Financial Services Bill

Lord Holmes of Richmond Excerpts

Committee stage
Wednesday 10th March 2021 Grand Committee

[Lord Griffiths of Burry Port (Lab)]

My Lords, I will not detain the Committee long. I would not normally be seen near a finance Bill, largely because I do not have and do not ever expect to have any finance to bother me. Nor would I presume to discuss mortgage payments, since I do not have and never will have a mortgage to worry about. However, what I do have is some experience of people in all kinds of situations, good and bad, from the cradle to the grave.

It was a conversation with someone whom I knew well that made me aware of the truly dreadful situation that we are debating and that they found themselves in. Here was someone who was in a bad—a very bad —situation: they and 250,000 others. My noble friend Lord Stevenson of Balmacara and the noble Lord, Lord Sharkey, have done us a great service in highlighting the plight of these people and have worked out a reasonable way to help them. I am happy to leave the heavy lifting on the matter to them and, no doubt, other Members of the Committee who will chip in on the same side of the argument. They have made a compelling case in detail and with passion, all of which will help to disguise the extent of my own ignorance.

I simply must express my bewilderment at the way, when this subject was debated in the House of Commons, no less a person than the Economic Secretary to the Treasury gave voice to some rather misleading statements. He said, for example, that “mortgage prisoners” were paying a mere 0.4% higher than average mortgages. That figure has been mentioned more than once and is simply not true, according to the picture that I have seen painted in reliable reports from various quarters. He also suggested that when the mortgages in question were sold to “vulture funds” and other non-regulated bodies, the borrowers retained all the same conditions stipulated in their original agreements. From the conversation that I had and other cases that I have subsequently read about, that just is not the case.

The Government seem to have treated mortgage prisoners as cash cows, a means of paying down Treasury debt, after the decision to rescue the banks after the crisis of 2008. On the day that conversation arose, I thought that it would be a friendly interchange on the streets of my home town, with perhaps a mention of the unexpected good fortune of the Welsh rugby team—but it actually opened a can of worms. The person I was speaking to is considered to be a “problem borrower”, one of the people referred to by the noble Baroness, Lady Noakes. But my friend is a problem borrower largely because of the depredation of resources due to the fact that she has been paying mortgages over the odds for 10 years now. Even someone whose only qualification for speaking in this debate is an O-level in economics found himself smelling a rat as he spotted an egregious injustice being done to mortgage prisoners.

The amendments seek to correct this situation. They are balanced and sensible. Martin Lewis, who was quoted more than once by the noble Lord, Lord Sharkey, and is a true expert in this field, writes this:

“Mortgage prisoners are the forgotten victims of the 2008 financial crash. The Government at the time chose to bail out the banks, but unfairly—immorally—hundreds of thousands of their victims were left without adequate help, trapped in their mortgages and the financial misery caused by it.”


No wonder they are problem borrowers. He continued:

“And they have been forgotten ever since.”


The Bill and the amendments give us an opportunity to unforget them, to make good on past failures, and to bring justice to a situation yearning for it. The Minister is a decent and fair man but will of course be bound by the usual conventions in a debate of this kind. It would be good to hear him promise to go back to his department to try to find a way of bringing a little hope and cheer to those who suffer in this way.

[Lord Holmes of Richmond (Con) [V]]

My Lords, it is a pleasure to take part in the debate on this first group of amendments. In doing so, I declare my interests as set out in the register. I congratulate the noble Lord, Lord Stevenson, on the manner in which he introduced the amendment. I also thank him for giving a wave to my Amendment 127 on this subject, which found itself a prisoner in a different group of amendments but was very much to the purpose of this group. Simply put, it would prohibit any more individuals becoming mortgage prisoners in this way.

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[Baroness Bennett of Manor Castle (GP) [V]]

My Lords, I will speak briefly to Amendments 108, 109 and 110 in the names of the noble Lords, Lord Hodgson Ashley Abbotts and Lord Knight of Weymouth. I broadly agree with everything they said.

