Financial Services and Markets Bill

Stella Creasy Excerpts

2nd reading
Wednesday 7th September 2022 Commons Chamber

[Richard Fuller]

The hon. Lady tempts me to talk beyond what is really the responsibility of the Government. She is raising questions that are correctly and appropriately for the parliamentary authorities to respond to. On her more general point about whether the system is correct to rely on the regulatory framework that was established in 2000, I think the answer is absolutely yes. As I have just mentioned, it provides the ability for an agile, pro-growth, competitive set of financial services regulations, and I believe that Parliament itself is capable of providing that democratic oversight over the regulators. If she is concerned about that, I encourage her to take it up with the parliamentary authorities in the usual way.

So I welcome the Treasury Sub-Committee. I have said that ultimately it is for Parliament to determine the best structure for the ongoing scrutiny of financial services regulators. The Bill also includes a new power for the Treasury to require the regulators to review their rules when that is in the public interest. Following any such review, the final decision on potential action would be for the regulators to make.

Following the repeal of retained EU law, the Government will have no formal mechanism to bring public policy considerations directly into rule-making. It is right for the democratically elected Government of the day to be able to intervene in a matter of financial services regulation where there are matters of significant public interest. The Government’s intention is therefore to bring forward an intervention power that will enable Her Majesty’s Treasury to direct a regulator to make, amend or revoke rules where there are matters of significant public interest. The Chancellor will take a final decision on the precise mechanics of the power and the Government will table an amendment in Committee.

Let me now turn to the Bill’s second objective: bolstering the competitiveness of UK markets and promoting the effective use of capital. I have already spoken about the improvements to the UK’s regulation of secondary markets in this Bill through reforms to the MIFID framework in the wholesale markets review. These changes will lower costs for firms and align our approach with that of other international financial centres such as the United States. To improve the smooth functioning of markets, we will introduce a senior managers and certification regime for key financial market infrastructure firms. We will expand the resolution regime for central counterparties to align with international standards, and enhance the powers to manage insurers in financial distress.

The next objective of the Bill is to strengthen the UK’s position as an open and global financial hub. Outside the EU, the UK is able to negotiate our own international trade agreements, including mutual recognition agreements—MRAs—in the area of financial services. The Government are currently negotiating an ambitious financial services MRA with Switzerland. Clause 23 enables the introduction of any necessary changes through secondary legislation to give effective to this and to any future financial services MRAs. Schedule 2 contains measures that enable the United Kingdom to recognise overseas jurisdictions that have equivalent regulatory systems for securitisations classed as simple, transparent and standardised, allowing UK investors to diversify their portfolio while maintaining the level of protections they currently enjoy.

The Bill takes the UK further forward as a centre for financial markets technology. Clause 21 and schedule 6 extend existing payments legislation to include payments systems and service providers who use digital settlement assets that include forms of crypto-assets used for payments, such as stablecoin, backed by fiat currency. This brings such payments systems within the regulatory remit of the Bank of England and the payments system regulator, allowing for their supervision in relation to financial stability, promoting competition and encouraging innovation.

To foster innovation, clauses 13 to 17 and schedule 4 enable the delivery of a financial markets infrastructure sandbox by next year, allowing firms to test the use of new and potentially transformative technologies and practices that underpin financial markets, such as distributed ledger technology. In parallel, the Bill promotes the finance sector’s resilience by allowing the financial service regulators to oversee the services that critical third parties provide to the sector.

Let me turn to the Bill’s final objective, which I know will have the commendable focus of colleagues throughout the House: the promotion of financial inclusion and consumer protection. The Government will continue to foster an industry that supports everyone so that individuals do not feel left behind by the rapid advancement in financial technology. There is an extensive programme of ongoing work related to consumer protection, especially in the areas that were legislated for in the Financial Services Act 2021, such as buy now, pay later agreements and the FCA’s rules on the consumer duty.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

The Minister is relatively new to his role, but he cannot help but be aware that it is now almost two years since this House recognised the real threat to our constituents’ bank balances posed by buy now, pay later and its lack of regulation. There is agreement throughout the House that these legal loan sharks must be regulated. The Minister may say that this is a complex policy area, but political will and the cost of living crisis demand fast action. Why is the necessary regulation not in the Bill? It could have been the perfect vehicle, ahead of Christmas, when these companies will profit again, to act to protect our constituents.

