to produce an impact assessment before disapplying EU rules or applying those different to those of the EU; and comparing such with various scenarios of UK-EU relations.

New clause 13—Review of Impact of Scottish National Investment Bank Powers—

“(1) The Chancellor of the Exchequer must review the effect of the use of the powers in this Act in Scotland and lay a report of that review before the House of Commons within six months of the date on which this Act receives Royal Assent.

(2) A review under this section must consider the effects of the changes on—

(a) business investment,

(b) employment,

(c) productivity,

(d) inflation,

(e) financial stability, and

(f) financial liquidity.

(3) The review must also estimate the effects on the changes in the event of each of the following—

(a) the Scottish Government is given no new financial powers with respect to carrying over reserves between financial years,

(b) the Scottish Government is able to carry over greater reserves between financial years for use by the Scottish National Investment Bank.

(4) The review must under subparagraph 4(b) consider the effect of raising the reserve limit by—

(a) £100 million,

(b) £250 million,

(c) £500 million, and

(d) £1,000 million.”

This new clause requires a review of the impact of providing Scottish Government powers to allow the SNIB to carry over reserves between financial years beyond its current £100m limit.

New clause 14—Application of money laundering regulations to overseas trustees: review of effect on tax revenues—

“(1) The Chancellor of the Exchequer must review the effects on tax revenues of section 31 and lay a report of that review before the House of Commons within six months of the date on which this Act receives Royal Assent.

(2) The review under sub-paragraph (1) must consider—

(a) the expected change in corporation and income tax paid attributable to the provisions in this Schedule; and

(b) an estimate of any change attributable to the provisions of section 31 in the difference between the amount of tax required to be paid to the Commissioners and the amount paid.

(3) The review must under subparagraph (2)(b) consider taxes payable by the owners and employees of Scottish Limited Partnerships.”

This new clause would require the Chancellor of the Exchequer to review the effect on public finances, and on reducing the tax gap, of section 31, and in particular on the taxes payable by owners and employees of Scottish Limited Partnerships.

New clause 15—Parliamentary scrutiny of FCA provisions—

“Any provision made by the Financial Conduct Authority under this Act may not be made unless a draft of the provision has been laid before and approved by a resolution of the House of Commons.”

This new clause subjects FCA provisions under this Act to the affirmative scrutiny procedure in the House of Commons.

New clause 16—Scrutiny of FCA Powers by committees—

“(1) No provision may be made by the Financial Conduct Authority under this Act unless the conditions in subsection (2) are satisfied.

(2) The conditions are that—

(a) a new statutory committee comprising Members of the House of Commons has been established to scrutinise financial regulation, and

(b) a new statutory committee comprising Members of the House of Lords has been established to scrutinise financial regulation.

(3) The Treasury must, by regulations, make provision for and about those committees.

(4) Those regulations must provide that the committees have at least as much power as the relevant committees of the European Union.”

This new clause requires statutory financial regulation scrutiny committees to be established before the FCA can make provisions under this Bill.

New clause 17—Review of impact of Act on UK meeting Paris climate change commitments—

“The Chancellor of the Exchequer must conduct an assessment of the impact of this Act on the UK meeting its Paris climate change commitments, and lay it before the House of Commons within six months of the day on which this Act receives Royal Assent.”

This new clause would require the Chancellor of the Exchequer to review the impact of the Bill on the UK meeting its Paris climate change commitments.

New clause 18—Review of impact of Act on UK meeting UN Sustainable Development Goals—

“The Chancellor of the Exchequer must conduct an assessment of the impact of this Act on the UK meeting the UN Sustainable Development Goals, and lay it before the House of Commons within six months of the day on which this Act receives Royal Assent.”

This new clause would require the Chancellor of the Exchequer to review the impact of the Bill on the UK meeting the UN Sustainable Development Goals.

New clause 19—Money laundering and overseas trustees: review—

“(1) The Treasury must, within six months of this Act being passed, prepare, publish and lay before Parliament a report on the effects on money laundering of the provisions in section 31 of this Act.

