Financial Services and Markets Bill [HL]

Baroness Tyler of Enfield Excerpts

Committee stage
Monday 29th June 2026 Grand Committee

Moved by

[Baroness Tyler of Enfield]

82: Clause 17, page 21, line 34, leave out subsections (2) to (11) and insert—
“(2) In section 3B(1) (regulatory principles to be applied by both regulators), after paragraph (h), insert—“(i) the need to consider financial inclusion.””

[Baroness Tyler of Enfield (LD)]

My Lords, I rise to speak to three amendments I have in this group: Amendments 82, 95 and 97. This group is all about financial inclusion. It is a very important group. I am also very sympathetic to the amendments in the name of the noble Lord, Lord Holmes, and my noble friend Lady Kramer.

Amendment 82 would place financial inclusion where I believe it firmly belongs: among the regulatory principles set out in this legislation which the regulators must consider in carrying out their functions. This is not a novel idea. When I had the privilege to chair this House’s Financial Exclusion Committee back in 2017, we recommended that financial inclusion be given a firmer footing in the regulators’ duties. Indeed, when this House last legislated on these matters, in the 2023 Act, I am sorry to say that financial inclusion was not included as part of the regulatory principles. Despite a concerted effort at the time to put it on a statutory footing, we did not succeed, and my amendment would simply correct that. Financial inclusion, which determines whether millions of people can access the essentials of modern economic life, surely belongs in legislation.

However, the Bill as drafted moves in the opposite direction, confining the regulatory principles to strategic activities only, thus removing them from day-to-day decisions that impact the lives of millions of people, particularly those who are financially excluded. My amendment would ensure that financial inclusion remains a live consideration in the regulators’ day-to-day work. I say this to the Minister: if financial inclusion is genuinely a priority for this Government, why does it not sit among the principles the regulator must consider, and should these principles not be considered when implementing the activities that truly affect many people’s daily lives, rather than being set aside to apply only to more abstract strategic work?

I am conscious that, in the Committee’s debate last week, there were those who felt that any new principles should meet the “essential and enduring” test—I think the noble Baroness, Lady Noakes, said that. In my view, financial inclusion is essential and enduring. Whether people can access banking, credit, insurance and savings is not a passing policy priority but a permanent structural feature of how the system serves, or fails to serve, the population. It has been a concern for decades and will remain one.

I turn now to my Amendments 95 and 97, which would require the FCA to report each year on how the exercise of its functions has affected financial inclusion, and to be ready to account to relevant parliamentary committees, which would include the Treasury Committee and the Lords Financial Services Regulation Committee, which we have just heard about. My purpose here is specific and, I hope, constructive: to ensure that financial inclusion is reported on openly every year and that the public and Parliament can scrutinise the activities of regulators in ensuring that we all have access to the financial services and products we need at a price we can afford.

We all know that what gets measured gets done. What is reported on, transparently and regularly, is far harder to neglect than what is not. This is not an abstract concern. When I chaired the Select Committee, we found that 1.7 million adults were without access to a basic bank account; that communities were losing their bank branches at an alarming rate, as we focused on last week; and that households on the lowest incomes were paying more for credit, insurance and essential services simply because they had less money. Nearly a decade on, too many of these problems persist. An annual report will give this House and the public a clear and reliable picture, year on year, of whether the position is improving or deteriorating on things such as access to bank accounts, access to face-to-face banking services, affordable credit and insurance—the list goes on.

Such a duty asks the FCA to ensure that those who are excluded from financial products and services are taken into account, with their experiences seen and their problems addressed. It creates no new rules for firms, which is an important point. It simply ensures that the fundamental question—“How are the most financially excluded people in this country being served?”—is asked and answered each year, in public, before Parliament.

--- Later in debate ---

[Lord Stockwood (Lab)]

My Lords, I am grateful to the noble Lord, Lord Holmes of Richmond, the noble Baronesses, Lady Tyler of Enfield and Lady Kramer, of Richmond Park, and other Peers for drawing attention to the important issue of financial inclusion. As someone who grew up in poverty, it is not an abstract concept to me and the community I come from.

The noble Baroness, Lady Tyler of Enfield, asked if I would meet her to discuss this agenda further. I would of course be happy to meet her and any other noble Lords who would like to discuss the topic. I will write to her ahead of that meeting on the FCA’s consumer duty and what it means for financial inclusion, but I assure noble Lords that the Government are not relying on the FCA’s consumer duty as a catch-all solution. The Government agree that people should be able to access the financial services they need—that is an important objective—but we think that these amendments are not necessary to achieve that.

Amendments 124, 128 and 104 would give the Financial Conduct Authority a new statutory financial inclusion objective and require it to establish an independent financial inclusion unit. These amendments focus on action and measurement. Financial inclusion requires all parts of the system to work together. That is why it is important for the Government to lead this agenda, not the FCA. To secure action, we have published a Financial Inclusion Strategy, setting out an ambitious package of measures to improve access to financial services.

The FCA is closely involved in delivering this work. Sarah Pritchard, the deputy chief executive, also sits on the Financial Inclusion Committee, which monitors the strategy and supports its implementation. The Government have taken formal steps to reinforce the FCA’s role in this area. In her most recent remit letter, the Chancellor asked the FCA to have regard to reinforcing financial inclusion, and the FCA is responding to that ask.

The FCA’s 2025-2030 strategy identifies helping consumers to navigate their financial lives as one of its four strategic priorities. As part of this, it highlights an increase in the consumers who hold key products as a success metric for its work, and it is acting on this. For example, to advance the Financial Inclusion Strategy’s aim of boosting savings, the FCA developed a regulatory statement to support the uptake of workplace saving schemes. On measurement, the FCA already plays an important role in tracking progress on financial inclusion through its flagship financial lives survey, which provides a strong evidence base for monitoring outcomes over time.

