Financial Services

Debate between Jonathan Reynolds and Vicky Ford

Thursday 26th April 2018 Westminster Hall

[Vicky Ford]

The hon. Member for Glasgow Central (Alison Thewliss) said she is extremely concerned about how soon we can give certainty in the EU negotiations. There are two sides to giving certainty. The Government’s statements—especially the detailed HSBC Canary Wharf speech—contain a huge amount of detail about the need for ongoing co-operation. The EU negotiators have also talked about wanting to have super-equivalence, and that is helpful, but we have not seen the same level of detail. It needs to come from both sides.

In my experience of many years of EU negotiations, having a seat at the table was sometimes helpful—that will be missed—but there were other times when it was a challenge. The financial services industry is much more important to our economy than it is to that of many other countries, although it does support them, but that left us with different exposures. That is why we did not want to have an identical approach to solve certain issues; the approach of maximum harmonisation—one size fits all—that we increasingly see across the single market is very challenging.

The hon. Member for Stalybridge and Hyde (Johnathan Reynolds) spoke about needing to confirm whether we are going to align. To me, that sometimes means having a completely identical approach, which can be a challenge. One thing I learned from my time in European politics is that there are times when the EU recognises equivalence, but without that being identical. I particularly look at the way in which we treated the bank sector. When we introduced our bank levy, the rest of Europe, particularly within the eurozone, had the funded deposit guarantee system. There were two different ways to solve the same issue to make sure that funds were set aside in case there was failure, but they are both built into the legislation.

[Jonathan Reynolds]

My point was not around the specifics of regulations; it is a question of economic models and the partnership we seek with the European Union. We have to try to move the negotiations forward. We have to give them an unequivocal sign of what our future intentions are, or we simply will not get the progress that we need. We are already way behind where we need to be. The point around equivalence is simply this: yes, that model will work, but it must have legal certainty. Without that certainty we will have the migration of business.

[Vicky Ford]

On legal certainty, I completely agree. It is only five or six stops on the Jubilee line to get to Canary Wharf, so I took the bother to go and listen to every single word that was said in that speech. I wish more Members from this House had bothered to go and listen to it and to speak to the industry players who were there afterwards, because it went into detail and addressed very important things—especially how one was going to co-operate with the colleges of supervisors that have been set up on a bank-by-bank basis. Speaking to the individuals who are responsible for the regulatory functions within their own institutions and getting that level of detail was welcome. It is not fair to criticise only the British side of the negotiations for not giving enough detail—the British side has given significant detail.

Maintaining ongoing co-operation, dialogue and exchange of information is key in building regulatory trust. Let us not forget that £45 billion of taxpayers’ money had to be spent bailing out RBS; we had to bail out branches of not just the British bank but the Dutch and Irish bank because there was no legal mechanism for a cross-border reorganisation of a bank in crisis. That has been resolved, and part of the way it has been resolved is by having that ongoing dialogue that brings together the British regulators with the Dutch and the Irish. The very clear message from the Chancellor that he wanted to continue to be part of that should be welcomed. It is not as simple as saying we need alignment to give legal certainty. From the contributions that I had from organisations prior to this debate, the calls are for more legal certainty to be given from the other side of the negotiation table.

I thank Members for the many suggestions on how to deal with the issue of branch closures. There are clearly different problems in different parts of the country. As I said, my part of the country is an urban area—a city—and because we are seeing a change towards digital banking, there is less demand for physical banking, so we need to manage that transition.

I thank my hon. Friend the Member for North East Derbyshire (Lee Rowley), who made fantastic points so eloquently about the future of financial services, reminding us that we need to look forward to what sorts of services we want come 2028 and beyond. The actions that we take are absolutely key. Unlocking some of the benefits of the digital age, but also making sure there is perhaps some friction in the system so that we can put protections in for consumers, is definitely one of the actions I want to continue focusing on after this debate. I think that will help to protect people from cyber-attacks on their bank accounts.

It is absolutely vital that we continue to champion these industries, to support the people who work in them and to work with other parts of the world. I completely welcome the comments that the Minister made about setting up the regulatory working group with the United States and other parts of the world, and I wish him great success. Let us pick up the specific issues that have been addressed by Members here to make sure that we make targeted interventions where we can to help the industry, the people who work in it and the very many of our constituents who are, at the end of the day, consumers of these services and rely on them. Thank you, Sir David, for this wonderful afternoon.

Question put and agreed to.

Resolved,

That this House has considered the financial services and the impact on the UK economy.