Financial Services Bill

Debate between Edward Leigh and John Glen

Report stage & 3rd reading & 3rd reading: House of Commons & Report stage: House of Commons
Wednesday 13th January 2021 Commons Chamber

[John Glen]

I am very happy to respond to that. That is why, over the last three years, I have engaged with the problem and worked with the FCA to change the lending criteria so that an estimated 125,000 of the 250,000 mortgage prisoners have been able to switch to more affordable mortgages if they are not taking on lending and are not in arrears. This a complex problem. I am still focused on the 55,000 that we estimate are in that difficult position. I will continue to work with stakeholders and industry representatives to find solutions, working closely with the FCA, but that does not permit me simply to allow any intervention. I did start my remarks with a concession on something that I thought was constructive.

Let me move on to new clause 26, which would require a lender to seek a borrower’s permission before transferring their loan. That would give rise to significant financial stability concerns, especially if a firm was entering liquidation, since it would prevent the timely transfer of the mortgage book. Selling a mortgage book can also represent a sensible way for a lender to manage its balance sheet and does not change the terms or conditions of a borrower’s mortgage contract.

I turn to a number of amendments relating to EU exit and financial services. New clause 12 would require the Treasury to assess the impact of adopting different rules from those of the EU through the Bill. It is right that the UK is able to adopt rules that best suit our own markets. The Government have published an impact assessment alongside the Bill, so the new clause is unnecessary.

[Sir Edward Leigh (Gainsborough) (Con)]

There is one overseas territory that is intimately connected to the EU: Gibraltar, which values its financial independence. I would just like to use this opportunity—I am sure the Minister will not mind commenting—to reassure the people of Gibraltar that their financial services are absolutely safe under this Government and this Bill.

[John Glen]

I am very happy to do that. Indeed, the Bill makes provision to ensure that there is ongoing certainty for financial services—particularly the insurance industry, which is so significant to the Gibraltarian economy.

New clause 20 would require the Government to review the cost of divergence from EU rules. I just do not accept that characterisation. Regulatory regimes are not static. There are a lot of myths around this area of divergence. Rules evolve all the time. Where we make changes to our frameworks as they stand today, those will be guided by our continued commitment to the highest international standards and by what is right for the UK’s complex and highly developed markets, to support our world-class environment for doing business. The Bill is the first part of that journey.

New clause 8 would require the Government essentially to report on the status of the EU’s considerations about UK equivalence. That is an autonomous process for the EU, and therefore that is not something that the Government can agree to do. The Chancellor recently announced a package of equivalence decisions—17 decisions out of the 30 that we had to make for the EU—and I will keep the House updated on the UK’s approach to equivalence, just as I did throughout the transition period.

I turn to new clauses 15 and 16, and amendments 3 and 4, which relate to how the regulators’ actions under the Bill will be scrutinised by Parliament. The UK’s regulators are internationally renowned as leaders in financial services regulation, and the Government believe that it is right that powers to implement often highly complex rules are delegated to the bodies with the appropriate technical expertise.

The FCA is already accountable to the Treasury, Parliament and the public. There is a statutory requirement for the FCA’s annual report and accounts for the financial year to be laid before Parliament by the Treasury, and a requirement to hold an annual public meeting at which the annual report can be discussed. There is currently nothing preventing a Select Committee of either House from reviewing the activities of the FCA at an inquiry, taking evidence, calling witnesses and reporting with recommendations. The Treasury recently published a consultation document on the review into the future regulatory framework for financial services, which seeks to achieve the right split of responsibilities between Parliament, Government and the regulators, now that we have left the EU. That is a significant undertaking that we must get right, and I look forward to continuing to engage with Members as part of that review.

I have spoken at length about a number of topics that are not directly addressed in the Bill. I will now address amendments relating to some of the measures that make up the Bill itself. I have already said that the prudential measures contain accountability frameworks, and I will begin by addressing a number of amendments that seek to add additional elements to that framework. As I said to the Public Bill Committee, amendments 1 and 2, along with amendments 9 and 12, all add considerations relating to climate change to the accountability frameworks. They are not necessary, as the Bill grants the Treasury a power to specify further matters to the accountability framework at a later date. I can assure Members across the House that the Treasury will carefully consider adding climate change as an issue to which the regulator should have regard, in the future. However, any such addition needs careful consideration and consultation on how it can be best framed. Therefore, the Government cannot support these amendments.

Amendments 8 and 11 would require the FCA and the PRA to have regard to the impact of their prudential rules on frictionless trade with the EU. Similarly, amendment 10 would require the PRA to have regard to the UK’s relative standing when making rules on capital requirements. These amendments are unnecessary. The accountability framework introduced by the Bill already requires the regulators to consider the impact of their rules on financial services equivalence. That is the main mechanism for financial services relationships between the UK and all overseas jurisdictions, not only the EU, and the Bill already requires the PRA to consider the UK’s standing in relation to other countries and territories.

