Financial Services and Markets Bill

Peter Grant Excerpts

Report stage
Wednesday 7th December 2022 Commons Chamber

[Andrew Griffith]

I thank my hon. Friend who, as one of my predecessors, has made a significant contribution to getting the Bill to where it is today. I will try to indulge him, but he will also recognise that the Bill is about putting enabling powers in place, and there will be opportunities on future occasions to discuss how we deploy those.

New clause 18 introduces a requirement for the regulators to ensure that all members of their statutory panels are external and independent of the Treasury, the Bank of England and the regulators. That will codify the current approach taken by regulators, putting it in statute, building confidence in their independence and ensuring that it is maintained on a long-term basis.

New clause 19 introduces a new requirement for the regulators to publish a list of respondents to their public consultations, provided that the respondents consent. The requirement is limited to the financial services regulators and their specific statutory consultation in existing financial services legislation. New clauses 18 and 19 also address points raised by my hon. Friend the Member for North East Bedfordshire (Richard Fuller) and the hon. Member for Richmond Park (Sarah Olney).

I also note the interest of my hon. Friend the Member for Harrow East (Bob Blackman) in enhancing regulator accountability through his new clauses on a new regulators’ supervision council and ending regulators’ statutory immunity from civil damages. I understand where he is coming from, and I note that he chairs the all-party parliamentary group on personal banking and fairer financial services, but the Government’s position is that a new supervisory council would duplicate existing accountability structures. Indeed, none of the representations that I receive from industry says that the biggest thing that will help growth and competitiveness is another layer of regulators. There is also a great deal of existing accountability structures, including the role undertaken by this House and its various Committees, which is why that position was supported by the Treasury Committee in its July 2021 report. Removing the regulators’ statutory immunity from liability and damages would risk regulators over-regulating to avoid the risk of liability. There are already mechanisms for holding regulators to account, including the complaints scheme. That scheme is overseen by the independent complaints commissioner, who has powers to recommend redress.

[Peter Grant (Glenrothes) (SNP)]

I certainly appreciate the Minister’s concern that we might see precautionary regulation, but is the best way to avoid that not simply to restrict the removal of liability to cases in which the regulator has clearly and negligently failed to act to deal with a situation in which an already regulated activity was being carried out in an unacceptable way? That is what happened with Blackmore Bond. It was not an unregulated activity; it was an activity that fell within the scope of the Financial Conduct Authority, but it failed to act and £46 million was stolen from people as a result.

[Andrew Griffith]

The hon. Member draws our attention to the very tragic cases that occur when financial regulation goes wrong and does not do its job in the way every Member of this House would like to see. He also talks about a legal threshold for that. He will perhaps appreciate that I do not have the facts of that particular case before me and that we are not drafting things here and now. I have heard from Members on both sides of the House about some of the problems in what we are talking about, which is essentially the conduct of the regulator, and I understand colleagues’ desire to look at legal liability as one remedy, but there are many powers in the Bill, and as I say, the Bill will not constrain the ability of this House or Ministers going forward.

The hon. Member for Kingston upon Hull West and Hessle (Emma Hardy), with whom I spent a lot of time in the Bill Committee—I suspect we will hear from her later this afternoon—has tabled a new clause on considering economic risks in regulators’ cost-benefit analysis panels. I would like to reassure her that the regulators already take steps—and, to assuage her concerns, they could perhaps do more—to think about economic crime when they do that. They have the power, of course, to consult experts where they consider it relevant.

I thank my hon. Friend the Member for North East Bedfordshire again for raising the issue of regulatory proportionality. I wish to reassure him that the Government are clear that the burden of any regulation should be proportionate to its benefits, and that is set out in existing legislation. I am very happy to reiterate again today that I expect the regulators to fully and proactively embrace that principle, which is embedded in statute. That is particularly important, as the Bill confers on them greater rule-making responsibilities. I suspect we will hear from my hon. Friend later on.

I will now turn to Government amendments 8 to 11 —I apologise, but there are quite a lot of amendments to crack on through. Clause 6 already enables the Treasury to exempt regulators from the statutory requirement to consult on rules when they are replacing retained EU law repealed by the Bill without making material changes. Amendments 8 to 11 go further. They create a blanket exemption from the statutory requirement to consult in situations in which the regulators remove EU-derived rules from their rulebooks without replacement. The amendments also allow the Treasury to exempt the regulators when they are amending EU-derived rules or replacing retained EU law in their rulebooks, and when the only material effect of the change is to reduce regulatory burdens. That ensures that the regulators can take that proportionate approach to consultation, accelerate the repeal of retained EU law, and not let the requirement to consult be an obstacle or delaying factor. It is a long time since the British people voted for Brexit, and it is time to start delivering those benefits. Nothing in the amendments changes the obligation on the regulators to act to advance their statutory objectives, so any reduction in regulatory burdens must be compatible with those objectives.