[Richard Fuller]

The hon. Lady is right to talk about the urgency and complexity of the issue. She understands that it is complex and will invigorate us all to move as quickly as possible. I note that even as recently as 19 August the FCA has followed up with the buy now, pay later companies to remind them of the rules that they have to operate under, and that the Government have committed to bring forward the consultation on the draft legislation before the end of the year. I look forward to discussing matters further with the hon. Lady.

The 2021 Act made legislative changes to support the widespread offering of cashback without a purchase by shops and other businesses. Clause 47 and schedule 8 go further and give the FCA the responsibility to ensure reasonable access to cash across the UK. The FCA will have regard to local access issues and a Government policy statement on access more generally. The Treasury will designate banks, building societies and cash co-ordination arrangements to be subject to FCA oversight on this matter.

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[Damian Hinds (East Hampshire) (Con)]

I welcome this ambitious piece of legislation. It is quite right that for a country and an economy such as ours, in which financial services play such a key role, we should be able to set UK-specific financial services regulation. I very much welcome the reframing of the regulatory objectives around long-term growth and international competitiveness. I want to speak to two specific aspects of the Bill that fall under “other miscellaneous provisions” but are nevertheless incredibly important: credit unions and compensation for the victims of fraud.

I turn first to credit unions, and in particular their role in financial inclusion and providing an alternative to high-cost, sub-prime lenders. Last night, I happened to be flicking through a well-thumbed copy of Hansard and looked at a debate from January 2014—hon. Members will remember it—when we were discussing payday lenders and the problems associated with them. We have come a long way since then. I think it is important sometimes to look back and say, “Where has regulatory change made a big difference?” We have had: the CMA report; the new FCA regime, including on payday affordability checks, roll-overs and restrictions on advertising; the measures on continuous payment authority, which I remember the hon. Member for Walthamstow (Stella Creasy)—no doubt, she would have wanted me to say this—championing so strongly; the cost of credit cap; and, most recently, the new FCA consumer duty.

More broadly, the Government put financial education on the national curriculum and, of course, supported credit unions with a commitment of up to £38 million for their development and further regulatory liberalisation.

[Stella Creasy]

I acknowledge what the right hon. Gentleman is trying to point out. However, does the evidence not show that it was the intervention of the financial ombudsman service that led to the downfall of companies, such as Wonga and Amigo, that were exploiting our constituents, rather than the intervention of the FCA, which oversaw unaffordable lending on its watch? Does that not show us why we need further FCA reform? It is the opposite of the point that he is making.

[Damian Hinds]

The hon. Lady makes an important point. It would be wrong—I am sure she did not mean to say it, even though it is what she just said—to say there was a single cause for those things. In fact, it is about changing the entire framework. In other parts of the market, for example home credit, there is a different set of reasons again why there has been a decline. We know the sub-prime segment shapeshifts the whole time, and we have also seen the recent growth of buy now, pay later. At a time of heightened financial stress, it is inevitable that new risks and new vulnerabilities manifest.

Wise heads always remind us that in seeking to curb the parts of the high-cost lending market that we do not like, there is always a danger that we instead push some part of that customer base into the arms of a high-cost lender whose idea of a late payment penalty is a cigarette burn to the forearm, so we must get the balance right. Regulation has been a success, but ultimately what we need is an alternative, because credit does form a part of people’s lives, and that is where credit unions and others, such as community development financial institutions, come into play.

We have seen development in the sector, but I would like to see a lot more. We have a great example in Northern Ireland—and indeed in the Republic of Ireland—of what a much more developed credit union sector can look like, and I would like to see that in mainland Britain. The proposals in the Bill will continue that development, amending the Credit Unions Act 1979 to allow for conditional sale and hire purchasing agreements to be undertaken by credit unions, along with the marketing of insurance services. I would only encourage the Government to go further, because our credit union sector is still small in Great Britain compared to Northern Ireland and there is much more that can be done. There is also more that can be done on CDFIs, whose growth, frankly, has been disappointing.

I encourage keeping an open mind on the regulatory aspects of the Bill. I do welcome the measures, but while the 3% per month interest cap is very reasonable, in some parts of financial services it is difficult to break even on that cap. Ironically, the demise of the market leader of the home credit business sector makes it more urgent for us to ensure there is very good provision from credit unions and other responsible lenders in its wake.

