Financial Services and Markets Bill

Stephen Hammond Excerpts

2nd reading
Wednesday 7th September 2022 Commons Chamber

[Stephen Hammond (Wimbledon) (Con)]

I was not expecting to be called quite so early in the debate, given the panoply of talent on these Benches and the Benches opposite. In the interest of brevity, I will briefly concentrate on three aspects of the Bill. First, I want to guide the House to my entry in the Register of Members’ Financial Interests.

This is one of the most significant Bills that this House is likely to look at in this Session of Parliament because, as the Minister has said, the realignment of the regulatory architecture offers a unique opportunity to become more nimble, more agile, more accountable—I hope—and more pragmatic in our approach to regulation. The most important parts of the Bill take forward the future regulatory framework. Requiring regulation to comply and to promote international competitiveness will address the widely held concerns that regulators have in the past used their powers narrowly and over-cautiously to reduce risk, thereby reducing innovation, increasing costs and decreasing consumer choice, which has overall been detrimental to competition.

Creating what is, let us be clear, a secondary objective of international competitiveness and growth is absolutely right. Having this objective in place will neither undermine the regulators’ independence nor cause any prospect of a financial crash. I also do not believe, as some have said, that it is in any way a push for the lowering of standards. The industry knows that proportionate and effective regulation by an accountable regulator is the key to international competitiveness. I was interested to hear the Minister say that he thought we in this House should look again at the accountability structures of regulators. I welcome this objective, and I also welcome the cost-benefit analysis panel, which again plays into the objective of ensuring a nimble, agile regime that protects consumers while taking up the opportunities post-Brexit.

However, with the secondary objective and the cost-benefit analysis panel, there is a concern that regulators must be accountable both to this House and to the Government, but in particular to this House. I welcome the setting out in practice of some of the key performance indicators for the regulator and I recognise and welcome the Sub-Committee of the Treasury Committee, but I hope we will be able to discuss this in Committee and I urge the Minister to think about whether amendments are needed to include an obligation on the regulators to state how any new regulation will meet and further the objective of international competitiveness. I hope he will also consider an annual report, at least on the delivery of those objectives, which should include some measurement against specified key performance indicators. There should be no suggestion that the regulators are being allowed to mark their own homework.

I am sure that the Minister will clarify this later, but the cost-benefit analysis panel needs either to have external members—that must be explicit—or to make it clear that it is taking external advice. It ought also to be clear exactly what criteria are being used to measure cost-benefit analysis. Those measures would help considerably in terms of accountability. I do not believe that scrutiny and accountability affect the independence of either the PRA or the FCA. As my hon. Friend the Member for Salisbury (John Glen)—who I have had the pleasure of questioning in this House a number of times—knows, I want to see this industry thrive. It is key to the whole of the United Kingdom, because two thirds of the jobs in the industry are outside London. I think he too would accept that scrutiny and accountability do not threaten the regulators’ independence. They are important if we are to have a regime that continues to be internationally renowned.

I have been fortunate enough to be a member of the Treasury Committee in the past, and I hear entirely what my right hon. Friend the Member for Central Devon (Mel Stride) has said. However, I would suggest to him that as a result of the pressures on the membership of the Treasury Committee and the Sub-Committee—I accept that they have the same powers—caused by the extra work, we should open a debate on whether the House needs to think again about whether just having a Sub-Committee of the Treasury Committee is adequate, given the importance of this industry to jobs and growth across the country. I will ask the Minister, perhaps in discussions, to consider yet again a Joint Committee of both Houses on financial services, which is what happens in other jurisdictions.

I welcome so many measures in the Bill, but let me touch briefly on just one. Others will talk about the revocation of retained EU law and a number of other aspects about which Members have already spoken, but I urge the Minister to press ahead with mutual recognition agreements. They are another key way to ensure that the United Kingdom’s financial services remain at the forefront of global financial trade. It is extremely welcome that we are pressing ahead with Switzerland, but I urge the Minister to continue to press ahead with the powers that the Bill allows to be implemented and the regulators to give effect to. With those words, I warmly welcome the Bill, and I look forward to supporting it.