Financial Services and Markets Bill

Lord Forsyth of Drumlean Excerpts

Committee stage
Wednesday 1st March 2023 Grand Committee

[Lord Deben (Con)]

My Lords, I remind the Committee of my interests, including chairmanship of PIMFA, which represents financial advisers, and at Sancroft we advise a number of financial institutions on sustainability.

I merely want to say that one of the groups of people who will benefit considerably from this are those who are regulated. The fact is that we need to recover confidence in the regulator in two particular areas. The first is what I call the conflicts between regulators, for which there is really no way of unpicking them so that they can work more effectively. That is particularly true among many of the people with whom I deal almost every day.

The second reason why this is so important is that I do not believe that anyone should be unaccountable if they have a public position. I very much agree with the noble Lord opposite who talked about the terrible opera story. I just do not think regulators can do their job properly unless they look over their shoulder to the public as a whole, which is what we are talking about in this bit regarding accountability. As a Minister for 16 years, I know that one’s accountability to Parliament and the public was an essential part of doing the job properly. One had to say to one’s civil servants, “Look, we can’t do that because it really would make people feel that we were behaving in a way that was unacceptable to Parliament or to the public.”

That is the problem for the boards of these regulators, which seems to me to be one of the issues. As my noble friend Lord Bridges suggested, some say that the boards should deal with it. That is not possible unless a board is itself accountable to the public and, in that sense, to Parliament. I do not believe that you can expect the boards to do their job of saying to the regulator, “Look, I’m sorry, you really can’t do that”, or indeed, “You can and should do this”. I am not suggesting that it should always be “Don’t do it”; sometimes it should be “Do it”. Later on, for example, we will discuss the issue that in the City of London the regulator does not insist that a competent person says not only whether, for example, there are gas deposits but whether under the law of Britain those gas deposits will be able to be used, which is just as important. At the moment the regulator does not do that and there is no way of insisting that it should. I therefore strongly support what my noble friend Lord Bridges has said.

[Lord Forsyth of Drumlean (Con)]

My Lords, this amendment is absolutely inspired. We had a debate earlier about the merits of parliamentary committees, and it was questioned whether they would have sufficient resource to do the work. I am very taken by what the noble Lord, Lord Tyrie, had to say. At the risk of embarrassing him, he was a very distinguished member of the Treasury Select Committee and did some fantastic work there. He comes from a background in the Civil Service and has experience inside government. Therefore, we should take very seriously what he had to say about the merits of this proposal.

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After those consultations, we focused our efforts on improving the mechanisms by which Parliament and government can scrutinise the regulators. We have discussed some of them before in this Committee: the notification to the Treasury Select Committee of consultations; the reply to representations by any parliamentary committees; a new power for the Treasury to direct regulators to review rules; a new statutory cost-benefit analysis panel; and a new government power in Clause 37 of this Bill to direct the regulators to publish more information, including on performance, where that is necessary for the scrutiny of their duties.

[Lord Forsyth of Drumlean (Con)]

My Lords, in my day, although it may have changed, when the Government issued a consultation document, it was basically to get agreement to what they wanted to do. In the case of the OBR, I remember the then Chancellor, George Osborne, arguing that the OBR was necessary in order that people could see that the Government were being honest and were subject to some kind of scrutiny, and that it would provide independent information that would enable Parliament and others to take a view.

I am trying to put this delicately, but my noble friend’s argument seems to be that the Treasury set out a consultation and reached an agreement so it is in the Bill. But the view that is coming out very clearly is that, for Parliament or anyone else to effectively hold the Treasury and the regulators to account, it is necessary to have an independent source of information. My noble friend is just reading out what we already know is in the Bill, but there is pretty well universal acceptance that that does not actually provide for sufficient accountability. Could she deal with that point? Why on earth would she be against something that would enable more transparency and more effective scrutiny?

[Baroness Penn (Con)]

I am afraid I am going to have to disagree with my noble friend’s point about consultation. I have spent too long in this Chamber, even in a limited time, being on the receiving end of scrutiny from noble Lords about the lack of consultation. The proposals in the Bill have gone through two rounds of public consultation. My noble friend may not see the value in public consultation, but that is not something that has been fed back to me in my dealings in other policy areas.

[Lord Forsyth of Drumlean (Con)]

Forgive me, but I did not say anything of the sort. Of course I can see the value in consultation. What I do not see the value in is consultation that then concludes that the Government should do what they wanted to do in the first place.