National Savings & Investments: Contingent Liabilities
Lucy Rigby Excerpts(5 days, 18 hours ago)
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The Economic Secretary to the Treasury (Lucy Rigby)
I am today laying a departmental minute to advise that National Savings & Investments is retrospectively informing Parliament about two new contingent liabilities not previously disclosed, due to procedural oversight by NS&I.
These contingent liabilities have arisen from NS&I’s transition from a single-supplier service delivery model to a multi-supplier model. They relate to operational losses and fraud losses. Operational losses are compensatory payments made to customers due to error, default, fraud or change in the administration of NS&I’s products. Fraud losses are a subset of operational losses and in this instance relate to customer compromise through no fault of the suppliers.
In 2020, NS&I launched a transformation programme to modernise its operational systems, transitioning from a long-standing, single-supplier service delivery model to a multi-supplier model. This transformation introduced new service delivery partners and redistributed responsibilities across the entire customer journey.
Due to multiple handovers within NS&I and increased complexity of processes, it became necessary to redistribute loss liabilities among suppliers and assign them based on fault. Unlike the previous service model, no single supplier has end-to-end ownership of the service. Consequently, suppliers have limited or no control over certain stages and the associated risk management. Each supplier is therefore accountable only for the areas they directly manage. Where a customer is compromised through no fault of any of the suppliers, liability rests with NS&I, who may then seek recovery from third parties such as the customer’s nominated bank.
Following the delivery of a major programme milestone at the end of September 2025, the number of processes split across multiple suppliers has reduced as of October 2025. This will lessen the complexity associated with establishing and apportioning liability. However, some risk will remain in allocating responsibility. This is because multiple suppliers continue to deliver elements of the end-to-end service with underlying processes measured by their customer outcomes rather than by their individual components.
A key benefit of NS&I’s revised delivery model is that, unlike the previous single-supplier arrangement where potential losses were built into a risk premium, NS&I will now only bear actual losses that occur. This change ensures greater transparency and delivers better value for taxpayers. Under the new framework, NS&I will determine liability based on clear evidence of fault across multiple suppliers, reinforcing accountability and improving cost-efficiency.
A small portion of the estimated operational losses has been identified for the 2025-26 financial year; however, no disbursements have yet occurred pending HM Treasury consent. Where investigations subsequently identify a responsible supplier, NS&I will seek recovery of costs under contractual provisions.
It is normal practice, when a Government Department proposes to undertake a contingent liability in excess of £300,000 for which there is no specific statutory authority, for that Department’s Minister to present a departmental minute to Parliament giving particulars of the liability created and explaining the circumstances; and to refrain from incurring the liability until 14 sitting days after the issue of the minute, except in cases of special urgency.
However, at the time the potential liabilities were initially assessed, NS&I concluded that they constituted part of its “normal course of business” as described by “Managing Public Money” and the contingent liability approval framework. This was on the basis that the occurrence of such liabilities was considered to arise from its core function of raising cost-effective financing for Government by issuing and selling retail savings products to the public. Following a more extensive review and discussion with HM Treasury, NS&I has subsequently determined that the new service delivery model resulted in NS&I taking on liabilities that were previously retained by a single supplier, giving rise to the two contingent liabilities.
Given the initial assessment of the nature of the expense, it is regrettable that NS&I was unable to provide the House with the normal period for consideration prior to the contingent liabilities being entered into. NS&I therefore acknowledges that Parliament was not informed earlier and apologises for this procedural non-compliance. Steps have been taken to strengthen internal assurance processes to ensure full compliance with parliamentary expectations and “Managing Public Money”.
The lifetime potential exposure for operational losses excluding fraud losses is estimated at £460,000, with only a small portion currently identified for clearance. Actual costs are expected to be materially lower, and some may be recoverable from suppliers. In addition, the lifetime potential exposure for fraud losses is £1.6 million bringing the total combined lifetime exposure to approximately £2.06 million.
NS&I has sought retrospective consent from HM Treasury.
If any of these contingent liabilities crystallise, provision for payment will be sought through the normal supply procedure.
[HCWS1201]
Finance (No. 2) Bill
Lucy Rigby ExcerptsTuesday 16th December 2025
(6 days, 18 hours ago)
Commons ChamberRead Full debate Finance (No. 2) Bill 2024-26 View all Finance (No. 2) Bill 2024-26 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts
The Economic Secretary to the Treasury (Lucy Rigby)
The shadow Financial Secretary, the hon. Member for Grantham and Bourne (Gareth Davies), took the time to mention Father Christmas and Tinder. I thought he might also have taken a moment to welcome the fourth major trade deal secured by this Government and signed today with South Korea, which is set to boost our economy by £400 million, but that was obviously too much to ask.
It is an honour to close this Second Reading debate on the Finance (No. 2) Bill. I thank the Exchequer Secretary to the Treasury for opening the debate, and all right hon. and hon. Members who made contributions. I look forward to hearing further contributions during the rest of the Bill’s passage.
Before I turn to the points made during today’s debate, let me be clear about the purpose of the Bill. I will frame it in the context of choices, because so many hon. Members who have contributed to the debate have done the same. Put simply, the Bill delivers the fair, responsible and necessary choices required to strengthen our economy and cut borrowing, to return our public services to health, to back British entrepreneurs and to make people better off. Those are the choices that this Government are making.
Lucy Rigby
Not yet.
We have heard absolutely nothing from the Opposition that acknowledges that they made the wrong choices. Indeed, what we heard just now from the shadow Financial Secretary and earlier from the shadow Chancellor was a masterclass in selective amnesia. People would be forgiven for thinking that Members on the shadow Treasury Bench were not living in this country during their period of Government, let alone running it. They have conveniently forgotten that their choices gave us appallingly low productivity, threadbare public services, ballooning welfare spending and real wage stagnation. Those were their choices, and it is little wonder that they do not to want to remember them, let alone be judged on them.
Several hon. Members rose—
Lucy Rigby
I will make a bit of progress. Our choices are different: they seek to rebuild and repair our country and our economy. They are choices to renew our public services and reform our welfare system; we are rebuilding our NHS, helping to lift hundreds of thousands of children out of poverty, and investing in getting more people into work. They are choices to strengthen our economy; we are maintaining the highest level of public investment for 40 years, backing British aspiration and, importantly, cutting borrowing and doubling the headroom against our fiscal rules.
Graham Stuart
If we look at employment over time, we see that employment was growing every month until a certain thing happened in July last year: Labour came to power. As of this morning, unemployment has officially gone up 5.1%. As it stands today, there is a 25% increase in the number of people who are not in employment. How can that possibly correspond with a mission for growth?
Lucy Rigby
I am afraid to tell the right hon. Gentleman that employment is rising in every single year of the forecast.
My hon. Friend the Member for Glasgow East (John Grady) raised the importance of getting debt and borrowing down. I could not agree more. There is nothing progressive whatsoever about spending over £100 billion a year on servicing our debt. That is more than five times our annual policing budget. It is money that could be spent on schools, hospitals and the urgent public service renewal that this country so desperately needs. That is exactly why, under this autumn Budget, borrowing falls in every year of the forecast, and we are bringing the national debt under control. The Chancellor is putting in place the fastest rate of fiscal consolidation in the G7, and she is doubling the headroom to £21.7 billion.
