Asked by: Lord Sikka (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government further to the court judgment in R (The Financial Conduct Authority) V National Westminster Bank Plc on 13 December 2021, what plans they have to introduce legislation to enable clawback of remuneration from directors of entities found guilty of money laundering.
Answered by Baroness Penn
The Government does not intend to introduce legislation to enable claw back of remuneration from directors of entities found guilty of money laundering. This is because the UK financial services regulators – the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) – jointly set requirements for firms, including National Westminster Bank Plc, regarding the claw back of promised, or paid, remuneration.
Under these requirements, where misconduct or material poor performance occurs - including for anti-money laundering controls failings - firms would need to consider whether promised or paid remuneration can be justified, or should be returned (“clawed back”) for senior and materially risk-taking staff. The regulators have supervisory and enforcement tools to deploy in cases where they are not satisfied that a firm has complied with their rules.
The FCA’s successful prosecution of NatWest Plc in 2021 represents the first criminal prosecution brought by the FCA against a bank under the Money Laundering Regulations, and demonstrates the FCA’s commitment to using the full range of powers available to tackle anti-money laundering failings.
Asked by: Lord Sikka (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what discussions they have had with the Bank of England regarding the reversal of its quantitative easing programme
Answered by Baroness Penn
Monetary policy is the responsibility of the independent Monetary Policy Committee of the Bank of England and this includes decisions on quantitative easing.
As set out in the letter exchange between the Chancellor and Governor on 3 February 2022, the Government indemnifies the Bank of England’s Asset Purchase Facility, the vehicle that delivers quantitative easing. As part of this, there are oversight arrangements in place, including regular risk oversight meetings between Treasury and Bank senior officials which monitor the scheme’s implementation and risks to the Exchequer.
The Governor set out in his letter exchange with the Chancellor that, were asset sales judged to be appropriate, the Bank would liaise with the DMO in order to minimise interference with the DMO's own issuance programme, and would consider the views of market participants as to how best to minimise disruption in private asset markets.
Asked by: Lord Sikka (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government whether they will publish a table showing the number of promoters of disguised remuneration schemes who have been prosecuted; and the outcomes of such prosecutions.
Answered by Baroness Penn
Promotion or operation of mass marketed tax avoidance schemes is not in and of itself a criminal offence. However, there are a range of offences which might be committed by those who promote tax avoidance schemes or advise on their use.
On that basis, one individual involved in the promotion of Disguised Remuneration (DR) schemes has been prosecuted. They received a sentence of two years imprisonment, suspended for two years, and 300 hours of “unpaid work”.
A number of individuals are currently under criminal investigation by HMRC for offences linked to DR Schemes.
In addition, since 1 April 2016, more than 20 individuals have been convicted for offences relating to arrangements which have been promoted and marketed as tax avoidance. These have resulted in over 100 years of custodial sentences. The majority of these convictions relate to promoters.
The Government and HMRC are committed to tackling promoters and operators of tax avoidance schemes. This includes challenging the entities and individuals who promote DR loan schemes.
Asked by: Lord Sikka (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what plans they have to make the facilitation of tax avoidance a crime.
Answered by Baroness Penn
HMRC has a range of criminal and civil powers available to it to tackle those who try to cheat the tax system and will continue to use its anti-avoidance regimes to challenge the entities and individuals who facilitate avoidance schemes. These regimes include Promoters of Tax Avoidance Schemes, Disclosure of Tax Avoidance Schemes, and the Enablers regimes, which impose significant penalties on promoters if they refuse to comply with various conditions.
There are also a range of possible criminal offences, such as cheating the public revenue, fraudulent evasion of Income Tax or VAT, or the general offence of fraud. Where the behaviour of avoidance promoters strays into these offences, they will be considered for criminal investigation.
Since April 2016, more than 20 individuals have been convicted for offences relating to arrangements promoted and marketed as tax avoidance schemes. The courts ordered over 100 years of custodial sentences. The majority of these individuals were promoters.
Asked by: Lord Sikka (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the effect the increase in the energy price cap will have on the (1) Retail Price Index, and (2) Consumer Price Index.
Answered by Baroness Penn
In its February Monetary Policy Report (MPR), the Bank of England set out its view of the likely impact of the cap increase, using information available just prior to Ofgem’s cap announcement, and prior to the announcement of the Government support packages. The Bank’s February 2022 MPR can be found on the Bank of England website.
The Office for Budget Responsibility will update its view of the outlook for CPI and RPI inflation in its spring 2022 forecast on 23 March.
The Government recognises that many households will need support to help deal with the rising cost of energy prices. Global supply chain disruptions and higher energy prices both represent challenges that are driving higher inflation. These are global problems which we are working with our international partners on, and we are supporting households with the cost of living, providing support worth around £12bn this financial year and next alongside an announced £9.1bn package to help households with rising energy bills in 2022-23.