The other issue I want to comment on briefly is the provisions on authorised push payment scams and mandatory reimbursement. This gives me the opportunity to join others in the nice things they have been saying about my hon. Friend the Member for Salisbury (John Glen), the former Economic Secretary to the Treasury. I had the opportunity to work with him when I was Security Minister and he was bearing down on the awful growth in fraud. We have not just seen that growth in this country. Fraud and economic crime have been growing in countries throughout the world. There is a change in crime, and we need to respond accordingly. I welcome the change in the Bill, because it brings consistency and fairness and will enhance confidence for people using online financial services. One should never take away all responsibility from the consumer, of course, but that is a welcome move.

Very briefly, there are two things I would like the Government to look at, one for the Treasury specifically and one for the wider Government. First, for the Treasury, it is not clear to me why this provision applies just to the faster payment system. It is true that the vast majority of scams happen through faster payments, but they may not in future. It is right that the regulator should have the ability at least to extend that scope.

Secondly, a bigger point—not for my hon. Friend the Economic Secretary, he will be pleased to know, but for others in Government—is that we should extend the principle beyond the banks. It is difficult to get sympathy for banks and bankers, but right now they are bearing the entirety of the burden even though they are just the last link in the chain of the scam. They have responded very well, partly through regulation on such things as strong customer authentication and so on, but also by going further off their own bat. I think that is partly to do with their moral commitment to their customer base, but it is also about the liability they face through the contingent model. One wonders whether, if social media platforms, telecoms companies and others had had those same incentives, we might already have a lower level of fraud than we have today.

Save for those two encouragements to my hon. Friend the Minister for the Government to look at going further, I strongly welcome the Bill and all he is trying to do.

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[Stella Creasy (Walthamstow) (Lab/Co-op)]

I do not want to disappoint my colleagues on the Government Benches, but I think that they know the issue on which I wish to focus in the time that is available to me. Before I start, I want to put on record, as a Co-operative and Labour MP, my support for the comments of my Labour colleagues on the importance of access to credit unions and of access to cash, which reflects the issue that I want to raise, particularly with regard to high-cost credit regulation.

I also wish to put on record some scepticism about the idea that there are wonderful opportunities as a result of Brexit. To my mind, there are simply problems that we will need to address, and I note that the former Minister, the hon. Member for Salisbury (John Glen), talked about the unlikelihood of a derogation from the existing regulations. Some may wonder whether this is the best use of parliamentary time, but I am willing to look at the legislation.

There is a genuine philosophical disagreement here about the concept of consumer protection. It is the lesson of high-cost credit regulation in this country that I do not think this legislation learns and it is our constituents who will pay the price.

Let me start by highlighting the points of agreement. I agree with the right hon. Member for East Hampshire (Damian Hinds) when he talks about this as an industry that is shape shifting—that it evolves to meet the times that it faces. Let me also put on record my appreciation of the work of the former Minister, the hon. Member for Salisbury. He and I have had many discussions about this industry and how best to address the threat that it poses to our constituents. Although we may not have agreed all the time, I have certainly respected the fact that he has been listening and looking at the evidence.

I am here today as a Cassandra, a broken record, to warn again of these industries and the latest antics of the companies, particularly the buy now, pay later lenders. Two years ago, we started to say that those lenders must be regulated, and I would argue that that was probably 18 months too late from recognising the threat that they pose.

The lessons of payday lending, guarantor lending and hire purchase agreements show that we simply cannot wait until the harm is evident among our constituents, especially when the abuse that is coming is self-evident already. Now that we are in a cost of living crisis, such caution is frankly unforgiveable, because it is our constituents who are paying the price. I hope that we can return to this matter in Committee. I am sure that the Minister now dealing with this Bill will recognise that, especially as the £1.8 billion that this country owes in personal debt—a rise of £62 billion—has not come from nowhere. Credit card borrowing in this country has jumped at its fastest rate in the past 17 years as people deal with the cost of living crisis.

When a third of households with children are cutting back on food to be able to pay their bills, it does not take a rocket scientist to work out that too much month at the end of somebody’s money and mouths to feed mean that credit must be found, and our constituents are turning to the high-cost lenders in their droves. I would be surprised if Members do not know what buy now, pay later is, because it is on every single website in this country now as a result of the delay in action. It has massively exploded as a result of the pandemic and now the cost of living crisis. Those companies are offering the opportunity to spread the payments, but they do not do so out of the goodness of their hearts; they do so because consumers spend 30% to 40% more. Add that toxicity to the way in which people are borrowing now to make ends meet: we are seeing buy now, pay later companies offering to put people’s energy bills onto these processes. We are seeing them offering the loans not for fast fashion, which is where people originally thought this kind of regulation was needed, but for basic goods and essentials. Millions of people in this country are now using this form of credit and getting into a hole that they cannot get out of. Those are not my words; it is what the evidence is now showing us. The previous Minister well knows that the evidence of harm is there. Indeed, that is what the FCA told us more than two years ago.