(2) The report must address—

(a) the anticipated change to the volume of money laundering attributable to the provisions of section 31; and

(b) alleged money laundering involving overseas trusts by the owners and employees of Scottish Limited Partnerships.”

This new clause would require the Treasury to review the effects on money laundering of the provisions in section 31 of this Act, and in particular on the use of overseas trusts for the purposes of money laundering by owners and employees of Scottish Limited Partnerships.

New clause 20—Regulatory divergence from the EU in financial services: Annual review—

“(1) The Treasury must prepare, publish and lay before Parliament an annual review of the impact of regulatory divergence in financial services from the European Union.

(2) Each annual review must consider the estimated impact of regulatory divergence in financial services in the current financial year, and for the ten subsequent financial years, on the following matters—

(a) business investment,

(b) employment,

(c) productivity,

(d) inflation,

(e) financial stability, and

(f) financial liquidity.

in each English region, and in Scotland, Wales and Northern Ireland.

(3) Each report must compare the analysis in subsection (2) to an estimate based on the following hypothetical scenarios—

(a) that the UK leaves the EU withdrawal transition period without a negotiated comprehensive free trade agreement;

(b) that the UK leaves the EU withdrawal transition period with a negotiated agreement, and remains in the single market and customs union;

(c) that the UK leaves the EU withdrawal transition period with a negotiated comprehensive free trade agreement, and does not remain in the single market and customs union; and

(d) that the UK signs a comprehensive free trade agreement with the United States.

(4) The first annual report shall be published no later than 1 July 2021.”

This new clause requires a review of the impact of regulatory divergence from the European Union in financial services, which should make a comparison with various hypothetical trade deal scenarios.

New clause 21—Duty of care specification—

“(1) The Financial Services and Markets Act 2000 is amended as follows.

(2) After Section 1C insert—

‘1CA Duty of care specification

(1) In securing an appropriate degree of protection for consumers, the FCA must ensure authorised persons carrying out regulated activities are acting with a duty of care to all consumers.

(2) Matters the FCA should consider when drafting duty of care rules include, but are not limited to—

(a) the duties of authorised persons to act honestly, fairly and professionally in accordance with the best interest of their consumers;

(b) the duties of authorised persons to manage conflicts of interest fairly, both between themselves and their clients, and between clients;

(c) the extent to which the duties of authorised persons entail an ethical commitment not merely compliance with rules;

(d) that the duties must be owned by senior managers who would be accountable for their individual firm’s approach.’”

This new clause would mean that the FCA would need to ensure that financial services providers are acting with a duty of care to act in the best interests of all consumers.

New clause 22—Extension of the Breathing Space and Mental Health Crisis Moratorium—

‘(1) The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 shall be amended as follows.

(2) In section 1(2), for “4th May 2021” substitute “31st January 2021”.

(3) In section 26(2), for “60 days” substitute “12 months”.’

This new clause would bring forward the start date of the Debt Respite Scheme and extend the duration of the Breathing Space Moratorium from 60 days to 12 months.

New clause 23—Impact of COVID-19 on the Debt Respite Scheme: Ministerial report—

“(1) The Treasury must prepare and publish a report on the impact of the COVID-19 pandemic on the implementation of the Debt Respite Scheme.

(2) The report must include—

(a) a statement on the extent to which changes to levels of household debt caused by the COVID-19 pandemic will affect the usage and operation of the Debt Respite Scheme;

(b) a statement on the resilience of UK households to future pandemics and other financial shocks, and how these would affect the usage and operation of the Debt Respite Scheme; and

(c) consideration of proposals for the incorporation of a no-interest loan scheme into the Debt Respite Scheme for financially vulnerable individuals affected by the COVID-19 pandemic.

(3) The report must be laid before Parliament no later than 28 February 2021.”

This new clause would require the Treasury to publish a report on the impact of the COVID-19 pandemic on the implementation of the Debt Respite Scheme, including consideration of a proposal for the incorporation of a no-interest loan scheme into the Debt Respite Scheme.

New clause 24—Mortgage contracts: regulation of management and ownership—

‘(1) Article 61 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 shall be amended as follows.

