Financial Services and Markets Bill

Nigel Evans Excerpts

2nd reading
Wednesday 7th September 2022 Commons Chamber

[Several hon. Members rose—]

[Mr Deputy Speaker (Mr Nigel Evans)]

I see that eight Members want to speak, so we will have to reduce the time limit to six minutes to get everybody in.

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[Ben Lake (Ceredigion) (PC)]

It is an honour to be able to contribute on this important Bill this evening and a real pleasure to follow the hon. Member for Vale of Clwyd (Dr Davies), who gave us a masterful and detailed account of the problems and challenges that the loss of bank services and bank branches causes for rural communities in particular. I hope to emulate some of his mastery of the subject in my remarks.

I wish to begin by associating myself with some of the concerns raised by other Members, particularly my friend the hon. Member for Glenrothes (Peter Grant), who talked about the transfer of responsibility and scrutiny power away from Parliament and more towards the regulators and, in certain respects, as regards the repatriation of some of the regulations, to designated legislation committees.

I also associate myself with the concerns that have been voiced about the need to strengthen as an objective for the regulators the need for sustainable growth and to ensure that they are very much aligned with some of the Government’s expectations on net zero. I do not think that we have yet heard an explanation as to why that statutory objective cannot be placed on the regulators. I see it as working hand in hand with sustainable growth and competitiveness; they do not necessarily need to compete with each other.

As I mentioned, I will focus my remarks on access to cash. In particular, part 2 of the Bill—clauses 47 and 48 —and the corresponding schedules 8 and 9 have a great deal to commend them. I put on record my support for some of those measures, which I believe will bring a real improvement, safeguarding access to cash for so many of our communities. Of course, we must note that a lot of communities, including in my own constituency of Ceredigion, have already suffered the loss of bank branches and ATMs. It has long been the case that people in those communities have had to travel 10 or 15 miles in order to access a free ATM, but the Bill at least puts in place a set of regulations and a process to ensure that no further gaps arise in future. For that, I do welcome it.

However, returning to a point that has been made by several hon. Members, including the hon. Members for Blackpool North and Cleveleys (Paul Maynard) and for Cleethorpes (Martin Vickers), I ask the Government whether it would be possible to extend the remit of the access-to-cash clauses to include certain services, and in particular in-person services. Other Members have explained just how important continued access to in-person services—branch services—is for many individuals; we have heard about their particular importance to the elderly, and to those who are perhaps not IT literate. I would add that in some rural areas, of course, digital banking remains a distant dream due to a lack of connectivity, so the ability to access personal banking advice is an essential amenity for residents of those areas.

However, something that bears repeating—I admit that it is perhaps not something I have afforded enough attention to in the past—is the impact that the loss of in-person banking services has on small businesses and on charitable and community organisations. Over the past decade or so in Ceredigion, we have seen a number of towns lose their final bank. Nevertheless, they are still market towns; they try to plough for a prosperous future, but the loss of in-person banking services has had an impact on small businesses and on charitable and community organisations.

To offer a few examples, small businesses in Tregaron, in Lampeter, and increasingly those in Llandysul, will often have to travel to Carmarthen, which may be a round trip of between 45 and 60 miles, depending on where they are located. Of course, the banks open during business hours, which to small businesses entails either closing for a few hours in order to deposit cash or access other banking services, or going without. I know for a fact that many businesses are now having to amend their business practices in unhelpful ways in order to accommodate that new banking reality.

It has also been a real challenge for many charitable and community organisations to open accounts. For example, I have been told that a community pub initiative had to wait almost nine weeks to open a bank account due to the changes in services locally. Charities, in particular, have reported to me that banks just do not understand the specific requirements they have as account holders; they do not understand that changing mandates in person is a particular task for charities. In rural areas, as in many others, many of those charitable groups and organisations make a valuable contribution to communities. At the end of the day, they are staffed by volunteers, and forcing those volunteers to travel 60-odd miles just to change a bank mandate is unfair.

That is why I would be very interested to see whether the Government could extend the new access-to-cash requirements to include those banking services. At the moment, I am afraid, banks are not waking up of their own volition to the importance of maintaining those services in rural areas, and communities are being let down. That is where the Government could step in; that would be a very important intervention, and would be much welcomed on both sides of the House.

[Mr Deputy Speaker (Mr Nigel Evans)]

The last Member with six minutes is Harriett Baldwin, and then we will go to five minutes, so everybody will have exactly the same amount of time.

[Harriett Baldwin (West Worcestershire) (Con)]

It is an honour to be called to speak in support of the Bill. In a way, it is an advantage to be called at this time because so many excellent points have been made by so many wonderful people, and I am pleased to say that I agree with most of them and that they have been expressed better than I could have done, including by the former Chancellor and the former Economic Secretary to the Treasury, who was responsible, I think, for putting together quite a large part of this Bill.

I recall the milestone of when the country voted to leave the European Union on 23 June 2016, because I was Economic Secretary to the Treasury at the time. Many questions came to the fore about what would happen to the regulation of our financial services, which have been referred to many times in this debate as one of our most important export and tax-paying sectors, providing many hundreds of thousands of jobs up and down the land. It is a very important sector, and over the past six years we have flirted with the idea of equivalence.

It is, I think, the EU Commission that has decided that equivalence does not suit it. Frankly, I think it is the EU’s loss, because obviously we are equivalent—or we were equivalent. It is the EU’s small businesses and growing firms that will lose easy access to the United Kingdom capital markets, which is a shame for them. I also know that discussions were had about the EU-Canada trade agreement and about the chapter on financial services, which is not in our current trade agreement with the EU. Clearly that has been rejected as a way forward, although there is scope for much more mutual recognition and the opening up of markets.

I welcome the decisions that have been made before the publication of this Bill, and the opportunities for divergence that are being seized in it. It is also welcome that the industry has been very much consulted and brought along with us on how Solvency II and MiFID II changes can help our economy grow.

However, the point on which I wish to focus has not been brought up much in this debate: the freedoms that this Bill gives us to look once again at the market for advice and guidance in this country. We have heard about many of the challenges that consumers face when they are making financial decisions on their own behalf. The cost of financial advice is high, and the guidance itself can be very generic. There is, of course, access to the Money Advice Service and to Pension Wise, which I encourage constituents to use if they can, but the Bill gives us the opportunity to look once again at the financial advice market and to have more customised guidance because of how technology has evolved and the important role that the FCA’s regulatory sandbox plays in allowing people to experiment.

I urge everyone who has spoken about consumers in this debate to support an amendment that I am planning to table with the help of the Investing and Saving Alliance. It would allow the provision of much more personalised guidance through the use of innovation and technology, helping consumers through difficult decisions such as moving pensions when they change employer. That would create a better informed consumer who would not necessarily fall so easily for some of the scams that we have been hearing about during today’s debate. We need to arm our consumers to be able to tackle those scams.

My final point is about the role of the regulator. Time and again in this debate Members have asked who regulates the regulator if it puts in place something with which we as MPs or our constituents disagree. There is an important role here for the Treasury Committee, on which I sit, and we will take that responsibility of scrutinising changes very seriously.

I also think one of the great strengths of our country is our common law; I know the Minister has been looking at the opportunities that have been outlined for bringing in some further rights of appeal through the common-law system against some decisions that regulators make. I know he has taken these points seriously, and I look forward to his responding to them at the end of the debate.

[Mr Deputy Speaker (Mr Nigel Evans)]

Just to inform everybody, the wind-ups will begin no later than 6.40 pm, and anybody who has spoken in this debate will be expected to be here at the wind-ups. With five minutes, I call Siobhain McDonagh.

