Draft Building Societies Legislation (Amendment) (EU Exit) Regulations 2018

Jonathan Reynolds Excerpts

Monday 5th November 2018 General Committees

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

It is lovely to see you in the Chair this evening, Mr Hosie. As the Minister has said, this is one of a large number of financial services SIs relating to preparations for a potential no-deal Brexit—about 70 are expected between now and February. The Minister and I broached some of the first of these, relating to the temporary permissions regime, on 24 October, and we look forward to returning to Committee frequently over the coming months.

The Opposition have voiced our concerns on the adequacy of this process already, but I will state them again for the record. The number of Treasury SIs and the speed with which they are set to unfold is deeply concerning with regard to ensuring that the Government are properly held to account. As the Opposition, we commit to make every effort to do so, but this is a constitutionally unprecedented and enormously resource-intensive task that leaves room for error, as much as we appreciate the time that the Minister, his staff and the civil service have taken to brief us.

Turning to the substance of the legislation, I ask the Minister to reiterate the reassurances that his colleague Lord Bates gave when the matter was debated recently in the other place: namely, that there is no intention to change the material situation affecting building societies, other than bringing references to EU member states onshore. In addition, could he further reassure me that these regulations will not apply in the event that a deal on financial services is struck with the EU?

May I also query what engagement has taken place with the building society sector about these arrangements? In the other place, my colleague Lord Tunnicliffe interrogated the Government on the status of mortgage contracts on EEA properties for UK owners after Brexit—I think he gave the example of a British citizen owning a property in Spain using a mortgage that has been provided from a building society. Lord Bates conceded in response:

“The SI will act to prevent building societies diversifying too far into EEA-based mortgage lending in future”.—[Official Report, House of Lords, 17 October 2018; Vol. 793, c. GC19.]

It may be the case that historically EEA lending for building societies has been limited. That is not something that I am personally aware of, and certainly most UK building societies that I am familiar with are focused predominantly on the UK market. However, if the Minister could just provide a little insight into what exactly Lord Bates was referring to in his response, that would be welcome.

That is all I wish to raise today, other than to thank the Minister and to say that our building society sector is trusted by millions of Britons and, of course, it is vital that its integrity is protected in the event of a no-deal Brexit.