The noble Lord, Lord Hodgson, in his introduction, referred to the level of dissatisfaction in our society: the threats from poverty, inequality and insecurity. I would say that these amendments are digging here into some of the depth of the problems that I referred to in my speech on a previous group and seek to provide some remedies. As he was speaking, I thought of meeting an USDAW representative in Sheffield referring to one of her members who had just come to her to seek a voucher for a food bank. The member was not, as you would expect as an USDAW member, unemployed; in fact, that member had seven jobs, but they were all zero-hours contract jobs and that particular week they had not delivered enough money for that person to feed themselves and their family.

However, it is important that we do not just focus—the noble Lord, Lord Hodgson, did not—on those who are in desperate poverty and inequality, as awful as that is. As he was speaking, I could not help but think of what the late, great David Graeber called—here I may be about to use what is unparliamentary language here, but it is a direct quote—“bullshit jobs”. The noble Lord referred to people’s desire to get meaning, to feel that what they are doing, how they are using their time and talents, is worthwhile and contributing to society. Indeed, a failure to acknowledge and understand that—a focus purely on the pounds, shillings and pence—is at the root of a lot of our problems: the financialisation, to which the noble Lord, Lord Knight, referred, of our entire economy—not just the financial parts but the real economy, the care economy, the public service economy.

The noble Lord, Lord Knight, referred to managing things in a different way. I point again to New Zealand’s living standards framework, that guides its Treasury—based on a system not that dissimilar to our own—where they judge the quality of work, people’s security, the quality of the environment and the economy all together and seek to manage them to a stable, secure, decent whole.

These are important amendments and crucial principles, so I wanted to speak briefly in favour of them.

[Lord Holmes of Richmond (Con) [V]]

My Lords, it is a pleasure to speak to this group of amendments. In doing so, I declare my interests as set out in the register. I shall speak particularly to Amendment 122. It is evident that employee share ownership is a positive force within our economy, and speaks so much to the current Covid environment and what kind of economic sector, work and business basis we can have to our economy as we built out of Covid.

It is no surprise that Sir Nicholas Goodisson, after taking the London Stock Exchange through the big bang and seeing some of the early privatisations, then moved on to a role heading up the Wider Share Ownership Council. He saw the benefits and the positive impact that it had for people to have a stake in something, and there could be no better example of that than employees having a stake—a share—in the company for which they work on a daily basis.

I believe we will see more innovative models of employee ownership coming through. The EOT, for example, is still very much in its embryonic phase but it is a very positive concept and construct. There will be further developments in this area and I believe Amendment 122 sets out the case very well that when employees have a share, a stake and a say in the business for which they work, it benefits all concerned.

[Baroness Kramer (LD)]

My Lords, first, I have to correct an error I made in the last group of amendments. I referred to the HBOS Reading scandal when I was talking about the Promontory report, and of course I should have been talking about the RBS GRG scandal; I am afraid I got my scandals wrong. My apologies for that—there really are too many to choose from. I hope that one day I find there are no choices; that would be a very good situation to be in.

I find this group of amendments wonderfully refreshing and a very important change of direction. Amendments 108, 109 and 110 in the name of the noble Lord, Lord Hodgson, build on the concepts that we already have in the UK Stewardship Code but take that further. In many ways, one can see a relationship with the duty of care amendments that we talked about earlier in this debate. That duty of care was focused on customers but in many ways that is now extending that perspective to employees. I find that exciting and worthwhile.

I and my colleagues in the Liberal Democrats have long talked about the need for a very different social contract between employers and the workforce. Very often that workforce may not be an official workforce in the formal sense; it may be people who are self-employed and working freelance but who in effect are working very closely with an organisation. The whole of that workforce needs a very different social contract as we go forward into a different era.

I think we both have different standards about how we treat each other and different expectations. However, we are also about to go into a period of transition to the digital age. That will be disruptive. It creates real issues for a large swathe of people and we cannot passively step back and look at a group of people just as collateral damage as we make that transition. The obligations to the workforce have become far more significant than they might have been in a fairly steady and static era when everything was expected and was not changing very significantly.

I have long been a fan of what is loosely called triple bottom line accounting—and have probably talked about it too often in this House—whereby issues such as the environment and the social impact along with the financial impact are measured when we look at both individual accounts and when we look globally at a nation’s accounts. We had earlier amendments around the issue of well-being, which are well related to all that.