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[David Simmonds (Ruislip, Northwood and Pinner) (Con)]

I add my congratulations to Ministers past and present involved in introducing the Bill. It is an incredibly important piece of legislation for my constituents. Ruislip, Northwood and Pinner has a high level of employment in the City and in connected financial services, and the subject is close to my heart, as I belong to an even more cherished race of human beings than Tory MPs—I am a former banker.

There have been a number of exceptional contributions to this debate, so I shall try to confine my contribution to items that have not been covered in a lot of detail. First, the Bill is good and important because it will continue to support innovation in the financial sector, of which the UK has a long and proud. If we look at the role played by financial centres in London and Edinburgh in the development of financial products that have brought security and stability to people’s lives, we can see that for centuries the UK has been a leading light in the world. A piece of legislation that enables the sandbox concept, for example, continues to support that innovation and incredibly important to the sector.

Secondly, as we move away from EU structures and governance, we need to ensure that there is appropriate scrutiny of arrangements for regulation and of the implications of the mutual recognition agreements into which we propose to enter. Contrary to what is sometimes said about EU matters being dealt with by unaccountable bureaucrats in Brussels, if anything, our criticism in the UK was that there was often too much scrutiny and democratic involvement. With trade deals, for example, agreements had to be looked at by the European Parliament and the Committee of the Regions. They had to be signed off by the Council of Ministers. There were multiple levels of engagement in that process, and we need to ensure that organisations such as Zurich, which shared a helpful briefing with hon. Members—it certainly informed my thinking about the Bill—can have appropriate input so that we get the calibration right to support innovation, as the Minister is committed to do, and so that we have appropriate consumer protection.

Many Members have referred to the sector as a jewel in the crown of the British economy, which clearly remains the case. It is striking in the context of the Government’s levelling-up agenda that we see, for example, significant inflows of investment in Northern Ireland as a result of opportunities that have been created by the development of the economy there. That has created an opportunity to look at how we spread the benefits beyond the centres to which my right hon. Friend the Member for Central Devon (Mel Stride) and my hon. Friend the Member for Salisbury (John Glen) referred. That is critical for the reputation of the sector, and it is incredibly important for our economy too.

A key part of that is ensuring that we futureproof the regulation of financial services in the UK. There has been much mention of crypto, but I would like to add the need to ensure that non-regulated activity undertaken by regulated institutions requires scrutiny. Our thanks are due to Private Eye magazine, for example, for the detail that it has provided in shining a light on the activities of a number of organisations. The hon. Member for Glenrothes (Peter Grant) referred to things such as funeral plans, but we also need to pay a good deal of attention to the activities of will writing organisations and trust services—for example, the Family Trust Corporation and the Philips Trust Corporation—because significant numbers of consumers may find themselves heavily disadvantaged as a result of advice that they thought came from a trusted financial source, but which was not regulated.

Finally, access to cash has been discussed a good deal. I specifically highlight the need, especially for small businesses, to be able to access banking for the purpose of transacting in coins. In my constituency, I have heard from a lot of small shopkeepers and small business owners that it is not just about consumers being able to get to an ATM—it is about their being able to pay in coin that they receive in payments from customers and being able to extract it for the purpose of having change for cash transactions, which for the most part they cannot do with ATMs.

In conclusion, I am pleased to support the Bill, which as the Minister said will support innovation in this key UK sector. It will ensure that our country remains a global market leader and, importantly, it will ensure that consumers in my constituency and across the UK are protected from scammers who may seek to do them financial harm.

[Mr Deputy Speaker (Mr Nigel Evans)]

Those who have participated in the debate should start to make their way towards the Chamber for the wind-ups, which will start at 6.40 pm.

Financial Services and Markets Bill

Nigel Evans Excerpts

Report stage
Wednesday 7th December 2022 Commons Chamber

[The Economic Secretary to the Treasury (Andrew Griffith)]

I beg to move, That the clause be read a Second time.

[Mr Deputy Speaker (Mr Nigel Evans)]

With this it will be convenient to discuss the following:

Amendment (a) to new clause 17, after “mentioned in paragraphs (a) to (ia) of paragraph 11(1);” insert—

“(aa) the effect of the Financial Services and Markets Act 2023 on financial stability, and potential risks to financial stability, in the UK;

(ab) an assessment of the delivery of the FCA’s objectives in the previous year;

(ac) an assessment of measures which could improve the delivery of the FCA’s objectives in the next year;”

Amendment (b) to new clause 17, after “mentioned in paragraphs (a) to (f) of paragraph 19(1);” insert—

“(aa) the effect of the Financial Services and Markets Act 2023 on financial stability, and potential risks to financial stability, in the UK;

(ab) an assessment of the delivery of the PRA’s objectives in the previous year;

(ac) an assessment of measures which could improve the delivery of the PRA’s objectives in the next year;”

Government new clause 18—Composition of panels.

Government new clause 19—Consultation on rules.

Government new clause 20—Unauthorised co-ownership AIFs.

New clause 1—National strategy on financial fraud—

‘(1) The Treasury must lay before the House of Commons a national strategy for the purpose of detecting, preventing and investigating fraud and associated financial crime within six months of the passing of this Act.

(2) In preparing the strategy, the Treasury must consult—

(a) the Secretary of State for the Home Office,

(b) the National Economic Crime Centre,

(c) law enforcement bodies which the Treasury considers relevant to the strategy,

(d) relevant regulators,

(e) financial services stakeholders,

(f) digital platforms, telecommunications companies, financial technology companies, and social media companies.

(3) The strategy must include arrangements for a data-sharing agreement involving—

(a) relevant law enforcement agencies,

(b) relevant regulators,

(c) financial services stakeholders,

(d) telecommunications stakeholders, and

(e) technology-based communication platforms,

for the purposes of detecting, preventing and investigating fraud and associated financial crime and, in particular, tracking stolen money which may pass through mule bank accounts or platforms operated by other financial services stakeholders.

(4) In this section “fraud and associated financial crime” includes, but is not limited to authorised push payment fraud, unauthorised facility takeover fraud, and online and offline identity fraud.

(5) In this section, “financial services stakeholders” includes banks, building societies, credit unions, investment firms, Electric Money Institutions, virtual asset providers and exchanges, and payment system operators.’

This new clause would require the Treasury to publish a national strategy for the detection, prevention and investigation of fraud and associated financial crime, after having consulted relevant stakeholders. The strategy must include arrangements for a data sharing agreement between law enforcement agencies, regulators and others to track stolen money.

New clause 2—Local community access to essential in-person banking services—

‘(1) The Treasury and the FCA must jointly undertake a review of the state of access to essential in-person banking services for local communities in the United Kingdom, and jointly prepare a report on the outcome of the review.

(2) “Essential in-person banking services” include services which are delivered face-to-face and which local communities require regular access to. These may include services provided in banks, banking hubs, or other service models.

(3) The report mentioned in subsection (1) must be laid before the House of Commons as soon as practicable after the review has been undertaken.

(4) The report mentioned in subsection (1) must propose a minimum level of access to essential in-person banking services which must be provided by banks and building societies in applicable local authority areas in the United Kingdom, for the purpose of ensuring local communities have adequate access to essential in-person banking services.

(5) The applicable local authority areas mentioned in subsection (4) are local authority areas in which, in the opinion of the FCA, local communities have a particular need for the provision of essential in-person banking services.

(6) In any applicable local authority area which, according to the results of the review undertaken under subsection (1) falls below the minimum level of access mentioned in subsection (4), the FCA may give directions for the purpose of ensuring essential in-person banking services meet the minimum level of access required by subsection (4).