Dave Doogan
I am grateful to the Minister for giving way. Will she concede that approximately three quarters of the last three hours of debate on this Bill has been devoted to the egregious family farm tax, including two noble and articulate contributions from Labour Beck Benchers, which took some bravery? Will she take that message back to the Chancellor, and get her to finally scrap the family farm tax?
Lucy Rigby
It is not a concession to acknowledge that that was the topic of much of the debate. We are more than aware of the strength of feeling on inheritance tax and the cost pressures that farmers are under, and I appreciate the compassion with which hon. Members have made their arguments. I remind them that that is why the Government came forward with the changes announced at the Budget just a few weeks ago. Following those changes to both APR and BPR, surviving spouses can pass on double the tax-free allowance, making the system more fair and simple for farmers.
A core part of strengthening our economy is about backing British businesses to reach their full potential. That means backing British innovation and aspiration and giving entrepreneurs what they need to start up, scale up, list and grow here in the UK. That is why this Bill significantly expands the enterprise management incentive scheme limits to maintain the world-leading nature of this relief.
John Grady
Does the Minister agree that it is due to the careful management of the public finances that we have record investment in defence and other areas of the Scottish economy, creating lots of well-paid jobs in Glasgow?
Lucy Rigby
The Scottish Government have been given a record settlement—a £820 million boost in this Budget—that takes the total additional funding for the Scottish Government from this Labour Government to more than £10 billion.
I was talking about the entrepreneurship package in the Budget. As my hon. Friend the Member for Buckingham and Bletchley (Callum Anderson) said, we are doubling the maximum amount that a company can raise through the generous enterprise investment and venture capital trust schemes. We are making them more generous, and are supporting more investment in companies that are making the transition from start-up to scale-up, and we are not stopping there.
When some of our most innovative, high-growth companies succeed, bringing jobs and growth to our economy, we want them to list here, too. That is why this Bill ensures that companies that list here in the UK will benefit from a stamp duty holiday on their shares for the first three years on the market—a point well made by my hon. Friend the Member for Burnley (Oliver Ryan). We are backing British entrepreneurs and ensuring that the UK remains one of the most attractive places in the world to found, scale and list a business.
Let me address the point referred to by the hon. and learned Member for North Antrim (Jim Allister) about the application of the measures that I have just spoken about to Northern Ireland. I can assure him that Northern Irish service companies will benefit from the expansion of the scheme, and goods and wholesale electricity companies in Northern Ireland will continue to benefit from the previous scheme limits.
Jim Allister
The key is in the point that the Minister finally made there; that is under the previous scheme. Northern Ireland is not to get the uplift that the rest of the United Kingdom does under clauses 13 to 15. Why? Because we are subject to EU state aid rules. We are being held back by the old rules, whereas everywhere else in the United Kingdom gets the new uplift.
Lucy Rigby
I assure the hon. and learned Member, who makes a valid point, that there are hardly any—very few, if any—of these types of goods and wholesale electricity companies in Northern Ireland that come close to the existing limits of the scheme, let alone the extended limits.
We are very clear about the role of business and economic growth in improving household incomes, but we are also clear that after the Opposition gave this country the worst Parliament on record for living standards, far too many people are still struggling with the cost of living. This Government are already making progress to tackle that. Wages have gone up more in the first year of this Government than in the entire first decade of the last Government. Real household disposable income was £800 higher in the first year of this Parliament than in the last year under the Tories, but we know that there is more to do.It is because of the fair and necessary choices in this Bill that we are able to help ease the cost of living for millions of families across this country. Those choices are how we are cutting energy bills for millions of households by an average of £150 per year and extending the warm homes plan. They are how we are lifting the two-child cap and, with it, lifting half a million children in this country out of poverty. They are how we are freezing prescription charges and rail fares, and increasing the national living wage while protecting the triple lock on pensions. This is a Government who are committed to helping people with the cost of living, to putting more money in people’s pockets, and the choices we are making in this Bill do just that.
My hon. Friends the Members for Scarborough and Whitby (Alison Hume) and for Wolverhampton North East (Mrs Brackenridge) are absolutely right that the choices this Government are making in this Finance Bill will help restore our public services. Those choices are why the Chancellor is able to put libraries in primary schools, as my hon. Friend the Member for Scarborough and Whitby referred to, and they are why she is able to protect NHS budgets as well. They are why she is able to invest an extra £300 million in NHS technology, roll out 250 new neighbourhood health centres right across this country, and continue to get waiting lists—which stood at a record high when this Government came to power—back under control. That means millions more people able to access the healthcare they need, free at the point of use; millions more people getting the operations, preventive care and scans they need. It is how we will be able to repair our NHS and ensure it will continue to exist for the next generation and for many generations to come.
This Finance Bill is about delivering on our commitments. It is about building a stronger economy in which prosperity and living standards rise, child poverty falls, businesses succeed and public services are renewed. Every measure in this Bill is geared towards that goal. We promised change and fairness, and we are delivering both. For those reasons, I commend this Bill to the House.
Question put, That the amendment be made.
Oral Answers to Questions
Lucy Rigby Excerpts(1 week, 6 days ago)
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Katrina Murray (Cumbernauld and Kirkintilloch) (Lab)
The Economic Secretary to the Treasury (Lucy Rigby)
We published the financial inclusion strategy last month, outlining ambitious measures that will improve financial inclusion right across the country. I am very grateful to my hon. Friend for her advocacy on this issue through the all-party parliamentary group on debt and financial inclusion. In line with the priorities outlined by the APPG, the strategy champions inclusive design to make products more accessible, increases debt advice capacity and supports financial independence for survivors of economic abuse.
Katrina Murray
I welcome the Minister’s response. I am a long-standing member of the NHS credit union, which is one of the credit unions affected by the withdrawal of the family protection plan by CMutual on 30 November. Policyholders over the age of 70 who have paid premiums well in excess of what they would have expected to have paid out have been left in the lurch with no alternative provision given. I thank the Minister for what she has done so far in pursuing peace of mind for those who have tried to do the right thing and planned for their funerals, but in the interim, can she bring all the stakeholders to the table to try to reach a solution that benefits those policyholders in particular?
Lucy Rigby
As my hon. Friend knows, I have been very sorry to hear of the difficulties of those affected by the withdrawal of that product. I pay tribute to her for all her efforts and those of her colleagues. They are doing everything possible to assist constituents. My officials are monitoring the matter very closely. We encourage anyone with information relevant to the Financial Conduct Authority’s investigation to go straight to the FCA. However, I would be more than happy to do as she suggests and get the stakeholders together.
Tim Farron (Westmorland and Lonsdale) (LD)
Access to banking is surely a key part of financial inclusion. The high street banks save £2 billion a year from having abandoned our high streets and town centres. Our post offices pick up the tab and we are glad that they do, but they are not funded by the banks anywhere near enough to be able to maintain their presence. In Westmorland, we have lost Hawkshead, Staveley and Grasmere post offices, and we are set to lose Shap and Tebay largely because the banks do not fund the post offices for doing their jobs properly. What is the Chancellor going to do to make them do that?
Lucy Rigby
I thank the hon. Member for his question. We very much understand the importance of in-person banking, including in beautiful, rural communities such as those that he represents. That is exactly why we are committed to rolling out 350 banking hubs right across the UK by the end of this Parliament. Over 240 hubs have been announced so far and more than 190 are already open.