The average buy now, pay later user is paying off £293 of buy now, pay later debt, but that is at current prices. With inflation rocketing in the way that it is, the only ones that will win from that are those that offer the ability to apparently spread the payments, but that simply gets people into further and further debt. Most of these companies will not be clear with their lenders about the consequences. Indeed, many people do not even realise that it is a form of credit; they just think that they are spreading the payments on the websites.

Shoppers were charged £39 million in late repayment fees on buy now, pay later loans last year. I dread to think what the figure is now. There is agreement across this House that we need to regulate these companies, but what there is not is the political will to make sure that it happens before the pressure points come. We have already been through one Christmas where one pound in every four spent was on buy now, pay later. There are millions of people still paying off those debts. On the regulatory timetable that the Government are talking about, we will not see action before some time late next year. Minister, some time late next year is far too late for our constituents.

[John Glen]

I cannot resist. I think there is great consensus in the House on this matter. It is not a question of a lack of political will; I can assure the hon. Lady that it is about the complexity of delivering that legislation. In fact, the intent’s having been stated will have a meaningful effect on market practices and will change, and is changing, behaviours in the marketplace.

[Stella Creasy]

I thank the former Minister for his intervention, but my question is what that means for consumers. The lack of regulation means that my constituents cannot go to the ombudsman to seek redress if they think they have been mis-sold this form of credit. As people are drowning in buy now, pay later lending, they cannot seek assistance except from the companies themselves. We now see mainstream banks moving into buy now, pay later—the very bank that looks at someone’s account to decide how much they can spread payments and how much more they can afford to borrow, because this is a form of borrowing.

The hon. Gentleman may argue that the market is moving, but constituents need help now, because it is now that they are getting into debts that they cannot get out of. The challenge for us all is that the pace of change is horrifically slow, and that is where the damage to our constituents will come. If we all agree that regulation matters, let us get on with it. Furthermore, let us ensure that some of those basic changes, such as the ability for the ombudsman to intervene, happen.

This legislation shows that that matters, because it was the intervention of the ombudsman that made a difference with payday lending. The evidence is clear; the Financial Conduct Authority was overseeing Wonga while it continued to make loans that were unaffordable to its customers. It was only when the ombudsman intervened that Wonga was finally held to account for its behaviour, and as a result it went bust—and Wonga is not a one-off. Our constituents need proper consumer credit protection.

The Minister will know that it is my belief that there should be a proper credit capping process for all forms of credit, so that we do not have to play whack-a-mole. The right hon. Member for East Hampshire reflected that when he talked about shape-shifting: as one of these companies is regulated, another one comes up. In the intervening period, however, it would be perfectly possible to bring in the ombudsman. If we set out a separate regulatory regime for those companies, we are setting a precedent for other forms of credit to come and ask for separate and, frankly, special treatment.

What our constituents need is clarity about who to go to when they get into trouble. We all tell our constituents to go to a debt adviser, but if they have rights, those rights need to be transparent. At the moment, if people are borrowing on buy now, pay later, they have no rights, because it is not regulated. They only have the indulgence of those companies, and asking turkeys to tell us whether Christmas is a good idea rarely ends in a present for anybody.

It is right that we act as quickly as possible. I do not agree with the hon. Member for Salisbury when he says that the political will is there, because frankly this could have been done a while ago. The timetable that the Government have set out, which does not seek any form of actual intervention until some time in late 2023—and even then, it is about consulting on further measures—simply will not wash. Every Member of this House will have constituents coming to them for whom buy now, pay later debt will be part of their debt make-up, who may have put their mortgage on it, because there are companies offering the opportunity of spreading payments. Little wonder, when after all the Government are telling us they are going to spread our energy bills; the Government proposals to date are a form of buy now, pay later.

I wish I was wrong. I wish I had been wrong about payday lending, but we waited too long, and there are still millions of people in this country who are owed money through the compensation scheme from those payday lenders because we waited too long to intervene. We must not make the same mistake again.