(7) A direction under subsection (6) may require a minimum level of provision of essential in-person banking services through mandating, for example—

(a) a specified number of essential in-person banking services within a geographical area, or

(b) essential in-person banking services to operate specific opening hours.’

This new clause would require the Treasury and FCA to conduct and publish a review of community need for, and access to, essential in-person banking services, and enable the FCA to ensure areas in need of essential in-person banking service have a minimum level of access to such services.

New clause 3—Essential banking services access policy statement—

‘(1) The Treasury must lay before the House of Commons an essential banking services access policy statement within six months of the passing of this Act.

(2) An “essential banking services access policy statement” is a statement of the policies of His Majesty’s Government in relation to the provision of adequate levels of access to essential in-person banking services in the United Kingdom.

(3) “Essential in-person banking services” include services which are delivered face-to-face, and may include those provided in banks, banking hubs, or other service models.

(4) The policies mentioned in sub-section (2) may include those which relate to—

(a) ensuring adequate availability of essential in-person banking services;

(b) ensuring adequate provision of support for online banking training and internet access, for the purposes of ensuring access to online banking; and

(c) expectations of maximum geographical distances service users should be expected to travel to access essential in-person banking services in rural areas.

(5) The FCA must have regard to the essential banking services access policy statement when fulfilling its functions.’

This new clause would require the Treasury to publish a policy statement setting out its policies in relation to the provision of essential in-person banking services, including policies relating to availability of essential in-person banking services, support for online banking, and maximum distances people can expect to travel to access services.

New clause 4—FCA duty to report on mutual and co-operative business models—

‘(1) The FCA must lay before Parliament a report as soon as practicable after the end of—

(a) the period of 12 months beginning with the day on which this Act is passed, and

(b) every subsequent 12-month period,

on how it considers the specific needs of mutual and co-operative financial services providers and other relevant business models when discharging its regulatory functions.

(2) The “specific needs” referred to in subsection (1) must include the needs of mutual and co-operative financial services providers to have a level playing field with financial services providers which are not mutuals or co-operatives.

(3) The “mutual and co-operative financial services providers and other relevant business models” referred to in subsection (1) may include—

(a) credit unions,

(b) building societies,

(c) mutual banks,

(d) co-operative banks, and

(e) regional banks.’

This new clause would require the FCA to report annually on how they have considered the specific needs of mutual and co-operative financial services.

New clause 5—PRA duty to report on mutual and co-operative business models—

‘(1) The FCA must lay before Parliament a report as soon as practicable after the end of—

(a) the period of 12 months beginning with the day on which this Act is passed, and

(b) every subsequent 12-month period,

on how it considers the specific needs of mutual and co-operative financial services providers and other relevant business models when discharging its regulatory functions.

(2) The “specific needs” referred to in subsection (1) must include the needs of mutual and co-operative financial services providers to have a level playing field with financial services providers which are not mutuals or co-operatives.

(3) The “mutual and co-operative financial services providers and other relevant business models” referred to in subsection (1) may include—

(a) credit unions,

(b) building societies,

(c) mutual banks,

(d) co-operative banks, and

(e) regional banks.’

This new clause would require the FCA to report annually on how they have considered the specific needs of mutual and co-operative financial services.

New clause 6—Updated Green Finance Strategy—

‘(1) The Treasury must lay before the House of Commons an updated Green Finance Strategy within three months of the passing of this Act.

(2) The strategy must include—

(a) a Green Taxonomy, and

(b) Sustainability Disclosure Requirements.

(3) In preparing the strategy, the Treasury must consult—

(a) financial services stakeholders,

(b) businesses in the wider economy,

(c) the Secretary of State for Business, Energy and Industrial Strategy, and

(d) the Secretary of State for Work and Pensions.

(4) In this section a “Green Taxonomy” means investment screening criteria which classify which activities can be defined as environmentally sustainable including, but not limited to—

(a) climate change mitigation and adaptation,

(b) sustainable use and protection of water and marine resources,

(c) transitions to a circular economy,

(d) pollution prevention and control, and

(e) protection and restoration of biodiversity and ecosystems.

(5) In this section “Sustainability Disclosure Requirements” are the requirements placed on companies, including listed issuers, asset managers and asset owners, to report on their sustainability risks, opportunities and impacts.’

This new clause would require the Treasury to publish an updated Green Finance Strategy. This must include a Green Taxonomy and Sustainability Disclosure Requirements.

New clause 7—Access to cash: Guaranteed minimum provision—

‘(1) The Treasury must, by regulations, make provision to guarantee a minimum level of access to free of charge cash access services for consumers across the United Kingdom.

(2) The minimum level of access referred to in subsection (1) must be included in the regulations.

(3) Regulations under this section shall be made by statutory instrument, and may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.’

New clause 8—Stewardship reporting requirements for occupational pension schemes—

‘(1) Section 36 of the Pensions Act 1995 (Choosing investments) is amended as follows.

(2) In subsection (1) after “(4)” insert “and, for relevant schemes, (4A)”.

(3) After subsection (4), insert—

“(4A) The trustees of relevant schemes must publish information regarding their stewardship activities. In doing so they must have regard to, amongst other matters, the scheme’s—

(a) purpose, culture, values and strategy;

(b) governance structures and processes;

(c) conflicts of interest policy;

(d) engagement strategy, including escalation steps;

(e) aggregate statistics on total engagement activity;

(f) thematic engagement priorities; and

(g) engagement outcomes.”

(4) After subsection (6), insert—

“(6A) For the purposes of this section—

(a) a “relevant scheme” means a scheme with £5bn or more in relevant assets,

(b) “relevant assets” is to be calculated in accordance with methods and assumptions prescribed in regulations.”’

This new clause raises the baseline standard of stewardship for large institutional investors beyond the minimum standards set by the UK’s implementation of the Shareholder Rights Directive, drawing on the Financial Reporting Council’s Stewardship Code and ShareAction’s Best Practice Engagement Reporting Template.

New clause 9—Stewardship reporting requirements for certain investors—

‘(1) The FCA may make rules requiring some or all of those managing investments to publish information on their stewardship activities. In doing so they must have regard to, amongst other matters—

(a) purpose, culture, values, business model and strategy;

(b) governance structures and processes;

(c) conflicts of interest policy;

(d) engagement strategy, including escalation steps;

(e) aggregate statistics on total engagement activity;

(f) thematic engagement priorities; and

(g) engagement outcomes.

(2) The FCA may make rules to clarify the definition of “the most significant votes” in rule 3.4.6 of the systems and controls section of the FCA Handbook.’

This new clause would enable the FCA to make rules raising the baseline standard of stewardship for large institutional investors beyond the minimum standards set by the UK’s implementation of the Shareholder Rights Directive, drawing on the Financial Reporting Council’s Stewardship Code and ShareAction’s Best Practice Engagement Reporting Template. It would also allow the FCA to define and monitor “significant votes”.

New clause 10—Consumer Panel duty to report to Parliament—

‘(1) FSMA 2000, as amended by Section 6 of the Financial Services Act 2012 and Section 132 of the Financial Services (Banking Reform) Act 2013, is amended as follows.

(2) At the end of section 1Q, insert—

“(7) The Consumer Panel must lay an annual report before Parliament evaluating the FCA’s fulfilment of its statutory duty to protect consumers, including comments on—

(a) the adequacy and appropriateness of the FCA’s use of its regulatory powers;

(b) the measures the FCA has taken to protect vulnerable consumers, including pensioners, people with disabilities, and people receiving forms of income support; and

(c) the FCA’s receptiveness to the recommendations of the Consumer Panel.”’