(2) After paragraph (2), insert—

“(2A) Managing a regulated mortgage contract is also a specified kind of activity.

(2B) Owning a regulated mortgage contract is also a specified kind of activity.”

(3) For sub-sub-paragraphs (3)(a)(ii) and (3)(a)(iii) substitute—

“(ii) the contract provides for the obligation of the borrower to repay to be secured by a legal mortgage of land (other than timeshare accommodation) in the United Kingdom;

(iii) at least 40% of that land is used, or is intended to be used, as or in connection with a dwelling.”

(4) After sub-paragraph (3)(c), insert—

“(d) ‘managing’ a regulated mortgage contract means having the power to exercise or to control the exercise of any of the rights of a lender under a regulated mortgage contract.

(e) ‘owning’ a regulated mortgage contract means holding the legal title to a regulated mortgage contract or to own beneficially the rights of the lender under a regulated mortgage contract.”

(5) For paragraph (4), substitute—

“(4) For the purposes of sub-paragraph (3)(a)—

(a) ‘mortgage’ includes charge and (in Scotland) a heritable security;

(b) the area of any land which comprises a building or other structure containing two or more storeys is to be taken to be the aggregate of the floor areas of each of those storeys; and

(c) ‘timeshare accommodation’ has the meaning given by section 1 of the Timeshare Act 1992(c).”’

This new clause would require the regulation of the ‘management’ and ‘ownership’ of a regulated mortgage contract.

New clause 25—Standard Variable Rates: Cap on charges for Mortgage Prisoners—

“(7) The FCA must make rules by virtue of subsection (1) in relation to introducing a cap on the interest rates charged to mortgage prisoners in relation to regulated mortgage contracts with a view to securing an appropriate degree of protection for consumers.

(8) In subsection (7) ‘mortgage prisoner’ means a consumer who cannot switch to a different lender because of their characteristics and has a regulated mortgage contract with one of the following type of firms—

(a) inactive lenders: firms authorised for mortgage lending that are no longer lending; and

(b) unregulated entities: firms not authorised for mortgage lending.

(9) The rules made by the FCA under subsection (7) must set the level of the cap on the ‘Standard Variable Rate’ at a level no more than 2 percentage points above the Bank of England base rate.

(10) In subsection (9) ‘Standard Variable Rate’ means the variable rate of interest charged under the regulated mortgage contract after the end of any initial introductory deal.

(11) The FCA must ensure any rules that it is required to make as a result of the amendment made by subsection (7) are made not later than 31st July 2021.”

This new clause would require the FCA to introduce a cap on the Standard Variable Rates charged to consumers who cannot switch to a different lender because of their characteristics and who have a regulated mortgage contract with either an inactive lender or an unregulated entity.

New clause 26—Conditions for the transfer of a regulated mortgage contract—

“(1) A regulated mortgage contract shall not be transferred without the written consent of the borrower.

(2) When seeking consent from either an existing or a new borrower the lender must provide a statement to the borrower containing sufficient information in order for them to make an informed decision.

(3) The statement provided pursuant to subsection (2) must be approved in advance by the Financial Conduct Authority and shall include—

(a) a clear explanation of the implications in terms of the interest rates which will be offered to the borrower including details of the policies and procedures which will apply for the setting of mortgage interest rates and for the making of repayments if the transfer takes place;

(b) how the transfer might affect the borrower;

(c) the name and address of the intended transferee, and of any holding company applicable;

(d) the relationship, if any, between the lender and the transferee;

(e) a description of the intended transferee and of its business, including how long it has been in operation, and details of its involvement in the management of mortgages; and

(f) confirmation that in the absence of a specific consent the existing arrangements will continue to apply.

(4) Each borrower shall be approached individually and shall be given a reasonable time within which to give or decline to give their consent.

(5) In this section, ‘regulated mortgage contract’ has the meaning given by article 61(3) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.”

This new clause would require the written consent of the borrower for the transfer of a regulated mortgage contract and require lenders to provide specified information to borrowers when seeking this consent and for this statement to be approved in advance by the FCA.