Mr Speaker
Order. [Interruption.] No, please just sit down. Don’t challenge me; it is not a good idea. We did quite a few days on the Budget. I think we can all remember every point you are making. Is there anything you would like to add? If you are carrying on the list, forget it. I call the Minister.
Lucy Rigby
The shadow Minister makes reference to a number of changes in the Budget that were pragmatic, responsible and fair. I contrast that with the Conservatives’ approach, which would return us to austerity. That would be both irresponsible and unfair.
Sir Julian Smith (Skipton and Ripon) (Con)
John Slinger (Rugby) (Lab)
The Economic Secretary to the Treasury (Lucy Rigby)
The recent Budget backed British innovation and aspiration by supporting businesses to start, scale and list in the UK. We have put in place a three-year listing tax relief for firms that list here, and we are expanding enterprise tax reliefs to incentivise investment in scaling firms. That means more jobs, more growth, and more British companies competing globally.
Jack Abbott
Over the last 18 months I have been working hard to drive investment into my town, county and region, and I was proud to unveil the east of England’s £4 billion investment prospectus at the UK’s Real Estate Investment and Infrastructure Forum earlier this year. I am also keen to encourage our own home-grown entrepreneurs in Ipswich and Suffolk so that we can better support innovative and high-growth businesses. Can the Minister outline how the three-year stamp duty exemption on shares, alongside other measures in the Budget, will seek to do that?
Lucy Rigby
At the Budget, we introduced the UK listing relief, which incentivises companies to list in the UK. The UK raised more equity capital in 2024 than was raised in the next three European exchanges combined. I look forward to seeing the brilliant entrepreneurs in my hon. Friend’s constituency benefit from these deep pools of capital.
John Slinger
In my constituency, I can combine rugby and gin, so I am grateful to the Chancellor for the measures in her Budget to help the hospitality trade and small businesses. Following, my visit to the family-owned Rugby Distillery—branded and flavoured around the game—can I ask what steps her Department could try to level the playing field, such as by extending small producer relief to alcohol above the 8.5% ABV limit? Small-scale producers find it harder to compete fairly with big producers, and we must help them to tackle their challenges and convert their entrepreneurial spirit into greater success.
Lucy Rigby
As someone who enjoys both rugby and gin, sometimes at the same time, I pay tribute to my hon. Friend’s support for the businesses in his constituency. To support spirits producers, the Government have put in place a range of measures. As for small producer relief, I know that the Exchequer Secretary to the Treasury is open to evidence on the operation of the new system. I should add that the Government plan to evaluate the reforms in late 2026, which will be three years after they took effect.
Sir Roger Gale (Herne Bay and Sandwich) (Con)
In east Kent, an entrepreneurial chain of 25 coffee bars employs young people who otherwise would probably be unemployable. The profit margin on those 25 coffee bars for the last year was £12. The hospitality industry is on its knees. Will the Chancellor recognise the need to cut VAT on hospitality to 10%?
Lucy Rigby
As has been covered by my colleagues, we are putting in a £4 billion support package and continuing to engage with the hospitality sector. I should also add that we are easing licensing to help venues offer pavement drinks and one-off events too.
John Glen (Salisbury) (Con)
I welcome the changes to the listings review, but will the Minister look at what is happening with research and development tax credits and the efficiency of the delivery of those tax credits, because when the system does not work well enough, businesses are struggling before they get to listing?
Lucy Rigby
I am grateful to the right hon. Member for his question, as I always am. We are doing an awful lot to support R&D in this country, including through many of the measures announced at the Budget. That includes putting an additional £7 billion into specific areas within the industrial strategy.
Euan Stainbank (Falkirk) (Lab)
The Economic Secretary to the Treasury (Lucy Rigby)
The Government of course recognise that innovation is key to our long-term economic growth and to higher productivity, and indeed to living standards. That is exactly why we are investing more in R&D, and we have made other incentives available too.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
It has been a rocky week for the Office for Budget Responsibility, so I am glad that the Chief Secretary to the Treasury recognises and has reiterated the value of an independent regulator in this space. Nevertheless, a lot of criticism of the OBR is swirling around. Would the Chief Secretary or the Chancellor like to remind people about the role of the fiscal risks and sustainability report, which does look longer term at the economy, and the importance that this has in planning? As the Chancellor said, it is not destiny just because of the figures, but that report is particularly useful in that respect.
Wendy Chamberlain (North East Fife) (LD)
Lucy Rigby
I am afraid that I must disagree with the hon. Lady when she says that 350 is a meaningless number, but of course we understand the importance of in-person banking for rural communities. The location of banking hubs is determined independently by Link, and the criteria are a matter for the FCA, but I regularly meet MPs to discuss the adequacy and the application of those rules. In fact, there will be a banking hub surgery for Members of Parliament tomorrow, and she is more than welcome to join it.
Gill German (Clwyd North) (Lab)
I warmly welcome the second rise in the national minimum wage under this Government. Some 160,000 workers in Wales have already benefited since the rise in April. Many of them are younger workers, particularly in the retail and hospitality sector, which is so important to my constituency at Christmas and beyond. What assessment has been made of the impact of the national minimum wage rise on younger workers, and what progress has been made on equalising the national minimum wage with the national minimum wage for under-21s?
Draft Financial Services and Markets Act 2023 (Prudential Regulation of Credit Institutions) (Consequential Amendments) Regulations 2025
Draft Financial Services and Markets Act 2000 (Regulated Activities) (ESG Ratings) Order 2025
Lucy Rigby Excerpts(2 weeks, 6 days ago)
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The Economic Secretary to the Treasury (Lucy Rigby)
I beg to move,
That the Committee has considered the draft Financial Services and Markets Act 2023 (Prudential Regulation of Credit Institutions) (Consequential Amendments) Regulations 2025.
The Chair
With this it will be convenient to consider the draft Financial Services and Markets Act 2000 (Regulated Activities) (ESG Ratings) Order 2025.
Lucy Rigby
It is a pleasure to serve under your chairmanship, Mrs Harris.
I turn first to the environmental, social and governance ratings order, which I note the Secondary Legislation Scrutiny Committee flagged as an instrument of interest in its 41st report. The draft order will bring the provision of ESG ratings within the regulatory perimeter of the Financial Conduct Authority. Regulation will improve standards in the market, boost investor confidence and reduce greenwashing, and it has strong support across the financial sector.
As hon. Members will be aware, ESG ratings are a spectrum of products usually marketed as providing an assessment of the ESG profile, characteristics, risk exposures or impacts associated with a company, fund or other financial instrument. ESG ratings are widely relied on by investors to guide investment decisions in line with sustainability risks, opportunities and preferences. Of the £10 trillion-worth of assets under management in the UK in 2024, half had integrated ESG factors into the investment process. In the UK in 2024, more than 5,400 firms were using ESG ratings.
However, the ESG ratings market has developed rapidly and without formal oversight. This has led stakeholders and users to raise concerns about transparency, governance, internal controls and potential conflicts of interest within ESG ratings providers. Identifying these concerns, the International Organisation of Securities Commissions published recommendations for ESG ratings and data providers, calling for higher standards and sufficient oversight in the sector. The Government have acted quickly to deliver progress on this important agenda.
Chris Coghlan (Dorking and Horley) (LD)
The Liberal Democrats welcome this measure, but what work have the Government done to ensure that the regulation will be in line with that of international regulators such as the Securities and Exchange Commission, to reduce the burden on our businesses?
