Oral Answers to Questions

Mark Garnier Excerpts

Tuesday 8th September 2026 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

[Mark Garnier (Wyre Forest) (Con)]

Many commentators have commented about public sector productivity underperformance. EY tells us that the public sector has underperformed to the point where it has cut GDP growth by 3% since 2019. The Institute for Government highlights an average of nearly 1% underperformance every year for that same period. Morgan Stanley reminds us that in the last year private sector productivity was up 1.8%, but public sector underperformance dragged it back into negative territory. Despite that, public sector pay was up over 6% last year, against private sector pay up just 2.8%. Why are the Government rewarding poor performance and does the Chancellor think that is sustainable?

[Emma Reynolds]

I can reassure the hon. Gentleman that we are focused on driving public sector productivity to reach the efficiency targets I talked about. We are holding each Department to account on that. As I said earlier, we are seeing great progress in the NHS, which is making a huge contribution to our productivity gains as a Government.

UK Financial Services

Mark Garnier Excerpts

Tuesday 1st September 2026 Westminster Hall

[Mark Garnier (Wyre Forest) (Con)]

It is a pleasure to serve under your stewardship, Mr Twigg. I thank the hon. Member for Buckingham and Bletchley (Callum Anderson) for securing this debate. He speaks with great authority, and it is refreshing to hear a positive vision of the financial services sector, especially given his experience working for the London Stock Exchange Group. He raised a number of points, some of which I will deal with in my speech.

The hon. Member raised some interesting points that are strongly related. The first was the lack of growth capital and the fact that we are not seeing a huge amount of money invested into the UK by UK pension funds. Companies looking for growth capital seem to go to places such as America, where they can do better. He also talked about the undervaluation of the UK stock market, which is part of that problem, as well as clean energy and the fantastic opportunity it provides for investment in long-term patient capital. It is interesting that, during the passage of the Pension Schemes Act, one complaint thrown up by a very large annuity asset manager was that it wanted to invest in the equity of wind farms, where there is a predictable income because of contracts for difference, but the Pensions Regulator would not allow it because it had to be invested in bonds, which have a more liquid market.

Although the Conservatives completely support the Mansion House compact and the Mansion House accord, there is too much stuff getting in the way. We had a long debate on this during the passage of the Pension Schemes Bill, now an Act. We are trying to work with the Government on how not just to force more money into the UK equity market, but to clear away the clag that gets in the way of investments. That comes to the point about regulation and the regulatory environment. I will discuss more of the hon. Member’s points in the main thrust of my speech, but I wanted to get that point over early on.

As we heard from my right hon. Friend the Member for Godalming and Ash (Sir Jeremy Hunt), the financial services sector matters hugely to the UK. It is often described as the engine room of our economy, for two good reasons. The first is that the banking sector provides the plumbing that moves finance around our economy, making sure that money, where it is accumulated through wealth, is distributed to people who need it. The second is our international position: the financial services sector generates 11% of national economic output and contributes £12 in every £100 of tax paid—it pays for a lot of the NHS. As we heard, the sector makes up more than 3% of all jobs in the UK, with 2.5 million people employed in it, and we have the most unicorns in Europe. The sector here is the second-largest asset sector globally, the third-largest insurance market globally and the fifth-largest domestic banking market globally. I could go on, but the point is that the UK is absolutely a world leader in financial services, and we need to continue to be that. It is vital that we get this right.

It is worth comparing London to New York. New York is the biggest financial services centre in the world and London is the second biggest, but in New York, 80% of the turnover is driven by the domestic market of America, while just 20% is international; those numbers are reversed in the UK, where 80% of the activity is international. International competitiveness is four times as important for us as it is for those in America. The Conservative party recognises that, and that is why the Leader of the Opposition has promised to deliver a new economic revolution and to create conditions that will allow the financial services sector to innovate, take risks and be an economic powerhouse.

Before discussing the future of UK financial services, we need to understand the past. The City of London has been innovating and leading the way for a few hundred years now. The Knights Templar issuing receipts to crusaders for their gold created the first ever bank notes. In the 17th century, Jonathan’s Coffee House—the hon. Member for Buckingham and Bletchley will be familiar with it—was the first to advertise share prices. From there the London stock exchange grew, setting the model for equity ownership the world over. Similarly, Lloyd’s Coffee House created the insurance market that we see today. By continually innovating, the UK led the way for centuries. It is vital that the UK continues that spirit of innovation to maintain its international lead.

Although we have enjoyed much success over the years, a recent report by TheCityUK and PwC shows that over the past decade growth has stalled. Technologies such as artificial intelligence and distributed ledger technology are fundamentally rewiring financial market infrastructure, and it is vital that the UK keeps up with the pace of change. Financial services firms are ready to do that, but they need policy makers to create the right conditions and then get out of the way, allowing them to innovate and take advantage of that.

