Financial Services and Markets Bill [HL]

Debate between Lord Hunt of Wirral and Lord Ashcombe

Committee stage
Monday 6th July 2026 Grand Committee

[Lord Hunt of Wirral (Con)]

My Lords, in moving Amendment 142A and speaking to the other amendments in this group, which I also support, I am asking for the FCA to be able to develop a dedicated division to undertake its regulatory activities regarding wholesale market participants.

This amendment is all about ensuring that in what is a highly competitive global marketplace the FCA can balance its priorities and resources effectively to benefit the consumer or clients who use them in those markets that the FCA regulates. The FCA’s protection of the individual consumer is rightly prominent, but businesses that are customers of wholesale markets, such as our world-leading London insurance market, require a very different level of protection. Currently, the definition used by the FCA is very unclear and does not distinguish between these two very different sets of needs.

I declare my long-standing interest in financial services Bills over the last 50 years, particularly as a practising solicitor in the City of London and a partner in the firm DAC Beachcroft LLP. I have slowly but surely seen the evolution of regulation, but I am concerned that it is now inhibiting the growth of what is for us one of the great global centres, particularly for insurance. However, the definition of wholesale does not just apply to insurance; it applies to other aspects of financial services as well. The FCA is well aware of the issue. Indeed, it has been raised actively with the FCA over the last few years and there have been commitments to action. However, sad to say, progress is not being made. The FCA appears to be struggling with the definition of a retail consumer and has not found the best way forward.

Once again, we rely on our Select Committee to highlight the issue. The cross-party Financial Services Regulation Committee identified this as an issue, finding in its report last year:

“The FCA does not do enough to distinguish between firms that cater to wholesale and retail markets in its regulation and supervision which … imposes unnecessary burdens and frictions on firms … These issues have fuelled an increase in bureaucracy and imposed significant monetary and resource demands on firms”.


Witnesses to that Select Committee gave key examples. They show that wholesale and retail markets serve fundamentally different customers. Retail regulation is designed to protect individual consumers, whereas wholesale markets are primarily used by professional investors, insurance firms, banks, pension funds and corporate entities. The London insurance market deals almost exclusively with corporate clients, but the regulations take a one-size-fits-all approach, applying consumer-focused rules to firms and activities for which they were never really intended.

We have a situation where pet insurance is essentially regulated in the same manner as marine or aviation insurance. Policies and services delivered in the London market are bespoke to the individual client or individually negotiated and tended, where there is no evidence of this type of market failure. They are not unit-based commoditised products that are offered within the retail market. The FCA’s implementation of what is described as the consumer duty has introduced considerable uncertainty for domestic and international firms operating in the London market. This uncertainty is driven by a lack of clarity on the FCA’s expectations as to how firms should comply with the consumer duty, including which markets and consumers it applies to.

I believe, therefore, that a dedicated wholesale division would help to ensure that regulation is proportionate to the sophistication of market participants. That is why I feel so strongly that this amendment and my noble friend Lord Ashcombe’s amendment should be contained in the Bill. I hope that the Minister will be able to address this issue for the first time as a Minister on a financial services Bill, recognising that, at the moment, we are dealing with two separate markets that are merged under the consumer duty, which is wholly inappropriate. I beg to move.

[Lord Ashcombe (Con)]

My Lords, I declare my interest as an employee of Marsh, which is an FCA-regulated firm. I shall speak to Amendment 142C in my name, which seeks, in essence, to achieve something modest but necessary: equipping the regulator with a clearer and more effective framework within which to operate.

I am—as, I suspect, other noble Lords are—unequivocal in my support for well-judged regulation. It is the foundation of consumer protection, market integrity and London’s standing as an international global financial centre, particularly in insurance, as my noble friend Lord Hunt mentioned. However, the position in which we find ourselves today is one not of insufficient regulation but of fragmentation, with a system that in parts lacks clarity and coherence.

At present, the FCA operates without a clear statutory distinction between retail and wholesale clients. The distinction between wholesale and retail markets is not academic; it is fundamental, particularly in insurance. Retail regulation exists to protect individuals and small businesses. Wholesale markets are, by contrast, the domain of larger and corporate entities. These participants are not passive consumers. They are typically active, informed buyers engaging in complex and often bespoke transactions, as I said on Monday last week. This is very much in line with my noble friend Lord Hunt’s Amendment 142A, to which I have added my name.

This situation leads to a consequence: a degree of inconsistency that is, frankly, difficult to justify. Businesses of broadly similar scale and sophistication can find themselves subject to different regulatory treatments depending on the regime applied or the particular lens through which they are viewed. That uncertainty serves no one well. It imposes a cost on, first, firms, which must devote increasing resource to navigating overlapping and at times contradictory interpretations, and, ultimately, on consumers and smaller businesses, which bear that burden through higher costs and reduced access to services.

There is, however, a straightforward solution. Where my amendment takes that further than my noble friend’s is as follows. A turnover threshold of £6.5 million already exists in statute and is used by the Financial Ombudsman Service to reflect the size of companies. It reflects a determination made by Parliament of the point at which a business can reasonably be expected to possess a degree of financial sophistication and resource, and it could easily be adopted by the FCA.

My amendment does not seek to innovate for innovation’s sake; rather, it seeks to bring coherence by anchoring the distinction between retail and wholesale clients to that already established threshold. In doing so, it would provide the regulator with a clear statutory direction. It would also introduce a necessary discipline: that retail-style protections should not be applied to wholesale clients unless there is a demonstrable and proportionate case for doing so.