Lucy Rigby
We remain open to the prospect of regulatory alignment with other regimes. We want to get this done first, but the hon. Gentleman raises an important point.
As I say, the Government have acted quickly to deliver progress. As hon. Members will know, a consultation was issued by the previous Government; this Government have ensured that the consultation response and draft legislation were published for technical comments as part of the Chancellor’s first Mansion House speech. That draft legislation has been refined into the ESG ratings order before the Committee.
The draft order will create a new regulated activity of providing an ESG rating where that rating is likely to influence a decision to make a specified investment. This will require providers of ESG ratings to be authorised and be supervised by the FCA. In recognition of the fact that ESG ratings are provided by a range of different persons, the scope of the regulated activity is designed to be proportionate to the risk of harm, avoiding dual regulation and maintaining consistency with the existing regulatory framework. The draft order contains specific exclusions to that effect, for example where a firm is providing ESG ratings as part of another regulated activity.
To support the integrity of the UK market and ensure a level playing field, ESG ratings that are provided to a UK customer by an overseas provider will fall into the scope of the regulated activity, except where those ratings are provided without remuneration or financial incentive. The Government support open, competitive and internationally connected financial markets, and we therefore intend to give further consideration to market access arrangements for overseas ESG ratings providers.
In the interests of allowing plenty of time for industry to engage, while also delivering a regulatory regime in a timely manner, the FCA launched its consultation on the specific regulations for ESG ratings providers on 1 December, on the basis that the draft order had been laid on 27 October. The FCA rules will be designed to be proportionate and tailored to address harms while protecting innovation, in line with the regulator’s secondary growth and competitiveness objective.
The proposal to bring ESG ratings providers into regulation has received strong support from industry. The move will strengthen market integrity and boost investor confidence, helping the sector to attract new users and providers. The draft order is a core part of the Government’s agenda to drive growth in the UK’s sustainable finance market.
The draft prudential regulation of credit institutions regulations are a technical instrument that makes changes to support reforms to UK banking regulation. The regulations will keep our legislation for financial services effective, and they will assist the Treasury in applying the FSMA model of regulation to set a prudential framework for banks. The regulations do not introduce any new regulatory requirements for firms.
As hon. Members will be aware, banks are required to follow a set of prudential regulations to manage their risk appropriately and maintain adequate levels of capital to protect against any losses. In addition, the biggest banks are required to hold additional loss-absorbing debt to ensure that they can be allowed to fail without the need for taxpayer-funded bail-outs such as those seen during the global financial crisis.
A significant amount of prudential regulation is set out in the capital requirements regulation, or CRR, which formed part of domestic law during our time as an EU member state. Following our exit from the EU, the Government have been tailoring the existing financial services framework to the UK’s needs. That includes the CRR, which will be removed from the statute book and largely restated in the Prudential Regulation Authority’s rulebook, providing more flexibility and allowing the PRA to set the relevant requirements.
To do that, legislation has been passed to revoke the CRR—notably in FSMA 2021 and FSMA 2023. In that context, the Government have brought forward these technical regulations to make a small number of consequential amendments to pieces of legislation that refer to specific CRR articles—specifically, they amend the Banking Act 2009 to ensure that definitions relating to share capital instruments and banks’ own funds reflect the revocation of certain CRR articles.
In summary, although these draft regulations are technical and do not introduce any new rules, they are nevertheless a necessary step in continuing the reform of our banking regulation to ensure that our regulatory framework remains coherent. I commend the regulations to the Committee.
Lucy Rigby
I welcome the consensus on the draft regulations. Four principal points were raised in relation to the draft order. The first was on the international position, and the recommendations we are putting in place in this draft order are in line with the IOSCO and OECD recommendations. The EU framework has been legislated for, but it will not come into force until 2026. In many areas of financial services, we have the ability to put in place an overseas recognition regime—an ORR. We do not yet have the ability to do that in relation to this, but we hope to take the power in the next financial services Bill to enable us to bring forward exactly this kind of measure where we wish to do so. The shadow Minister might be aware that Hong Kong, Singapore and Japan have codes of conduct of this nature.
In relation to charities—this is a good point and was considered—the scope of the regulated activity set out in the draft order is designed to be proportionate to the risk of harm. As such, charities will be excluded from regulation where a rating is provided on an occasional or one-off basis, or where there is no remuneration or other financial benefit provided to the charity. As I said, this approach, informed by consultation, ensures that the regulation is risk-based and proportionate while avoiding loopholes.
The shadow Minister also mentioned defence. The Chancellor has stated very clearly her view that supporting the defence industry, and indeed Ukraine, is consistent with ethical investing. The regulation will allow investors to more fairly evaluate ESG risks and opportunities related to defence companies. I should make it clear that we have engaged extensively with the defence sector, and we think there is quite limited evidence that defence firms have struggled to access finance on ESG grounds.
Briefly, the fiduciary duty is important and, as the shadow Minister knows, it has been much discussed. The Pensions Minister will address it further in subsequent stages of the Pension Schemes Bill.
Gareth Davies
I am very grateful to the Minister for outlining the Government’s position on defence stocks. I wonder whether she could do the same for oil and gas.
Lucy Rigby
The point in relation to oil and gas is exactly the same as that for defence. There is no conflict between what we are doing here and investment in those areas. If anything, it will be helpful across the board. Fiduciary duty was the final point raised, so I will leave it there.
Question put and agreed to.
DRAFT FINANCIAL SERVICES AND MARKETS ACT 2000 (REGULATED ACTIVITIES) (ESG RATINGS) ORDER 2025
Resolved,
That the Committee has considered the draft Financial Services and Markets Act 2000 (Regulated Activities) (ESG Ratings) Order 2025.—(Lucy Rigby.)
Financial Inclusion Strategy
Lucy Rigby Excerpts(1 month, 2 weeks ago)
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The Economic Secretary to the Treasury (Lucy Rigby)
Today, I have laid the financial inclusion strategy—Command Paper 1424. Financial inclusion means that people can access the financial products and services they need. When people are financially excluded, every day is harder, plans are precarious, and a financial setback can snowball into a crisis. But when people are included, a potential shock can become a manageable obstacle, and aspirations can become achievements. These benefits have knock-on effects for our wider society, making financial inclusion a bridge to opportunity and an engine for growth.
I want to see a financial services system that works for everyone, where people can access the products and services they need to build their financial resilience and achieve their goals. The strategy sets out our approach to improving financial inclusion and, in turn, ensuring that everyone can access the financial products they need to participate fully in the economy, manage their money well, and plan for the future.
The strategy brings together a package of initiatives to improve access to financial services and strengthen financial resilience across the UK. This builds on the Government’s existing progress, such as the ongoing roll-out of 350 banking hubs, and looks to future opportunities, such as the development of a new digital pass which can help people prove their identity. It is structured around six key pillars: banking and digital inclusion; savings; insurance; credit; problem debt; and financial education and capability. Three themes of mental health, accessibility, and economic abuse have been considered throughout to ensure that interventions address the specific barriers consumers affected by those issues can face. Through these areas of focus, the strategy also supports wider Government priorities, including building household financial resilience and driving sustainable economic growth. Its measures include:
Action to tackle the impact of economic abuse on victim-survivors’ credit scores, enabling people to regain their financial independence following the devastating impact of abuse;
A new pilot taken forward by the largest banks to open bank accounts for people who struggle to access mainstream banking, such as people experiencing homelessness;
A new national coalition of employers to support organisations to help their employees save for unforeseen circumstances;
Action to drive greater accessibility of products for people who can face challenges in using essential financial services, such as people with disabilities and mental health conditions.