This new clause would introduce a further level of Parliamentary scrutiny of the work of the FCA to protect consumers by requiring the Financial Services Consumer Panel to lay an annual report before Parliament outlining its views on the FCA’s fulfilment of its statutory duty to protect consumers.

New clause 11—Personalised financial guidance: power to make regulations—

‘(1) The Treasury may by regulations make provision for UK citizens to access personalised financial guidance from appropriately regulated financial services firms, for the purposes of supporting them to make decisions which improve their financial sustainability.

(2) The “UK citizens” referred to in sub-section (1) include, in particular, UK citizens who are unlikely to have access to financial advice (provided in accordance with Chapter 12 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001).

(3) In this section, “personalised financial guidance” means a communication—

(a) that is made to a person in their capacity as an investor or potential investor, or in their capacity as agent for an investor or a potential investor;

(b) which constitutes a recommendation to them to do any of the following (whether as principal or agent)—

(i) buy, sell, subscribe for, exchange, redeem, hold or underwrite a particular investment which is a security, structured deposit or a relevant investment; or

(ii) exercise or not exercise any right conferred by such an investment to buy, sell, subscribe for, exchange or redeem such an investment; and

(c) that is—

(i) based on a consideration of the circumstances of that person; and

(ii) not explicitly presented as suitable for the person to whom it is made.

(4) The provision that may be made by regulations under this section includes provisions—

(a) relating to the provision of financial advice;

(b) relating to suitability requirements under MiFID;

(c) conferring powers, or imposing duties, on a relevant regulator (including a power to make rules or other instruments).

(5) The power to make regulations under this section includes power to modify legislation.

(6) The power under subsection (5) includes power to modify the definition of “personalised financial guidance” in subsection (2).

(7) Regulations made under this section, and which modify only the following kinds of legislation are subject to the negative procedure—

(a) EU tertiary legislation;

(b) subordinate legislation that was not subject to affirmative resolution on being made.

(8) Regulations under this section to which subsection (7) does not apply are subject to the affirmative procedure.

(9) Before making regulations under this section, the Treasury must consult the FCA.

(10) In this section—

“legislation” means primary legislation, subordinate legislation and retained direct EU legislation;

“MiFID” means Regulation (EU) 2017/565 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive.’

New clause 12—Requirement to publish regulatory performance information on new authorisations—

‘(1) The FCA and PRA must each lay before Parliament a report on their regulatory performance as soon as practicable after the end of—

(a) the period of six months beginning with the day on which this Act receives Royal Assent, and

(b) each subsequent quarter.

(2) A report under this section must include analysis of data on—

(a) the number of new applications for authorisation made to each regulator during the reporting period, with a breakdown by authorisation type;

(b) the rates of approval for applications for authorisation by each regulator, with a breakdown by authorisation type;

(c) the average length of time taken from application to final authorisation decision by each regulator;

(d) the FCA or PRA‘s assessment of the time and cost incurred by applicants to comply with information requirements for authorisation; and

(a) such other matters as the Treasury considers appropriate.’

This new clause requires both regulators to publish regular reports to Parliament on their regulatory performance for new applicants for regulation.

New clause 13—Requirement to publish regulatory performance information on authorised firms—

‘(1) The FCA must lay before Parliament a report on its regulatory performance as soon as practicable after the end of—

(a) the period of six months beginning with the day on which this Act receives Royal Assent, and

(b) each subsequent quarter.

(2) A report under this section must include the average length of time taken from the initial submission of an application for authorisation by an applicant to the issuing of a final decision by the FCA for each of the following regulatory responsibilities—

(a) approved persons;

(b) change in control;

(c) variation of permission;

(d) waivers and modifications that alter compliance obligations.’

This new clause requires the FCA to publish regular reports to Parliament on its regulatory performance for existing authorised entities and persons.

New clause 14—Determination of applications—

‘(1) The Financial Services and Markets Act 2000 is amended as follows.

(2) After section 61(2) insert—

“(2ZA) In determining the application, the regulator must—

(a) assign a new application to a case handler within five working days of the application being received;

(b) complete an initial application review within ten working days of allocation to a case handler; and

(c) make no requests for additional information after a period of fifteen working days from the receipt of the application.

(2ZZA) The regulators must publish, on an annual basis, monitoring data relating to—

(a) the proportion of cases which require escalation to sponsoring firms, including summary trend data on the reasons for escalation;

(b) the average time taken to assign a case handler; and

(c) the average number of days it takes to complete determination of an application.’

This new clause would add to the regulators’ authorisation KPIs outlined in the Financial Services and Markets Act 2000 and require them to publish monitoring data related to the determination of authorisations.

New clause 15—Regulators’ duty to report on competitiveness and growth objective—

‘(1) The FCA and PRA must each lay before Parliament a report as soon as practicable after the end of—

(a) the period of 12 months beginning with the day on which this Act receives Royal Assent, and

(b) every subsequent 12-month period,

on how they consider that they have facilitated the international competitiveness of the economy of the United Kingdom and its growth in the medium to long term.

(2) Reports under this section must include analysis of data on the following—

(a) steps taken to simplify regulatory rulebooks and frameworks;

(b) the number of new market entrants to the UK;

(c) new regulations introduced in the previous twelve months;

(d) an assessment of the impact of the new regulations to UK competitiveness;

(e) comparative analysis of the number of new authorisations in the UK and other international jurisdictions in the previous twelve months;

(f) comparative analysis of product and service innovations introduced in the UK and other international jurisdictions in the previous twelve months; and

(g) such other matters as the Treasury may from time to time direct.’

This new clause would require both the FCA and PRA to each publish an annual report setting out how they have facilitated international competitiveness and growth against a range of data and analysis requirements.

New clause 16—Regulatory principles to be applied by both regulators: proportionality principle—

‘(1) The Financial Services and Markets Act 2000 is amended as follows.

(2) In section 3B(1)(b), leave out from “benefits,” to end and insert “taking into consideration the nature of the service or product being delivered, the nature of risk to the consumer, whether the cost of implementation is proportionate to that level of risk and whether the burden or restriction enhances UK international competitiveness.”’

This new clause would amend the existing regulatory principle for both regulators and require them nature of and risk to the consumer, and the service or product being delivered, must be taken into account when imposing a new burden or restriction.

New clause 21—Prudential capital requirements for specified financial institutions—

‘(1) Within six months of the passing of this Act, the Treasury must by regulations set prudential capital requirements for specified financial institutions.

(2) Regulations under this section must require financial institutions to hold in reserve £1 for every £1 used to finance assets connected with fossil fuel activities, which is liable for potential loss due to the climate risk exposure of the assets.

(3) In this section “fossil fuel activities” means the extraction, production, transportation, refining and marketing of crude oil, natural gas or thermal coal, as well as any fossil-fuel fired power plants, unless covered by an exemption.’

This new clause would give the Treasury the power to make regulations requiring financial institutions to hold capital in reserve to reflect the climate risk exposure of assets connected with fossil fuel activities.

New clause 22—FCA: Regard to financial inclusion in consumer protection objective—

‘(1) FSMA 2000 is amended as follows.

(2) In section 1C (The consumer protection objective), after subsection (2)(c) insert—

“(ca) financial inclusion;””.

New clause 23—FCA duty to report on financial inclusion—

“(1) The FCA must lay before Parliament a report, as soon as practicable after the end of—

(a) the period of 12 months beginning with the day on which this Act is passed, and

(b) every subsequent 12-month period,on financial inclusion in the UK.