Let me briefly cover the two remaining Government amendments, and I will then move on. New clause 20 ensures that a new type of fund vehicle currently being explored—the unauthorised contractual scheme—would be commercially viable if it were introduced. The proposed fund has the potential to improve the competitiveness of the UK by filling a gap in the UK’s existing fund offering and supporting the domestic growth agenda by facilitating greater investment in UK real estate by UK funds. Amendment 17 is a minor and technical amendment to rectify an inadvertent omission in drafting.

I will now address the amendments tabled by other Members. I am conscious that I am speaking before Members have had a chance to introduce their amendments, so I look forward to responding in more detail, where necessary, at the end of the debate. Let me start with the important issue of access to cash. I represent a rural constituency with a higher-than-average proportion of elderly and vulnerable residents, so I am acutely aware of the very real concerns around this topic. As of today, there remains extensive access to cash across the UK as a whole—over 95% of people live within 2,000 metres of a free cashpoint. I want to be clear that it is not acceptable for people to have no option but to travel large distances or pay ATM fees to access their own money.

If hon. Members have a concern in their local area, as I know many have, I strongly recommend that they reach out to LINK, which is leading the industry-led initiative to see what can be done to help constituents. LINK is delivering, for example, a new free-to-use ATM in the Pollards Hill estate in the constituency of the hon. Member for Mitcham and Morden (Siobhain McDonagh)—I have already made a commitment to her to visit and open it.

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[Peter Grant]

Thank you, Madam Deputy Speaker. I am pleased to speak on behalf of the Scottish National party in this afternoon’s debate, and I find myself in a strange position: after welcoming the new SNP leader last night, it is quite possible that, having stood up from the Front Bench, I might be sitting down on the Back Benches. It is a strange experience for me, but it has been quite common on the Conservative Benches for most of this year.

Colleagues who served on the Bill Committee will know that I had to miss most of its considerations for family reasons, and I want to place on the record my thanks to my hon. Friend the Member for West Dunbartonshire (Martin Docherty-Hughes), who unhesitatingly took on my share of the work on the Committee as well as his own. By all accounts, from what I have heard from Members of all parties, he did so very well. None of them said that he did it better than I would have done, although quite possibly he did.

We have well over 60 new clauses and amendments in front of us today, and we are not going to do justice to 10% of them—that is the nature of the way this place operates. I am also well aware that since we started the Committee deliberations, only three parties have had the chance to contribute, and I think it is only fair—I hope it is possible—that that balance be addressed later today. Other parties have voices and constituents, and the voters and constituents who do not like the governing party have a right to have their voices heard in the debate, which will be the only chance that they get.

I intend to simply restate the SNP’s position on the main themes of the Bill, as an indication of where we stand on most of the amendments. I will mention some specific amendments, but I hope that my comments will give an indication of which ones we support.

We recognise that there is a need for a complete overhaul of the UK’s financial services regulatory framework, although possibly in a slightly different direction from where the Government want to take it. For example, I have long argued that the Financial Conduct Authority does not have enough powers or resources. It has to be said that sometimes it does not seem to have the desire to take swift and effective action to stop frauds before they happen, and sometimes it does not have the power to compensate victims afterwards.

The SNP continues to have severe reservations about forcing regulators to put international competitiveness on an equal and sometimes higher footing than their actual regulatory responsibilities. There is a potential and very clear conflict of interests between being responsible for regulating the conduct of organisations and being responsible for helping them to become profitable. There are ways that companies can become more competitive that are quite clearly helpful to the public interest, and there are ways they can do it that are neutral to the public interest. There are also ways that a company can become more competitive that are extremely damaging to the public interest—for example, look at the way P&O treated its workers a few months ago. That made the company more competitive, but it was clearly against the wider public interest.

The regulators should have clear responsibilities on matters such as financial stability, consumer protection, fraud prevention and climate change objectives. On climate change objectives, I will not shilly-shally and make excuses; I will support new clause 25 if the House divides on it.

The Government have missed the chance—although from the Minister’s comments, I think we can assume that they have deliberately ignored the chance—to put financial inclusion at the heart of the Bill, so we will support amendments that address that. My understanding is that the official Opposition will press new clauses 2 and 7 to a Division today and we will certainly support them. As has been mentioned, free access for people to get their cash out of the bank is important and has to be available as a legal right, not simply as a by-your-leave on behalf of the banks and other financial institutions. I share the suspicion that if the amendments had not been tabled and if the banks had not known that those were coming, they would not have been nearly so keen to adopt voluntary codes of practice, and so on. We will also support new clause 23, which will force the FCA to give much more recognition and priority to the requirement for greater financial inclusion.