That brings me to what we need to do to unlock the future of UK financial services. First, we need to look at regulation in the UK. Although it is important to recognise that the UK’s regulatory and legal frameworks make us an attractive destination—that is really important; our rule of law is vital to this—we believe that the UK has gone too far and that regulation has become too burdensome. Research from TheCityUK suggested that the cost of regulatory compliance across the financial services sector now exceeds £33.9 billion. That represents more than 13% of firms’ annual average operating cost.

An interesting number was presented to the Treasury Committee by Nationwide Building Society, which estimated that, as a result of over-regulation by the regulators and over-compliance by their own internal compliance department, their lending book was £35 billion smaller than it would have been, had they been complying with the original rules and regulations. That is an awful lot of money taken out of the economy, getting stuck in one building society—admittedly the biggest one, but none the less, that is an important measure that we need to consider. This money could have been better spent across the whole of the wider sector, but more worryingly, it has affected our international reputation. The chief executive officer of Marsh McLennan said that it cost six times more to comply with regulation in the UK than in any other country it operates in. That does not foster an attractive business environment. Something needs to change.

That is why the Conservatives recently announced three policies that would reduce the regulatory burden. First, we would remove the ringfencing on banks. Secondly, we would reduce bank capital requirements. Thirdly, we would replace the Financial Ombudsman Service with a financial adjudication service.

[Bobby Dean]

The description of the regulatory regime since 2008 is fair. There has been a degree of over-correction, particularly on things such as capital requirements, and the regulators themselves are saying that we could do with some tidying up, but abolishing the ringfencing regime—one of the fundamental protections put in place for everyday bank users in relation to the risks presented by investment banking—does not seem like addressing an over-correction. It seems like a revolution back to the 2008 regulatory regime. Can the hon. Gentleman defend that Conservative party proposal in that context?

[Mark Garnier]

Yes, I can, from having been on the Treasury Committee from 2010 to 2016, when we looked at creating the Financial Conduct Authority and the Prudential Regulatory Authority, and, more relevantly, on the parliamentary commission on banking standards. Our report recommended that we introduce the measures in the Davies review, which was bringing ringfencing in. The hon. Member may remember that, at the time, the Liikanen review in the European Union looked at ringfences. The subtle difference between our ringfencing and theirs is that it was described as caging the tigers in Europe and as putting a fence around the deer park in the UK. Our retail banks were ringfenced. The problem we have found is that it has become increasingly complex to operate the regime, and the Europeans did not bring it in; as a result the resolution regime on banks—the recent Bank Resolution (Recapitalisation) Act 2025 looked at this—actually means that we now have an awful lot of other stuff in place and do not necessarily need the ringfencing.

The problem with ringfencing is that banks end up with a cliff edge, where their customers are traversing from the ringfenced bank to the commercial and investment banks, and it becomes very difficult. Only one bank has managed to satisfy itself that it is okay, and it has set that ringfence limit at £100 million worth of turnover; all other banks have been at the lower end, which is close to £5 million or £10 million in turnover.

It is costing us more and becoming less internationally competitive to have a ringfencing regime that other countries did not adopt. When we adopted it we were the first mover, but we were not followed. International competitiveness is the key point, as well as the bank resolution. There are MRELs, bullion bonds and a lot of stuff out there that makes up for that, brought in since the financial crisis. It just looks like we have too much. I hope that answers the question from the hon. Member for Carshalton and Wallington (Bobby Dean).

Analysis shows that the annual cost to the UK’s banking sector of ringfencing alone is £1.5 billion. At the same time, reports from industry are clear that ringfencing is duplicated and is not responsible for post-crisis improvements. In 2022, the independent review of ringfencing and proprietary trading said that

“the reduction in the implicit government guarantee and progress in ending too-big-to-fail was not found to be attributable to ring-fencing.”

We understand that the Government are looking at this, and at reforming the ringfencing regime through the Financial Services and Markets Bill. The Economic Secretary to the Treasury and I will be spending a lot of time in the coming months going through the minutiae of banks’ balance sheets—frankly, I find it fascinating; I hope she does too. However, like most of the Bill, while welcome, we feel that the Government are not fully utilising the opportunities that the Bill will provide, and that they could go much further. As I say, I will not delve into too much of the detail because we have a long time to go through all this, but I hope that the hon. Member for Buckingham and Bletchley will throw his weight behind the Financial Services and Markets Bill when it comes to the House of Commons.

