Financial Services and Markets Bill [HL]

Lord Holmes of Richmond Excerpts

2nd reading
Monday 8th June 2026 Lords Chamber

[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to take part in this Second Reading debate, and, in doing so, I declare my technology interests as adviser variously to the Crown Estate, Endava plc and Simmons & Simmons LLP. I congratulate the Minister on the clear and cogent way he introduced the provisions in the Bill. I will concentrate largely on what is not in the Bill now but what I hope may be included by the time we get to Third Reading.

First, AI is across our society, our economy and our financial services—be that in fraud detection, credit decisioning or algo trading—yet, currently, the Bill is strangely silent on it. The regulator is having to use existing powers that were never designed for these new technologies.

To that effect, what does the Minister believe is the right approach to AI in the Bill, given that the Government have stated that they will take a domain-specific approach, leaving it to the individual regulators? If one takes that approach, how can a consumer or customer of a financial services product be guaranteed clarity, consistency and a coherent approach when they avail themselves of financial services, not least because there are two regulators in this sector? A business may well have dual regulatory responsibilities, so how would not having horizontal and cross-sector AI regulation work?

There is no effective framework for cyber resilience in the Bill. In contrast to AI, the Government have decided that, on cyber, you can have a cross-economy and cross-society approach. I ask the Minister: what is different about cyber? Why can it be seen to be cross-sector, but AI cannot?

On financial inclusion, I welcome the provisions around access to banking and in-person services. Although, as other noble Lords have mentioned, the devil is largely in the detail as to what precisely is meant by the services, there is almost no point whatever in having a branch open if, when you go into that branch, you are told that there is machine or a screen in the corner that you can go and use. How is that financial inclusion or digital inclusion? When financial exclusion and digital exclusion all too often walk hand in hand, we need greater clarity in the Bill when it comes to these financial inclusion and access requirements.

We should consider what the third-largest economy in the world is. The United States is first, and China is second. In third place is fraud and economic, cyber and financial crime—it amounts to $10.5 trillion, which could affect hospitals, schools, teachers, nurses, doctors, defence or any element of state spending. One can be sure that the UK is losing its share of billions in financial crime and fraud. Yet where is the modern framework in the Bill to address these new fraud vectors, not least AI-enabled fraud? Why is there not more in the Bill that looks to address how AI can be deployed as a sword and shield against the nefarious use of AI?

There are a few nods and winks in the Bill to financial education, but we need to see much more on this. If there is to be less asymmetry between customer and firm, financial education is critical. How can the Government, the Financial Inclusion Committee, the Money and Pensions Service, which does such great work, and firms themselves can be brought together to have a far greater, coherent and consistent approach to financial education for all? How will this tailor with what is currently proposed, with the excellent Francis review of the curriculum? What will financial education look like in that?

There are many positive provisions in the Bill, but it is marked by errors and omissions excepted. There is so much that is not in the Bill that needs to be in it. It is a significant Financial Services and Markets Bill, yet it is silent on AI and cyber and it is quiet, if not completely silent, on financial inclusion, fraud and financial education. If this continues unamended and these issues unaddressed, individuals, our communities and our country will be the worse for it. They will be under-enabled and under-empowered and, as a consequence, there will be more than suboptimal economic activity. We have the Bill. We do not need to make it bigger, but we can make it better.