I put the Minister on notice, and I ask for support from across the House, because I do not think this is a party political issue; it is about the pace of change. I will be proposing an amendment to this legislation that will give the Government the same time period of 28 days that the buy now, pay laters give our constituents to bring in that secondary legislation and give our constituents the protection of the ombudsman. It is a necessary and vital measure in a cost of living crisis to ensure that when people who cannot choose between eating or heating—because they cannot afford to do either—turn to buy now, pay later, they are not creating further problems for themselves down the road.

I know that hon. Members across the House agree that this kind of lending is a problem, but it is time for clarity, it is time for simplicity and it is time for that legislation. I hope that I will find supporters on the Government Benches, and I know that we will find supporters in the other place. Above all, I know that our constituents deserve better.

Financial Services and Markets Bill

Stella Creasy Excerpts

Report stage
Wednesday 7th December 2022 Commons Chamber

[Andrew Griffith]

I am happy to confirm that we will pursue it with great urgency, as the Government should be doing with everything in this important domain. Although the Government will not be supporting new clause 11 today, it goes some way to address the issue, so I will look at it as a basis for potentially moving forward. The Bill enables us to do that, so we do not have to do it today. I commend the other amendments tabled in relation to preventing consumer harm.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

The Minister has been talking about the importance of regulation. He will know that one area that is not regulated at all is buy now, pay later, and he will have seen new clause 28 in my name. A poll published today says that 40% of the British public will do their Christmas spending with a buy now, pay later loan. A quarter of those who use buy now, pay later are missing other payments, because they are getting into a cycle of unaffordable debt. We have been talking about regulating these companies for nearly three years now; the Government’s proposals talk about regulation possibly coming in another year’s time. Can he see a way to at least introduce the protection of the ombudsman, so that this Christmas does not leave families with a nasty wake-up call come 1 January?

[Andrew Griffith]

I will try to respond to the hon. Lady’s points further when I sum up, so I can make some progress. We had that debate several times in Committee. We have to be slightly cautious about the unintended consequences of taking into scope a much wider set of transactions that involve an element of deferred payment, but I am sympathetic to her points.

I thank my hon. Friend the Member for Harrow East for raising the topic of a statutory duty of care for consumers. Ensuring that consumers of financial services get the right protection they need remains a priority. The FCA comprehensively analysed the options for improving that, which led to the consumer duty that will come into force in July.

The hon. Member for Bath (Wera Hobhouse) tabled new clauses 34 and 35 to require trustees of occupational pension schemes and fund managers to act in the best interest of beneficiaries, which is indeed the position as it stands today, although I will listen carefully to her points. Trustees and fund managers will be subject to the FCA’s consumer duty, which puts on them a focus of delivering good outcomes for customers.

I turn to amendments relating to frauds and scams. The Bill is a huge step forward in tackling the growing problem of authorised push payment scams. I will be clear that, as I set out in my response to the hon. Member for Hampstead and Kilburn in Committee, the Government are committed to tackling fraud far more widely than in just financial services. She may like to know that the Home Office has now confirmed that a national fraud strategy will be published early in the new year.

Specifically for financial services, UK Finance publishes a half-year fraud update, which sets out how the industry is working together to respond to the fraud threat and to support customers. In relation to the amendments concerning the reimbursement of victims of authorised push payment scams, the payment systems regulator has already signalled its intention to deliver a higher degree of consumer protection.

On sustainable finance, no Government have done more on the climate. We have legislated to reach net zero greenhouse gas emissions by 2050. We support strengthening the UK financial services regulatory regime’s baking in of the climate, as underlined by clause 25, which requires the regulators in discharging their functions to have regard to the need to contribute to achieving compliance with net zero. The regulators will be required to report annually on how they have considered that regulatory principle. That is a significant step in our goal of making the UK a net zero-aligned financial centre, and builds on our green finance and net zero strategies across the whole gamut of regulatory activity. The Government committed to updating our green financial strategy and will announce further information on timing imminently.

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[Sir Geoffrey Clifton-Brown (The Cotswolds) (Con)]

I am grateful to catch your eye, Madam Deputy Speaker.

I congratulate the hon. Member for Blaenau Gwent (Nick Smith) on tabling new clause 10, for which he should receive much of the credit. This amendment has an extremely simple intent in laying a duty on the FCA to report to Parliament 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”—

finally and most importantly—

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

I will now say why paragraph (c), in particular, is so important. The hon. Member has explained clearly why the FCA should regularly report to Parliament, and in my role as deputy Chairman of the Public Accounts Committee, I have constantly urged openness and transparency, wherever possible, so that our constituents can make full and proper judgments on the actions, or lack of them, of regulators such as the FCA.