I have a second point on taxation. If we are to unlock the future of UK financial services, the other area we have to look at is the level of taxation. In a world where capital, talent and business activity are highly mobile, the UK needs to remain an attractive place to do business. That is especially important given the international nature of the UK’s markets. While our competitors such as the US have a high domestic focus, the UK is the exact opposite: the London Stock Exchange Group found that more than four fifths of the revenues of FTSE 100 constituents now stem from outside the UK. Despite that, data from across the industry shows that the UK is an outlier when it comes to the level of taxation on our financial services sector.

Taking the banks as an example, data from UK Finance and PwC in 2025 suggests that the total tax rate on banks in London is 46.5%, which is significantly higher than in other financial centres such as Amsterdam, Frankfurt, Dublin and New York, as we have already heard. In fact, compared with the US, our banks are paying 60% higher tax than theirs are. Another example is the insurance sector. Data from the Association of British Insurers shows that their membership’s total tax contribution increased by 77% between 2014 and 2024. Analysis suggests that that has mainly been driven by increases in the insurance premium tax.

[Derek Twigg (in the Chair)]

Order. I am conscious of time. I assume that the shadow Minister is coming towards the ends of his comments, but I want to make sure that the Minister and Member in charge have plenty of time to respond. I will call the Minister in about a minute’s time.

[Mark Garnier]

I will draw my remarks to a close, Mr Twigg—I have been rambling on a bit. I thank the hon. Member for Buckingham and Bletchley again for his words. This has been a very intelligent and thoughtful debate. As I say, the most important point is that we have to be incredibly mindful of our international competitiveness, which is so vital for our country. It is so important that we get this right. If we fail, we may find our descendants sitting in this Chamber in 20 or 30 years’ time, wondering what on earth happened to the UK’s financial services sector. We must get it right.

Face-to-Face Banking: Rural Areas

Mark Garnier Excerpts

Tuesday 1st September 2026 Westminster Hall

[Mark Garnier (Wyre Forest) (Con)]

Thank you for your leadership, Mr Wishart. I welcome the Minister back to her position as the Economic Secretary to the Treasury for the second time. It is a great pleasure to see her in her place. Much more importantly, I congratulate the hon. Member for South Devon (Caroline Voaden) on securing this important debate. The fact that 25 Back Benchers have contributed illustrates just how important the subject is to our constituents. The debate has also illustrated the fact that the nature of banking in the UK is evolving quite fast.

According to data from Finder, just under 30% of adults used online or remote banking in 2006. In 2024, that figure had increased to 88%. It is simply the case that fewer people are using face-to-face banking services, but that does not mean we should get rid of branches altogether. As we have heard, many people still rely on them. We need to strike the right balance between allowing our banking system to evolve with changing consumer habits and protecting those who rely on traditional banking services, such as vulnerable people and local businesses.

Before I go further, it is valuable to provide some context to this debate. According to Which?, 6,871 bank branches have closed since 2015, meaning that 69% of branches closed in that period. Which? also found that 56 of our constituencies, from Norwich North to Mid Bedfordshire, are now without a single bank branch, and that 101 constituencies have just one branch left. The South Devon constituency is part of that category, following the recent closure of the Lloyds Bank branch in Totnes. As the hon. Lady set out, the impact on all her constituents, but especially the vulnerable and older constituents she serves, is significant.

In the increasingly digital world in which we live, it is easy to forget that many people struggle to use technology. The Government’s own statistics suggest that 1.3 million adults in the UK are deemed to be digitally excluded. Although that has decreased from 6.8 million in 2017, there are still a significant number of people who find the digital alternatives difficult to navigate.

[David Mundell]

Does my hon. Friend acknowledge that some people who would otherwise be willing and able do not have access to these services? Many of my constituents do not have good enough mobile service to operate apps.

[Mark Garnier]

My right hon. Friend raises another big argument that we could have on the issue of rural broadband, but it is worth making the point regarding internet connectivity that I was just coming on to. I know this is as painful in other constituencies as it is in Wyre Forest. According to the financial lives 2024 survey, adults living in rural areas were,

“disproportionately more likely to report having poor or no connectivity.”

We must also remember that many of our local businesses rely on face-to-face banking services. According to the House of Commons Library, an average small business deposits cash twice a month, withdraws cash once a month and gets change for their cash registers once a month. It is worth bearing in mind that, typically, we have about 3,500 businesses per constituency, so an awful lot of people rely on these services.

I remember the impact that was felt in 2015 when HSBC closed the last bank in Bewdley in my constituency; people were utterly dismayed. Happily, the post office stepped in and was able to help resolve the issues, but since then we have now discovered that that the post office is under threat. We are working on it, but it demonstrates the point that things are changing very quickly.

There is also a more subtle outcome of a sharp reduction in bank branches: the relationship between a bank and the local economy is being dramatically reduced, which has implications for our wider economy. Local branch managers living in a community, providing banking services to local businesses and understanding local economic opportunities as well as pressures, are well placed to understand the commercial value of a loan application by a local business. That is important.

