Draft Financial Services and Markets Act 2000 (Financial Promotion) (Amendment) (No. 2) Order 2023 Draft Financial Services and Markets Act 2023 (Benchmarks and Capital Requirements) (Amendment) Regulations 2023 Draft Financial Services and Markets Act 2023 (Consequential Amendments) Regulations 2023

Tulip Siddiq Excerpts

Tuesday 5th December 2023 General Committees

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

It is a pleasure to serve under your chairmanship, Mr Dowd.

As I said during the legislative debates on the Financial Services and Markets Act 2023, when the Minister’s predecessor was in post, the Labour party is supportive of reforms to replace retained EU legislation with new bespoke domestic rules where it makes sense to diverge in the interests of the UK economy.

I can confirm today that the Labour party remains supportive of the regulations amending retained EU law in relation to certain prudential requirements on credit institutions, long-term investment funds and elements of the Payment Accounts Regulations 2015. This also extends to regulations that will introduce changes to the implementation of Basel 3.1 capital rules, including extending the implementation period and reintroducing the SME supporting factor. I am also supportive of the regulations put forward to exempt crypto firms that are subject to money laundering regulations from the Financial Conduct Authority’s new restrictions on the industry’s ability to authorise financial promotions.

Overall, we agree with the draft regulations. I have just two questions for the Minister, on changes to capital requirements. Given that the Prudential Regulation Authority is proposing to remove the SME supporting factor when it confirms its final rule, are the Government not reintroducing a measure that the PRA plan to abolish subsequently? If so, what reassurances can the Minister give me that if the PRA goes ahead with its plan, the UK’s SME lending market will not be left at a significant competitive disadvantage against its European counterparts due to the increased cost of capital?

If the Minister is happy to answer those questions—or write to me later—the Opposition are happy to give the draft regulations our full support.