Financial Services and Markets Bill [HL]

Debate between Lord Holmes of Richmond and Baroness Neville-Rolfe

Committee stage
Wednesday 8th July 2026 Grand Committee

[Baroness Neville-Rolfe (Con)]

My Lords, in moving Amendment 167, I am grateful for the support of my noble friend Lord Altrincham and the noble Baroness, Lady Altmann.

Financial education is incredibly important, but it is unusually weak in the UK compared to, for example, Finland, the Netherlands, Singapore and Australia. The Times rightly has a campaign to improve it. Rishi Sunak has spent time and effort since leaving office trying to do so, citing how much better people do in life if they understand inflation, the magic of compound interest and the importance of diversifying risk. Financial education is an issue on which I have campaigned for a very long time, notably in my 2022 review of the state pension age. I believe it is central to how people live their lives, make decisions, protect themselves and participate responsibly in the economy. It helps them to make sensible decisions about borrowing, mortgages, insurance and pensions, to avoid scams and financial harm, and to understand basic financial and economic statistics. This is a mission that I hope noble Lords of all political perspectives can support.

Amendment 167 would give the FCA a new statutory duty to promote public understanding of financial services and financial capability. For example, it could produce succinct basic explanatory material on concepts such as compound interest, basic banking, and portfolio and asset diversification. The amendment would require the FCA to report annually on the actions it has taken to improve financial capability, the groups most at risk of poor financial literacy, the groups most vulnerable to financial exclusion, and how improved financial capability contributes to consumer resilience, competition and economic growth.

The reason this matters is that the FCA’s current objectives focus on consumer protection, market integrity, competition, and growth and competitiveness. There is not currently a primary statutory duty on the FCA to improve financial capability across society. Better-informed consumers are less vulnerable to fraud and more likely to save, plan for retirement, compare products, switch providers and exercise choice. That supports not only individual resilience but competition and growth. Poor financial literacy often falls hardest on those who are already vulnerable or excluded. If people do not understand the financial system then they are less able to access it, less able to challenge poor treatment, less able to avoid expensive mistakes and less able to make decisions which improve their long-term security.

One problem is that financial education provision is scattered and variable in quality. There are many good initiatives, some even by the private sector, as I remember from the work done by Tesco Bank in Scotland, but they are not joined up. The curriculum has been improved slightly, although mainly through citizenship and maths, with some schools doing very good work but others being less effective. As recent debates on student loans have shown, this is something that we really need to grasp. We ask 17 and 18 year-olds to make significant financial decisions with long-term consequences, yet we do not ensure that they are equipped with the skills and knowledge needed to make the decisions well.

Many teachers find financial education difficult, and, like people from all walks of life, they are not aware enough of it in their own lives, let alone skilled enough to teach the basics well. They need support, resources and confidence. Financial education needs to be included in teacher training and linked to university teaching. I echo the difficulties of the noble Lord, Lord Carlile, with the scope of the Bill, since an amendment I tabled on the subject was rejected.

The truth is we need a step change at every level. My amendment does not ask the FCA to replace schools, teachers, parents, charities, or the Money and Pensions Service—although that service is too divorced from most financial transactions to do a good job. Our amendment would impose a duty on the FCA to recognise that improving financial capability should be part of its mission, and would require it to report properly each year on what it is doing. That could have a catalytic effect.

I welcome Amendment 170, in the name of my noble friend Lord Holmes of Richmond, which would require the FCA to work with the Money and Pensions Service to produce a national financial education strategy. That is complementary to my amendment.

There is a strong case for a more joined-up national approach. Financial education should not be a patchwork of disconnected initiatives. We need a coherent strategy, covering budgeting, saving, investment literacy, pensions, debt, fraud prevention, digital finance and support for vulnerable groups. I was glad to have a positive response on this issue from the noble Lord, Lord Livermore, to a recent Question, and would be very grateful if the Minister could respond to our pleas. Better financial education could be a key pillar of consumer protection. This is an area where a legacy is waiting to be created. I beg to move.

[Lord Holmes of Richmond (Con)]

My Lords, it is an absolute pleasure to follow my noble friend Lady Neville-Rolfe. I support her Amendment 167, which, as she rightly identifies, has many common themes with my Amendment 170.

I have been working on financial education and financial capability for a long time. As my noble friend rightly identifies, and as we have mentioned in other groups, the need for a coherent cross-society, cross-economy financial education and financial capability strategy, covering every stage of life, could barely be more needed than it is today.

