Financial Services and Markets Bill

Lord Roborough Excerpts

Committee stage
Wednesday 1st March 2023 Grand Committee

Finally, Amendments 171 and 174 deal with the regulations made and firms’ right to challenge them. Amendment 171 would entitle an authorised person or a firm to apply to the Upper Tribunal, in which a judge would sit with experienced specialists, as in the Employment Appeal Tribunal. The Upper Tribunal would be responsible for dealing with appeals against decisions made by certain lower tribunals and organisations. It would make authoritative decisions, applying the law to the facts. It would be invaluable to lay down a principled approach to achieve consistency, predictability and fairness. Lower tribunals would be obliged to follow its rulings. Amendment 174 would provide protection against charges of misconduct, and I stress that they must have acted “reasonably”, not just in good faith.

[Lord Roborough (Con)]

My Lords, I declare my interests as a shareholder in an FCA-regulated asset management company, and as having been regulated as an employee for 30 years in financial services, including five years as a senior manager.

I have put my name to my noble friend Lord Lilley’s amendments. While they follow on from the amendments adding the requirement for predictability and consistency that were discussed on day two of Committee, to some extent they also stand alone. I also support my noble friend Lord Bridges’ amendments and indeed any proposal for effective oversight and scrutiny of regulatory performance.

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[Lord Roborough (Con)]

The Bill introduces secondary objectives unrelated to the core objectives. Should that unlimited liability also be extended to these? Will the regulator be determining acceptable travel policies for business? Which financial markets are priorities for growth and competitiveness? What will be the enforcement process if individuals or companies disregard these? How can the regulated have confidence in the application of these objectives without some kind of body of precedent and rapid appeals process? The regulators themselves will benefit from a clear body of case precedents when making decisions. I urge the Minister to give serious consideration to the importance of rapid and practical accountability of the regulator for its actions to those it regulates, if London is to remain a financial hub where the global community wants to base its investments, businesses and careers.

[Lord Eatwell (Lab)]

My Lords, I regret that I was not able to take part at Second Reading as I was working in the United States. I hope I have the indulgence of the Committee to make some comments on this set of amendments. As someone who has chaired a major regulator, I found the representation of the principles and approach to regulation as “vague” a rather chilling remark.

What we have seen with the amendments of the noble Lord, Lilley, and those who have supported them, is an attempt significantly to change the entire philosophy on which the regulatory system has so successfully developed in this country. That philosophy has been based on principles-based regulations. Those principles are not vague, as has been asserted; they are determined by Parliament. The rules have then been developed on the basis of serving an industry which is dynamic and continuously changing, unlike the building industry, many of whose practices have not changed since Tudor England.

The fact that the regulatory system can adapt to a rapidly changing industry has been a source of considerable strength within our regulatory system. If we are to introduce an entirely different legal approach, that has to be argued out. There should be a Green Paper, a White Paper and a proper Bill saying that the regulatory approach in this country is going to be fundamentally changed. That is what I fear: the amendments of the noble Lord, Lord Lilley, would effectively introduce a wedge of change that would fit very uncomfortably with the current structure.

On the other hand, I support the amendments proposed by the noble Lord, Lord Bridges, and particularly commend the remarks of the noble Lords, Lord Hill and Lord Forsyth. They argued that although this new accountability device—this new entity—would deal with, let us say, the technical side of regulatory issues, we still need a parliamentary committee to deal with the political side because regulation is both highly technical and has an essential political core. That is why we need both components. Therefore, I strongly support the amendments of the noble Lord, Lord Bridges, and the views put forward by the noble Lords, Lord Hill and Lord Forsyth, on the need for the dual structure to ensure a proper level of both technical and political accountability.