The strategy has been developed with the support of a financial inclusion committee of consumer and industry representatives. It has also been informed by extensive engagement with wider stakeholders across Government, regulators, civil society, and the financial services sector. I would like to thank all those who have contributed their time and expertise to the development of this important work.
This strategy will be delivered in partnership across Government, regulators, civil society, and the financial services sector. The UK Government will also continue to engage closely with the devolved Governments on areas of shared and devolved responsibility. Together, we will work to support consumers to build financial confidence, resilience, and wellbeing.
This strategy will guide Government and industry activity to promote financial inclusion, and it will be reviewed in two years’ time to ensure that progress is made.
The financial inclusion strategy is available on gov.uk: www.gov.uk/government/publications/financial-inclusion-strategy
[HCWS1019]
Oral Answers to Questions
Lucy Rigby Excerpts(1 month, 2 weeks ago)
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Caroline Voaden (South Devon) (LD)
The Economic Secretary to the Treasury (Lucy Rigby)
The Government understand the importance of in-person banking to communities, and we are working closely with industry to roll out 350 banking hubs across the United Kingdom. More than 240 hubs have been announced so far, and more than 180 are already open. I know that that includes two in the hon. Member’s constituency, and I look forward to our upcoming meeting to discuss her constituents’ banking needs.
Caroline Voaden
When Labour was in opposition, its shadow Economic Secretary, the hon. Member for Hampstead and Highgate (Tulip Siddiq), welcomed measures to protect access to cash, but was concerned about the fact that they did
“nothing to protect essential face-to-face banking services.”—[Official Report, 26 June 2023; Vol. 735, c. 71.]
Such services go beyond a banking hub, but they are now vanishing. While the Financial Conduct Authority is responsible for access to cash, it appears that there is no Government body overseeing access to face-to-face banking services. Does the Minister agree that new regulation is needed to support residents and businesses in rural areas, especially as banks will prevent customers from cashing cheques in post offices from January?
Lucy Rigby
We recognise the important role that post offices, in particular, play in providing essential banking services as well as banking hubs. Decisions about which services are available at post offices—such as cheque deposits—are made by banks as part of their commercial arrangements. I should emphasise that customers continue to have other options for paying in cheques, which I know is an issue for the hon. Member; in the case of Lloyds, it can be done via Freepost. As I have said, I look forward to discussing these issues further with the hon. Member during our meeting.
Gareth Thomas (Harrow West) (Lab/Co-op)
One way of improving access to banking in rural and, indeed, urban areas would be to increase the reach and role of community banks, or community development finance institutions. Given that CDFIs play a big role in American economic life and are backed to do so by the biggest banks, would it not be good if our biggest banks helped to fund their expansion here as well?
Lucy Rigby
My hon. Friend is well versed in all these areas, and has done considerable work in this regard. As I have said, the banks play a role in providing access to cash, for instance via post office banking services.
Mark Garnier (Wyre Forest) (Con)
In this month of blaming everyone else for every woe that befalls the Government and using it as an excuse to bust manifesto pledges left, right and centre, it seems that the Government are claiming credit for more banking hubs, but we all know that the rolling out of banking hubs is a purely commercial decision by the banks. It is the banks that are choosing to do this, to serve their customers. Is it now the Government’s policy to blame everyone else for their own incompetences, and to claim credit for everyone else’s good ideas?
Lucy Rigby
Where it is appropriate to do so—indeed, it is very often appropriate to do so—we will blame the Conservative party for the state of the country, and it is appropriate to do so here. On the criteria that Link uses for banking hubs, I will remind the hon. Gentleman that, in relation to the access to cash regime, that was designed and passed by the previous Government.
The Economic Secretary to the Treasury (Lucy Rigby)
I pay tribute to my hon. Friend for her years of work to further financial inclusion both during her time here and prior to Parliament. This is a timely question, because tomorrow we will publish the Government’s financial inclusion strategy, which sets out an ambitious programme of measures to improve financial inclusion and resilience for communities right across the UK.
Gill Furniss
Earlier this year, I chaired a roundtable with the all-party parliamentary group on debt and financial inclusion that highlighted our five key asks. Nearly 70% of adults in my constituency are considered to be in financially vulnerable circumstances—among the highest proportions in the city. What steps does the Minister plan to take to measure the impact of the financial inclusion strategy? Will she meet me to discuss that?
Lucy Rigby
My hon. Friend raises a really important point. As part of developing the strategy, the Government have engaged with Financial Inclusion Committee members and other organisations on how to measure the impact of the strategy, and indeed to drive its delivery. The strategy’s implementation will be reviewed two years from publication against outcomes-based metrics to provide an update on progress. I will be more than happy to meet her to discuss this.
John Glen (Salisbury) (Con)
When I was Economic Secretary, against the advice of officials I advanced something called the no interest loan scheme. I am given to believe that one of the Minister’s two predecessors since the general election may have suspended that valuable attempt to support the most vulnerable in society. Will she look at that again in advance of the Budget in three weeks? There really was wide cross-party support for it.
Lucy Rigby
I am aware of the scheme that the right hon. Member talks about. He will appreciate that I cannot pre-empt the launch of the strategy tomorrow, nor indeed the Budget, but I would be more than happy to meet him to talk about it in more detail.
Dr Simon Opher (Stroud) (Lab)
Kenneth Stevenson (Airdrie and Shotts) (Lab)
The Economic Secretary to the Treasury (Lucy Rigby)
I am indeed aware of this issue. I know that it affects people in my hon. Friend’s constituency and in plenty of other Members’ constituencies, too. I also know how concerned he and other Members are about it. It is for the Financial Conduct Authority to consider whether it is appropriate to take any further steps, but I have asked my officials to engage with the FCA on how it is approaching this.
Jerome Mayhew (Broadland and Fakenham) (Con)
Economists have told the Chancellor that stamp duty is a terrible tax because it damages growth. The Government’s response is to double stamp duty on a £300,000 house. Why?
Stamp Duty Land Tax
Lucy Rigby Excerpts(1 month, 3 weeks ago)
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The Economic Secretary to the Treasury (Lucy Rigby)
I thank all hon. and right hon. Members who have contributed to the debate. I especially thank the Chief Secretary to the Treasury, my right hon. Friend the Member for Ealing North (James Murray) for his speech at the start, and the shadow Chancellor, the right hon. Member for Central Devon (Sir Mel Stride) for bringing forward this debate. I also thank the shadow Secretary of State, the right hon. Member for Braintree (Sir James Cleverly) for concluding on behalf of the Opposition.
With those niceties over, I turn to the substance of the motion we are debating, which, as the Chief Secretary to the Treasury said, is fundamentally flawed. Despite the Leader of the Opposition’s seemingly steadfast commitment to having no policy at all, which has now been very much abandoned, Conservative Members have looked back at their shockingly bad economic record and taken the rather extraordinary view that they are well placed to offer input and advice on the upcoming Budget, which is entirely a matter for the Chancellor to decide once she has seen the OBR’s forecast and which she will share with the House at the end of next month.
