Covid-19: Financial Markets

Lord Harris of Haringey Excerpts

Wednesday 25th March 2020 Lords Chamber

[Lord Callanan]

I thank my noble friend for his comments but taking short and long positions allows for the hedging of risks, and short selling can therefore benefit a wide range of investors, not just hedge funds, by helping them to manage the risk in their portfolios, particularly when the market is volatile. Many of these investors are ordinary investors, including pension funds for employees of companies and local government. However, I understand my noble friend’s point, and the regulators are closely monitoring activity. I cannot comment on the figures that he quoted about the extent of short selling in recent days but overall, the FCA’s reporting data shows that aggregate net short selling activity reported to the FCA is low as a percentage of total market activity and has in fact decreased over successive recent days.

[Lord Harris of Haringey (Lab)]

My Lords, I refer to my interests in the register as chair of National Trading Standards and of the Fundraising Regulator for charities. The Minister just responded in quite strange ways to the profiteering by some hedge funds. Would he also like to comment on the profiteering that has taken place, with many retailers jacking up the prices of commodities that currently appear to be in short supply? I am sure he is also aware that many outrageous and unscrupulous scammers are going round, preying on all sorts of people, including some who are very elderly, by purporting to be offering Covid-19 cures or testing, and there are even people going around claiming to collect money for Covid-19-related charities which do not exist. What powers and extra support will the Government give to stamp down on all those practices?

[Lord Callanan]

I thank the noble Lord for his question. He is right to draw attention to the profiteering from a small number of retailers. We are aware of that and are looking urgently at what legal powers and frameworks are in place in order for us to do something about it. We will not hesitate to take any action that is required. With regard to his second point, I am afraid that, sad to say, a small number of unscrupulous and callous individuals will always seek to take advantage of any crisis.

--- Later in debate ---

[Lord Callanan]

The noble Lord makes a good point. I am sure that the FCA and the regulators are closely watching what is happening in all markets. As I mentioned, when short selling, certainly in European markets, is banned in certain exchanges, we also limit trading in those countries. So, yes, it is something that we monitor closely.

[Lord Harris of Haringey (Lab)]

The noble Lord will be aware that his right honourable friend the Prime Minister constantly evokes comparisons with the leadership shown during the Second World War. During that war, profiteering was considered a very serious matter, yet we have just heard that nothing is going to happen very quickly on short selling. Given that the Minister dismissed the activities of scammers preying on vulnerable people simply as something that happens all the time, and given that the aim is to try to get everyone in this country to work together and to support each other, does he not think that the Government should take firmer action?

[Lord Callanan]

I certainly did not dismiss that activity; I said that it was appalling and callous, and obviously I wish that people would not indulge in it. However, criminal law and sanctions exist for activities of this sort. We have some powers in this area, and the department’s officials are looking at this matter at the moment. If wrongdoing and illegal activity are proven, we will not hesitate to take the strongest possible action. I view this activity as appalling and I apologise to the noble Lord if I did not give that impression in my earlier answer.