Asked by: Lord Sikka (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government, further to the report HMRC responses to inaccurate claims, published on 12 January, what is the methodology for estimating the amount lost to fraud and error; what is the value of these claims; and what is the forecasted expenditure for such claims, for (1) the Coronavirus Job Retention Scheme (2) the Self-Employment Income Support Scheme phases 1 to 3, and (3) the Eat Out to Help Out scheme.
Answered by Viscount Younger of Leckie - Shadow Minister (Work and Pensions)
The Government introduced unprecedented COVID support, helping millions of people across the UK. The schemes were designed to protect against Error and Fraud (E&F) by only making grants to individuals and businesses matched to information already on HMRC systems wherever possible, preventing ineligible claims, blocking suspicious claims up front, and investing in post-scheme compliance.
The latest E&F estimates and expenditure across the COVID-19 support schemes are included in HMRC’s 2021 Annual Report and Accounts, released on 4 November 2021, which can be found on the gov.uk website.
HMRC has published a technical document alongside the Annual Report and Accounts 2020 to 2021 detailing the methodology for measuring E&F in the Coronavirus Job Retention Scheme (CJRS), the Self-Employment Income Support Scheme (SEISS) phases 1 to 3, and the Eat Out to Help Out scheme (EOHO). This can be found on the gov.uk website.
HMRC aim to produce updated E&F estimates for CJRS and SEISS by Summer 2022.
HMRC are taking tough action to tackle fraudulent behaviour. Anyone who keeps money despite knowing they were not entitled to it, faces repaying up to double the amount, plus interest, and potentially criminal prosecution in serious cases.
HMRC established the Taxpayer Protection Taskforce and is estimated to recover approximately £800 million to £1 billion in the two years to 2022-23, on top of around £500 million recovered in the year 2020-21. HMRC will continue to address fraud and error in the schemes beyond the duration of the taskforce.
Asked by: Lord Sikka (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government further to the European Commission’s €344 million fine on UBS, Barclays, RBS, HSBC and Credit Suisse on 2 December for operating a foreign exchange cartel, what plans they have to appoint an independent inquiry into the operations of the UK arms of these banks.
Answered by Lord Agnew of Oulton
The UK’s independent financial services regulator, the FCA, investigated misconduct in the foreign exchange markets and fined six firms (Citibank, HSBC, JP Morgan, RBS, UBS, and Barclays) a total of £1.4 billion in 2014 and 2015 for failures of systems to control trading practices.
Alongside this, the European Commission opened a competition investigation in 2013, into the same issue, including covering any harm within the UK. In accordance with the EU-UK Withdrawal Agreement, the EU has continued to be responsible for the case, because it was initiated before the end of the transition period. The EU shall reimburse the UK for its share of the amount of the fine once the fine has become definitive.
Asked by: Lord Sikka (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what progress they have made in (1) investigating, and (2) prosecuting, allegations of banks forging customers’ signatures.
Answered by Lord Agnew of Oulton
The Government expects all companies to obey the law and relevant regulations. Anyone with evidence of such forgery taking place should report it to their bank in the first instance. If their concerns remain, or they do not have a direct relationship with the lender, they should report it to the relevant authorities.
Although the Treasury sets the legal framework for the regulation of financial services it does not have investigative or prosecuting powers of its own and is not able to intervene in individual cases. The Financial Conduct Authority (FCA) requires all authorised firms to have systems and controls in place to mitigate the risk that they be used to commit financial crime. Whilst the police have primary responsibility for investigating fraud the FCA also has powers to take a variety of enforcement action against firms that carry out fraudulent activity.
The National Crime Agency (NCA) is continuing to assess the material submitted by the Bank Signature Forgery Campaign and information obtained following preliminary enquiries to clarify matters with certain members of the public who had raised the issue. The NCA is making a thorough assessment to determine whether there are grounds for a criminal or regulatory investigation.
Asked by: Lord Sikka (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what powers they have to examine the operations of the Business Banking Resolution Service.
Answered by Lord Agnew of Oulton
The Business Banking Resolution Service (BBRS), which launched on 15 February 2021, offers a free, independent service designed to settle unresolved and new complaints that are not eligible for the FOS. The Government has always been clear that it welcomes the BBRS. However, it is an independent non-governmental body, and this independence is vital to its role. Its credibility, authority and value to SMEs would be undermined if it were possible for the Government to intervene in its decision-making or operational matters.Asked by: Lord Sikka (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what plans they have to exercise their statutory powers to examine the takeover of Liverpool Victoria insurance company.
Answered by Lord Agnew of Oulton
The assessment and approval of the proposed sale and demutualisation of LV= (previously Liverpool Victoria) is an ongoing and independent process, overseen and scrutinised by the financial services regulators, and subject to approval by the Courts. It would be inappropriate for the Government to intervene in this independent process.
The regulators’ supervision of the sale includes an assessment of the fairness of the transaction, the impact on policyholders and competition in the interests of consumers, and the quality of communications with members of LV=.
The Court processes involve a number of safeguards which are designed to ensure that policyholders are kept informed and their interests protected.