The Conservatives have looked at all of this, thought for seemingly quite a long time about it, and decided that now is the right moment to offer some policy. The solution to all the hardship they inflicted on the country during their time in power is more of the same: more unfunded tax cuts, more instability, more austerity, more harm to our public services and, dare I say it, more of the approach that meant that their penultimate Prime Minister was outlasted by a lettuce.
Lucy Rigby
I will make some progress.
That is the Conservatives’ pitch to the British public—reckless with our public finances, reckless with our public services and reckless with the future of this country. Conservative Members are competing to say how sad and angry they are about this tax. They will be furious when they find out which party gave us the highest tax burden since the second world war! [Interruption.] The motion is a seemingly straight-faced argument from Conservative Members that we should do the exact thing that brought their 14 years of government to an end. It is proof that they have learned—
Madam Deputy Speaker
Order. It is not my job to write yours or the Minister’s speech—if only. That was not a point of order.
Lucy Rigby
Thank you, Madam Deputy Speaker.
The motion is proof that the Conservatives have learned none of the lessons of their catastrophic mini-Budget or of the years of the punishing austerity that was inflicted on the people and institutions of this country, with nothing whatsoever to show for it but soaring debt, low productivity and devastated household finances.
Let me be clear that stamp duty is not a beloved tax—far from it; it is no more beloved than any other taxes—but it is an effective tax that raises billions of pounds annually, with those buying the most expensive properties contributing the most. That contribution is vital to the upkeep of our public services, our NHS, our schools and our armed forces. Abolishing it would take billions out of the public purse—£13.9 billion alone. It would be a multibillion-pound tax cut affecting the budgets of our most essential services.
It is the same horror show from the same old Conservatives, wildly swinging their scythe at public services without a care in the world for the consequences for our NHS, our schools and our armed forces. Which services would Conservative Members want to cut down this time? Would it be fewer nurses, fewer soldiers or fewer police officers? [Interruption.] Conservative Members are asking me whether I am asking them. I am more than aware that in the debate they referenced their fantasy economics based on welfare cuts. The shadow Chancellor oversaw the biggest increase in benefit spending in decades when he was Secretary of State for Work and Pensions. If he truly believes that welfare spending needs cutting, why did he let it balloon? We have heard from various hon. Members about their objections to this tax and about all sorts of things they imagine might be in the Budget.
Graham Stuart
Just to be clear, does the Minister agree that this is a bad tax? Would she, in a perfect world, seek to find ways of controlling public expenditure so that the tax could be removed and people across the country—first-time buyers and the elderly in particular—could benefit from that?
Lucy Rigby
It is a tax, so obviously I do not love it, but what I find extraordinary is the Conservative party’s new-found hatred of taxation when they increased taxes 25 times in the last Parliament.
As I said, we heard from various hon. Members about their objections to this tax. I will not engage on the points made about the Budget, for obvious reasons, except to repeat that we are committed to a single major fiscal event per year where the Chancellor will set out any tax decisions in the usual way alongside the OBR’s forecast. That fiscal event will take place, as everyone knows, on 26 November, at which point there will be plenty of time to discuss and debate the decisions that the Chancellor takes in the Budget.
I want to speak to some of the points raised during the debate. We heard plenty from Conservative Members about why they want to abolish stamp duty. I think some points were made thoughtfully; I say that in a well-meant way. I am sorry to say, however, that we heard absolutely nothing from Conservative Members on their appalling economic record. We heard nothing from them on their appalling record on house building—save for the acknowledgment of the right hon. Member for North West Hampshire (Kit Malthouse)—nothing on the waste of public money from the fraud on their watch, and nothing whatsoever that could be described as fiscal responsibility.
We heard from some of my hon. Friends on the Labour Benches about the urgent need to build more houses in this country, given our appalling inheritance. That is the key way that we solve the housing crisis. I pay tribute to the thoughtful speeches of my hon. Friends the Members for Welwyn Hatfield (Andrew Lewin), for Milton Keynes North (Chris Curtis), for Crewe and Nantwich (Connor Naismith) and for North Warwickshire and Bedworth (Rachel Taylor), and to my hon. Friends the Members for Loughborough (Dr Sandher) and for Tipton and Wednesbury (Antonia Bance), who spoke powerfully of the consequences of the Conservative party’s mismanagement of the economy, which include food banks, poverty and, of course, the housing crisis.
I welcome the commitment of the right hon. Member for North West Hampshire. He talked about the need to build more housing and, indeed, about beautiful housing. I assure him that that is exactly the type of housing that this Government will facilitate being built—although I note that his colleagues took him straight back to opposing development no sooner had he made that point. I also welcome his mini-insight into the infighting of the last Government.
Dr Luke Evans
The hon. Lady may recall that it was a Labour Secretary of State who removed the word “beautiful” from the national planning policy framework. How does she expect to have those beautiful designs if that has been taken away as a standard within the guidance that her Government provided?
Lucy Rigby
I assure him that the houses will be beautiful and that we will build 1.5 million of them over the course of this Parliament. There was a brief reference to Nirvana from the Conservative Benches before a descent back into half-baked and unfunded plans, to which we on the Government Benches thought, “Well, Nevermind.”
Lucy Rigby
Thank you. I was pleased to hear the Liberal Democrats spokesman, the hon. Member for St Albans (Daisy Cooper), and others in the party say that they will oppose the motion. I wholeheartedly agree with her that it is fundamentally flawed.
To be clear, we are a Government of fiscal responsibility. Our steadfast commitment to the fiscal rules has brought stability to our economy and allowed us to boost investment by £120 billion over the course of this Parliament. The dividends of that approach, even after just a year, are already clear: the highest growth in the G7 in the first half of this year, cuts to interest rates, real wages rising more in the time since the last election than they did in 10 years of Conservative Government, record investments from overseas, and new homes and infrastructure progressing all over the country. That is a strong foundation to build on in the years ahead.
Today, we have debated a simple question of two visions for the country. Put another way, does this country go forwards or backwards? The Conservative party wants us to go back—back to its time in office, when Britain had a Government that pursued unfunded tax cuts and austerity, leading to soaring debt, low productivity, under-investment and anaemic growth. It was a Britain where we did not build infrastructure, including houses, and where far too many people were unable to get on the housing ladder.
This Government want the country to move forward. We are managing the public finances with stability and certainty in an uncertain world. We are a Government who invest in public services, our infrastructure and our communities, and work with businesses and local leaders to bring growth and opportunity to every part of the country. We are a Government who are building houses, including in areas of the country that the shadow Secretary of State—
Lucy Rigby
Madam Deputy Speaker, I am afraid that I am being interrupted. We are a Government who are building houses, including in areas of the country that the shadow Secretary of State has previously described in rather unparliamentary language. We are a Government who support working people with new jobs, higher wages and new homes. We are a Government who are committed to building 1.5 million new homes this Parliament and to restoring the dream of home ownership.
We are a Government who will not duck the difficult decisions but face into them, because that is the only way that we will deliver a decade of national renewal and a thriving economy for the people of this country. That is what today’s debate is about: backwards with fiscal irresponsibility from the Conservatives or forwards with economic stability, investment and reform under this Prime Minister and this Chancellor.
Question put.