Like the hon. Member for Blaenau Gwent, I will give the House an example. The PAC inquiry that we held in April and June this year highlighted the plight of some 2,000 of the 7,700 British Steel pensioners who in 2019 suffered significant financial shortfalls because of the wrong advice given by a significant number of independent financial advisers who advised pensioners to opt out of their valuable defined-benefit pension schemes. To add further insult to injury, the actions by the regulator caused a number of independent financial adviser companies to go out of business or merge with others, and therefore the compensation that pensioners received rightly was capped. I know this is a complicated subject but both the hon. Member and I are using it as an egregious example of why the FCA needs to be more accountable to Parliament and our constituents. This amendment stems from recommendations 5a and 5b in the PAC report “Investigation into the British Steel Pension Scheme”, published on 21 July:

“The FCA should be more proactive and consumer-focused in its engagement with stakeholders. It should have a better mechanism for responding to consumer harms and collect more evidence on a regular basis to pick up on issues that are being raised, especially from emerging risks in financial markets…The FCA must also review how effective the Financial Services Consumer Panel is at consumer protection and how it influences policy debates within the FCA from a consumer angle.”

The hon. Member and I have had discussions with the Economic Secretary, who is on the Front Bench today, and I believe he is sympathetic to the principle that the FCA needs to be much more accountable. If that is the case, I very much hope that he will concede the principle of this amendment and incorporate it as a Government amendment in the other place. Neither the hon. Member nor I wish to be prescriptive about how or when this reporting should take place to Parliament; that is a matter for the Government.

No financial institution will ultimately exist without its consumers. The whole point of the FCA as a regulatory authority is to protect their interests. Rather than having to work through long and complicated reports, there needs to be clear, easily available information on what regulators are doing, or not doing, on their behalf. All of this requires a fundamental shift in the regulator’s—the FCA’s—attitude to the consumer and a commitment to engage more when things go wrong.

Finally, I want to comment on the fraud aspects of the Bill. The PAC recently conducted an inquiry on fraud and discovered that 41% of all reported crime in June was accounted for by fraud, up from 30% in 2017, yet just 1% of police resources is being devoted to fraud crimes. So we urgently need to see the Government’s new comprehensive fraud strategy.

[Stella Creasy]

I rise to add my wholehearted support to the comments of my hon. Friend the Member for Kingston upon Hull West and Hessle (Emma Hardy), to new clause 7, to my Front Bench, and indeed to the points made by the hon. Member for The Cotswolds (Sir Geoffrey Clifton-Brown): many of us have had concerns about the FCA and its ability to represent consumers for many years, and it is good to see that work being done.

I shall focus on new clause 28. The bridge of the Titanic received seven warnings about icebergs. It was told exactly where the iceberg was, but on hearing those warnings it varied the direction of travel by one or two degrees yet kept going full steam ahead. The visible iceberg was 50 to 100 feet high and 200 to 400 feet long, yet still they ploughed into it. It does not take a rocket scientist to recognise that we have a personal debt crisis in this country with a cost of living crisis, that our constituents are struggling because there is too much month at the end of their money, and that those who make their money from those who are struggling are licking their lips.

This Bill is about financial regulation yet one of the most pernicious legal loan sharks is the buy now, pay later industry. The pool in which they fish is wide. This country has £205 billion-worth of consumer credit lending to account for, up £482 million on the previous month. People are borrowing not just to pay Peter and Paul, but to pay for their mortgages, to put food on their table, petrol in their car and clothes on their children’s backs. Let me be clear: I do not stand here with a hair shirt on saying nobody should borrow, but in that environment, when our constituents are being exploited by these companies, it is absolutely right to regulate them and protect our constituents, yet that is not what is happening here.

For nearly three years we have been warning the Government on the need to act on legal loans harks and the buy now, pay later companies—those warnings that came to the bridge of the Titanic. The Klarnas, the Laybuys and the Clearpays are the companies whose names we see when we go to check out online. They account for 6% of all online spending in the UK, and that is expected to double in the next two years. High thousands of reputable retailers have them on their websites. They have them not to help people to spread their payments as the companies claim, but because people spend on average 30% to 40% more if they use buy now, pay later.

