Financial Services and Markets Bill

Sarah Olney Excerpts

2nd reading
Wednesday 7th September 2022 Commons Chamber

[Sarah Olney (Richmond Park) (LD)]

It is a pleasure to take part in this debate. First, I would like to welcome the Minister to his position and wish him a long ministerial career. It is a privilege to take part in this debate with so many well-informed Back Benchers, which I would say has been a real feature this afternoon.

The Liberal Democrats welcome this Bill. Obviously, it is absolutely essential for the ongoing regulation of financial services and markets in this country, and we very much welcome the majority of its provisions. As the hon. Member for Salisbury (John Glen) mentioned, it is a very big Bill. It has 330 pages, and it is clearly the result of a great deal of hard work over many months by many individuals. However, I have to say that it is disappointing, given the flexible nature of the financial services industry and the fast-moving nature of the sector, that this Bill does not go further in anticipating some of the issues we think we will be experiencing. It was interesting to hear from the hon. Members for Walthamstow (Stella Creasy) and for Blaenau Gwent (Nick Smith) about some of the issues they are already experiencing in their constituencies—of course, those issues are not just confined to the ones they represent—that the Bill does not address, and I want to come on to a couple of those.

The main aim of the Bill is to establish a new regulator, and the role of regulators has come under microscope quite a bit over the summer. We have seen, for example, that Ofwat does not have powers to stop sewage being pumped on to our beaches and that Ofgem does not have powers to prevent massively increasing fuel bills for domestic consumers or businesses. I think it has come as something of a surprise to many of our constituents that the role of regulators currently in this country is perhaps not as extensive as they thought. I know that certainly many of my constituents will be expecting a regulator of financial services to have powers that go beyond what is provided for in this Bill.

I am particularly concerned about the focus on competitiveness, which has already been raised by the hon. Member for Brighton, Pavilion (Caroline Lucas) and others, at the expense of other statutory objectives, and I very much want to endorse what she said about the importance of reflecting net zero objectives. Indeed, this would be an excellent opportunity for the Minister to say a little more about that, perhaps in his concluding remarks. For all his many faults and failings, the previous Prime Minister was a massive champion of the net zero agenda. During the summer we heard some interesting signals from the new Prime Minister about her approach to that issue, and this is a great opportunity for the Minister to place on record that the new Prime Minister, and this new Government, will have the same commitment to those net zero objectives, and perhaps to talk more about why we do not see them enshrined in the Bill.

What concerns my constituents is that consumer protection is not as much of an important issue in the Bill as the strategic objective on competitiveness. We have talked already about fraud and scams, which are causing huge harm throughout our economy. I will not say too much about cryptocurrency, but there is no doubt that the landscape of crypto offers unseen, untold opportunities for future fraud, and we must get our heads around that. Fraud is causing huge harm to individuals and our economy, and current structures for tackling it are not fit for purpose.

I am surprised when I hear from constituents who have been victims of fraud, because it is not just vulnerable people or those who perhaps lack education, or older people who are not used to online banking; this issue affects vast swathes of people, and I am often surprised by how well educated, experienced professionals become victims of fraud. It is clear that we are not yet sufficiently on the side of the consumer in tackling it. Yes, there is always an element of buyer beware, but the scales are being tilted too far in favour of the fraudsters, and we need to be doing much more to give people powers to tackle that. I welcome the measures to tackle push payments, but I would like to see a great deal more about fraud. That is not just an existing and growing threat because, as I said, the prospect of threats in future is enormous. The onus is not just on the individual to protect themselves, because I do not believe they have sufficient powers to do that.

A further area of concern is access to cash. Much has been said about that already, so in the interests of time I will merely endorse what the hon. Members for Cleethorpes (Martin Vickers), for Mid Derbyshire (Mrs Latham) and for Edmonton (Kate Osamor) have already said. I particularly want to emphasise free access to cash. Obviously, rural and remote communities have particular needs, but the hon. Member for Edmonton summed it up well when she said that urban constituencies can also be poorly affected by that issue. I support the proposed community banking hubs, but currently their creation requires buy-in from existing banks, and we need something that can be independent of that.

In conclusion, the Liberal Democrats very much welcome the Bill, although we would like to see stronger powers to tackle fraud and more on access to cash. A point was made at the beginning of the debate about regulators. A regulator’s powers are granted by Parliament, which is why it is so important that Parliament has power to hold a regulator to account. The real weakness of the Bill is that so much is being delegated to secondary legislation that will not have scrutiny or oversight. As I said, we want to be at the forefront of financial services and their development. It is a fast-moving sector, and we in this country have the skills and experience for it to continue to be a key sector. However, it is vital that Parliament has the oversight that it needs regarding the set-up and ongoing activities of the regulator, and the Bill must be strengthened to ensure that.