(2) A report under this section must include—

(a) an assessment of the state of financial inclusion in the UK;

(b) details of any measures the FCA has taken, or is planning to take, to improve financial inclusion in the UK;

(c) developments which the FCA considers could significantly impact on financial inclusion in the UK; and

(d) any recommendations to the Treasury which the FCA considers may promote financial inclusion in the UK.’

New clause 24—Rules relating to forest risk commodities—

‘(1) FSMA 2000 is amended as follows.

(2) After section 19 (The general prohibition) insert—

“19A Specific requirements regarding forest risk commodities

(1) A person must not carry on a regulated activity in the United Kingdom that may directly or indirectly support a commercial activity in relation to a forest risk commodity or a product derived from a forest risk commodity, unless relevant local laws were complied with in relation to that commodity.

(2) A person that intends to carry on a regulated activity that may directly or indirectly support a commercial activity in relation to a forest risk commodity or a product derived from a forest risk commodity, shall establish and implement a due diligence system in relation to that regulated activity.

(3) In this section, “due diligence system” means a system for—

(a) identifying and obtaining information about the commercial activities of any beneficiary of the regulated activity and of their group regarding the use of a forest risk commodity,

(b) assessing the risk that relevant local laws were not complied with in relation to that commodity, and

(c) mitigating that risk.

(4) A person that carries on a regulated activity in the United Kingdom that directly or indirectly supports a commercial activity in relation to a forest risk commodity or a product derived from a forest risk commodity shall be subject to—

(a) the reporting requirements under paragraph 4 of Schedule 17 of the Environment Act in relation to the due diligence system required under subsection (2) of this section, and

(b) Part 2 of Schedule 17 of the Environment Act as though they are a person to whom Part 1 of that Schedule applies.

(5) Terms used in this section that are defined in Schedule 17 of the Environment Act shall have the meaning given to them in that Schedule.”’

New clause 25—Long term economic resilience and prosperity objective—

‘(1) FSMA 2000 is amended as follows.

(2) In section 1B (FCA’s general duties)—

(a) in subsection (2) leave out “function well” and insert “deliver long term economic resilience and prosperity”;

(b) in subsection (3) for paragraph (c) substitute—

“(c) the climate safety objective (see section 1E);

(d) the nature protection objective (see section 1F).”

(3) For section 1E (The competition objective) substitute—

“1E The climate safety objective

The climate safety objective is: facilitating the net UK carbon emissions target in section 1 of the Climate Change Act 2008, and the 1.5 degrees temperature goal of the Paris Agreement.

1F The nature objective

The nature objective is: facilitating alignment with halting and reversing biodiversity loss by 2030.”’

This new clause would make the FCA’s strategic objective ensuring that the relevant markets deliver long term economic resilience and prosperity, remove the competition operational objective and introduce two new operational objectives; climate safety and nature protection.

New clause 26—Prohibited regulated activity: new fossil fuel developments—

‘(1) A UK bank, or person acting on behalf of a UK bank, may not carry on a regulated activity where the carrying out of the activity would have the effect of providing financial investment in, or facilitating the financing of, new fossil fuel developments.

(2) In this section—

(a) “new fossil fuel developments” includes—

(i) any activity, in the UK or elsewhere, which enables or contributes to the enabling of, the extraction, processing and distribution of fossil fuels, and

(ii) the construction, in the UK or elsewhere, of fossil fuel-powered electricity generation;

(b) “fossil fuels” has the same meaning as in section 32M (Interpretation of sections 32 to 32M) of the Electricity Act 1989;

(c) “UK bank” has the same meaning as in section 2 (Interpretation: “bank”) of the Banking Act 2009.

(3) The FCA may impose sanctions against the relevant bank, where the prohibition in subsection (1) is contravened.

(4) The sanctions mentioned in subsection (3) includes—

(a) the imposition of a penalty of such amount as the FCA considers appropriate;

(b) suspension of variable components of remuneration;

(c) suspension of dividend pay-outs;

(d) removal of access to central bank funding; and

(e) removal of permission to carry on regulated activities.

(5) This section shall come into force on 31 December 2023.’

This new clause would prohibit banks from conducting regulated activity which may enable new fossil fuel developments from December 2023 onwards, and give the FCA powers to impose certain sanctions for non-compliance.

New clause 27—Refusal to provide services for reasons connected with freedom of expression—

‘(1) No payment service provider providing a relevant service (the “provider”) may refuse to supply that service to any other person (the “customer”) in the United Kingdom if the reason for the refusal is significantly related to the customer exercising his or her right to freedom of expression.

(2) Where a customer has prominently and publicly exercised his or her right to freedom of expression, it is to be presumed that any refusal by a provider to supply a relevant service was significantly related to the customer exercising his or her right to freedom of expression unless the provider can provide a substantial basis for believing there was an alternative good and proper reason for the refusal.

(3) Where a customer has prominently and publicly exercised his or her right to freedom of expression and has been refused a relevant service by a provider on application by the customer, the FCA must within 5 working days issue an order to the provider immediately to recommence supply unless the FCA considers it clearly inappropriate to do so.

(4) An order issued pursuant to subsection (3) must last until the FCA is satisfied that there was or there has subsequently arisen an alternative good and proper reason for the refusal.

(5) Upon considering an application by the customer under subsection (3), where the FCA decides not to issue an order to the supplier, the FCA must give reasons in writing to the customer explaining its decision not to issue an order.

(6) Where the FCA is satisfied that there has been a breach by a provider of the obligation in subsection (1) or the failure to comply with an order issued pursuant to subsection (3), the FCA may impose a penalty on the provider of such an amount as it considers appropriate. The FCA may, instead of imposing a penalty on a provider, publish a statement censuring the provider.

(7) The FCA must within three months of the coming into force of this section prepare and arrange for publication of a statement of its policy with respect to—

(a) the circumstances the FCA will consider under subsection (3) in deciding whether it is clearly inappropriate to issue an order; and

(b) the imposition of penalties and statements of censure under subsection (6).

(8) A breach by a provider of the obligation in subsection (1) and the failure to comply with an order issued pursuant to subsection (3) are actionable at the suit of the customer, subject to the defences and other incidents applying to actions for breach of statutory duty.

(9) In this section—

(a) a “relevant service” means a service which is (in whole or in part) directed at users in the United Kingdom and constitutes—

(i) any service provided pursuant to any regulated activity; or

(ii) any service in relation to a payment system for the purposes of enabling the transfer of funds using the payment system as referred to in section 42(5) of the 2013 Act;

save for any service expressly excluded by regulations;

(b) a “payment service provider” has the same meaning as under section 42(5) of the 2013 Act;

(c) the right to freedom of expression has the same meaning as under Article 10 of the European Convention on Human Rights—

(i) save that it includes the right to campaign for or seek to protect the right to freedom of expression of others; and

(ii) save as excluded by regulations;

(d) “the 2013 Act” means the Financial Services (Banking Reform) Act 2013.

(10) Regulations under this section may be made pursuant to the provisions of section 428 of FSMA 2000 save that—

(a) before preparing regulations under this section, the Secretary of State must consult the FCA and such other persons as the Secretary of State considers appropriate; and

(b) they must be adopted using the affirmative procedure before Parliament.’

New clause 28—Regulation of buy-now-pay-later firms—

‘(1) Within 28 days of the passing of this Act, the Secretary of State must by regulations make provision for—

(a) buy-now-pay-later credit services, and

(b) other lending services that have non-interest-bearing elements

to be regulated by the FCA.

(2) These regulations must include measures which—

(a) ensure all individuals accessing services mentioned in sub-section (1) have access to the Financial Services Ombudsman,

(b) ensure that individuals applying for services mentioned in sub-section (1) are subject to credit checks prior to the service being approved, and

(c) ensure that individuals accessing services mentioned in paragraph (1) are protected by Section 75 of the Consumer Credit Act.’