As I mentioned, we welcome the Bill’s anti-fraud measures, but they do not go nearly far enough. The Bill is hardly even present-proof, never mind future-proof. It is almost as though we are finally catching up to legislate, at the end of this year, for last year’s scams, and we are failing to notice that the bad guys and gals have designed new scams for this year and are already working on next year’s. For example, I welcome the fact that the Bill will give the Payment Systems Regulator a duty to improve the reimbursement of authorised push payment scams, but the same provision will not be carried over to the victims of crypto-scams, pension scams, investment scams or various others.

We will support new clause 1, as well as new clause 36, if that is pushed to a vote. New clause 36 emerged from a conversation between Public Accounts Committee members after we took evidence recently on the Government’s record on tackling fraud. A lot of us were struck by the fact that we knew, but had never really thought about, the fact that nobody has any idea of what the real level of fraud is in the United Kingdom, because, too often, financial institutions have a self-interest in choosing to cover it up rather than to report it. We know that 40% of reported crime in the United Kingdom is fraud, and the proportion is probably higher than that because a lot of the frauds against individual institutions are covered up rather than reported.

I am grateful to the hon. Member for Sheffield, Hallam (Olivia Blake) for taking the time and trouble to introduce that new clause. If, as I strongly suspect will happen, the Government say that they are not against the principle but that they do not like the way in which it has been drafted, I hope that they commit to introducing a similar amendment in the other place in due course.

I remember—I think a lot of Opposition Members do—that not that long ago, the Tories were very enthusiastic about the idea of forcing people, including Members of Parliament, to report cases of suspected illegal immigration. It will be a real test and give a real indication of how seriously the Government take the damage that fraud causes to all our constituents if they refuse to even consider a similar requirement to report cases of suspected fraud.

The final serious concern that we have about the Bill, as with several other Bills that we have seen being rammed through this place, is the relentless drive to become as different as possible from the European Union, just for the sake of it. Although I do not know whether amendments 8 to 11 will be voted on tonight, had the Government submitted those as new clauses in Committee, or had they been part of the Bill as published, it is almost certain that we would have opposed them.

It will come as no surprise that, on behalf of the people of Scotland, the SNP will resist any attempt to drag us further from our European friends and neighbours than we already are. We make no secret of our intention to keep our country in a position where the restoration of our independence will be followed as swiftly as possible by our restoration to our rightful place as a sovereign nation in the EU. We want the transition back into EU membership to be as easy as possible, so we want that to be from the starting point of being as close to alignment with the EU as we can be.

This morning, an opinion poll showed support for Scottish independence at 56%—by jings! The new leader of the SNP group has fairly made his mark, has he not? Fifty-one per cent. would vote SNP in a Westminster election; that is even more than the landslide that we had in 2015. That increases to 53% if, as the SNP intends, the Westminster election becomes a de facto referendum.

The prospect of Scotland applying to rejoin the European Union as an independent nation within the next few years is not just a fanciful idea, nor is it just likely; it is now highly probable and is rapidly becoming a certainty. We have to act in the best interests of the people of Scotland by making sure that after independence we remain as close as possible to our friends and neighbours in the European Union so that our transition back to European Union membership can be as swift and smooth as possible.

When we rejoin the European Union, it is very likely that central Scotland will immediately become its second biggest financial services centre. It matters to our economy to be able to get back into the European Union with as little fuss and disruption as possible. For that reason, the future of our financial services sector lies not in isolationism from the Government, but in internationalism through membership of the European Union.

[Several hon. Members rose—]

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[Peter Grant]

I endorse and share the thanks of both the previous speakers to all those who have helped the democratic process to happen. Obviously, we are not particularly happy about the results of some of the votes, but that is what happens in life. If we go back to the day before this Bill got its First Reading, we will see that the six Treasury ministerial posts have been held by 21 different people. Who knows, we might have the same Minister on the Front Bench by the time the Bill comes back from the Lords, but I would not bet on it.

Among the people I want to thank personally are my very good and hon. Friend the Member for West Dunbartonshire (Martin Docherty-Hughes), who did such a power of work on his own in the Bill Committee, and someone who will not be a well-known name to most people here, although those of us who know her will understand she has been an absolute star, and that is Sarah Callaghan of the SNP research team. She joined a very good research team not long ago and she has been a fantastic support to me and my colleagues in preparation for this Bill, so I say thanks to Sarah.

I thank the Minister for the courtesy he has shown throughout political debates in which we have not always agreed, but in which I hope we have always been able to be courteous to each other. We will not oppose the Bill; we have reservations about it, but on balance it is just about good enough to get through.

[Madam Deputy Speaker (Dame Eleanor Laing)]

I pause, lest there be further excitement—but no.

Question put and agreed to.

Bill accordingly read the Third time and passed.