An application for a business loan is usually something that business owners and managers want to get in place as fast as they can, but the reality is that applications for smaller business loans now take an average of nine months to be approved. That is not good for our local economies. Furthermore, banks need to lend money. That is the business they are in. Each loan creates a banking asset. Indeed, 95% of the money in circulation is the result of banks lending it into existence through fractional reserve banking. It is in the interest of both our banks and our economy that they lend, but if it takes too long, others will step in. That can be good, but it can be bad.

Private debt is gaining traction alongside private equity. Meanwhile, unregulated loan notes have been central to some recent mis-selling issues at the smaller end of the market. That is not the fault of the banks, but the lack of local banking services opens doors to alternatives, not all of which are properly understood, risk-assessed and regulated. However, we must recognise that banks are businesses. I do not want to be an apologist for banks, but they do provide a very important service, which they have to do in a profitable way. They have to make commercial decisions, and they have to consider the footfall in their branches and the take-up of digital banking.

[Caroline Voaden]

The hon. Member says that banks have to make profits. Last year, Lloyds made £6.7 billion in profit. Does he agree that £6.7 billion is such an incredible amount of money that asking banks to put more money into maintaining services for customers across rural Britain is not an exceptional or particularly demanding ask? The money is there. Nobody needs to be making £6.7 billion of profit a year.

[Mark Garnier]

As I say, I am not an apologist for banks, and I am keen to ensure that we get a balanced argument. The hon. Lady is absolutely right that that is an awful lot of money, but it all comes down to what should be the right and proportionate response. I do not disagree with her fundamental point, but the question is slightly more complicated.

I will give the hon. Lady an example from my constituency. Not so long ago, I went into a branch of Santander. It was a Thursday, and I was banking a cheque. I was the fourth customer that the bank teller had seen that week. It was utterly dismal, and that was in the centre of Kidderminster. The branch was closed the following week. There are issues for banks—whether they should necessarily be opening branches that could get one or two customers coming in a week. There is a balance to be struck. If a branch is not viable, should the bank keep it open?

We must look at the other opportunities. The last Conservative Government recognised that and were committed to retaining vital banking services. That is why we provided a system of free and convenient access to banks through the post office branch network, why we introduced protections for access to cash and why we enabled the development of banking hubs through the Financial Services and Markets Act 2023.

I am glad that the Government have continued our positive trajectory, especially through their commitment to 350 new banking hubs by 2030, but I also welcome the independent access to banking services review chaired by Richard Lloyd. We are interested to see its outcomes and recommendations, but would be grateful if the Minister gave us a clue as to when it will report. Decisive Government action could ensure support for underserved communities in good time and mitigate the impact of bank branch closures.

This and previous debates on this subject have shown just how much Members support bank branches, especially in rural areas. Members have emphasised how many of their constituents and local businesses still rely on those services, which is especially true in rural areas such as South Devon. It is vital that the Government step up to support communities who lack adequate banking services provision.

The publication of the access to banking services review will help to identify the next steps, but many people will be frustrated that the Government are undertaking another review and not taking action. As the previous Prime Minister, the right hon. and learned Member for Holborn and St Pancras (Keir Starmer), said, people are “impatient for change”. When it comes to this issue, our constituents do not want to wait much longer.

Oral Answers to Questions

Mark Garnier Excerpts

Tuesday 23rd June 2026 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

[Mark Garnier (Wyre Forest) (Con)]

May I start by congratulating the former Economic Secretary, the right hon. and learned Member for Northampton North (Lucy Rigby), on her promotion to Chief Secretary? In the eight months that I shadowed her in her previous role, she made a strong impact and gained significant, well-deserved respect from those in the financial services industry. May I also welcome my fourth Economic Secretary, and wish her the very best of luck in the role?

As the Leader of the Opposition said in a speech last week, tax and regulation is getting in the way of financial services lending and investing in the UK economy. Does the new Economic Secretary think that the next Chancellor will do a better job of ensuring growth for this country?

[Rachel Blake]

This Chancellor has secured six interest rate cuts. We are creating the conditions for investment in business. Investment in skills and innovation is up; investment in regional infrastructure is up; and whole-economy investment is up by 4.9% since the election. This country is the best place for start-ups and scale-ups, thanks to the economic stability that the Chancellor has been securing.

Oral Answers to Questions

Mark Garnier Excerpts

Tuesday 28th April 2026 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

[Mark Garnier (Wyre Forest) (Con)]

The Economic Secretary to the Treasury will know that our financial services industry is a shining example of our international economic might. However, overinterpretation of rules and regulations has led to banks being nervous of taking risks, and that has slowed growth in the City and holds up international trade. For example, overinterpretation of anti-money laundering rules means that foreign inward remittances can take up to two weeks to clear into a UK bank account, while poor classification of risk-rated assets potentially starves businesses of growth debt capital. Will the Economic Secretary please assure the House that this ever-unnecessary tightening of the rules will be addressed in the financial services Bill, due to be announced in the King’s Speech?