Draft Financial Services and Markets Act 2023 (Mutual Recognition Agreement) (Switzerland) Regulations 2025
Lucy Rigby Excerpts(1 month, 3 weeks ago)
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The Economic Secretary to the Treasury (Lucy Rigby)
I beg to move,
That the Committee has considered the draft Financial Services and Markets Act 2023 (Mutual Recognition Agreement) (Switzerland) Regulations 2025.
It is a pleasure to serve under your chairmanship, Mr Mundell.
The regulations will implement commitments made by the UK under the Berne financial services agreement of 2023, and will strengthen our economic relationship with Switzerland, one of the world’s leading financial centres. In short, they will provide greater certainty and flexibility for UK businesses, helping to ease cross-border trade in financial services and boosting growth. Importantly, they will maintain and enhance robust oversight and protection for UK consumers. I am pleased that the regulations have been welcomed across industry, including by TheCityUK, and I pay tribute to the previous Government for their work on the agreement during their time in office.
There are three key elements to the legislation, which establishes a new framework for market access, regulatory co-operation and safeguard powers for UK regulators. First, the regulations will remove duplicative and burdensome requirements for UK firms, making cross-border financial services trade with Switzerland easier, more stable and more predictable. The new framework will allow Swiss investment service firms to supply certain cross-border services directly to UK clients, including sophisticated and high net worth individuals, without the need for UK authorisation. In return, British businesses, especially insurers, will be able to provide certain services directly to Swiss clients without the need for Swiss authorisation. Importantly, insurance brokers will also be exempt from Swiss localisation rules.
Secondly, the legislation will protect consumers, market integrity and financial stability by ensuring that the new access arrangements are safe and well managed. New powers and duties will be granted to the Financial Conduct Authority, the Prudential Regulation Authority and the Bank of England. Thirdly, the regulations will establish enhanced co-operation arrangements between UK and Swiss regulators, which will be supported by a formal memorandum of understanding, signed on 22 September. This will support information sharing and effective dispute resolution and will facilitate the authorities’ relevant functions for the purposes of ensuring financial stability, market integrity and the protection of investors and consumers. The FCA and the Bank, as well as the PRA, will also work closely with their Swiss counterparts in FINMA to address any risks or issues that may emerge.
Should the Committee support the legislation today, as I hope it does, the agreement will enter into force in January 2026. I commend the regulations to the Committee.
Financial Inclusion
Lucy Rigby Excerpts(2 months ago)
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The Economic Secretary to the Treasury (Lucy Rigby)
It is a pleasure to serve under your chairmanship, Dr Huq. I thank my hon. Friend the Member for Glasgow North (Martin Rhodes) for securing this important debate and for giving me the opportunity to discuss a topic that is integral to the ability of his constituents, my constituents and all our constituents to participate not just in our economy, but in society as a whole. I also thank other hon. Members who have contributed to the debate. From the number of interventions that have been made, it is clear that this is a very important issue to all of us throughout the House.
I think we can agree on the importance of ensuring that everyone across the UK has access to appropriate and affordable financial products and services. I really do appreciate the strength of feeling on the issue. I know that some Members present will have had the opportunity at recent party conferences, as I did, to engage with the likes of Fair4All Finance, the Centre for Social Justice, Rooted Finance and other organisations.
I pay tribute to TAG, the charitable organisation in my hon. Friend’s constituency that he mentioned, for the incredible work that it is doing to promote social inclusion for disabled people. I recognise the importance of that work and the need to go further to ensure that our financial system works for everyone; I will return to that point.
As my hon. Friend has set out, some of the statistics on financial inclusion in the UK are sobering: 900,000 people still do not have access to a bank account, 10% of adults have no savings, and another 21% of adults have less than £1,000 to draw on in the event of an emergency. When it comes to digital inclusion, which he raised, 3.3 million people—7% of current account holders—do not bank online or use a mobile banking app. However, I believe that this Government are on the cusp of making a real difference in that regard via the publication of our national financial inclusion strategy. Through that strategy, we can open up access to the right financial services, build households’ financial resilience and transform our constituents’ financial wellbeing.
However, I must stress that although the Treasury will publish the financial inclusion strategy, Government alone cannot solve some of the issues that we have been discussing today. We need a joint effort across industry, regulators and the third sector. That is exactly why I, along with my immediate predecessor—my right hon. Friend the Member for Wycombe (Emma Reynolds)—and my hon. Friend the Member for Hampstead and Highgate (Tulip Siddiq), have developed our financial inclusion strategy, with the support of a committee made up of consumer and industry representatives.
The committee has been considering a range of barriers faced by those who are financially excluded, as well as three important, cross-cutting themes—economic abuse, mental health and accessibility. The latter theme is particularly relevant to the points that my hon. Friend the Member for Glasgow North has raised. He will appreciate that I am slightly limited in what I can say before the publication of the strategy, but I can confirm that the fact that accessibility is a cross-cutting theme has been important to the development of the strategy. It has prompted the committee to look closely at the role that inclusive design can play in improving accessibility for underserved groups. I also want to make it very clear that we will publish the strategy before the end of the year.
Peter Swallow (Bracknell) (Lab)
A key part of financial inclusion is supporting young people to be included and ensuring that they have essential skills, including financial literacy. Has the Minister spoken with any colleagues in the Department for Education about how we can make sure that young people have the right essential skills, including financial literacy, as part of the strategy?
Lucy Rigby
I am happy to confirm to my hon. Friend that we have had those discussions. I hope he will see the evidence of those discussions when the strategy is published, and I hope he will see them in a positive light.
I will now address the Government’s position on banking hub services and branch closures, in response to some of the points that have been raised today. I will then come on to some of the other points that have been raised, particularly discrimination in branches, which we must deal with, and digital exclusion.
As one would expect, the Financial Inclusion Committee and its sub-committees’ discussions reflect the fact that banking services have changed remarkably in recent years. Many people, including our vulnerable constituents, have benefited from digital innovations that have enabled them to bank more conveniently and securely at any time and from anywhere. Last year, the vast majority of current account holders—93%—used online or mobile banking services. That includes 75% of over-75s. At the same time, reliance on physical branches has declined significantly. However, the Government are clear about the importance of face-to-face banking to individuals and communities, and are committed to championing access for all. That is why we are working closely with the banks to roll out 350 banking hubs by the end of this Parliament. More than 180 have already opened across the country, offering vital access to cash and everyday banking services.
We have also worked closely with the industry to improve the services that are available at those banking hubs. That includes ensuring that customers do not have to bring their own phone or tablet to access banking support, as well as a commitment to trial the use of printers, enhancing accessibility. We are committed to continuing to work with industry to ensure that banking services in hubs deliver the support that customers require.
I receive regular correspondence about the location of hubs. Hon. Members will know that the location of hubs is set by the Financial Conduct Authority’s rules, which protect access to cash. Although the Government do not have a role in that decision-making process, my predecessor and I have met with Link very regularly. Indeed, I have a meeting with John Howells coming up, and I regularly feed in hon. Members’ views.
Turning to discrimination in branches, I will specifically address the experience of the customers shared by my hon. Friend the Member for Glasgow North. It was, frankly, hard to hear some of those negative and no doubt damaging experiences. I want everyone to feel valued and respected in their interactions with financial services. I know we would all wish that.
As my hon. Friend knows, all service providers, including banks and building societies, are bound by the Equality Act 2010 to make reasonable adjustments where necessary. In addition, under the FCA’s consumer duty, firms must identify where customers or groups are not getting good outcomes, and they must understand why. Although I set out that framework, we would always encourage people to contact their bank to explore reasonable adjustments to the services they might require. It is important that people know that if that is not happening, they have a right to contact the Financial Ombudsman Service.
