Financial Services and Markets Bill

Lord Ashcombe Excerpts

2nd reading
Tuesday 10th January 2023 Lords Chamber

[Lord Ashcombe (Con) (Maiden Speech)]

My Lords, it is a great honour to speak to you today for the first time, concerning the Financial Services and Markets Bill being introduced by the Minister, my noble friend Lady Penn. Before continuing I must declare my interest as an employee of Marsh Limited, the insurance broker.

I would like to take a moment to thank the many who have shown me huge kindness on my arrival in the House feeling like the new schoolboy all over again. I thank the doorkeepers, clerks, special advisers, librarians and Black Rod for their generous advice on so many issues. In particular, I would like to thank my noble friends Lord Glenarthur, Lord Ashton, Lord Borwick and Lady Sanderson, who have encouraged me and given me great help and guidance. Finally, without the help of the Opposition Chief Whip, I think I would still be wandering the passages of this labyrinthine building even now, two months later, yet to be discovered, totally lost. I hope he does not regret it.

The Cubitt dynasty was founded by Thomas Cubitt, who was the first to establish the building contracting business as we know it today. In the process, he became one of the great developers of early 19th century London, including in the development of the Grosvenor estate from Belgravia to the Thames. Two of his best-known buildings are the east front of Buckingham Palace and Osborne on the Isle of Wight. It was not he who was awarded the Ashcombe peerage but his son, my great-great-grandfather, in 1892. George Cubitt served in the House of Commons for over 30 years followed by 25 years in this House. His son Henry followed in his footsteps but was very unfortunate in that he lost his first three sons in the Great War. They are remembered on the Royal Gallery memorial. In 1920, the family building company built the Lutyens-designed Cenotaph in Whitehall.

I inherited not from my father but from his first cousin. I was brought up in the Republic of Ireland and took a civil engineering degree here, then entered the world of insurance where I have spent 35 years working in the energy sector. It is the insurance aspect that brings me here today. Many of us have experience dealing with personal insurance but there is a great deal more to the subject than that. Insurance is one of the country’s greatest economic strengths and a source of vital capital to an increasingly fractious global risk landscape.

Indeed, without the abilities of the London insurance market, grain and other vital foodstuffs trapped in Ukraine would not have been exported last year to those countries desperately in need of food; as the sanctions start to bite there have been many restrictions put in place, but the market has responded by continuing to provide insurance on a humanitarian basis. Also, development and investment in new technologies would be significantly reduced. An example of the London market innovation is the provision of insurance for the surge in green and blue hydrogen prototypical initiatives to reduce carbon footprints and combat climate change.

Insurance has often been portrayed as the poor relation of the City of London. However, this financial sector today employs almost 50,000 people. We have the highest concentration of insurance-related intellectual capital, experience, insurers, brokers and affiliated professional services. This is what makes London a world-leading global insurance market. Using 2020 data, the London market share of the worldwide premium is in excess of $120 billion, although the market share of 7.6% has been static over the last five years. It is larger than its next three competitor markets—Bermuda, Singapore and Zurich—combined but is continually being challenged. The sector generated 24% of the City’s GDP and just under 1.8% of the United Kingdom’s GDP.

One of the secondary objectives of this Bill is for the regulators to promote the growth and competitiveness of the UK economy. An area where the London market has no participation is captive insurance companies. This would certainly be an opportunity for growth as it is a $54 billion industry. Even UK companies such as Network Rail and Transport for London have their captives in foreign jurisdictions. These captive insurance companies are designed to provide insurance to their parent company or its entity. It is no longer the tax legislation, an oft-cited reason for this being the case, but the regulatory hurdles, as the regulators treat them as commercial insurance companies.

Regulators will always remain an important part of the checks and balances of financial business, but they need to be proportionate in recognising that personal consumers need a greater level of protection than the more sophisticated companies, which have significant experience and take professional advice on how to manage their risk protection. It should not be one size fits all.

Secondly, the Bill currently allows the regulators to determine how they believe they have met the requirements of the competitiveness objective. This suggests that they can mark their own homework. Would it not be preferable to have a set of key performance indicators laid down in the Bill, by which they can be measured when reporting back to the Government and Parliament?

With these thoughts in mind, I thank noble Lords for this opportunity and look forward to supporting this Bill, promoting growth and competitiveness for our financial services industry and, ultimately, growing this vital sector of the economy.