I recognise Amendment 128’s emphasis on independent scrutiny and prioritisation of financial inclusion in the FCA’s work. As part of the FCA’s statutory framework, the consumer panel is in place to represent the interests of consumers and provide independent advice and challenge to the FCA. As already covered, the FCA’s strategy and membership of the Financial Inclusion Committee means that financial inclusion is embedded in its work. This is more effective than an operationally independent unit.

On oversight and transparency, I understand the intention behind Amendment 104, which seeks to require the FCA and PRA to report annually on financial inclusion, and Amendment 95, which would require the FCA to report on financial inclusion metrics and how it has acted to improve financial inclusion. However, these amendments are not necessary or appropriately targeted. The regulators already report publicly and are accountable to Parliament. Moreover, the FCA’s financial lives survey provides a biannual update on a wide range of financial inclusion metrics in the UK, including the numbers of unbanked people, those who have been declined for a product and the experiences of vulnerable customers. The FCA is also closely involved in the delivery of the Government’s Financial Inclusion Strategy, which is a public document and subject to public review next year. Amendment 104 would place reporting duties on the PRA, whose statutory role is prudential regulation, creating uncertainty about the PRA’s remit and what it would be expected to report against.

Amendment 82 would add financial inclusion to the regulatory principles that the FCA and the PRA must have regard to when discharging their general functions. The Government do not agree that this is the right mechanism to ensure that financial inclusion is prioritised. The amendment would require unclear action from the PRA. Parliament regularly holds the regulators to account for their work on financial inclusion. The Commons Treasury Select Committee recently held a session with the FCA’s deputy CEO for its Financial Inclusion Strategy inquiry. Amendment 97’s requirement that the FCA be prepared to demonstrate to relevant parliamentary committees how it has had regard to financial inclusion is therefore unnecessary. Any relevant Select Committee can call the FCA and hold it to account for its work on financial inclusion.

Amendment 141 seeks to require the FCA to establish a new legal route for third- party access to control another person’s assets, which goes well beyond its regulatory remit. The law requires parents or guardians to have legal authority to make decisions about the financial assets or property of their adult children. This includes accessing funds held in a mature child trust fund. Decisions about who may act on behalf of a person lacking capacity are governed by the Mental Capacity Act 2005 and are determined by the courts, reflecting the need for safeguards to protect vulnerable people. It is not appropriate for FCA rules to seek to substitute or override existing rules and processes. The Ministry of Justice recognises that the process of obtaining access can be challenging for the parents and carers of young people who lack capacity. It is exploring how the Government can best facilitate access for parents and carers to child trust funds on behalf of their children. I would be happy to raise this with the MoJ rather than berate it, as the noble Baroness suggests.

Turning to Amendment 161, I recognise how a broader set of data might support a more accurate assessment of underserved SMEs’ creditworthiness. However, it should be noted that the Treasury already has the ability in Section 4(5) of the Small Business, Enterprise and Employment Act 2015 to specify the SME information that must be shared. We are actively considering updates to the scope of data in the next phase of the CCDS reforms. However, it will not be expanded in line with this amendment, given that it would require redesigning the scheme entirely, expanding it beyond financial services participants, some of whom see little return for their participation, which already imposes a degree of burden. I do not think it appropriate for financial services legislation to impose regulatory obligations on non-financial market actors in this way, not least without consultation. That is not to say the ambition is misplaced. Indeed, these issues are potentially better addressed through the future development of open finance and smart data initiatives.

Amendment 169 seeks to require a review of know-your-customer requirements. I understand the concern that the current framework may not always operate as it should in supporting access to financial services. As the noble Lord, Lord Holmes, rightly stated, technology is already playing a part but can do better. Indeed, businesses such as Quantexa and Onfido are leading the way in this space. The Government do not believe that anti-money laundering requirements and financial inclusion are mutually exclusive. The money laundering regulations already provide firms with the flexibility to take a proportionate and risk-based approach to customer due diligence. As part of the financial inclusion strategy, major high-street banks have launched pilots on improving access to bank accounts, demonstrating how financial inclusion initiatives can operate within the existing framework.

Reforms to make customer due diligence requirements more proportionate and effective have already been made, including through amendments to the money laundering regulations made via statutory instrument earlier this month. The Government are also taking steps to support the effective use of new technologies, such as through the publication in February of guidance on the use of digital identities to support customer verification. Finally, the money laundering regulations also mandate a review of their regulatory provisions every five years to assess whether they are effective, appropriate and proportionate. The next such review will be published in 2027.

The noble Lord, Lord Holmes, asked how financial inclusion has changed under the current Government. In November, we published the Financial Inclusion Strategy, which supports access to banking for those with no fixed abode and small-sum lending to help people access credit and makes it easier for people to save. The noble Baroness, Lady Tyler of Enfield, noted that when a House of Lords Select Committee looked at this topic, it found that 1.7 million people were unbanked. Although it is still too high, I can report that the latest survey data shows that the number of unbanked people has fallen to under one million. As I already set out, with many of the actions we are taking, the Government hope to reduce this further. Financial inclusion is not a gap in the framework. It is an agenda already being delivered by the Government, with the FCA closely engaged in its implementation. I therefore ask the noble Baroness to withdraw her amendment.

[Baroness Tyler of Enfield (LD)]

My Lords, I thank the Minister for his response and all noble Lords who have spoken on this group of amendments. The debate has been very thoughtful, and I very much appreciated the collaborative tone of the contributions. I thank the Minister very much for agreeing to meet me and other interested Peers, and I very much look forward to that happening before Report. I was also grateful to the Minister for emphasising the point that the consumer duty cannot be the be-all and end-all. As my noble friend Lady Kramer very clearly put it, it is not a duty of care.