Queen’s Speech

Lord Holmes of Richmond Excerpts

Monday 16th May 2022 Lords Chamber

[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to take part in this debate on the gracious Speech and, in doing so, I declare my technology interests as set out in the register. I will cover the two areas of financial technology, hereafter fintech, and financial inclusion, hereafter “fininc”.

It is over a year since the Kalifa review into financial technology opportunity in the UK. How should we judge the success of any review and its recommendations? Well, economies around the world are rapidly taking up the recommendations of the Kalifa review. I believe that, in the UK, we need to ensure that we take every last recommendation right across the piece if we are to take the opportunity that fintech presents. Specifically, can my noble friend say where we are currently with the start date for the centre for finance, innovation and technology, what resource the centre has and who indeed will lead it?

On the regulatory review, there is a real opportunity for us to release all the potential power of fintech for the benefit of every citizen across the UK, but that is not an inevitability. It will need the right thought-through regulatory framework if we are to enable this.

On “fininc”, it was pleasing in last year’s Financial Services Bill—now an Act—to have got in the provision around cashback without the need for a purchase. Its success has been shown not only in taking up some of the slack for the closing of bank branches and ATMs but that—perhaps most pleasing to me and others who pushed for the measure—the large majority of transactions for cashback without purchase have been for £20 or under. Not only is this picking up where ATMs have left off but, crucially, it is taking an area of the economy of our society previously largely not covered and ignored by financial services provision. What more will be done to ensure that cashback without the need for a purchase is enabled in every community up and down the country? Similarly, on the shared banking hubs, which are a great proof of concept and success, I ask my noble friend: how will we ensure scale and that, again, every community up and down the country can avail itself of such a hub?

It is pleasing to see the potential measures around cash in the proposed financial services and markets Bill, but access to cash is but one part of the deal. What do the Government intend to do around acceptance of cash? If you will, what currency cash if no place to spend it? It is crucial that we look at both elements so that the 5 million to 8 million people who rely on cash can be assured that they can, rightly, continue to do so. Cash still matters, and it matters materially to millions up and down the country.

Finally, I briefly touch on central bank digital currency. The Bank of England has done tremendous work in this space, but can the Government put even more pace into this work and look at some of the non-monetary benefits of a central bank digital currency and of programmable money? I give one pertinent and potentially huge illustration of how a CBDC could help: atomic settlement at the border. What a difference that could potentially make.

In no way do I think that fintech, artificial intelligence, distributed ledger technology or the internet of things alone can cure the current issues that we face. However, if we orchestrate them and have them converging together for the public good, the opportunity exists to human-lead on all these new technologies for economic growth and economic, social and psychological good for the benefit of us all.