Financial Services and Markets Bill [HL]

Lord Ashcombe Excerpts

Committee stage
Wednesday 24th June 2026 Grand Committee

Moved by

[Lord Ashcombe]

69B: Clause 16, page 18, line 33, leave out “5” and insert “3”

[Lord Ashcombe (Con)]

My Lords, unfortunately, I was unable to speak at Second Reading—like the noble Lord, Lord Vaux of Harrowden, as he mentioned on Monday—but I am delighted to be back in time to speak in Committee. I declare my interest as an employee of Marsh, an FCA-regulated firm.

The amendment in my name in this group, Amendments 69B and 73A, propose that our financial regulators move from a five-year to a three-year strategic planning cycle. At its heart, this is a straightforward proposition: regulators must keep pace with the world they regulate. In financial services, the rate of change has accelerated to such an extent that a five-year strategy can quickly become outdated. When the FCA and the PRA last set their strategies, few could have anticipated the speed and scale of the developments that followed. The volatility seen in digital assets, the rapid emergence of artificial intelligence in financial decision-making, the growing importance of cyber resilience to financial stability and the impact of geopolitical tensions on global markets have all evolved far more quickly than expected. Yet regulators remain bound by frameworks conceived for a very different environment.

A three-year cycle offers a more realistic and proportionate approach. It is not an arbitrary shift. It better reflects the pace of change in financial services, aligns more closely with the Treasury’s spending review cycle and mirrors the planning horizons adopted by many firms. It also corresponds more closely to the time it takes for innovation to move from novelty to something requiring clear regulatory oversight. Some may argue that a five-year cycle provides greater stability, but stability should not be confused with rigidity. A strategy that is clearly out of date does not offer certainty; it risks losing credibility. True stability lies in a framework that is regularly reviewed and refreshed, so that it remains relevant and dependable. Nor would a shorter cycle create unnecessary disruption. It would not require regulators to constantly change direction; rather, it would ensure that their strategies are revisited at appropriate intervals and updated where necessary. That strikes the right balance between continuity and responsiveness.

There is a practical consideration. Industry participants have consistently highlighted that five-year strategies can be overtaken by events well before their conclusion, making it harder for firms to plan with confidence. In reality, regulators have already had to adapt to unforeseen shocks—whether economic, geopolitical or technological —outside the normal review cycle. For that reason, this is not a radical proposal but a pragmatic one.

It is important that financial regulation does not rely on a planning horizon that no longer reflects the realities of the market. The FCA and the PRA are strong institutions, but even the most capable regulators cannot be expected to operate effectively within five-year strategies in a period of such rapid change. A three-year cycle is a measured reform. It would help to ensure that regulation remains responsive, credible and accountable, while fully respecting the independence of our regulators.

These are probing amendments. As such, can the Minister say why the Government chose to fix five-year periods for strategy reviews? I believe that is too long, so I look forward to hearing his thoughts on that. I also support the amendments in the names of my noble friend Lady Noakes and the noble Baroness, Lady Bowles of Berkhamsted. I beg to move.

[Baroness Noakes (Con)]

My Lords, I will speak to Amendments 70, 71, 73, 74 and 76 in my name. I thank the noble Lord, Lord Vaux of Harrowden, for adding his name to Amendments 70, 73 and 76.

At first sight, Clause 16 looks like a bit of “motherhood and apple pie” legislation. After all, what is not to like about five-year strategies, which are what most businesses do in the UK and internationally? A closer look at Clause 16, however, reveals a bit of a mess. The position we have at the moment is that the PRA is required to determine a strategy, and it does this by way of annual business plans. There is no requirement in statute for the FCA to do anything but it has routinely issued annual plans; last year, it issued a five-year strategy as well. So this is clearly a slightly messy area, and the Government are right to try to tidy it up.

I fear, however, that the solution in Clause 16 will make things worse. First, the requirement for a strategy seems to be a static one, requiring a five-year strategy to be set and then replaced when the five years have nearly run out. The subsections of new Sections 1JZA and 2E, to be inserted by Clause 16, envisage that the strategies can be revised or replaced, but it is unclear what the trigger for that is other than when the Treasury issues new recommendations in a remit letter. In the business world, strategies are kept under review and are often revisited annually—certainly more often than every five years. I believe that Clause 16 needs a positive requirement for the regulators to keep their strategies under review, if only to confirm their continuing validity. My noble friend Lord Ashcombe’s Amendments 64A and 73A would partly get round the problem by shortening the period, but they still envisage a static strategy; it would be three years and then, at two years and nine months, you would do another one, which is not a satisfactory approach to drawing up strategies.

The Explanatory Notes explain that these strategies are expected to be

“high level and focus on the FCA’s and PRA’s top priorities”.

That is fine, but it is not very useful for the regulated firms that want to know how the regulators’ actions will affect them in practice. If these five-year plans are anything like the FCA’s five-year strategy—all 20 pages of it are full of drawings, photographs and big letters—firms will be very disappointed. The FCA’s four priorities of being a smarter regulator, fighting financial crimes, supporting growth and helping consumers are so high level that they mean nothing to regulated firms.

At the moment, both regulators annually set out the detail of what they plan to do for the following year. Can the Minister say whether this will continue once the Bill becomes law? There will be no requirement in law for either the FCA or the PRA as a consequence of the Bill, and, given the lightweight content of the FCA’s five-year plan and the Government’s intentions for only high-level strategies, it would be a serious error if the regulators were not required to publish their detailed annual plans as well.

These are deficiencies in Clause 16 but they are not covered by specific amendments, mainly because, when I drew up my amendments, I was working on the naive premise that asking for a five-year strategy was a sound, if unexciting, proposition. As I have explained, I now see that as flawed in many ways. For this reason, I fully support the Clause 16 stand part notice in the name of the noble Baroness, Lady Bowles; I am sorry that I did not have time to add my name to it.

On the amendments that I have tabled, I will start with Amendment 70, which requires the FCA’s strategic priorities to include its secondary competitiveness and growth objective. The equivalent provision for the PRA in new Section 2E, inserted by Clause 16, says that the strategic priorities of the PRA include secondary objectives, whereas the drafting of new Clause 1JZA for the FCA does not extend to the secondary objectives. The Minister has helpfully written to me today to say that the Government sort of accept that but that they will work up their own amendment. I thank him for that and I look forward to seeing the text of that ahead of Report.

--- Later in debate ---

[Lord Stockwood (Lab)]

They are obviously related.

[Lord Ashcombe (Con)]

My Lords, what an interesting debate this turned out to be. There are a number of flaws, which have been extremely well demonstrated by all noble Lords on this side of the Room. I thank the Minister for his answer to my question. I am also extremely grateful to my noble friend Lady Noakes for improving my amendment significantly by talking about annual plans, which is quite correct. However, it is imperative that we continue to have parliamentary oversight of the regulators. From the discussion we have had this afternoon, there is no doubt that this clause still has a number of legs in it, and the horse race will continue for some time. I am sure we look forward to coming back to this on Report but, with that, I beg leave to withdraw my amendment.

Amendment 69B withdrawn.