I was excited to hear the example of New Zealand that the noble Lord, Lord Knight, detailed to a fairly significant degree. Nearly 20 years ago I spoke to a conference in Auckland around these issues as New Zealand was making its decision to revisit the way in which it managed its national accounts and looked at corporate accounts. I notice that very often, when we look at an English-speaking country with close ties to the UK, we find it much easier to absorb the examples and to treat them in a sense as a pilot from which we can learn. I therefore hope very much that the principles in these amendments will be enhanced.

Like the noble Lord, Lord Hodgson, and my noble friend Lady Bowles, I am a great believer in employee share schemes. There is always a downside to be aware of. If something goes wrong in a company, you want to make sure that employees have also built other pension resources, have diversification and all those kinds of opportunities. A principle that is held as very important for senior management ought to be extended down throughout the employee base. Where you have ownership, you have a voice, and having a voice is important both in empowering people in their everyday life as a workforce and in making sure that they drive the direction of the company they are working for. We all know that the old-fashioned view that all that matters is the shareholder is essentially part of the past, and I very much welcome all these amendments as part of the future.

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Moved by

[Lord Holmes of Richmond]

112: After Clause 40, insert the following new Clause—
“Designated artificial intelligence officer
(1) The Secretary of State must by regulations made by statutory instrument provide that companies operating in the financial services sector who use artificial intelligence (“AI”) must have a designated AI officer.(2) The AI officer under subsection (1) has responsibility for ensuring the—(a) safe,(b) fair,(c) unbiased, and(d) non-discriminatory,use of AI.(3) The AI officer under subsection (1) also has responsibility to ensure that data used in any AI technology is unbiased.”

[Lord Holmes of Richmond (Con) [V]]

My Lords, in moving Amendment 112 I shall speak also to the following 10 amendments in the group, through to Amendment 136E, which is also in my name. I declare my interests as set out in the register and thank other noble Lords who have signed up to speak.

There are 11 amendments in the group and I should like to begin by making some broad comments about the overall theme. The group’s headline is fintech, financial technology, which covers a number of areas in and around that subject and demonstrates the connectivity between all the elements of 4IR, the fourth industrial revolution, including new technologies, and how they interact with one another in the context of financial services. They include AI—artificial intelligence —DLT or distributed ledger technology and blockchain, just to mention some that I will be coming on to discuss as we reach the amendments.

The Government have had a good story to tell on fintech since 2010—and indeed before: the Blair Administration were very positive around the UK’s opportunity and the potential that we have in this area of fintech. Perhaps the best example to date is the FCA’s sandbox, the measure of its success being its replication in more than 50 jurisdictions around the world. It was ground-breaking in its time; certainly, we find ourselves now, if not at a crossroads, certainly at a point where we need to consider everything across the fintech landscape and truly reflect on whether we are doing enough, or anywhere near enough, to ensure that the benefits are maximised for individuals, companies, all corporate entities and the UK as a whole.

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I applaud my noble friend Lord Holmes for bringing this important topic to the attention of the Committee. It is an area within which the Government, as well as the financial regulators, are very active. We intend to remain a world leader in this area. This has been a wide-ranging debate and I am conscious that we are limited in time. If there are any questions that I have failed to address in detail I will write to noble Lords. In the meantime, I hope that the work I have described will mean that my noble friend feels able to withdraw his amendment.

[Lord Holmes of Richmond (Con) [V]]

My Lords, I thank all noble Lords who have taken part in this debate.

I say to the noble Baroness, Lady Bennett, that her point on bitcoin was well made but, for the record, it is probably worth clarifying that that is a construction only of that particular cryptocurrency rather than an inevitability of a blockchain-based system.

I thank my noble friend Lady McIntosh of Pickering for her comments and for signing two of the amendments in the group. Similarly, I thank my noble friend Lady Neville-Rolfe for her comments on digital ID. I very much take her putting some more lead in my pencil to underscore the urgency of the issue; I am in complete lockstep with her on that point. I also thank the noble Baroness, Lady Kramer, and the noble Lord, Lord Tunnicliffe, for their constructive and positive comments, and indeed the Minister for her response. With that, I beg leave to withdraw Amendment 112.

Amendment 112 withdrawn.