UK as a Financial Services Hub

Lee Rowley Excerpts

Wednesday 6th February 2019 Westminster Hall

[Lee Rowley (North East Derbyshire) (Con)]

It is a pleasure to serve under your chairmanship, Mr Stringer. I congratulate my hon. Friend the Member for Hitchin and Harpenden (Bim Afolami) on securing this debate; in my view, we do not talk enough about financial services in this place.

Although financial services are unfashionable and often a thing of derision, the blunt reality, as we have heard today, is that even 10 years after the financial crisis, the industry contributes a staggering £70 billion to our Exchequer. Whether or not we like banks, insurance companies and asset managers, the ultimate point is that they pay for a lot of our public services, and we should focus more on what they are doing and how we can ensure that they do more in this country.

This is important for me on a personal level, because before I came to this place, I worked in financial services, both in London and across the country, for the best part of 10 years. I was glad to see the regional nature and significance of financial services brought home in this debate. For most of the past 15 years, I was technically based about 30 minutes north of here, near Euston station, but I spent probably 60% of my time with my teams in Sheffield, Leeds, Bootle, Manchester, Leicester and elsewhere. I was on the road all the time. In places such as Bootle, which are not necessarily associated with financial services, we find a substantial number of people employed in these kinds of industries, which are major anchor employers for many of those communities.

We Brits like to be very cynical about things such as financial services. We like to say that they are not working for us, that they do not deliver for us and that there are huge problems—and to some extent there are. I am absolutely apoplectic with rage about what the Royal Bank of Scotland has done in closing down a bank branch in my major town, Dronfield, a few weeks ago. I understand the economic challenges of a retail network, but people have a right to be angry about the way that RBS did it; there was a lack of conversation and real engagement with constituents.

When we put aside all that, the reality is that the industry has been highly successful. and highly important to our country—though I do not dispute its controversial nature—and we must ensure that it remains so. Those are not just words. This industry gives people in North East Derbyshire the opportunity to set up their own business by giving them access to the financing that my hon. Friend the Member for Hitchin and Harpenden talked about. It allows people to own their home—the new houses that are being bought in North East Derbyshire—and ensures that small and medium-sized enterprises in my constituency have the opportunity to grow.

I will touch briefly on Brexit. I come from a different position from my hon. Friend the Member for Bromley and Chislehurst (Robert Neill) on this. I want a deal, too, but I want a good deal. It is incumbent on us to accept that there are circumstances in which we may have to go to a no-deal position. We cannot accept just any deal, or we might as well have not bothered with the last two years and simply accepted what the EU gave us the day after 2016.

I am the chairman of the all-party parliamentary group on alternative lending and vice-chair of the APPG for challenger banks and building societies. More importantly, I am doing a fellowship with a fantastic institution, the Industry and Parliament Trust, going around a number of banks and talking about the future of banking. Although there will be issues, and we do not want to create problems with business models unless we have to, I believe that the level of preparation in this industry is high, and the understanding of what needs to be done is good. We may have to accept no deal in certain circumstances, although I hope we will not; it will be down to EU intransigence if we do.

My point, in the brief time I have left, is that Brexit is not the big thing for this industry. We in this place are obsessed with Brexit in a way that I think is incredibly unhealthy and that will only get worse in the next few weeks. The actual challenges for this industry are much broader than Brexit. They are about FinTech, and how we ensure that we increase the number of people operating in FinTech here and that this remains a fantastic place to work. They are about artificial intelligence and how we incorporate it into financial services in the long term. They are about regulation. I have a particular interest in capital regulation, having worked in risk for the last two years before I came here, and I simply do not understand some of the directions we are going in on capital regulation. I cannot explain all that in 45 seconds, but I am sure there will be another time to discuss that.

There are key challenges around disintermediation and how we ensure that banking as a whole gets closer to customers. We will have a huge problem with insurance in the coming decade; insurance is based on a model in which we pool risk, on the basis that we do not fully understand the customer base we are serving. As we get more and more knowledgeable, from a data perspective, about individuals, the pooling of risk becomes a conceptual challenge that we will have to get through. We have a huge problem with customer services. Often in banking and financial services, people feel done to, rather than done with. We have to work with the industry to understand why that is.

I am conscious that my time is short, but ultimately I agree with my hon. Friends that this is an important area that needs more debate. We need to ensure that we develop our country, so that more banks, insurance companies and asset managers are investing here, and staying here longer, to create the wealth that we all know is vital for our public services.