New clause 30—Offence of facilitation of or failure to prevent financial crime (No. 2)—

“(1) A financial services company commits an offence if it—

(a) facilitates, aids or abets a relevant offence;

(b) does not take all reasonable steps to prevent the commissioning of a relevant offence.

(2) A financial services company guilty of an offence under this section shall be liable—

(a) on conviction on indictment, to a fine;

(b) on summary conviction in England and Wales, to a fine;

(c) on summary conviction in Scotland or Northern Ireland, to a fine not exceeding the statutory maximum.

(3) For the purposes of this section—

‘financial services company’ means any person, including a body of persons corporate or unincorporated, authorised by or registered with the Financial Conduct Authority’;

‘relevant offence’ means—

(a) fraud, as defined in the Fraud Act 2006;

(b) false accounting, as defined in the Theft Act 1968;

(c) any offence under the following sections of the Proceeds of Crime Act 2002;

(d) tax evasion;

(e) an offence under Part 7 of the Financial Services Act 2012; and

(f) insider dealing, as defined in the Criminal Justice Act 1993.”

This new clause would create an offence in cases where financial services companies facilitate or fail to prevent financial crime.

Government amendment 15.

Amendment 13, in clause 33, page 39, line 37, at end insert—

“(c) the successor account must bear, in each financial year, at least the same level of bonus as the mature account before maturation.”

This amendment would ensure customers do not lose any bonus should their funds be moved from a matured account into a new one.

Amendment 14, in clause 33, page 39, line 37, at end insert—

“(7) Regulations under sub-paragraph (2) may only be made if the conditions in sub-paragraph (8) are met.

(8) The conditions referred to in sub-paragraph (7) are—

(a) There must be an account available to any affected customer which provides at least as generous a bonus structure as the matured account.

(b) The customer must have been successfully contacted by a relevant Department or public body.

(c) The customer must have been given full and accessible information on the effects of changing account.”

This amendment would ensure customers are contacted and informed before their funds are transferred.

Amendment 4, in clause 37, page 44, line 9, at end insert—

“(c) after subparagraph (2) insert—

(2A) A person may not be appointed as chief executive under paragraph 2(2)(b) unless they have the consent of the Treasury Committee of the House of Commons.”

This amendment would require a candidate for the position of chief executive of the FCA to receive the consent of the Treasury Committee for their appointment.

Amendment 3, in clause 37, page 44, line 14, at end insert—

“(2C) A person may not be appointed as chief executive under paragraph 2(2)(b) until the Treasury has prepared and published a report on the effectiveness of the FCA under the tenure of the previous chief executive.”

This amendment would require the Treasury to prepare and publish a report on the effectiveness of the previous chief executive in advance of the appointment of a new chief executive.

Government amendments 16 to 21.

Government new schedule 1—Forfeiture of money: electronic money institutions and payment institutions.

Government amendment 22.

Government amendment 23.

Amendment 5, in schedule 2, page 60, line 18, at end insert—

“(f) impose requirements relating to the publication of quarterly statements on portfolio holdings.”

This amendment would allow the FCA to impose requirements on investment firms to publish quarterly statements on their portfolio holdings.

Amendment 6, in schedule 2, page 60, line 18, at end insert—

“(3A) General rules made for the purpose of subsection (1) must impose requirements relating to the publication of quarterly statements on portfolio holdings.”

This amendment would require the FCA to impose requirements on investment firms to publish quarterly statements on their portfolio holdings.

Government amendments 24 to 26.

Amendment 1, in schedule 2, page 63, line 5, at end insert—

“(ba) the target for net UK emissions of greenhouse gases in 2050 as set out in the Climate Change Act 2008 as amended by the Climate Change Act (2050 Target Amendment) Order 2019, and”.

Amendment 7, in schedule 2, page 63, line 5, at end insert—

“(ba) the promotion of ethical investments with reference to the judgements of the International Court of Justice or the High Court of England and Wales concerning genocide under Article II of the United Nations Convention on the Prevention and Punishment of the Crime of Genocide, and findings of genocide or ethnic cleansing by a United Nations-mandated investigation.”