This new clause would bring the non-interest-bearing elements of bring buy-now-pay-later lending and similar services under the regulatory ambit of the FCA, as proposed by the Government consultation carried out in 2022.

New clause 29—Cost benefit analyses to include assessments of economic crime risks—

‘(1) FSMA 2000 is amended as follows.

(2) In section 138I(7), at end insert—

“(c) an assessment of economic crime risks posed by the proposed rules”’.

This new clause would require cost-benefit analyses to include assessments of the risk of economic crime arising from the proposed rules.

New clause 30—Establishment of Financial Regulator’s Supervision Council—

‘(1) The Secretary of State must, within six months of this Bill receiving Royal Assent, make provision for the establishment of a body to be known as the Financial Regulator’s Supervision Council (“FRSC”).

(2) The role of the body established under subsection (1) is to provide independent scrutiny and oversight of the work of the FCA and its fulfilment of its duties and responsibilities, particularly its consumer protection objective.

(3) The responsibilities of the body shall include, but not be limited to—

(a) overseeing the performance of the FCA from a consumer perspective, including undertaking annual appraisals and commissioning or undertaking periodic reviews as appropriate; and

(b) appointing, reviewing annually the performance of and, where appropriate, dismissing—

(i) the Chair and Chief Executive of the FCA (jointly with HM Treasury);

(ii) the non-Executive Directors of the FCA appointed by the Department for Business, Energy and Industrial Strategy;

(iii) Members and Chair of the Financial Services Consumer Panel;

(iv) the Financial Regulators’ Complaints Commissioner;

(v) the directors of the Financial Ombudsman Service and its Independent Assessor;

(vi) the directors of the Financial Services Compensation Scheme; and

(vii) such employees as the FRSC requires to perform its statutory role.

(4) The body is to be funded by a 1% levy on the FCA’s revenue.

(5) Membership of the body shall be selected through open competition and must include individuals representing the interests of financial services consumer groups.

(6) The Secretary of State may by regulations, following consultation with consumer groups, make further provision for the body’s responsibilities, powers, constitution and membership.

(7) Any reports published by the body must be laid before Parliament.’

New clause 31—Regulators’ duty of care—

‘(1) Individuals and organisations undertaking activities within the remit of the FCA and PRA shall owe a duty of care to consumers.

(2) The “duty of care” means an obligation to act towards consumers with a reasonable level of watchfulness, attention, caution and prudence.

(3) An individual or organisation in breach of this duty of care may be subject to legal claims for negligence.’

New clause 32—Regulators’ immunity from civil damages action—

‘(1) Relevant regulators may be the subject of civil damages actions in cases where—

(a) a consumer has suffered material financial loss,

(b) the loss has occurred since 1 December 2001,

(c) the activity in the course of which the consumer suffered material financial loss is within the remit of the relevant regulator, and

(d) the relevant regulator was aware, or could reasonably be expected to have been aware, that the consumer would have been at risk of suffering financial loss and negligently failed to take sufficient action to prevent the consumer from suffering such loss.

(2) Any recommendations made by the investigator appointed under section 84(1)(b) of the Financial Services Act 2012 following the upholding of a complaint made against a regulator by a consumer who has suffered financial loss, which may include the providing of material financial redress, shall be considered binding on the regulator.

(3) The Limitation Act 1980 shall not apply in relation to any civil actions brought under this section until six years after this section has come into force.’

New clause 33—Reporting requirement: Green agenda—

‘(1) Within six months of the passing of this Act, and every twelve months thereafter, the PRA and FCA must jointly lay before the House of Commons a report setting out their assessment of—

(a) the ways in which the PRA and FCA have incentivised and promoted green finance for the period covered by the report,

(b) the impact of the UK financial system in incentivising green investment for the period covered by the report, and

(c) the ways in which the PRA and FCA have supported the Secretary of State’s ability to meet the duty set out is section 1 of the Climate Change Act 2008.

(2) For the purposes of this section, “green finance” means financial products or services which aim to reduce emissions, and enhance sinks of greenhouse gases, and aim to reduce vulnerability of, and maintain and increase the resilience of, human and ecological systems to negative climate change impacts.’

This new clause would place a requirement on the PRA and FCA to report on ways in which they have promoted and incentivised green finance and green investment.

New clause 34—Investment duties of occupational pension schemes—

‘(1) Section 36 of the Pensions Act 1995 (Choosing investments) is amended as follows.

(2) In subsection (1) remove “(4)” and insert “(4A)”.

(3) After subsection (4), insert—

“(4A) The trustees must act in the way they consider, in good faith, would be most likely to be for the benefit of the beneficiaries as a whole and to be fair as between the beneficiaries, including as between present and future beneficiaries and in doing so have regard (amongst other matters) to—

(a) the likely consequences of any decision in the long term,

(b) the impact of their investments on society and the environment,

(c) environmental, social and governance risks and opportunities (including, but not limited to, climate change),

(d) the desirability of the trustees maintaining a reputation for high standards of business conduct,

(e) the need to act fairly as between beneficiaries and members of the scheme, and

(f) in relation to investments that provide money purchase benefits, the views of beneficiaries and members of the scheme.

(4B) The trustees shall publish a policy statement of its understanding of benefit as relevant to its beneficiaries and of how it has regard to the matters in subsection 4A(a) to (d). The Secretary of State may make regulations regarding such policy statements.

(4C) The trustees shall report to beneficiaries the performance of the portfolio in delivering the benefit as defined in the policy statement and shall do this at the same time as it reports on the financial performance of the portfolio.

(4D) A fiduciary investor shall take all reasonable steps to ensure that all of its delegates and advisers comply with this section.”’

This amendment broadens the investment duties of trust-based pension schemes and FCA-authorised personal pension providers to require specified investors to make investment decisions in the “best interests” of beneficiaries.

New clause 35—Investment duties of personal pension providers—

‘(1) The Financial Services and Markets Act 2000 is amended as follows.

(2) After section 137FD insert—

“137FE FCA general rules: pension investment

(1) The FCA must make general rules requiring managers of some or all relevant pension schemes to invest the assets in the best interests of members of the scheme and in the case of a potential conflict of interest, in the sole interest of members and survivors. In doing so they must have regard (amongst other matters) to—

(a) the likely consequences of any decision in the long term,

(b) the impact of their investments on society and the environment,

(c) the desirability of the managers maintaining a reputation for high standards of business conduct, and

(d) the need to act fairly as between members of the scheme.

(2) The FCA may make general rules requiring managers of relevant pension schemes to report publicly on how they have met the requirement in sub-section (1)

(3) In this section “relevant pension scheme” means—

(a) a personal pension scheme within the meaning of an order under section 22, or

(b) a stakeholder pension scheme within the meaning of such an order.”’

This amendment broadens the investment duties of trust-based pension schemes and FCA-authorised personal pension providers to require specified investors to make investment decisions in the “best interests” of beneficiaries.

New clause 36—Duty to report fraud—

‘(1) Financial services providers must, upon the detection of fraudulent activity or suspected fraudulent activity, report such activity to a relevant investigating authority.

(2) Financial services providers must publish an annual report which includes information on levels of identified fraudulent activity and steps taken, or planned to be taken, to reduce and prevent such or further fraudulent activity.’

Government amendments 8 to 11.

Amendment 19, in clause 29, page 41, line 12, at end insert

‘, and also to financial inclusion.

‘(2A) For the purposes of this section, “financial inclusion” means the impact on those who might be prevented from accessing financial services as a result of the new rules made by either regulator, or from accessing them on the same terms as existed before the making of the new rules.’