This is not about weakening regulation; it is about smart regulation. It is a call for regulation that is properly targeted and grounded in the realities of the market. This matters because we must allow the FCA to focus its efforts where they are most needed, which is on genuine customer protection for individuals—you and me when we are purchasing insurance, for example—rather than dispersing them across forms of compliance that add bureaucracy cost without delivering commensurate benefit.

There is a genuine competitive point here too. Post Brexit, we have the chance to move faster than Europe, but we can do that only if the industry has certainty. Businesses need to know where they stand. They cannot plan investment or hire teams based on regulatory guidance that shifts depending on whom you talk to and when. They need law. My amendment offers a measure of that certainty. It would reduce unnecessary friction and support the FCA in meeting its secondary objectives of growth and competitiveness, and it would do so without in any way diminishing the protection afforded to those who genuinely require it. This is a measured and pragmatic proposal that respects the importance of regulation while seeking to improve its application. I support the other amendments in this group.

Employment Rights Bill

Debate between Lord Hunt of Wirral and Lord Ashcombe

Committee stage
Tuesday 3rd June 2025 Lords Chamber

[Lord Ashcombe (Con)]

My Lords, I appreciate what the noble Baroness said, because this is about fairness and making sure life works. There are a lot of companies, big and small, where, to a great extent, what has been proposed is already working. However, there are a number of instances—including somewhere like where I work—where I do not think this would work.

I will just give your Lordships one quick example. I work in insurance for a huge insurance broker. We had a client in the United States who by 5 pm had not decided whether to renew his insurance contract in London. If he had not renewed it by 1 June—which I guess was a Sunday—he would have had no insurance on that specific part of his business. A member of my team kindly stayed online, for want of a better word—he was probably out and about with the phone in his pocket—and the call came through at some time after 9 pm. Looking at the way the clause is drafted, I am not sure whether that would be considered enough of an emergency to get a member of staff out of bed, so to speak. Equally, that company might have had to stop working, doing whatever it was doing in the oil and gas industry—I know that will not endear me to the noble Baroness, but that is a fact. But we had to bind that insurance contract once we got the order. It was all ready to go; it was just a question of sending a number of emails to say that it was done. So there are huge swathes of the country where it is in fact in place already, as the noble Baroness, Lady Coffey, has said, but in some of the big City environments where you are working across time zones particularly, it is extremely difficult to enact.

On working from home, we all worked at home for some time; personally I loathed it—I am back in the office almost as much as I can be. However, I have members of staff who like working at home, and, let me tell your Lordships, they know how to turn themselves off when they do not want to talk to us anymore, and they are good at it. So they should be, and I respect them for it. But if you really need them, you can always find them.

Finally, you can turn the damn machines off. Be it a telephone, a computer, an iPad or whatever it is, there is an off button out there. Certainly when I was a child, we were told never to call anybody after 9 pm, and that was friends and family. So there are some unwritten rules out there that are already very effective.

[Lord Hunt of Wirral (Con)]

My Lords, we are very grateful indeed to the noble Baroness, Lady Jones of Moulsecoomb, for introducing us to a fascinating debate. The noble Lord, Lord Goddard of Stockport, put us in touch with the real world, and then my noble friends Lady Coffey and Lord Ashcombe reminded us about what happens in real life. I suppose I have immediately to declare my interest as a practising solicitor. My phrase, which I always used to share with Albert Blighton, was that I was available 168/52. The number 168 is 24 times seven. So you quickly appreciate that, as a solicitor, you have to be available all the time.

When I won the contract to represent cricket with the England and Wales Cricket Board, they wanted to know whether I would be available on a Sunday evening when there was an incident at a Sunday league match, and I said, “Yes, of course I would”. So it is very much up to the individual to make themselves available.

When I was asked to join the Front Bench in the House of Commons in 1977, I do not think anybody expected that I would refuse to answer an Adjournment debate, even though it might have been at 3 am, which it was on one occasion. Therefore, you set your working parameter in the way in which you develop your own workaholic tendencies, but you should not expect it of everyone, and I think that is what the amendment is all about.

Do you have the right to disconnect? Although I am sympathetic to the idea that you should be able to switch off, which the noble Lord, Lord Goddard, put in context, when the Bill is already introducing considerable uncertainty for employers around shift notice periods, payment for cancelled shifts and wider questions of how flexible working is to be managed in practice, we have to be very cautious about layering on yet another rigid and potentially burdensome obligation.

The noble Baroness may have put forward what appears to be a straightforward proposal, giving workers a right not to respond to emails or calls outside their contracted hours, but in reality, as the Government have quickly realised, despite what they may have said in advance of the election, this whole proposal raises serious practical and legal questions. What does “working hours” mean in a world of flexible, hybrid and self-managed work? How do we define an emergency? What happens in small teams, in customer-facing sectors, which my noble friend Lord Ashcombe highlighted, and in businesses operating across time zones?

Employers, especially small businesses, already face growing compliance costs. This would add yet another administrative requirement. There would have to be a written policy on the right to disconnect, a consultation process, enforcement procedures and, of course, exposure to tribunal claims. So, we must ask: is this really the right moment to introduce such sweeping regulation?

The Bill already creates new rights and obligations that will take time to bed in. There is uncertainty around shift scheduling, compensation for cancellations and the cumulative compliance burden. I have to say to the noble Baroness that I believe the effect of this amendment would be to increase that uncertainty further and risk undermining flexibility for both sides. Most workers and employers already navigate these boundaries reasonably and sensibly. A blanket legislative approach risks making day-to-day communications feel legally fraught, especially in smaller organisations where roles are not so rigidly defined.