Asked by: Baroness Bennett of Manor Castle (Green Party - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the systemic impact from the Financial Conduct Authority’s crackdown on wealth management services under the Consumer Duty; what estimate they have made of the likely total compensation that will need to be paid by wealth management firms; and what other areas of the financial sector they expect to be impacted by the Consumer Duty.
Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)
Requirements regarding financial adviser ongoing services started in 2013 following the Retail Distribution Review, with additional requirements resulting from the Markets in Financial Instruments Directive in 2018.
In February, the FCA wrote to a number of financial adviser firms requesting information about their delivery of ongoing services, for which their clients continue to be charged. The FCA is collecting this information to assess what, if any, further regulatory work it may undertake in this area.
The FCA’s new Consumer Duty seeks to set a higher and clearer standard of care that firms owe their customers. The FCA is an independent non-governmental body and is responsible for determining the application of the relevant rules. The Government will continue to monitor the effectiveness of Consumer Duty rules, as they bed in and as industry becomes more familiar with them.
Asked by: Lord Sharkey (Liberal Democrat - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what, if any, statutory powers the Bank of England has to issue binding directions to (1) the Prudential Regulation Authority, (2) the Financial Conduct Authority, and (3) the Payment Systems Regulator; and on how many occasions in each year since 2007 they have been exercised.
Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)
The Treasury has statutory powers to issue directions to the Bank of England, which can only be used under specific conditions or circumstances. None of the powers outlined below have ever been used.
The Bank of England also has powers to direct the Prudential Regulation Authority (PRA), Financial Conduct Authority (FCA) and Payment Systems Regulator (PSR).
Asked by: Lord Sharkey (Liberal Democrat - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what, if any, statutory powers they have to issue binding directions to the Bank of England; and on how many occasions in each year since 2007 they have been exercised.
Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)
The Treasury has statutory powers to issue directions to the Bank of England, which can only be used under specific conditions or circumstances. None of the powers outlined below have ever been used.
The Bank of England also has powers to direct the Prudential Regulation Authority (PRA), Financial Conduct Authority (FCA) and Payment Systems Regulator (PSR).
Asked by: Gregory Campbell (Democratic Unionist Party - East Londonderry)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether he plans to publish a report on the impact of Consumer Duty on consumer contact with financial services firms in the 12 months since it's establishment.
Answered by Bim Afolami - Economic Secretary (HM Treasury)
The Government has no plans to publish a report on the impact of the Consumer Duty.
The Consumer Duty was introduced by the Financial Conduct Authority (FCA), which is operationally independent from Government and is directly accountable to Parliament for how it carries out its functions. The FCA has committed to monitoring the outcomes experienced by different consumer groups, including those in vulnerable circumstances, to check they are not being disadvantaged as a result of the Duty. It also publishes information about the implementation of the Consumer Duty by firms, including examples of good practice and areas for improvement, on its website: https://www.fca.org.uk/firms/consumer-duty
The Financial Services and Markets Act 2023 introduced a new requirement on the financial services regulators to keep their rules under review, and to publish a statement of policy for how they conduct rule reviews. The FCA’s rule review framework can be found at: https://www.fca.org.uk/publications/corporate-documents/our-rule-review-framework.
Asked by: John Hayes (Conservative - South Holland and The Deepings)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what recent assessment his Department has made of the adequacy of the availability of cash withdrawal facilities in Lincolnshire.
Answered by Bim Afolami - Economic Secretary (HM Treasury)
The government recognises that cash continues to be used by millions of people across the UK, including those who may be in vulnerable groups.
The government legislated through the Financial Services and Markets Act 2023 to establish a new legislative framework to protect access to cash. This establishes the Financial Conduct Authority (FCA) as the lead regulator for access to cash and provides it with responsibility and powers to seek to ensure reasonable provision of cash withdrawal and deposit facilities, on both a national and local basis. The FCA expects to finalise its regulatory rules in the third quarter of this year.
The most recent analysis undertaken by the FCA is available on the FCA website: Access to cash coverage in the UK 2023 Q1
Asked by: Lord Taylor of Warwick (Non-affiliated - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government, following reports of the shrinkage of the non-prime lending market, what steps they are taking to ensure that vulnerable customers have access to fair and regulated credit products.
Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)
The government is committed to taking steps to widen access to affordable credit, and is overseeing a number of initiatives to support this goal.
Since 2019, the government has made £100 million of dormant assets funding available to Fair4All Finance to support their work on financial inclusion, and an additional £45 million for initiatives to tackle the elevated cost of living. The government has also provided Fair4AllFinance with £3.8m of funding to pilot a No-interest Loans Scheme, designed for consumers in vulnerable circumstances who would benefit from affordable rather than high-cost credit.
As part of the Financial Services and Markets Act 2023, the government has amended the Credit Unions Act 1979 so that credit unions in Great Britain can offer a wider range of products and services.
Asked by: Olivia Blake (Labour - Sheffield, Hallam)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the adequacy of the Bank of England’s progress on integrating (a) climate and (b) nature considerations into its operations.
Answered by Bim Afolami - Economic Secretary (HM Treasury)
The financial regulators’ primary focus must be to ensure the safety, soundness and integrity of the markets they regulate. While the government expects that the Bank will play a crucial role in supporting the achievement of the government’s net zero target, it is not their primary responsibility given many of the levers for change sit outside of financial services regulation.
However, the Financial Services and Markets Act 2023 introduced a new regulatory principle for the Financial Conduct Authority, Bank of England and Payment Systems Regulator to consider in their work. To further strengthen the UK’s regulatory regime relating to climate and the environment, the government has embedded the consideration of the UK’s climate and environmental targets across the full breadth of the regulators’ general functions on a statutory basis.
This regulatory principle seeks to cement the government’s long-term commitment to transform the economy in line with its target to reach net zero by 2050, and to make progress towards the government’s long-term environmental goals, by ensuring the regulators must have regard to the government’s commitment to achieve these targets when discharging their functions.
This principle does not create any specific requirements on firms. Rather, they are expected to inform the future work of the regulators.
Asked by: Grahame Morris (Labour - Easington)
Question to the Home Office:
To ask the Secretary of State for the Home Department, if he will bring forward legislative proposals to require banks to compensate victims of fraud in circumstances in which anti-fraud banking protocols have not been followed.
Answered by Tom Tugendhat - Minister of State (Home Office) (Security)
To protect victims against authorised push payment (APP) scams, ten of the UK’s largest banks are currently signed up to the voluntary Contingent Reimbursement Model (CRM) Code. In 2022, £248m of losses to APP scams were reimbursed to victims under the commitments of this code.
Further, through the Financial Services and Markets Act 2023, the government legislated to require the Payment Systems Regulator (PSR) to introduce mandatory reimbursement for APP scams within the Faster Payment System, where 98% of APP fraud takes place. The PSR has confirmed that mandatory reimbursement will come into force in October 2024.
Asked by: Anneliese Dodds (Labour (Co-op) - Oxford East)
Question to the Department for Business and Trade:
To ask the Secretary of State for Business and Trade, what recent assessment her Department has made of the equality impact of the increase in the angel investment annual income threshold.
Answered by Kevin Hollinrake - Minister of State (Department for Business and Trade)
The Government is aware of the recent increase in the threshold level for High Net Worth individuals as defined under the Financial Services and Markets Act 2000. Self-certification under this exemption is one of several ways in which individual investors can make angel investments. Other options include self-certifying as a sophisticated investor through membership of an angel group or syndicate for at least six months, or accessing investments through a firm authorised by the Financial Conduct Authority.
HM Treasury sponsors the relevant legislation and hence the Department for Business and Trade has not sought to assess the equality impact of this change.
Asked by: Anneliese Dodds (Labour (Co-op) - Oxford East)
Question to the Department for Business and Trade:
To ask the Secretary of State for Business and Trade, what discussions his Department has had with stakeholders on the decision to increase the angel investment annual income threshold to £170,000.
Answered by Kevin Hollinrake - Minister of State (Department for Business and Trade)
The Department for Business and Trade has received several representations about the recent increase in the threshold level for angel investors wishing to self-certify as High Net Worth individuals under the Financial Services and Markets Act 2000. These representations have been referred to HM Treasury which is the sponsor of this legislation.