[Lucy Rigby]

The hon. Gentleman will not expect me to pre-empt anything that may or may not be announced in the King’s Speech. What I will tell him, though, as he already knows, is that this Government are backing our financial services sector to the hilt to ensure that it continues to be the world-leading success that it is.

Car Insurance Industry: Fraud

Mark Garnier Excerpts

Wednesday 22nd April 2026 Westminster Hall

[Mark Garnier (Wyre Forest) (Con)]

It is a great pleasure to serve under you this afternoon, Ms Lewell, and I thank the hon. Member for North Shropshire (Helen Morgan) for securing this important debate. We have heard quite a lot of depressing stories about how people have been scammed and ripped off, and all colleagues will agree that more needs to be done to tackle fraud and spoofing in the car insurance industry.

Whether it is crash-for-cash scams, ghost broking or paid ad spoofing, our constituents are all being ripped off on so many levels; not just the cost itself, but the increase in insurance premiums. These practices are also harming the insurers and our wider financial services industry. The Minister will therefore agree with everyone in the room that more needs to be done to tackle this problem, but I hope she will reflect on colleagues’ comments about whether the Government are actually going far enough to tackle it.

To give some context, fraud is a threat that is becoming more prevalent every year. In 2024, fraud accounted for 44% of all crime reported in England and Wales, with about £1.16 billion of fraudulent general insurance claims identified. On the car insurance industry specifically, a 2024 report from the Association of British Insurers said:

“Motor insurance continues to be the area where insurers see the most illicit claims occurring, and they detected 51,700 motor scams worth £576 million.”

The ABI’s data suggested that that accounted for 53% of all fraudulent claims that year. It is safe to say that there is an issue that needs to be rectified, that we need to do more to protect our constituents and that we need to work closely with the industry to resolve this issue.

The thrust of this debate is paid ad spoofing, which is a very problematic but less well-known practice affecting the car insurance industry. According to the ABI, four in five people have never heard of it, so it is welcome that we have the opportunity to discuss it and raise its profile today. As the hon. Member for North Shropshire set out, paid ad spoofing is when fraudsters mimic legitimate businesses. They pay for ads to appear in search results when a customer searches for a legitimate service.

In the context of car insurance, the ads usually refer to unscrupulous claims and accident management businesses, and tend to relate to those who have been involved in an accident. As Direct Line states, the practice relies on

“the fact that in the aftermath of an accident, you might not be as vigilant as you’d otherwise be, searching quickly on your mobile and clicking on the first option you see.”

Fundamentally, these organisations are relying on a consumer believing they are dealing with their own insurer. They then arrange various services that the consumer’s insurer would provide, adding more cost to the process. This is all done with the aim of recovering costs from the insurer, but if the insurer challenges the charges, the drivers are the ones left to pick up the bill.

Understandably, those affected—such as the constituents of the hon. Member for North Shropshire—feel ripped off, and the companies that pretend to support them are actually exploiting them. The last Conservative Government understood that, which is why we instructed the Financial Conduct Authority to become responsible for claims management companies in 2019. As a result, firms must be authorised by the FCA to carry out their activities, and repeated violations will result in their authorisation being removed. It also means that customers can escalate complaints to the financial services ombudsman.

However, I understand that accident management activities are currently unregulated, so will the Minister outline whether the Government are considering regulating those activities of claims management companies? I would also be grateful if she could provide an assessment of the resolution process for customers, and whether she thinks improvements need to be made.

The other central issue is how these practices are allowed in the first place. Fraud is often complicated and involves many different actors. Consumers and insurers have a part to play in tackling it, but the actors, such as technology firms and social media platforms, should also bear responsibility; after all, they are the delivery mechanism for this fraud.

We should acknowledge that some technology firms have taken action, and Google is a good example. In 2021, it required companies advertising financial services to demonstrate that they are authorised by the Financial Conduct Authority, which is a positive step. But more needs to be done, and we need a joined-up approach.

The Government’s fraud strategy was an opportunity to do that. Although it is broadly welcome and recognises the role of technology firms in tackling fraud, not one of its action points requires change from them. Could the Minister set out why that decision was taken and what steps she is taking to ensure that responsibility is correctly allocated when it comes to fraud?

Fraud in the car insurance industry is a serious issue, and I am grateful to the hon. Member for North Shropshire for bringing it up. Fraud in general is becoming an issue of national security, and we need to get a handle on it. The Government should continue working with all actors to stop these practices, and we will support them when they try to do so. Consumers also need to remain vigilant to these practices.