But what people are telling us very clearly is that they are spending money they do not have. A quarter of all buy now, pay later users have been unable to pay for at least one essential because they are having to make repayments on buy now, pay later products. Some 25% of users have also missed a payment or made a late payment on a buy now, pay later loan in the last 12 months.

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[Andrew Griffith]

I will not give way to my hon. Friend this time.

To conclude, financial and related professional services play a crucial role, as we have heard from many speakers. They contribute nearly £100 billion in taxes and, as my right hon. Friend the Member for Chelmsford reminded us, that pays for more than the cost of the salaries of every nurse in this country. The Government have an ambitious programme for an open, outward, sustainable, technologically advanced and internationally competitive sector that will unleash the most opportunities not just for those who work in it, but for communities across the United Kingdom.

[Stella Creasy]

I am sorry to interrupt the Minister in his final flow, but he did promise he would give me a direct answer. With 40% of people saying they are going to put their Christmas spending on buy now, pay later loans, and they have no regulatory protection, what is going to do to help them this Christmas?

[Andrew Griffith]

The hon. Lady knows from our conversations in the Bill Committee our ambition to look again afresh at the regulations in the consumer credit market. That is outwith this Bill, but it is a commitment that remains and that we will bring forward at the earliest opportunity.

Do not underestimate the power of this Bill. This is an unlock for our financial services. This is the start of delivering our Brexit freedoms. It is giving us back the opportunity to make ourselves competitive—a more prosperous economy, jobs for our children and grandchildren, tax revenues that will pay for our high-quality services, and higher GDP growth. All of that is contained in this Bill, at the same time as protecting the consumers that Members opposite talk about, and delivering on the ambition to put this on the statute book.

Question put and agreed to.

New clause 17 accordingly read a Second time, and added to the Bill.

6 pm

Proceedings interrupted (Programme Order, 7 September).

The Deputy Speaker put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83E).

New Clause 18

Composition of Panels

‘(1) FSMA 2000 is amended in accordance with subsections (2) to (8).

(2) After section 1M (FCA’s general duty to consult) insert—

“1MA Composition of Panels

(1) A person who receives remuneration from the FCA, the PRA, the Payment Systems Regulator, the Bank of England or the Treasury is disqualified from being appointed as a member of a panel established under any of sections 1N to 1QA or 138IA.

(2) Subsection (1) does not apply in respect of a panel mentioned in that subsection if regulations made by the Treasury provide for it not to apply to that panel.

(3) Regulations under subsection (2) may make provision in respect of a panel—

(a) generally, or

(b) only in relation to such descriptions of persons or cases as the regulations may specify (but the power to make such regulations may not be exercised so as to specify persons by name).”

(3) In section 1N (FCA Practitioner Panel), after subsection (5) insert—

“(6) Subsections (4) and (5) are subject to section 1MA.”

(4) In section 1O (Smaller Business Practitioner Panel), after subsection (6) insert—

“(6A) Subsections (5) and (6) are subject to section 1MA.”

(5) In section 1P (Markets Practitioner Panel), after subsection (6) insert—

“(7) Subsections (4) to (6) are subject to section 1MA.”

(6) In section 1Q (Consumer Panel), after subsection (4) insert—

“(4A) Subsection (4) is subject to section 1MA.”

(7) After section 2L (PRA’s general duty to consult) insert—

“2LA Composition of Panels

(1) A person who receives remuneration from the FCA, the PRA, the Payment Systems Regulator, the Bank of England or the Treasury is disqualified from being appointed as a member of a panel established under any of sections 2M, 2MA or 138JA.

(2) Subsection (1) does not apply in respect of a panel mentioned in that subsection if regulations made by the Treasury provide for it not to apply to that panel.

(3) Regulations under subsection (2) may make provision in respect of a panel—

(a) generally, or

(b) only in relation to such descriptions of persons or cases as the regulations may specify (but the power to make such regulations may not be exercised so as to specify persons by name).”

(8) In section 2M (the PRA Practitioner Panel), after subsection (5) insert—

“(6) Subsections (4) and (5) are subject to section 2LA.”

(9) In section 103 of the Financial Services (Banking Reform) Act 2013 (regulator’s general duty to consult) after subsection (5) insert—

“(5A) A person who receives remuneration from the FCA, the PRA, the Payment Systems Regulator, the Bank of England or the Treasury is disqualified from being appointed as a member of a panel established under subsection (3).