This amendment would require the FCA, when making Part 9C rules for investment firms, to have regard to findings of genocide by the courts and UN-mandated investigations.

Amendment 8, in schedule 2, page 63, line 5, at end insert—

“(ba) the likely effect of the rules on trade frictions between the UK and EU, and”.

This amendment would ensure the likely effect of the rules on trade frictions between the UK and EU are considered before Part 9C rules are taken.

Amendment 9, in schedule 2, page 63, line 5, at end insert—

“(ba) the likely effect of the rules on the UK meeting its international and domestic commitments on tackling climate change, and”.

This amendment would ensure the likely effect of the rules on the UK meeting its international and domestic commitments on tackling climate change are considered before Part 9C rules are taken.

Amendment 10, in schedule 2, page 79, line 25, after “activities” insert

“in the UK and internationally”.

This amendment would ensure the likely effect of the rules on the relative standing of the United Kingdom as a place for internationally active credit institutions and investment firms to be based or to carry on activities are considered both in terms of their UK and international activities before Part CRR rules are taken.

Amendment 2, in schedule 3, page 79, line 29, at end insert—

“(ca) the target for net UK emissions of greenhouse gases in 2050 as set out in the Climate Change Act 2008 as amended by the Climate Change Act (2050 Target Amendment) Order 2019, and”.

Amendment 11, in schedule 3, page 79, line 29, at end insert—

“(ca) the likely effect of the rules on trade frictions between the UK and EU, and”.

This amendment would ensure the likely effect of the rules on trade frictions between the UK and EU are considered before CRR rules are taken.

Amendment 12, in schedule 3, page 79, line 29, at end insert—

“(ca) the likely effect of the rules on the UK meeting its international and domestic commitments on tackling climate change, and”.

This amendment would ensure the likely effect of the rules on the UK meeting its international and domestic commitments on tackling climate change are considered before CRR rules are taken.

Government amendments 27 to 31.

[John Glen]

Our financial services sector is critical to our national effort to recover from the impacts of covid-19 and move towards a resilient, open and sustainable future for the UK economy. The Bill is the next step in a process to take back control of our financial services legislation, having left the European Union and come to the end of the transition period.

There are a large number of amendments to address, so I will speak at some length, but hopefully as succinctly as possible. Let me start with the 20 new clauses and amendments tabled in my name, which do four things. I will first address new clauses 27 and 28, new schedule 1 and amendments 16 to 20. I hope that the right hon. Member for Wolverhampton South East (Mr McFadden) will be pleased to see this set of new clauses and amendments, which have been tabled in response to an issue that he raised in Committee.

The Government remain committed to supporting the FinTech sector. The UK is widely considered to be a leading market—probably the leading market—for starting and growing a FinTech firm, and I am proud of that reputation. It has recently become clear that provisions in the Proceeds of Crime Act 2002 are creating challenges for some types of smaller firms known as e-money institutions and payment institutions. These institutions, which include industry leaders such as Revolut, Worldpay and TransferWise, have experienced significant growth over recent years. Currently, they need to submit a defence against money laundering request—which I shall refer to as a DAML from now on—to the National Crime Agency, to seek consent before proceeding with any transaction involving criminal property, however small.

Exiting the European Union: Financial Services and Markets

Debate between John Glen and Baroness Winterton of Doncaster

Tuesday 16th June 2020 Commons Chamber

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

I beg to move,

That the draft Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2020, which were laid before this House on 24 March, be approved.

[Madam Deputy Speaker (Dame Rosie Winterton)]

With this it will be convenient to discuss the following motion:

That the draft Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2020, which were laid before this House on 6 May, be approved.

[John Glen]

I welcome my opposite number, the right hon. Member for Wolverhampton South East (Mr McFadden), to his place. He has a distinguished history of public service and I look forward to a constructive dialogue with him today and on future occasions.

As the House will be aware, the Treasury has been undertaking a significant programme of financial services legislation since 2018, introducing almost 60 statutory instruments under the European Union (Withdrawal) Act 2018. It has been an enormous privilege for me to do the vast majority of those measures. These SIs were made prior to exit day—31 January 2020—and covered all essential legislative changes needed to ensure a coherent and functioning financial services regime at the point of exit, had the UK not entered a transition period.

