Financial Services Reform

Baroness Ludford Excerpts

Wednesday 23rd July 2025 Lords Chamber

[Baroness Ludford (LD)]

My Lords, I thank the Minister for the Statement. The Government want to reintroduce informed risk-taking into our financial services system to deliver prosperity for working people. As my noble friend Lady Kramer pointed out, the last time we had risk-taking in the financial services system in a context of global competitive deregulation, in 2008, it created a crisis that meant the taxes of working people bailed out the bankers. How confident are the Government that we are not going down that path again?

In that context, why is the Chancellor disagreeing with the Governor of the Bank of England, who said that

“we can’t compromise on … financial stability”

and, notably, failed to endorse the route the Chancellor is taking?

On what the Minister called “reforming the ISA system”, I certainly agree with the comments that have been made about the need for more financial education, and it may be that ISA reforms can be discussed. But I question the way in which the Chancellor went about this. She created a scare story about how cash ISAs were going to be abolished. That scare story has run for several months, which will surely discourage the normal punter who is not confident in retail investment from saving at all.

Should the Chancellor not sack the spad or speech-writer who is encouraging her to shoot from the hip, which she seems to have a bit of a tendency to do, and take the better route of launching a reasonable debate, instead of letting these issues float and scare people?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her contribution. There was a lot there. There was a crumb of truth in the things she said, but I certainly do not accept the characterisation of any of the three points she made. She started by talking about risk-taking. Do we want informed consumers to be able to take risks in order to get better returns? Yes, we do. She talked about how just that alone would take us back to the situation at the time of the financial crisis. I have already set out that I fundamentally do not accept that point. We are not removing any of the regulatory architecture that was put in place after the global financial crisis and, as I have said, the Chancellor said very clearly:

“The protections that were put in place … were the right thing to do, with better protections for consumers and more accountability injected into the system”.


Does the noble Baroness think it is right that if a consumer has a large amount of cash sitting in their bank account, the banks that money is with cannot say to them that there might be better ways to invest their money? That is at the core of what she talked about. She started her remarks talking about better returns for consumers. That is exactly what we are talking about: getting better returns for consumers. That is why introducing a greater level of risk is important.

The noble Baroness talked about the Chancellor being at odds with the Governor of the Bank of England. Again, I do not think that is the case. I have read the comments. He is talking about the things that we are doing, so I do not think that that is true, and I do not think that they are at odds.

I think I have already addressed the question on ISA reforms. As I have said, the Government will continue to talk to industry and others about the options for ISA reforms. Again, we recognise the potential for ISA reforms to improve returns for savers and access to capital for UK businesses. At the end of the day, all these reforms are about getting better returns for savers—surely, we can all agree with that—and better returns for the UK economy and, again, I hope we can all agree with that.