There are two pernicious forces striding our streets, walking hand in hand: financial exclusion and digital exclusion, one often causing and compounding the other. Becky Francis’s review found that it was absolutely key to have financial education and capability within the curriculum, but it is about how that naturally touches on digital capability, media literacy and capability, and AI literacy and capability. These threads all come together, and can do so a positive, additive fashion if they are seen as positive, and are personalised and focused on the individual at every stage of her or his life, to enable all of us to make choices and to be included. With so much in society going digital—to be fair, not much in the Bill is going digital, but that is perhaps an outlier—financial exclusion for want of financial education and capability could dramatically increase and exacerbate the exclusion already felt by those at the most extreme end of our society.

Education is not just about what happens with the curriculum; it is a matter for our regulator. Through that, when it is a primary concern for the regulator, it gives it a sharpness of focus, putting it right at the centre for the regulator responsible for our financial services. It works with the Government’s stated aims in other areas. If the Government constantly state that they want to take a domain-specific approach, a financial education and capability, together with a domain-specific approach, will mean that the FCA will bring in money advice and a pension service alongside that.

I add to this to ensure that financial education and capability go beyond traditional products. When one considers how many young people are engaging with and investing in—in some senses, I put quotes around “investing in”—crypto, it is clear that the financial education and capability need to cover all the financial products, instruments and assets that are currently out there and being used and traded, not least by young people, who need to be enabled, empowered and given the capability and capacity to choose which products they want to engage with in a meaningful and capable fashion.

Amendment 171 is a different matter. It is a very specific amendment on SME right of action with the FCA—a right of action that is currently not available to SMEs. One can see at first blush why this is the case, because there is a clear distinction between a private person and an SME. The difficulty is, as currently set out in Section 138D of FSMA on the definition of a private person, that a private person and an SME are, in reality, characters that represent a principle and policy that sit underneath them. That is what the amendment is all about. The principle being set out is the assumption that a private person is always in need of a right of action because of their circumstances, which an SME is not.

This is beguilingly appealing at first blush, but entirely wrong in being a coherent strategy that includes everyone. The reason is that it inevitably tends to the mean: the average private person on the famous omnibus or the average SME with levels of understanding, support and financial wherewithal. But that does not cut it. That should never have cut it, and it does not cut it for current situations, because, on the one hand, it is clearly entirely possible and a reality that thousands of small and micro entities out there do not have these assumed resources, capabilities and capacities. On the other hand, there are millions of private persons who are far more capable and economically sophisticated than these small and micro entities.

This amendment is specific, clear and coherent: it is to extend that right of action to small and micro entities. I am not suggesting that the drafting is perfect; there may need to be de minimis levels put in, or a clearer definition of what small and micro entities are. But again, if the Government want growth and to back our businesses, not least our small and micro businesses, it is a question of coherence, clarity and fairness. SMEs should have a right of action when it comes to the FCA. This should not be limited just to private persons, as currently set out. I look forward to the Minister’s response and I beg to move.

Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2025

Debate between Lord Holmes of Richmond and Baroness Neville-Rolfe

Wednesday 28th January 2026 Grand Committee

[Baroness Neville-Rolfe (Con)]

The Minister’s reply was extremely helpful. One thing I am a little uncertain about relates to the Treasury, or the crypto assets unit, looking at the possible wrinkle or flaw that my noble friend Lord Holmes mentioned. If that led to a change in the SI, my understanding is that it would not come back here. That is because, in answer to the question of the noble Baroness, Lady Kramer, the Minister explained that this is a ground-breaking SI and after that, because it is important to be flexible, the FCA would make any changes. Assuming that is right, this is a plea from us for an update as to the progress of those discussions when they have taken place. My understanding from our shadow Minister in the other place was that discussions were ongoing on this matter, which he was extremely grateful for. It would be useful for us to know the final outcome of those. If a small change has to be made to the regulations, I am sure we will be supportive.

I am delighted to hear about financial education. I look forward perhaps to giving the Minister a cup of tea and learning a bit more about that on a future occasion because it goes beyond the framework of today’s discussion. On SMEs, it is not only that we want the Government to think about them, which they are obviously doing, but to make sure that the scam issue with SMEs is part of either the Government’s or the FCA’s thinking. It is an important matter for struggling small businesses in the country. We do not want that issue to go further. I am happy to agree to the passing of this statutory instrument and thank the Minister and the Treasury for all the work that they have done in this area.

[Lord Holmes of Richmond (Con)]

My Lords, I likewise thank the Minister and the team for the thoroughness of the answers. To underline the point raised by my noble friend Lady Neville-Rolfe, can the Minister say today clearly whether there are ongoing negotiations, which is our understanding, around this specific point or whether this SI will through unamended and that is the Government’s position? Secondly, do the Minister and the Government accept the issue of double regulation, which would be a consequence of these regulations, and the broader point around that? That is because of the roles that particularly the Bank of England and the FCA are playing in this process, with firms potentially finding themselves subject to double regulation at different stages of their development.