[Several hon. Members rose—]

Financial Services and Markets Bill

Sarah Olney Excerpts

Report stage
Wednesday 7th December 2022 Commons Chamber

[Richard Fuller]

I am afraid I cannot give way because of your desire to get on, Madam Deputy Speaker, which I completely agree with.

Amendments 1 and 4 bring in the importance of transparency for those two regulators, the FCA and the PRA. We do not want to see regulators going away into a secret room, not telling anyone what the cost-benefit analysis is, and then coming out and saying, “We’ve decided it is X.” We need true transparency on their deliberations and on the opinions that they have received. I am very specific in those amendments.

The hon. Member for Hampstead and Kilburn (Tulip Siddiq), the shadow spokesperson, who is not in her place, spoke about her concerns about the intervention power, which I think she completely mislabelled as a dangerous thought—I think it is a fairly reasonable thought. In her absence, I will just say to those on the Opposition Front Bench that what looks good in an era of declining yield curves and quantitative easing in a democratic country may look differently in an era of rising yields and quantitative tightening.

My amendments are quite specific. The Minister has been supportive throughout the process and I look forward very much to hearing his conclusions in his summing-up.

[Sarah Olney (Richmond Park) (LD)]

The Liberal Democrats recognise the importance of good regulation. Well-designed, effectively administered, properly enforced regulation creates a level playing between competitors and instils confidence in consumers and players in all markets. As the Liberal Democrats’ Treasury and business spokesperson, I have spoken to many businesses in many sectors, including in the City, and I have not found anywhere an appetite for the sweeping away of regulations often advocated by Members on the Conservative Benches. Everywhere I hear calls for effective regulation, properly administered.

[Andrew Griffith]

Would the hon. Lady be able to identify any Member of this House who has talked about the merits of sweeping away regulation? That is not the position of the Government.

[Sarah Olney]

With respect, I did not say it was the position of the Government, but the Minister cannot deny that it has been advocated for on many occasions during the referendum campaign and on many occasions since. I think he is being disingenuous.

Although the Liberal Democrats welcome some aspects of the Bill that will update the regulatory framework for financial services, we remain concerned by the lack of accountability of the regulators to Parliament and by the potential impact of this Bill on financial stability. The Government have described this Bill as a once-in-a-generation opportunity to reshape financial regulation, but as currently written the Bill lacks ambition and inspiration. In particular, it is a missed opportunity to create a regulatory framework that turbocharges the green agenda and strengthens protections for victims of fraud.

My fundamental concern with the drafting of the Bill is how it undermines the role of Parliament while extending significant new powers to both regulators and the Treasury. As ever, the devil is in the detail, which will be largely hidden within secondary legislation that will not receive parliamentary scrutiny or oversight. Accountability and transparency are the cornerstone of effective regulation. It is vital that those principles are upheld to maintain national and international confidence in the UK’s financial services sector and to improve the operational performance of regulators.

The Bill did not previously contain sufficient powers to require the regulators to report on their performance against their objectives. I am therefore pleased that the Government have made some steps towards improving accountability and transparency though the addition of new clause 17. However, the new clause still does not go far enough in establishing parliamentary oversight of the regulators. Regulators’ powers are granted by Parliament, and that is who they should be accountable to—not to a Minister who may only be in place for a matter of weeks.

I remain concerned that the new statutory objective on international competitiveness could increase risk-taking in the financial services sector. We do not need to be reminded of just how damaging that sort of behaviour can be. I am particularly concerned that the secondary objective of competitiveness will negatively impact the regulator’s delivery of its primary objective of ensuring financial stability.

Our amendments (a) and (b) to new clause 17 would place additional requirements on the regulators to report on the delivery of their objectives, including with an assessment of the impact of the Bill on financial stability. If the last few months have proved anything, it is that volatility in financial markets has a very real and direct impact on households, so I urge the Government to think about how the Bill can be strengthened to ensure that financial stability remains at the forefront of regulators’ activities.

I am pleased to see that a number of amendments on green finance have been tabled, but it is disappointing to see the Conservatives’ lack of ambition in that area. We have such an opportunity to be a leading global centre for green finance, but the Bill does nothing to facilitate that. There is an increasing appetite among investors to support the green transition, but British businesses often struggle to access the green capital they need. New clause 33, tabled in my name, would place a requirement on the regulators to report on ways in which they have promoted and incentivised green finance and green investment. Time is running out for us to lead the world on this, and I urge the Government to commit to a green finance strategy and to start thinking seriously about how a regulatory framework can mobilise green finance.