The European Union (Withdrawal Agreement) Act 2020 received Royal Assent in January this year. The 2020 Act contains a general rule that delays those parts of the SIs that would have come into force immediately before, on or after exit day, so that they instead come into force by reference to the end of the transition period, which we leave at the end of this year. Over the course of this year the Treasury will therefore, where necessary, continue to use powers under the European Union (Withdrawal) Act 2018, as amended by the 2020 Act, to prepare for 1 January 2021. This will involve the Treasury bringing forward a small number of SIs that, in particular, will ensure that recently applicable EU legislation will operate effectively in the UK at the end of the transition period. The SIs before the House today are two such instruments. The approach taken in these SIs is aligned with the general approach established by the EU (Withdrawal) Act 2018, providing continuity by retaining existing legislation at the end of the transition period but amending where necessary to ensure effectiveness in the UK-only context.

I turn to the draft Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2020. From now on, I will refer to this instrument as the OTC SI. In preparation for the UK’s withdrawal from the EU on 31 January 2020, Parliament approved several EU exit instruments to ensure that the European market infrastructure regulation would continue to operate effectively in the UK at the point of exit. EMIR was updated on 1 January this year by a regulation known as EMIR 2.2, which now applies in the UK. The OTC SI that we are discussing today address deficiencies in the UK’s post-transition framework arising as a result of that update.

EMIR is Europe’s response to the G20 Pittsburgh commitment in 2009 to regulate over-the-counter derivative markets in the aftermath of the last financial crisis. EMIR mandates the use of central counterparties, known as CCPs, to manage risk between users of derivative products. EMIR has been effective in increasing the safety and transparency of derivative markets, thereby reducing the associated risks that users may face, and UK CCPs play an essential role in reducing systemic risk and ensuring the efficient functioning of global financial markets.

EMIR 2.2 introduced an updated third country or non-EU CCP supervision framework, including an updated recognition regime. This means that EU authorities can have greater oversight over third country CCPs that are systemically important to the EU. Perhaps the most substantial update in EMIR 2.2 is the ability for the European Securities and Markets Authority to tier third country CCPs according to their systemic importance to the EU as part of the recognition process. ESMA will now take on certain supervisory responsibilities for systemic third country CCPs known as tier 2 CCPs.

This OTC SI updates the UK’s recognition framework in line with EMIR 2.2 by transferring ESMA’s new powers to the Bank of England after we leave the transition period. That includes the ability to tier non-UK CCPs as part of the recognition process, and to supervise non-UK CCPs that are systemically important to the UK. The Bank of England has already been given the power to recognise non-UK CCPs wishing to operate in the UK in an earlier SI under the EU (Withdrawal) Act. EMIR 2.2 also empowers the Commission to adopt delegated Acts setting out the details of how the framework will function in practice. This includes how tiering and deference to the rules of home authorities referred to as “comparable compliance” will function. This instrument transfers the power to establish these frameworks to the Bank of England.

Since the Bank already has responsibility for safeguarding financial stability in general, and managing systemic risk in CCPs in particular, this is an appropriate conferral of functions as it allows the Bank to manage the systemic risk posed by some non-UK CCPs in a way that is appropriate for the UK. The statutory instrument therefore transfers the remaining Commission functions—including the power to deploy the so-called location policy—to Her Majesty’s Treasury.

Under EMIR 2.2, ESMA can recommend to the Commission that a third-country CCP that is felt to be substantially systemically important should lose permission to offer some services to EU clearing members, unless those services are offered from inside the EU. This is referred to as the location policy, the inclusion of which in EMIR 2.2 the UK did not support because of concerns that it could lead to market fragmentation and reduce the benefits provided by the global nature of clearing. However, the powers in the European Union (Withdrawal) Act 2018 under which we introduced the SI extend only to the addressing of deficiencies arising from withdrawal. During the passage of that legislation, commitments were made that the powers would not be used to make significant policy changes, so I am not going to deviate from that.