I conclude by flagging to my constituents in Wyre Forest the current advice on how to avoid paid ad spoofing. First, people need to check the website’s URL to ensure that it is their legitimate insurer. Secondly, they should save the phone number on their insurance policy document to their telephone. Thirdly, if people are unsure about who they are speaking to, they should hang up and check their insurance details—caveat emptor.

Draft Capital Requirements Regulation (Market Risk Transitional Provision) Regulations 2026 Draft Credit Institutions and Investment Firms (Miscellaneous Definitions) (Amendment) Regulations 2026

Mark Garnier Excerpts

Tuesday 21st April 2026 General Committees

[Mark Garnier (Wyre Forest) (Con)]

It is a great pleasure to serve under your chairmanship, Mrs Hobhouse. As the Minister has said, the draft regulations are pretty uncontroversial, and the Opposition will certainly not oppose them.

I have a couple of questions on the draft Capital Requirements Regulation (Market Risk Transitional Provision) Regulations 2026. The Minister has quite rightly said that they have been introduced in response to delays in other jurisdictions, including the US and the EU. Of course, it is very important that we remain globally competitive and do not cause any self-inflicted harm. However, can the Minister provide some more detail on why other jurisdictions are delaying the implementation of these rules? Is it procedural, or is it because they have some concerns about the rules that they are being asked to implement?

Secondly, the draft regulations allow the Treasury to extend the delay beyond 1 January 2028, which is absolutely fine—we completely understand why that might need to be the case. That will also be subject to the affirmative procedure. However, there are one or two concerns within the industry that this provision might create uncertainty about when the rules will actually be brought in. It would be very helpful if the Minister gave some idea about what internal tests the Treasury will use to decide whether to pursue such an extension. As I said, the Opposition support the intention behind the draft regulations, and we will certainly not be pressing them to a vote.

Hidden Credit Liabilities: Role of the FCA

Mark Garnier Excerpts

Tuesday 14th April 2026 Westminster Hall

[Mark Garnier (Wyre Forest) (Con)]

Thank you, Sir Roger, for chairing the debate. I congratulate the right hon. Member for Hayes and Harlington (John McDonnell) on bringing this incredibly important subject up for discussion. At the heart of the debate are individual people—people who have lost their businesses, their livelihoods and, in some cases, their health and, indeed, their lives. Let me be crystal clear: where there has been malpractice, those affected should and must be supported and compensated. Every stakeholder in this issue, from the banks to the business owners—certainly the business owners—should agree with that.

I have a certain amount of experience of this. I was a member of the Treasury Committee from 2010 to 2016 and a member of the parliamentary commission on banking standards. We looked at the Financial Services Act 2012, which created the Financial Conduct Authority and the Prudential Regulation Authority to replace the previous regulator, the Financial Services Authority, which had been an abject failure. The FSA was created under the Financial Services and Markets Act 2000, which started the tripartite regime that singularly failed our economy and resulted in the financial crisis in 2008.

There is absolutely no question but that what we saw prior to the financial crisis, when we had that credit bubble, were some very bad practices. We looked into this again on the parliamentary commission on banking standards. The legislation that came out of that, the Financial Services (Banking Reform) Act 2013, was originally started due to the LIBOR scandal. None the less, we looked into the fundamental malpractices going on in banks, and what we saw, absolutely beyond a shadow of a doubt, was a mismatch in the balance of interests between shareholders, customers and staff that was massively in the favour of staff. That is what we found, and that fundamental malpractice by the financial services system is what those two Acts of Parliament were designed to resolve.

What we are looking at today is three important areas: those who were sold interest rate hedging products, which most of this debate has been about; those who were placed into RBS’s global restructuring group; and those who were on fixed-rate loans in Northern Ireland. I want briefly to go through each. On the hedging products, it was common practice back in the 2000s for businesses to be sold variable rate loans, as well as interest rate hedging products, which were known as collars and caps. In principle, they are not inherently bad products in themselves, as they offered the borrower greater flexibility. If people are borrowing money at 6% and are capped at 8%, but the quid pro quo is that they are collared at 4%, that actually works for them, because it protects them from a spike in interest rates.

Of course, the problem was that we did not see a spike in interest rates; rather, we saw a massive collapse of interest rates during the financial crisis. Interest rates dropped from 575 basis points in 2007 to just 50 basis points in 2009, and that is where borrowers were left out. Of course, we have also seen mismanagement of Government—I am the first to admit that, under Liz Truss’s Government, we saw interest rates spike at 15%. Collar and cap arrangements would have protected borrowers from that, so there is a benefit to them. However, I completely understand that we are looking here at where there has been malpractice behind these contracts.