Amendments 13 and 14 relate to the Help to Save scheme. We expect the majority of account holders to make an active decision about where they want to transfer their money where their accounts mature. However, I recognise that some individuals will become disengaged from their accounts, and before I turn to the specific amendments, I want to update the House on the Government’s plans for supporting these disengaged customers. Successor accounts, which are enabled by this clause, are one of the options that have been under consideration. Having carefully assessed the options, the Government have decided not to use the power provided by this clause at this point. This is primarily because of the operational issues, which mean that we would not be able to guarantee that every customer would be able to have a successor account opened for them automatically. I was therefore unable to conclude that this approach represented value for money. Instead, the Government propose to support customers who do not provide specific instructions for the transfer of their money, by ensuring that they receive their funds into their nominated bank account—the account into which they already receive their bonus payments. If the bonus payments are paid into that account, the principal amount will revert to that account. This will ensure that disengaged customers will be reunited with their savings and bonus payments.

Amendments 13 and 14 would, in effect, extend the four-year term of the Help to Save scheme by providing a guaranteed bonus for the successor account. The aim of Help to Save is to kick-start a regular long-term savings habit and encourage people to continue to save via mainstream savings accounts. The Government’s view is that a four-year Help to Save period is sufficient to achieve this objective. Amendment 14 also seeks to mandate the contacting of customers regarding the transfer of balances to a successor account. This amendment is unnecessary, as all customers will be contacted ahead of their accounts maturing, to encourage them to engage with their accounts and to provide instructions on where to transfer their funds.

New clause 2 would require the Treasury to publish a report on the anticipated use of the debt respite scheme. The expected demand and take-up of both elements of the debt respite scheme have been quantified to the extent possible at this stage and published in the appropriate impact assessments. I share right hon. and hon. Members’ determination that these schemes should work for those who need them. The Government will of course closely monitor both schemes’ usage and consider the impacts of covid-19 and the wider economic recovery on them. I am afraid that producing a report within six months evaluating the impact of changes made by clause 32 on levels of debt across the UK, as proposed by new clause 9, is not possible, as the regulations establishing a statutory debt repayment plan are unlikely to have been made and implemented by that point. I can assure Members that the Government are committed to properly evaluating both the statutory debt repayment plan and the breathing space after their commencement.

Breathing Space Scheme

Debate between Edward Leigh and John Glen

Wednesday 19th June 2019 Commons Chamber

[John Glen]

The hon. Lady raises two points. I was not familiar with the Debt Hacker app, but I will seek it out because it sounds like a very worthwhile initiative. I respectfully say to her that in the fourth quarter of 2018 debt as a percentage of household income was 139%, whereas 10 years previously it was 160%. I recognise that households are experiencing strain, but it is not quite as dire as she makes out.

[Sir Edward Leigh (Gainsborough) (Con)]

Loan sharks are the unacceptable face of capitalism, but this is a complex area and the Government should proceed with caution. Confidence in the market, and in capitalism more generally, depends crucially on the payment of debt. I very much hope that the Government will consult widely with the industry, particularly with credit card companies, and consider piloting, because there are unintended consequences of Governments, in their dying days, trying to virtue-signal and regulate more but actually doing more damage than good. Therefore, please may we have piloting and widespread consultation?

[John Glen]

I am grateful to my right hon. Friend for his observations. This is not virtue-signalling; it is delivering on a manifesto commitment with the sectors involved, carefully and methodically. We rightly have a robust regulator with powers to deal with exploitative credit providers. As I indicated earlier, we are not complacent. I observe his concerns about ensuring that we implement this appropriately and with the wide assent of the industry.

Oral Answers to Questions

Debate between Edward Leigh and John Glen

Thursday 21st December 2017 Commons Chamber

[John Glen]

I was delighted to see that the Manchester combined authority, which includes Rochdale, received £250,000 from the libraries opportunities for everyone fund. I will continue to work with the libraries taskforce to extend benchmarks, toolkits and best practices, and to look at different models of delivering services to ensure that libraries continue to thrive, as we see in Rochdale.

[Sir Edward Leigh (Gainsborough) (Con)]

6. What recent assessment she has made of progress towards the target of 95% superfast broadband coverage.

Oral Answers to Questions

Debate between Edward Leigh and John Glen

Monday 14th July 2014 Commons Chamber

[Sir Edward Leigh (Gainsborough) (Con)]

3. What discussions he has had with his counterparts in the middle east about the situation in Iraq.

[John Glen (Salisbury) (Con)]

8. What plans he has to consult partner countries in the middle east about a solution to the current violence in Iraq.