Government amendments 12 and 13.

Amendment 1, in clause 40, page 54, line 29, at end insert—

‘(c) be provided with any information or data that the Panel requires in order to fulfil its duties;

(d) publish the agendas and minutes of meetings of the Panel; and

(e) make publicly available its recommendations in full including, but not limited to, the evidence base and analysis it used to make its recommendations, the assessed costs and benefits of the FCA’s activities and the range of representations made by Panel members regarding those recommendations.’

Amendment 2, page 54, line 36, at end insert

“at least two of whom must be representatives of FCA authorised firms.”

Amendment 21, page 54, line 38, at end insert

“, at least three of whom must have experience and expertise in the field of economic crime, with one each drawn from the public, private and third sectors respectively”.

This amendment would require the FCA’s Cost Benefit Analysis Panel to include individuals with expertise in economic crime.

Government amendment 14.

Amendment 3, page 54, line 41, leave out from “must” to end of line 42 and insert

“within 30 days of the receipt of representations made to it by the FCA Cost Benefit Analysis Panel, publish a response to such representations, including a statement of actions it will take as a result of the representations.”

Amendment 4, page 55, line 20, at end insert—

“(c) be provided with any information or data that the Panel requires in order to fulfil its duties;

(d) publish the agendas and minutes of meetings of the Panel; and

(e) make publicly available its recommendations in full including, but not limited to, the evidence base and analysis it used to make its recommendations, the assessed costs and benefits of the PRA‘s activities and any dissenting representations made by Panel members regarding those recommendations.”

Amendment 5, page 55, line 2, at end insert

“at least two of whom must be representatives of PRA authorised firms”.

Amendment 22, page 55, line 29, at end insert

“, at least three of whom must have experience and expertise in the field of economic crime, with one each drawn from the public, private and third sectors respectively”.

This amendment would require the PRA’s Cost Benefit Analysis Panel to include individuals with expertise in economic crime.

Government amendment 15.

Amendment 6, page 55, line 32, leave out from “must” to end of line 33 and insert

“within 30 days of the receipt of representations made to it by the PRA Cost Benefit Analysis Panel, publish a response to such representations , including a statement of actions it will take as a result of the representations.”

Government amendment 16.

Amendment 7, in clause 64, page 78, line 20, at end insert—

“(5A) The relevant requirement referred to in subsection (5) must specify that reimbursement in qualifying cases cannot be refused on the basis that a victim, or victims, ought to have known that the payment order was executed subsequent to fraud or dishonesty.”

This amendment would prevent reimbursement for victims of fraudulent or dishonest payments being refused on the basis that that they should have known the payment was fraudulent or dishonest.

Amendment 20, page 78, line 20, at end insert—

“(5A) The relevant requirement mentioned in subsection (5) must set out clearly that—

(a) those to which the requirement applies have a duty to ensure that reimbursement is made in all qualifying cases, and

(b) the penalty imposed by the Payment Systems Regulator, under section 73 of the Financial Services (Banking Reform) Act 2013, for failure to comply with that duty, will be not less than £100,000 in each instance of failure.”

Amendment 23, in schedule 2, page 119, line 19, leave out sub-paragraphs (2) and (3).

This amendment would maintain the regulator’s duty to establish appropriate position limits in commodity speculation, to ensure the effective functioning of commodity markets and prevent potentially risky speculation.

Amendment 24, page 119, line 2, leave out “that paragraph” and insert “paragraph (1)”.

This amendment would maintain the regulator’s duty to establish appropriate position limits in commodity speculation, to ensure the effective functioning of commodity markets and prevent potentially risky speculation.

Amendment 25, page 119, line 32, leave out sub-paragraph (5).

This amendment would maintain the regulator’s duty to establish appropriate position limits in commodity speculation, to ensure the effective functioning of commodity markets and prevent potentially risky speculation.

Amendment 27, page 120, line 4, leave out paragraph 48.

This amendment would remove the proposed amendment to the FCA’s power to intervene, to maintain transparency in commodity markets and reduce the scope of so-called “dark pools”.

Amendment 26, page 120, line 10, leave out sub-paragraph (4).

This amendment would maintain the regulator’s duty to establish appropriate position limits in commodity speculation, to ensure the effective functioning of commodity markets and prevent potentially risky speculation.

Government amendments 17 and 18.

Amendment 28, page 155, line 7, at end insert—

“(1A) When exercising its functions under this Part, the FCA may issue a direction to a designated person, for the purpose of establishing a banking hub.

(1B) A designated person must comply with a direction under subsection (1B).

(1C) A “banking hub” is a facility which—

(a) provides cash access services,

(b) is facilitated jointly by multiple providers of such services,

(c) contains private consultation spaces at for users of cash access services, and

(d) is established for the purpose of ensuring reasonable provision of cash access services where there would otherwise be a local deficiency of such provision.”

This amendment would require designated persons to comply with direction given by the FCA for the purposes of establishing banking hubs.

[Andrew Griffith]

The financial services sector is central to our Government’s ambition to bolster our global competitiveness and boost growth in all parts of the United Kingdom. This Bill delivers on our ambition by seizing the opportunities of our departure from the European Union, tailoring financial services regulation to UK markets and delivering better outcomes for the economy, consumers, victims of fraud and businesses. There are many amendments for consideration today, so I will be as succinct as possible, and I look forward to having time to respond to hon. Members’ contributions later.

In Committee, I heard from colleagues on both sides of the House about the importance of holding the operationally independent regulators to account regarding their performance—in particular, that there should be regular reporting on their performance to support scrutiny, beyond just the annual report. Regulation is about not just the contents of the rulebook, but how effectively and on how timely a basis those rules are enforced and implemented.

The Government and regulators are both committed to the highest standards of operational effectiveness. That is why last week we published an exchange of letters with the regulators, making clear the intention to publish more detailed performance data in relation to their authorisation processes on a more regular basis. However, I also noted the clear consensus in Committee on the need to enhance the existing statutory provisions. In particular, I thank my hon. Friends the Members for Wimbledon (Stephen Hammond) and for North Warwickshire (Craig Tracey) for raising this important issue.

As a result, new clause 17 provides a new power for the Treasury to require the regulators to publish additional information on a more regular basis, where that is necessary to support this House’s scrutiny of their performance in discharging their general functions.

--- Later in debate ---

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I reiterate what the Minister said: a lot of Members wish to speak in the debate, and he has been on his feet for about half an hour. If we are to have time for the amendments and other contributions, we need to cut back on interventions.

[Andrew Griffith]

Thank you, Mr Deputy Speaker; you are as wise as my right hon. Friend the Member for North West Hampshire is flattering. We will make some progress and allow others to contribute.

Let me move on to access to banking and payment services. Just as we have said about cash, they are the essential ingredients of modern life and for many businesses. The new clause tabled by my hon. Friends the Members for Hastings and Rye (Sally-Ann Hart) and for Northampton South (Andrew Lewer) raised the important issue, to all of us in this House, of free speech, and the crucial role of payment service providers in delivering services without censorship. Since Committee stage, I have met with my hon. Friend the Member for Hastings and Rye, the FCA and PayPal regarding its recent temporary suspension of some accounts. I draw hon. Members’ attention to my letter deposited in the House, in which I set out the Government’s position on that important matter. I also circulated the letter from PayPal that sets out that it re-evaluated and reversed its decision in a number of the specific cases raised. It says that it was never its intention to be an arbiter of free speech, and that none of its actions was based on its customers’ political views.