(5B) Subsection (5A) does not apply in respect of a panel mentioned in that subsection if regulations made by the Treasury provide for it not to apply to that panel.

(5C) Regulations under subsection (5B) may make provision in respect of a panel—

(a) generally, or

(b) only in relation to such descriptions of persons or cases as the regulations may specify (but the power to make such regulations may not be exercised so as to specify persons by name).”’—(Andrew Griffith.)

This new clause disqualifies those who are paid by a regulator, the Bank of England or the Treasury from being appointed to a statutory advisory panel, subject to any exemptions the Treasury may set out in regulations.

Brought up, and added to the Bill.

New Clause 19

Consultation on Rules

‘(1) In section 138I of FSMA 2000 (consultation by the FCA), after subsection (4) insert—

“(4A) The FCA must include, in the account mentioned in subsection (4), a list of the respondents who made the representations, where those respondents have consented to the publication of their names.

(4B) The duty in subsection (4A) is not to be read as authorising or requiring such processing of personal data as would contravene the data protection legislation (but the duty is to be taken into account in determining whether particular processing of data would contravene that legislation).

(4C) For the purposes of this section, the exemption relating to functions conferred on the FCA mentioned in paragraph 11 of Schedule 2 to the Data Protection Act 2018 (exemption from application of listed GDPR provisions) does not apply.”

(2) In section 138J of FSMA 2000 (consultation by the PRA), after subsection (4) insert—

“(4A) The PRA must include, in the account mentioned in subsection (4), a list of the respondents who made the representations, where those respondents have consented to the publication of their names.

(4B) The duty in subsection (4A) is not to be read as authorising or requiring such processing of personal data as would contravene the data protection legislation (but the duty is to be taken into account in determining whether particular processing of data would contravene that legislation).

(4C) For the purposes of this section, the exemption relating to functions conferred on the PRA mentioned in paragraph 9 of Schedule 2 to the Data Protection Act 2018 (exemption from application of listed GDPR provisions) does not apply.”

(3) In section 104 of the Financial Services (Banking Reform) Act 2013 (consultation requirements), after subsection (5) insert—

“(5A) The Payment Systems Regulator must include, in the account mentioned in subsection (5), a list of the respondents who made the representations, where those respondents have consented to the publication of their names.

(5B) The duty in subsection (5A) is not to be read as authorising or requiring such processing of personal data as would contravene the data protection legislation (but the duty is to be taken into account in determining whether particular processing of data would contravene that legislation).

(5C) In this section “data protection legislation” has the same meaning as in the Data Protection Act 2018 (see section 3 of that Act).”’—(Andrew Griffith.)

This new clause would require the FCA, the PRA, the Payment Systems Regulator and the Bank of England to publish the names of respondents to their consultations on proposed new rules, where those respondents have consented to such publication.

Brought up, and added to the Bill.

New Clause 20

Unauthorised Co-ownership AIFs

‘(1) FSMA 2000 is amended as follows.

(2) In section 261E (authorised contractual schemes: holding of units)—

(a) before subsection (1) insert—

“(A1) This section sets out requirements for the purposes of section 261D(1)(a) (authorisation orders).”;

(b) in subsection (1) for “a contractual” substitute “the”.

(3) After section 261Z5 insert—

“Chapter 3B

Unauthorised co-ownership AIFs

261Z6 Power to make provision about unauthorised co-ownership AIFs

(1) The Treasury may by regulations make provision about unauthorised co-ownership AIFs that corresponds or is similar to, or applies with modifications, any of sections 261M to 261O and section 261P(1) and (2) (rights and liabilities of participants in authorised co-ownership schemes).

(2) Regulations under subsection (1) may make provision about unauthorised co-ownership AIFs generally, or about unauthorised co-ownership AIFs of a description specified in the regulations.

(3) In this section “unauthorised co-ownership AIF” means a co-ownership scheme that—

(a) is an AIF, and

(b) is not authorised for the purposes of this Act by an authorisation order in force under section 261D(1).”’—(Andrew Griffith.)

This new clause would enable the Treasury to make provision about the rights and liabilities of participants in unauthorised co-ownership AIFs which is similar to that made in relation to authorised co-ownership schemes in Chapter 3A of Part 17 of the Financial Services and Markets Act 2000.

Brought up, and added to the Bill.

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.’—(Tulip Siddiq.)

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.

Brought up.

Question put, That the clause be added to the Bill.