The OTC SI transfers the powers to use the location policy to the Treasury, subject to advice from the Bank of England and appropriate procedural safeguards and transitional provisions. I assure the House that because of the very different nature of the UK’s clearing markets, it is hard to foresee circumstances in which the Bank would appropriate the use of that tool in practice. EMIR 2.2 also makes changes to internally used supervisory and co-operation mechanisms but, as the UK is no longer part of the EU, those provisions are removed by the SI.

Finally, the OTC SI updates the recognition powers set out in the temporary recognition regime, which was established by a previous SI to enable non-UK CCPs to continue their activities in the UK after exit day, while their recognition applications are assessed. This SI updates the recognition requirements in line with the new EMIR 2.2 provisions. The Treasury has worked closely with the Bank of England to prepare the instrument and has also engaged with the financial services industry, as we have done throughout. The draft legislation has been publicly available on the legislation.gov.uk website since 24 February, and the instrument was laid before Parliament on 25 March.

In summary, the OTC SI is necessary to ensure that existing EMIR legislation will continue to function effectively in the UK from the end of the transition period, following the updates made in EMIR 2.2. In particular, it will ensure that the UK has the tools necessary to manage the financial stability risks posed by some of the largest non-UK CCPs.

Let me turn my attention towards the second of tonight’s SIs, the Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2020. Although this SI makes amendments to approximately 20 pieces of legislation, the number and nature of the amendments are modest and minor. They act to preserve the effect of recent changes to EU legislation in the UK, and in doing so limit any impact on business that would otherwise arise at the end of the transition period.

Primarily, this SI fixes deficiencies in recently applicable EU legislation, which is congruous with the Treasury’s approach to previous financial services EU exit instruments and the approach required by the European Union (Withdrawal) Act 2018. It also revokes pieces of retained EU law and UK domestic law that it would not be appropriate to keep on the statute book at the end of the transition period.

This SI contains a small number of minor clarifications and corrections to previous financial services EU exit instruments. The House will be aware of the unprecedented scale of the legislative programme that the Treasury has undertaken, which has been carried out with rigorous checking procedures. However, errors are unfortunately made on occasion, and when they arise it is important that they are corrected as soon as possible. This has happened previously, and I will continue to be completely transparent when such shortcomings become apparent.

I note that this SI also includes provisions initially included in the Cross-Border Distribution of Funds, Proxy Advisors, Prospectus and Gibraltar (Amendment) (EU Exit) Regulations 2019, which were laid using the made affirmative procedure in October 2019, when at the time it was necessary to ensure that the SI was in place prior to the previous exit date of 31 October. That SI subsequently ceased to have effect, but it is important that those provisions, which include amendments to the UK’s prospectus regime to ensure it remains operational in a wholly domestic context, are in force before the end of the transition period. Those provisions have therefore been included in this IS.

I would like to say a few words on the amendments that this SI makes to a previous EU exit instrument, the Equivalence Determinations for Financial Services and Miscellaneous Provisions (Amendment etc) (EU Exit) Regulations 2019, which I shall now refer to as the equivalence SI. The equivalence SI allows the Treasury to make equivalence directions for EEA states during the transition period for specified provisions. Today’s SI adds additional equivalence regimes to the scope of the power for the Treasury to make equivalence directions for EEA states during the transition period. This is through the inclusion of provisions relating to central securities depositories, which are entities that hold financial instruments and trade repositories that collect and maintain records of derivative trades.

This SI also amends the existing drafting on the length of the direction power to tie it to the end of the transition period. This will enable Ministers to make directions during the transition period to come into force at the end of the transition period, granting equivalence to the EEA for those regimes. Finally, this SI clarifies that the Treasury can impose limitations on the application of state-level equivalence decisions in granting equivalence to the EEA—for example, in response to EU conditions placed on the UK. As with the OTC SI, the Treasury has been working closely with the financial services regulators in the drafting of this instrument and has engaged with the financial services industry.

In conclusion, the Government believe that these instruments are necessary to ensure that the UK has a coherent and functioning financial services regulatory regime at the end of this year when we leave the transition period, and I hope that the House will join me in supporting them. I commend the regulations the House.