I want to be extremely clear that the Government are committed to ensuring that the regulations respect the balance of rights between users and service providers’ obligations, including in respect of freedom of expression, whether of the Free Speech Union, the trade union movement, law-abiding environmental movements or anyone else expressing lawful views. To ensure that the existing regulatory regime is operating as it should in that respect, I will seek further evidence through the Government’s review of payment services regulation in January. To continue this transparent dialogue with colleagues on an important subject, I will provide an update to Parliament in the form of a written ministerial statement before the formal closure of that review, and table amendments to the relevant regulations using the powers in today’s Bill, if necessary.

We recognise the value that the mutuals sector brings to the UK economy in providing a door to affordable credit. The Government are committed to the health and prosperity of the mutuals sector, which is why we supported the private Member’s Bill of the hon. Member for Preston (Sir Mark Hendrick), which would allow co-operatives, mutual insurers and friendly societies further flexibility in determining for themselves the best strategies for their business. As I said in Committee in response to amendments tabled to today’s Bill by the hon. Member for Hampstead and Kilburn (Tulip Siddiq), the Government consider that the Financial Services and Markets Act 2000 already ensures that regulators consider mutual entities as they exercise their regulatory functions.

--- Later in debate ---

[Caroline Lucas (Brighton, Pavilion) (Green)]

The Bank of England’s climate stress test, published in May, showed that banks need to take climate action immediately or face a hit to annual profits of up to 15%. This is not just about airy-fairy words about the transition, but about banks that, as we have just heard, are bankrolling the fossil fuel industry, which will bring real risks to the finance sector as well as to the rest of the world. Can the Minister say whether he will support new clause 25?

[Mr Deputy Speaker (Mr Nigel Evans)]

Before the Minister does, I will just say that he has been speaking for three quarters of an hour now. A lot of people want to contribute to the debate.

[Andrew Griffith]

On this side of the House, we are about action not words. I listened with great care to what the hon. Lady said, but action starts at home. In her constituency, the Green party leader flew on a jet aeroplane to COP and the level of recycling is half that of neighbouring West Sussex. People should get their own house in order before coming to virtue-signal about others’.

New clauses 8 and 9 in the name of the hon. Member for Sheffield, Hallam (Olivia Blake) raise the important issue of financial stewardship. The Department for Work and Pensions, which is responsible for that, has already made a public commitment to review stewardship disclosure requirements. That will be done during 2023.

Finally, the Government believe that effective commodities market regulation is key to ensuring that market speculation does not lead to economic harm. The current regime we have inherited from the EU is overly complicated and poorly designed. To ensure that this is calibrated correctly, the Bill delegates the setting of position limits from the FCA to trading venues themselves. The amendments in the name of the right hon. Member for Hayes and Harlington (John McDonnell) seek to reverse this. The Government’s position is that this would place unnecessary restrictions on investors, to the detriment of all market participants. It would place the UK at a disadvantage compared with other international financial centres, such as the EU, that apply restrictions only to contracts that genuinely pose a risk.

--- Later in debate ---

[John McDonnell (Hayes and Harlington) (Lab)]

On a point of order, Mr Deputy Speaker. I do not wish to delay the debate, but in the Financial Times today there is an announcement that the Chancellor of the Exchequer will make a significant statement on Friday about the future of our financial services. There was no reference by the Minister to that statement. It looks as though the statement will be made outside the House, not to the House, because it is being made in Scotland on Friday. Could I ask for your intercession to remind the Government that major statements of this sort, and it is billed as the most significant statement in the last 20-odd years, should be made on the Floor of the House?

[Mr Deputy Speaker (Mr Nigel Evans)]

I am getting no indication that the Minister wants to comment on that, but the fact is that the Speaker has said time and again that he deprecates statements that should be made to the House first being made elsewhere, and I am sure the Minister will take that on board.

I call the shadow Minister.

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

The Opposition support the Bill, particularly the new secondary objectives for regulators on international competitiveness and long-term growth. It is a welcome first step in supporting the City to take advantage of opportunities outside the EU, such as creating a welcoming environment for new financial technologies and incentivising financial services to increase investments in domestic industries through reform of solvency II.

We were delighted when, after much pressure from the Labour party, the Minister decided to drop his dangerous policy of the intervention power. Despite repeated warnings from the Bank of England, business and the Labour party that he should not be putting the UK’s international competitiveness at risk by threatening our system of regulatory independence, the current Minister pushed on and told me it was a good thing. In my eyeline, I can see the hon. Member for North East Bedfordshire (Richard Fuller), who, when he was the Economic Secretary to the Treasury, said to me on Second Reading that it was right for Ministers to be able to intervene in such a way.

Financial Services and Markets Bill

Nigel Evans Excerpts

Consideration of Lords message
Monday 26th June 2023 Commons Chamber

[Peter Grant]

I think that both that intervention and the muttering from a sedentary position on the Treasury Bench give an indication of just how seriously this Government take money laundering. Perhaps we can all speculate as to the reasons why.

We are not against the idea that any regulation should be applied proportionately, but it is too sweeping a generalisation to say that, because of someone’s job or who they know, they somehow become less of a risk. Let me give just one example. Would Baroness Mone of PPE Medpro have been regarded as being at low risk of anything because she was a Member of the House of Lords and a one-time Government envoy?

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I gently remind the hon. Member that we are not allowed to directly criticise Members of the House of Lords by name.

[Peter Grant]

I stand corrected, Mr Deputy Speaker. Unless I said more than I intended to, I think I was asking a question; I was not expressing an opinion.

Let us not forget that over the last 10 to 15 years a huge amount of dirty money from Russia and other former Soviet republics has been laundered into the United Kingdom by people who, at least financially and in terms of their donations, were very closely associated indeed with leading politicians. It has to be said that, had Putin not carried out a second invasion of Ukraine last year—if he had been satisfied with the original illegal activity in Ukraine 2014—that money would probably still be coming in, because the Government only moved in a big way on dirty Russian money after the second invasion of Ukraine. They did not do anything, or anything like enough, in 2014 or afterwards, so we have to ask whether they are really serious about cutting off this dirty Russian money at source and handing it back to the people that it was originally stolen from.

I thought it was quite interesting that the Minister said that it was a bad idea to agree Lords amendment 10, to improve financial inclusion, at such a late stage, when the Government are happy to accept Lords amendment 38, to weaken our defences against money laundering, at the same late stage. That may give an indication of what the priorities might be of people who wield a lot of influence over the Government—maybe not the Minister’s own priorities.

As I have said, we in the SNP continue to support the Bill. Our concerns on almost all counts have been in areas that did not go far enough, such as the accountability of the regulators—the Financial Conduct Authority, for example. My issue is that the regulators have not been held properly to account for the myriad times they have failed to regulate and have simply not protected the public and investors. Other authorities have not protected pensioners. We can look at Blackmore Bond, London Capital and Finance, Premier FX, the British Steel pension scheme, the AEA Technology pension scheme, and hundreds of other financial scandals that were allowed to happen—or certainly allowed to happen as badly as they did—because the regulators did not do the job they were set up to do. They should be held accountable to this place and to the public for their failures to regulate. I am concerned that if we tie them up with too much regulation about how they regulate, and if they are worried about being dragged into Parliament or politically overruled when they do regulate, there is a danger that they will start to lose their independence from political interference, without which no regulator on these islands can ever be effective.

It is disappointing that the Government seem determined to reject some Lords amendments that would have made the Bill better, and to push through at least one that will significantly weaken it. It would be sad indeed if this elected Chamber were not allowed to express its will on whether amendment 38 makes the Bill better or worse. I for one believe that it makes it worse, and I hope we will be able to divide the House on it tonight.