Earlier this year, the FCA published a report setting out areas for improvement in how financial services firms support customers in vulnerable circumstances, including those with learning disabilities in particular. The FCA highlighted in the report that most firms could not evidence how they had embedded the needs of customers in vulnerable circumstances into their product design, which is something we are determined to see change. As I have mentioned, in developing our strategy we have been looking at the role of inclusive design in developing financial inclusion. There has been really positive work to improve the way that financial services work for disabled people, so it is critical that we build on that.
I want to highlight briefly the work of Project Nemo, which was founded in 2024 to address digital accessibility and the under-representation of disabled people in financial services. Project Nemo’s research demonstrates that inclusive features can support those with learning disabilities to manage their money with greater independence and develop products that are more accessible for all. We are determined to build on the good work that has gone on previously to deal with the issues that my hon. Friend the Member for Glasgow North raises.
I want to address digital inclusion and the points that my hon. Friend raised in that regard. We recognise that digital exclusion can be a significant barrier in how consumers are able to access and use financial services products. That is why digital inclusion is an area of focus in the financial inclusion strategy. It has been specifically considered by its own sub-committee, alongside issues around access to banking services. The strategy, which hon. Members will be able to see in due course, will examine what more industry and Government can do to help address the problems and ensure that everyone can engage with financial services and manage their money in what we all know is an increasingly digital society.
The Department for Science, Innovation and Technology is the lead Department for digital inclusion. Earlier this year, it published a digital inclusion action plan that focuses on digital barriers beyond financial services, including digital skills and confidence—issues raised today—and widening access to devices and connectivity, providing support through local communities.
I have addressed the matter of financial education, but I also want to touch briefly on the point made by my hon. Friend the Member for Hampstead and Highgate about the insurance market. I can confirm to her that insurance is in the scope of the financial inclusion strategy. As she knows, there is other work going on, including via the motor insurance taskforce, which is looking at the issues she raised—specifically, the cost of motor insurance to all our constituents.
Sam Carling (North West Cambridgeshire) (Lab)
PwC analysis has shown that one in three adults in the UK struggle to access mainstream credit, largely due to poor or just thin credit files. That is causing a huge financial inclusion problem, especially for young people trying to get a mortgage. Will the Minister meet me to discuss ways we can improve that situation in collaboration with industry, for example through the reporting of rent payments to credit reference agencies?
Lucy Rigby
I am more than happy to meet my hon. Friend to discuss those issues. I said at the outset that the financial inclusion strategy is considering cross-cutting themes. The issue of credit rating agencies has come across my desk outside the scope of the strategy, in relation to economic abuse. As he knows, there are serious issues with people—women in particular—having their credit rating affected as one impact of economic abuse. That is something that I am extremely interested in and that we are looking at. Indeed, the committee is looking at it as part of the financial inclusion strategy.
I will close by thanking my hon. Friend the Member for Glasgow North for his continued championing of financial inclusion. I thank hon. Members on both sides of the House for raising their points today. Some raise financial inclusion with me very regularly via correspondence or via conversations in the voting Lobby and elsewhere. I very much appreciate their doing that, and I encourage them to continue to do so as we seek to address these serious issues, which affect not just our constituents’ ability to engage with financial services, but their ability to participate in societal life as a whole. I want to thank again—
Motion lapsed (Standing Order No. 10(6)).
Draft Financial Services (Overseas Recognition Regime Designations) Regulations 2025
Lucy Rigby Excerpts(2 months ago)
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The Economic Secretary to the Treasury (Lucy Rigby)
I beg to move,
That the Committee has considered the draft Financial Services (Overseas Recognition Regime Designations) Regulations 2025.
It is a pleasure to serve under your chairmanship, Sir Roger. The draft regulations before the Committee support the Government in their operation of overseas recognition regimes. Specifically, they provide His Majesty’s Treasury with the powers needed to ensure that designations of individual jurisdictions are assessed and implemented in a manner that is compatible with our existing regulatory regime.
As hon. Members know, the UK’s historical strength in global financial markets is built on our international openness and reach. Our ability to provide unilateral recognition where the regulatory framework in an overseas jurisdiction provides similar outcomes to the UK’s is an important tool to support cross-border financial services. Recognition can provide a range of regulatory benefits, which include: enabling overseas firms to provide services directly into the UK; aligning requirements on UK-authorised firms, whether they are engaging with UK or overseas markets or counterparties; and providing regulatory relief by removing duplicative requirements on cross-border business.
This recognition framework is common to other jurisdictions. For example, the EU maintains equivalence regimes, the United States makes comparability determinations in respect of other jurisdictions, and Australia operates a system that allows it to judge whether foreign regulatory regimes are sufficiently equivalent. The regulations promote consistency in regulatory standards, provide the foundation for long-term regulatory co-operation between jurisdictions, and support financial stability.
The regulations were first published in draft form to coincide with the Chancellor’s Mansion House speech in July, alongside a guidance document that outlines the principles and processes governing ORRs and a memorandum of understanding agreed between HM Treasury and the financial services regulators. As the documents make clear, ORRs are the Government’s new harmonised approach through which the UK will recognise overseas jurisdictions’ financial services regulation and supervision.
The regulations support the Government in their operation of recognition regimes, specifically in relation to the designation of individual jurisdictions. As I said, the regulations will ensure that designations are assessed and implemented in a way that is compatible with our existing regulatory regime, and they will therefore support financial stability, market integrity, consumer protection and competition.
The regulations have three main functions: first, in relation to information and advice, the decision to designate an overseas jurisdiction is taken by HM Treasury Ministers on the basis of an assessment undertaken by officials, with technical advice from our expert regulators and made by statutory instrument laid before Parliament. The powers in the regulations update HM Treasury’s existing powers to request information and advice from the Bank of England, the Prudential Regulation Authority and the Financial Conduct Authority, as part of the process of assessing and then designating an overseas jurisdiction. As I said, an MOU is established between HM Treasury and our financial services regulators in accordance with the regulations.
Secondly, the regulations give the Treasury the power to impose conditions on the application of an ORR designation. The conditions are specific changes to the effect of a designation—for example, limiting the effect to a given size of firm—and ensuring that we can support cross-border financial services while assessing any areas of risk. This change will help to maintain consistency with the regulatory and supervisory standards that we expect in our markets.
Thirdly, the regulations make amendments to two existing ORRs. The Government previously established two ORRs covering insurance and short selling respectively, as part of the process of repealing assimilated EU law under the powers afforded by the Financial Services and Markets Act 2023. No new designations have been made under either of those two ORRs, meaning that there has been no need yet to use the powers in the regulations. The amendments to the regimes simply make the definition of an overseas jurisdiction consistent across all ORRs, including those already established, ensuring that there is a single approach across financial services regulation that can be easily understood, including by our international partners.
The regulations are clearly defined and limited in scope. Their sole purpose is to provide the Treasury with the powers needed to ensure that the designations of individual jurisdictions are assessed and implemented in a manner compatible with our existing regulatory regime. They will ensure we can operate ORRs effectively and thereby support the global competitiveness of the UK’s financial sector, facilitate cross-border financial services, and provide a consistent approach across financial services legislation.