It is incredibly important, though, to look at the problem with the Financial Services Authority, the precursor of the Financial Conduct Authority, which identified that lenders failed to ascertain borrowers’ understanding of risk. That is why it was right that the nine banks involved compensated customers to the tune of £2.2 billion. I appreciate that we are talking about those who were not compensated, but there was a recognition that there was a problem.

On the global restructuring group, the Financial Conduct Authority identified a number of clear failings in customer service and poor interactions. I understand that NatWest bank has accepted that the conduct fell far below the standards expected and has paid out something in the region of £100 million in compensation. In the grand scheme of things, that is not a huge amount of money; none the less, it has accepted that. However, it seems from the results of the regulatory reviews by the FCA, as well as the judicial proceedings, that it has not properly compensated people.

I should also point out that banks did a great deal to support businesses around the time of the financial crisis. That might sound counterintuitive to hon. Members, but one of the great discussions we had on the Treasury Committee was about the surprisingly small number of businesses that had gone bust. There was an argument at the time that banks were artificially supporting businesses while they had bad cash flow and damaged balance sheets, and that forcing companies into liquidation would crystallise the deficit of the loan on to the banks’ balance sheets. There was an argument that they were doing the wrong thing by keeping alive what were then referred to as zombie businesses. This whole issue was incredibly complicated after the financial crisis, and there was an awful lot going on in various different parts of all this.

I want finally to turn to the fixed-rate loans, which are mostly the ones used by Ulster Bank in Northern Ireland, which again is a subsidiary of NatWest. The allegation is that the banks took out their own interest rate swaps, booking them in customers’ names and adding a related credit bump. That is a serious allegation, suggesting that the bank staff recorded up-front profits for those swaps and earned personal commissions. The FCA was absolutely right to investigate it, but following its investigation, it said:

“We have seen no evidence that would lead us to conclude that further supervisory work and/or intervention with Ulster Bank/NatWest was required.”

I recognise that many will disagree with that conclusion, but even so, it cannot be argued that the FCA did not look into it. This comes down to what we want the FCA to achieve. The hon. Member for Liverpool West Derby (Ian Byrne) said that the FCA is not accountable, but actually, it is accountable to Parliament through the Treasury Committee, and it is the job of Members on the Committee to ensure that the FCA does the job that we want it to.

When we created the FCA in 2012, the idea was that there would be greater focus on consumer protection. The Financial Services Authority was set up to do the prudential regulation and the conduct regulation. The FCA was set up purely to do the financial conduct regulation, which is looking at how people are looked after. The Prudential Regulation Authority was then set up to do the nuts and bolts of the financial system—to make sure that we did not see a failing in the banking system rather like we had during the great financial crisis. I recognise that many colleagues will feel that process has not happened, particularly in the case we are talking about, but we have to accept that the FCA is an independent body. As I say, it is accountable to Parliament through the Treasury Committee, but it is an independent body.

In a similar debate in 2018, my right hon. Friend the Member for Salisbury (John Glen), when he was Economic Secretary to the Treasury, said:

“We can set the law, but we then must be bound by it and respect the judgment and independence of the FCA.”—[Official Report, 18 January 2018; Vol. 634, c. 1127.]

To the extent of the law we created, he is absolutely right. In the same way that we respect the judgment of the Supreme Court, even if we disagree with it, we should respect the judgments of the Financial Conduct Authority. It is up to the Minister to come up with a solution, but does she agree with that, or has the FCA got this fundamentally wrong? If so, what line will the Government take? Will they deliver the judge-led judicial review that people are looking for? I hope she will be able to answer that.

In closing, I want to return to those who have been affected. SMEs make up 99% of all businesses in the UK, so it is not an exaggeration that they are the lifeblood of our economy. When they succeed, we all benefit. They need confidence that institutions and financial services are backing them and are there to serve them and to make their businesses work. This issue has damaged that trust, and many have experienced painful losses. We need to rebuild that trust. I am not sure whether a judge-led inquiry is the right step, but I am open to it. The decision on whether to undertake one, however, is ultimately for the Government. I look forward to the Minister’s remarks.

Oral Answers to Questions

Mark Garnier Excerpts

Tuesday 10th March 2026 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

[Mark Garnier (Wyre Forest) (Con)]

Thanks to this Government’s policies on pensions, which actively disincentivise saving into private pension schemes, people will increasingly rely on the support of the state. This is not sustainable. I asked the Minister about this yesterday, and he dodged the question, so I will ask him again: will the Government cancel pension fund mandation and abandon salary sacrifice caps—yes or no?

[Torsten Bell]

This Government have set out our policy. On the question of salary sacrifice, any responsible Government should look at the effectiveness of all tax reliefs. If salary sacrifice for pensions had not been reformed, the cost would have risen to £8 billion over the course of this Parliament. That is the cost of the entire Royal Air Force. If the Conservative party wants to be treated like a serious party that is committed to fiscal discipline, as it claims to be, it is time to grow up.

