Asked by: Lord Myners (Crossbench - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what plans they have to allocate further resources to monitor incidents of money laundering associated with trade finance involving (1) misleading invoices, (2) bills of lading, and (3) the role of banks and other finance specialists in this field.
Answered by Lord Agnew of Oulton
The Government’s ambitious Economic Crime Plan sets out the significant action we are taking – in conjunction with the private sector – to combat money laundering and other economic crimes. Many of the reforms committed to in the Plan will benefit efforts to tackle trade-based money laundering (TBML), which the 2020 National Risk Assessment on Money Laundering & Terrorist Financing assessed as a growing risk.
On TBML specifically, HMRC has established this threat as a priority illicit finance risk. HMRC’s work includes reviewing current trade compliance procedures and identifying opportunities to enhance our risk detection capabilities.
More widely, we are also investing more to tackle economic crime. The 2020 Spending Review announced an increase in the government’s efforts to tackle economic crime by providing an additional £30.5 million in resource and £32.5 million in capital funding in 2021/22, including support for the National Economic Crime Centre (NECC) which coordinates law enforcement’s response to money laundering.
Further to this, we are also currently formulating our response to the Economic Crime Levy consultation. It will raise £100 million of additional funding per year to help fund reforms outlined in the Economic Crime Plan, including for the Suspicious Activity Reports reform programme and an uplift for the UK Financial Intelligence Unit. It will be an important source of funding for our ongoing action to tackle money laundering in all its forms.
Asked by: Lord Myners (Crossbench - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what plans they have to review the governance processes of equity index construction, including in relation to (1) economic growth, (2) financial stability, and (3) management accountability.
Answered by Lord Agnew of Oulton
The use and operation of equity indices by UK supervised entities is governed by the Benchmarks Regulation, introduced in 2016. The Government has proposed amendments to the Benchmarks Regulation in the current Financial Services Bill to support the orderly wind-down of critical benchmarks. However, there are no current plans for a broader review of the legislation.
Asked by: Lord Myners (Crossbench - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government whether they completed an economic impact assessment for the reintroduction of the Crown preference for insolvency.
Answered by Lord Agnew of Oulton
The Government’s reforms to make HMRC a secondary preferential creditor for certain tax debts (otherwise known as Protecting Your Taxes in Insolvency) came into effect across the UK on 1 December 2020.
The Government has taken a proportionate approach, applying changes only to taxes paid in good faith by employees and customers, but held temporarily by the business, including Pay as You Earn (PAYE) Income Tax and VAT. The reforms do not reintroduce crown preference, which applied more broadly across all tax debts.
The Government undertook careful work to assess the impact of the reforms ahead of announcement and implementation. As with all tax policy changes, the Government published this assessment in a tax information and impact note which can be found on gov.uk.[1]
[1] Full web-link: https://www.gov.uk/government/publications/changes-to-protect-tax-in-insolvency-cases.
Asked by: Lord Myners (Crossbench - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what plans they have to investigate the socioeconomic consequences for consumers of banks charging negative real interest rates.
Answered by Lord Agnew of Oulton
The Government believes that individuals, regardless of their background or income, should have access to useful and affordable financial products and services.
The independent Monetary Policy Committee (MPC) of the Bank of England sets the Bank Rate to meet the objectives set out in its remit of maintaining price stability and subject to this, supporting the economic policy of the Government, including its objectives for growth and employment. The MPC is sensitive to the effect of low interest rates on savers and does consider the effect monetary policy decisions have on all households.
Commercial banks make commercial judgements that influence the degree of pass-through from changes in Bank Rate into retail interest rates, with conditions in financial markets and in the banking sector also influencing interest rates paid on deposits or charged for lending. The Government does not seek to intervene in these commercial decisions.
Asked by: Lord Myners (Crossbench - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what steps (1) they, or (2) the Financial Conduct Authority, have taken to ensure that the pricing of funds managed by H20 Asset Management is based on fair valuation of portfolio investments.
Answered by Lord Agnew of Oulton
This is a matter for the Financial Conduct Authority (FCA), which is operationally independent from Government. The question has been passed on to the FCA. The FCA will reply directly to the noble Lord by letter. A copy of the letter will be placed in the Library of the House.
Asked by: Lord Myners (Crossbench - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what plans they have to publish their response to the European Commission’s review of the Alternative Investment Fund Management Directive, and in particular the question on the delegation of portfolio management by funds in the EU to entities based in third countries.
Answered by Lord Agnew of Oulton
The UK is a global leader in asset management and UK firms manage portfolios for clients located around world, including in the EU. The government is a strong supporter of portfolio delegation as an international norm in cross-border financial services that ensures investors around the world have access to the best investment expertise. The Treasury engages with EU counterparts on a range of issues and publishes consultation responses where it is appropriate to do so.
Through the Asset Management Taskforce and other engagement, the Treasury continues to work closely with industry leaders to identify opportunities to promote the UK asset management sector and the interests of the investors it serves.
Asked by: Lord Myners (Crossbench - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government whether they, or the Financial Conduct Authority, have reviewed (1) the accuracy, and (2) the regulatory completeness, of the statements issued by H2O Asset Management on 16 September and 22 September in connection to illiquid investments held in open-ended funds; and whether they (1) have investigated, or (2) plan to investigate, whether the transactions disclosed with related parties were in the best interests of all fund investors
Answered by Lord Agnew of Oulton
This is a matter for the Financial Conduct Authority (FCA), which is operationally independent from Government. The question has been passed on to the FCA. The FCA will reply directly to the noble Lord by letter. A copy of the letter will be placed in the Library of the House.
Asked by: Lord Myners (Crossbench - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the letter from 18 March 2019 by the Systemic Risk Council to the Financial Stability Board in response to that Board's discussion paper on the resolution of central counterparty clearing houses; and what plans they have to review capital adequacy and the effectiveness of incentives to prevent failure.
Answered by Lord Agnew of Oulton
The UK is committed to maintaining the highest international and domestic standards of financial regulation, including for central counterparties (CCPs). The UK continues to play an active role in setting the international standards related to the recovery and resolution of CCPs. The UK was one of the first jurisdictions to have a domestic recovery and resolution regime in place, and we continue to keep this framework under review to ensure it effectively mitigates and prevents failure.
Asked by: Lord Myners (Crossbench - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of (1) the potential risks for UK investors by H2O Asset Management's approach to valuing unlisted investments held in open-ended funds, and (2) whether any group of investors, including associates and other clients of H2O Asset Management and its executives and owner, have been treated preferentially.
Answered by Lord Agnew of Oulton
This is a matter for the Financial Conduct Authority (FCA), which is operationally independent from Government. The question has been passed on to the FCA. The FCA will reply directly to the noble Lord by letter. A copy of the letter will be placed in the Library of the House.
Asked by: Lord Myners (Crossbench - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government whether they have received any requests for information from the Autorité des Marchés Financiers in connection with the Financial Conduct Authority’s supervision of the valuation of investments in public funds managed by H2O Asset Management.
Answered by Lord Agnew of Oulton
This is a matter for the Financial Conduct Authority (FCA), which is operationally independent from Government. The question has been passed on to the FCA. The FCA will reply directly to the noble Lord by letter. A copy of the letter will be placed in the Library of the House.