Social Security

Mark Garnier Excerpts

Tuesday 10th February 2026 Commons Chamber

[Mark Garnier (Wyre Forest) (Con)]

It is a great pleasure to debate these two statutory instruments with the Exchequer Secretary. As he stated, they are made each year, and the precedent is for them to be debated on the Floor of the House. I am glad to see that that practice continues, and I hope that the Government will keep this going for the remainder of the current premiership, however long that may last. I want to make it clear that we will not be voting against the measures before us when the debate concludes. However, I would like to comment on each SI and the wider political discourse around them.

First, the social security regulations set the rates of certain national insurance contribution classes and the level of certain thresholds for the 2026-27 tax year. Specifically, they uprate the lower earnings limit, the small profit threshold and the rates of class 2 and class 3 national insurance contributions. The increase will be 3.8%, which is the consumer prices index figure from September 2025. All other limits and thresholds that these regulations cover will remain frozen at their current level.

This highlights that the increase last year was 1.7% compared with 3.8% this year. Both these percentages represent the rate of inflation that our constituents are suffering, but the 1.7% is of course what we left the Government when they came to power, and 3.8% is the level of inflation they are now delivering for consumers. When we left office, inflation was at 2%. We had managed to get it down following a once-in-a-generation pandemic and Russia’s illegal invasion of Ukraine and the subsequent energy crisis.

Since Labour has come in, inflation has risen almost every month and is now stuck at about 3.6%. Why is that? It is because the Government are relentlessly pursuing policies instead of making practical solutions—for example, the drive towards net zero. We of course want net zero and to get to the point where we clean up our carbon footprints, but by going too far they have managed to put up energy bills by £300 since they were elected. Is it any wonder that inflation is so high and shows little sign of coming down any time soon? I do not want to press the Minister on too many questions, but could he in due course let us know when the Government expect inflation to return to the target rate of 2%, which everybody agrees is where it should be?

The other point that I want to make about the statutory instrument is that it extends the employer national insurance contributions relief for veterans to 2028, which means businesses will continue to pay no employer NICs on salaries up to the veterans upper secondary threshold of £50,000 or £270 for the first year of their employment, which is a very good thing, as I think the Minister will agree. We introduced this relief in 2022, as we wanted to encourage as many employers as possible to help our veterans. These people have done a huge amount to protect our country, and it is important that we show our gratitude to them.

[Dan Tomlinson]

indicated assent.

[Mark Garnier]

The Minister is nodding, and I am sure he agrees with us on this point. Therefore, we welcome the fact that the Government have committed to extending this relief for the next two years.

However, I point out that the Government said in the Budget document:

“The government will extend the employer NICs relief for employers hiring veterans in their first civilian role to April 2028, from which point support for veterans into employment will be covered through spending review settlements rather than through this tax relief.”

The Government have committed to consult on which way would be best to do that, which is positive, and I hope the Minister is open to considering continuing this relief as an option if a suitable alternative cannot be found. In due course, it would be great if he or the Government could let us know what is being planned and on what timeframe, so we may understand what will be happening for veterans.

The child benefit and guardian’s order will uprate the allowances in line with CPI for the 2026-27 tax year. Again, we welcome the increases as these benefits are an important part of our welfare system. Guardian’s allowance is designed to provide further support to people who care for someone else’s child—for example, if the child’s parents have died. When these people step as guardians, they are incredibly important in the upbringing of young children, and we have a duty to support them so that they can ensure that the children they care for have the best start in life.

Although these state benefits are important, the Government are abandoning their responsibilities to tackle the wider benefits bill. In this debate last year, the former Exchequer Secretary, who is now the Chief Secretary to the Treasury, said:

“the Government are committed to delivering a welfare system that is fair for taxpayers while providing support to those who need it.”—[Official Report, 4 February 2025; Vol. 761, c. 716.]

When it came down to it, however, this Government did not take the opportunity to make those savings. Instead, it appears that they caved in to their Back Benchers, and we are now in a position where the benefits bill continues to balloon. According to The Times, even the Prime Minister has vetoed plans to reform the welfare system, simply to avoid the embarrassment of yet another U-turn. That is not fair to taxpayers, or to those who need support the most. In due course, I hope the Minister will set out when the needed benefit reforms will be brought forward and what steps he is taking to ensure that taxpayers’ money goes to those who need it most.

The Conservatives will not stand in the way of any of the statutory instruments before us today, but we look forward to hearing what the Minister has to say—not necessarily this afternoon, I stress—on the points I have raised.

[Madam Deputy Speaker (Judith Cummins)]

I call the Liberal Democrat spokesperson.